Crain's Cleveland Business by Crain's Cleveland Business

BEER: Craft breweries hope to come out of pandemic stronger, eye new markets. PAGE 3

FOCUS | MIDDLE MARKET: Digital lending broker OverDrive finds a new gear. PAGE 12

CRAINSCLEVELAND.COM I MARCH 8, 2021

REAL ESTATE

Renaissance Cleveland Hotel owner plans substantial renovations at historic property BY MICHELLE JARBOE

A renaissance for the Renaissance Owner Skyline Investments Inc. plans to renovate the lobby and meeting spaces at the Renaissance Cleveland Hotel in the $20 million first phase of a broader makeover. The public areas of the hotel haven’t been overhauled in decades. | MICHELLE JARBOE/CRAIN’S CLEVELAND BUSINESS

The owner of the Renaissance Cleveland Hotel is preparing to launch a substantial makeover of the 102-year-old landmark in the heart of downtown. Skyline Investments Inc., the Canadian hospitality company that has controlled the hotel since 2015, revealed its intentions in a recent filing with the Ohio Development Services Agency. The company expects to apply for $2 million in state historic preservation tax credits this month to help finance the $20 million first phase of a larger project. That work, which could begin this year, would involve “a comprehensive rehabilitation” of the hotel’s public spaces — the ornate lobby, ballrooms and meeting rooms on the 14-story building’s first four floors. Those renovations are part of “a broader improvement strategy to be executed in the coming years,” according to Skyline’s submission to the state. The 491-room Renaissance is the city’s second-largest hotel, dwarfed only by the Hilton Cleveland Downtown, which opened in 2016. Hospitality experts say the renovations are long overdue — and well-timed, as the Sherwin-Williams Co. prepares to start construction on a new corporate headquarters across the street, on the north side of Superior Avenue. See RENAISSANCE on Page 18

MANUFACTURING

ENTREPRENEURSHIP

Increased communication, technology and costs are necessary to tackle supply chain challenges

VFA builds up businesses and communities

Manufacturers find ways around slower shipping times, higher material prices BY RACHEL ABBEY MCCAFFERTY

Slow shipments. Not enough employees. Soaring costs. Depleted inventories. The supply chain is full of knots and holes right now, spots for com-

panies to stumble. And there are ways to mitigate these challenges, from increased automation to higher wages, but they all come with a cost. To address supply chain and demand challenges, General Die Casters Inc. in Twinsburg has been run-

NEWSPAPER

ning overtime and installing automated equipment, said CEO and president Brian Lennon. He has raised wages to attract employees and is starting to work with a temp agency in Puerto Rico to bring in more people. And the company has been engaging in a lot of communication with its customers, trying to figure out what each actually needs in order to keep running while inventory slowly builds back up. Communication has been critical at MVP Plastics Inc. in Middlefield and K-J Fasteners Inc. in Eastlake, too. See SUPPLY CHAIN on Page 20

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Nonprofit teaches young college graduates entrepreneurship that adds value to regions BY JAY MILLER

Leopoldo Pena has founded a business that helps communities attract new businesses. Ryan Cleary has co-founded a business that helps a company’s employees manage their paychecks. Jeffrey Stern is a founding partner of a blockchain-based startup. In addition, he’s running a podcast that focuses on Cleveland. All three are alumni of Venture for America (VFA), a nonprofit that runs a two-year fel-

lowship for recent college graduates who aspire to entrepreneurship. VFA was the creation of Andrew Yang, an entrepreneur who sought the Democratic nomination for president in 2020 and now seeks to be mayor of New York City. Beyond just introducing recent college graduates to the world of entrepreneurship, VFA has a goal of building the communities it operates in. It has grown to 14 cities since its creation in 2011. It came to Cleveland in 2013. See VFA on Page 18

3/5/2021 4:14:32 PM

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BEER

State of the Brewnion in 2021: Cautious optimism After being in ‘survival mode,’ craft breweries hope to come out of pandemic stronger BBY JEREMY NOBILE

As the pandemic hit last spring, forcing the hospitality industry to cull staff and rework business plans, Matt Cole, owner of Fat Heads Brewery, stepped away from his desk and back into his brewing boots. While Cole enjoyed returning to his roots slinging barley in the brewhouse, the situation was bittersweet. Cole laid off 60% of his 330-person workforce — including 100 just in the restaurant at his massive Middleburg Heights mothership, which is bringing in just 45% of what it used to — as COVID-19 pushed Ohio into lockdown and cash flow slowed. He stepped in to pick up the slack in the brewhouse. Many of those employees have returned since, but not all. From staff to menus to beer offerings, the operation overall is much leaner today. “It was a survival mode kind of thing we fell into,” he said. “It kind of forced us to run more efficiently. We had to tighten things up, watch our spends. And that’s a good thing. But the most painful thing for me has been the restaurant and our staff there.” This past year was the most challenging the booming craft beer industry has faced as on-premise sales — where brewers make their best margins — nosedived. With losses partially offset by strong grocery sales and government stimulus, the reality, however, is not as quite as bleak as it may seem. Despite frothy headwinds, craft breweries closed in 2020 at a comparable rate to 2019. Various others opened or remain in the planning stages. That includes several in store from Columbus’ North High Brewing, which is expanding across the state to Cleveland and beyond, and smaller brewers coming online. There’s much hope in the industry riding on the pandemic winding down as vaccines become widespread and revelers break out of hibernation. “As infection rates and case numbers decline, people will start to feel more confident in public places again and start visiting brewery taprooms more frequently,” predicted Justin Hemminger, deputy director of the Ohio Craft Brewers Association (OCBA). In the meantime, winning a share of off-premise sales will remain key for breweries looking to do more than just survive. “We are still forecasting on-premise to be down 38% compared to 2019, which is devastating,” said Mark King, CEO of Great Lakes Brewing Co. “But we think we can turn this around and not only beat 2019 with bad on-premise, we think we can get close to 2018’s volume. We’re going to have the biggest packaged beer business in Great Lakes history.”

Great Lakes Brewing Co.’s canning line was installed at its Strongsville warehouse last year. Being able to package beer in cans has been critical to the company capitalizing on off-premise sales. Above right, GLBC’s new Crushworthy beer shows off the refreshed aesthetic CEO Mark King has brought to the 33-year-old brand. | CONTRIBUTED

Bartender Eric Eisenmann pours a beer at Fat Heads Brewery in Middleburg Heights. | CONTRIBUTED

Still hopping There are about 360 active craft breweries in Ohio today, compared with 328 at the start of 2020, according to OCBA figures. The state saw 47 openings and just 15 closings in 2020. Those rates are similar to prior years, despite the pandemic. There were 55 openings and 11 closures in 2019, and 50 openings and 10 closures in 2018.

This rendering shows the exterior of a COhatch space coming online in Ohio City. The site will include a North High Brewing facility featuring a brewery dedicated exclusively to the production of hard seltzers. | CONTRIBUTED RENDERING

With another 55 breweries in planning stages, there’s a chance Ohio could surpass 400 brewpubs by the end of the year. There is a lot of variation in how breweries came out of 2020, said Bart Watson, chief economist for the Brewers Association. But it has been a harrowing year. Even with stimulus money from the Paycheck Protection Program, total employment in the craft industry was down by about 15% in February, Watson said. Craft breweries heavily reliant on draft sales, which dried up with restaurants and taprooms closed or reduced in capacity, were hit harder than those already packaging beer for stores. This prompted more canning of brewed beer to put on grocery shelves, further increasing competition off-premise and contributing to an aluminum can shortage. While alcohol consumption spiked in the early days of the pandemic, drinking somewhat leveled out the rest of the year. And imbibers weren’t just buying up beer. Wine, liquor and hard seltzer, especially via e-commerce sales, seemed to slant hard toward non-beer booze. Watson estimates there may have been just a 1% increase in U.S. alcohol consumption per capita in 2020. Plus, there are more alcohol brands jockeying for those off-premise sales than ever. Some estimates have projected an 8% decrease in global alcohol consumption in 2020. In total, Watson, who is finalizing the BA’s annual economic report, said industrywide volume of craft beer produced was down 8% to 10% in 2020. Average revenue lost would be much more than that. “When grocery sales are up 10%, it’s because restaurant sales were down 50%,” Watson said. Nationwide, there were approximately 700 brewery openings in 2020, according to the BA, compared to 1,000 in 2019. There were about 300 closings last year. That’s far from the worst-case scenario that could’ve played out. “But I don’t want to imply your local brewery is doing great,” Watson

“WE ARE CREATING NOISE, NEW BRANDS, NEW COLORS. WE ARE BACK IN THE CONVERSATION AMONG YOUNG CONSUMERS AGAIN. IT’S BEEN A BIG CHALLENGE, BUT WE NEED TO DO THAT.” ——Mark King,CEO of Great Lakes Brewing Co.

said. “People are definitely hurting. And maybe not dying doesn’t mean you’re healthy. We might still see in 2021 a lot of people holding on for dear life, and maybe 2021 is what finishes them off.” “As things get more competitive,” he added, “the buzzword is differentiation.”

Turning the corner For Fat Heads and Great Lakes, differentiation means product innovation. Both are leaning hard into variety 15-packs to appeal to consumers making fewer trips to the store, for example. Great Lakes also is benefiting from an aesthetic redesign and having beers in cans. Revamped marketing, a new canning line and a restaurant renovation were costly investments made as King settled into Great Lakes, but they’re rooted, he said, “in turning this business back to growth.” A 30-year-old brand that had been declining the past seven years, Dortmunder saw off-premise sales spike 30% in 2020 thanks to its new look and aluminum packaging. And while low-calorie IPAs are trending up, King looks to have Great Lakes stand out with a low-calorie citrus wheat called Crushworthy. “We are creating noise, new brands, new colors. We are back in the conversation among young consumers again,” King said. “It’s been a big challenge, but we need to do that.” He added, “Winning off-premise is going to be a major battle cry for us this year.” See BREWERIES on Page 21

Correction ``A story about Goodyear Tire & Rubber Co.’s acquisition of Cooper Tire & Rubber Co. in the March 1 edition of Crain’s Cleveland Business incorrectly ranked the top tiremakers in the world. According to Tire Business’ Global Tire Report, Michelin is first (based on global sales), followed by Bridgestone and Goodyear. March 8, 2021 | CRAIN’S CLEVELAND BUSINESS | 3

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Group says it helped bring $3.35 billion in capital investment and $450 million in new payroll to the region in 2020 BY KIM PALMER

Interest Rates at All Time Lows

REAL ESTATE

Focus and urgency help Team NEO battle pandemic-impacted year

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Despite the major challenges of 2020, regional economic development organization Team NEO reports it had a role last year in the creation of more than 8,500 jobs generating about $449 million in annual payroll through the completion of 84 new projects. The group’s 2020 annual report, called Resilience and Recovery: The Northeast Ohio Region Progresses Despite the Pandemic, also found the business growth and job creation organization’s efforts brought a total of $3.35 billion in new capital investment into Northeast Ohio last year. Team NEO said that since 2015, when it began tracking these numbers, the 2020 new-payroll figure is the highest on record, and the number of new jobs is the second-highest created in a single year. The 2020 figures stand out from 2019, when Team NEO assisted on 84 new projects with about 5,440 jobs, $282.3 million in new payroll and slightly more than $1 billion in capital investment. What was critical last year, said Bill Koehler, CEO of Team NEO, was meeting the challenges of the pandemic by providing early and ongoing intervention on behalf of companies. “We engaged with business leaders to identify pain points and immediate challenges,” Koehler said. “We developed solutions and strategies to continue moving forward — both in cases of extreme loss and unprecedented growth. We worked to get access to information and leverage resources, and that led us to be able to deliver results we saw.” He said “a good deal of the development projects” started in 2020 had a faster time frame for expansion — 180 to 200 days, rather than a more standard 250 days. The shortened time frame was a result of businesses making and acting

on decisions quickly in part of what Koehler dubbed “the urgency of now.” “You had companies that either had problems, or they saw an opportunity to address somebody else’s problem,” he said. “This brings incredible focus to the table — the focus that comes with urgency and the need to get something done quickly.” That urgency was part of Team NEO’s work to offset pandemic-related job losses and help organizations that chose to expand, resulting in the retention of about 11,500 jobs, according to the report. MCPc, a global data protection company based in Cleveland, worked with Team NEO to open two new facilities in the past two years, including a security operations center in Midtown. The pandemic sent employees across the country into remote virtual offices and created a world of exposure and risk that many organizations underestimated. And that, said MCPc CEO Andy Jones, meant the cybersecurity business was extremely busy all year. “Unfortunately, many organizations were underprepared to have virtual associates, and as a result, many of them experienced some sort of incident,” Jones said. He said the surge in cybersecurity needs meant many businesses shortened adaptation time frames for technology upgrades. Team NEO had provided programs to support the company’s physical and employee growth with workforce grants. Jones said MCPc might not have been able to respond as quickly or as well to the business impact from the pandemic without the partnership. Team NEO was able to deal with the ramifications the pandemic and continue pre-pandemic development projects in part because of the unique nature of Ohio’s approach to funding economic development. JobsOhio is the private nonprofit partner behind Team NEO. The statewide organization, created in 2011 under former Gov. John Kasich, uses

revenue from the state’s liquor franchise for economic development. Last year, overall liquor sales were $1.57 billion, up 18% from $1.32 billion in sales in 2019 and 27% higher than 2018, according to data from the Ohio Division of Liquor Control. That meant JobsOhio had funds to put toward existing pre-pandemic projects, as well as COVID-19 related expenses for Ohio businesses and to support manufacturers as they pivoted to address pandemic-driven market needs. “There are states that put a moratorium on economic grants, and at the same time JobsOhio is invested $500 million in COVID relief,” Koehler said. “The combination of companies having access to capital, the increased demand for the products our region makes and having a certain type of manufacturing base allowed us to find opportunities to support growth.” When the state lacked personal protective gear, Team NEO connected Eaton — the power management giant that has North American headquarters in Beachwood — with Thogus, a custom plastic injection molding company in Avon Lake, to collaborate on the production of 350,000 face shields for front-line workers. And loans and grants for job retention for the new headquarters of Sherwin-Williams and an all-electric pickup truck project with Lordstown Motors Corp. still were available, even as state revenues dipped early in the pandemic. Koehler hopes that urgency of now and collaboration between Team NEO, JobsOhio, local partners and businesses will continue post-pandemic. “We can’t lose that momentum,” Koehler said. “We might not be able to sustain the pace we have going on now, but seeing opportunity, recognizing it and bringing it to reality, that focus we need to keep.” Kim Palmer: kpalmer@crain.com, (216) 771-5384, @kimfouroffive

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REAL ESTATE

Carnegie Management grows big federal contracting business

Carnegie Management & Development Corp. will soon start building a sprawling clinic for the GSA and the Veterans Administration in Fredericksburg, Va. The Westlake real estate developer won a contract to design and construct the clinic, which it will own and lease to the federal government for 20 years. | CONTRIBUTED RENDERING

Westlake developer has almost $400 million in projects involving Veterans Administration builds in three states BY STAN BULLARD

cess. Carnegie rents the buildings to the feds for about 20 years and provides property management for GSA as their owner. The Fredericksburg project has a total contract value of $18 million in rent annually, according to GSA. To win the work, Carnegie has a team focused on identifying potential projects and bidding for them. All told, Carnegie has 125 employees devoted to GSA work, including people in the field managing the properties. It works with a network of almost 300 consultants, from architects to other specialists. “We compete with some of the largest (development and construction) companies in the country,”

reliance on Zoom has complicated the process of working with multiple stakeholders on the projects. Motorists on Interstate 90 speed“We try to be respectful of the coning past Carnegie Management & cerns of communities and assure Development Co.’s Westlake headthem we will own these buildings for quarters are unlikely to suspect a fedyears,” Khouri III said. eral contracting behemoth is based GSA projects attracted Carnegie at the small contemporary building. for several reasons. Although it’s no Haliburton Co., “The federal government is a good Carnegie is undertaking prodigious credit tenant,” he said, which lenders projects as a design-build-own conlike. “And it’s recession-proof, altractor for the General Services Adthough these are low-margin deals.” ministration. Mark Rantala, chief adviser for Its latest, now finishing the final Economic Development Advisors of design phase, is a Veterans AdminisRocky River, is not surprised that tration clinic in Fredericksburg, Va., Carnegie has done well in the GSA that will cost an estimated $250 milworld. lion to build. The four-story, nearly Rantala, a real estate agent before 500,000-square-foot building will entering economic developcontain about 2,000 exam ment who did many lease rooms, medical specialty ar“WE WIN BECAUSE WE transactions for retailers with eas including a pharmacy, PAY A HIGH LEVEL OF Carnegie, said, “We did multiand even some beds for overnight stays. ATTENTION TO DETAIL. ple deals for (former) Sears Hardware stores. They knew “We think we’ll start conFEW COMPANIES ARE Carnegie would get it done, struction in 30 days,” said Rusand get it done on time. They tom Khouri, Carnegie’s foundWILLING TO DEDICATE are very good at understander, in a phone interview. GSA THEMSELVES TO ing the needs of their clients. describes the project as the They’ve likely gotten very largest private Veterans Ad- UNDERSTANDING AND EXECUTING good at understanding how ministration project so far. the government bids projects Although it’s not the biggest SUCH COMPLEX PROJECTS.” and become efficient at it. deal undertaken by the fami- — Rustom Khouri, Carnegie Management Carnegie focuses on producly-owned company — a shop- & Development Co. founder ing for them the same way it ping center in Indianapolis has that designation — the Virginia Khouri said. For example, for a Fay- did for Sears Hardware.” However, Khouri, whose office project is the latest in a line of busi- etteville, N.C., clinic, it initially vied ness building for the VA that Carnegie with 21 other companies, and seven walls are peppered with pictures of in Fredericksburg. himself or family members with has pursued since 2008. “We win because we pay a high lev- presidents and other politicians, disAlong with a Daytona Beach, Fla., project costing about $100 million el of attention to detail,” Khouri said. counts the pull of profits. “We believe it’s a calling,” the elder that will go up this year, and a $20 mil- “Few companies are willing to dedilion build it’s finishing in Sheffield Vil- cate themselves to understanding and Khouri said. “We are helping veterans get better health care. It’s somelage, Carnegie has undertaken 12 VA executing such complex projects.” Carnegie is involved in every stage thing we feel good about doing. It structures across the United States. It entered the highly competitive of the project, from finding sites and helps a population that seriously VA business after constructing offices working with architects and the GSA needs better attention and facilities. for the FBI. The company’s start as a to the final punch-list for finishing Veterans put their lives on the line for government contractor began inaus- the buildings. Much of the field work the country. These facilities are state piciously as the developer of Ohio is now overseen by Khouri’s son, of the art. Medical professionals will auto emission testing facilities in the Rustom Khouri III, a business devel- want to work there. I believe nothing opment and pre-development man- in the private sector is superior.” 1980s. Carnegie partners with construc- ager who shepherds deals from early tion contractors and architects for planning through construction. Stan Bullard: sbullard@crain.com, Khouri III said the pandemic and (216) 771-5228, @CrainRltywriter the projects in the GSA bidding pro-

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PERSONAL VIEW

Water innovation and technology is key to the future of our region RICH WILLIAMS FOR CRAIN’S CLEVELAND BUSINESS

BBY MICHAEL SCHUM

EDITORIAL

Don’t let up G

ov. Mike DeWine has made some mistakes in the last 12 months of COVID-19. We all have. But DeWine generally has been a steady steward of Ohio during unfathomably difficult times, and we’re once again seeing the value of his patient, mature leadership as the state approaches the finish line of its pandemic response. The governors of Alabama, Iowa, Mississippi, Montana and Texas last week declared that state mask mandates would no longer be needed to prevent the spread of COVID-19. Mississippi and Texas are essentially reopening their states with no restrictions. And there’s an increased level of yapping from ambitious political figures in Ohio to follow suit. DeWine, though, is acting cautiously — and wisely — by keeping some restrictions in place and setting a specific standard for lifting all COVID-19 public health orders. Last Thursday, March 4, DeWine said those orders will end when Ohio “gets down to 50 cases per 100,000 people for two weeks.” Numbers like that can feel abstract, but here’s the important context: On Dec. 3, 2020, Ohio was at 731 cases per 100,000 people over a two-week period. By Feb. 3, that number had fallen to 445. And by DEWINE IS ACTING CAUTIOUSLY March 3, it was lower still, at 179. The numbers are going — AND WISELY — BY right way, fast, in large KEEPING SOME RESTRICTIONS the part due to the stepped-up IN PLACE AND SETTING A pace of vaccinations. DeWine noted that more SPECIFIC STANDARD FOR than 1.8 million Ohioans LIFTING ALL COVID-19 (about 15% of the populaPUBLIC HEALTH ORDERS. tion) have received at least one dose of a vaccine, and the state now has more than 1,200 vaccination locations. In Ohio’s nursing homes, a top priority for vaccinations, DeWine said coronavirus cases have fallen by 90% since December — to about 270 case per week from more than 2,800. The federal government is doing its part on this front, with the help of private industry. The Biden administration announced last week that the country will have enough vaccine supply to inoculate every American adult by the end of May, two months earlier than previously expected. That timeframe was sped up by Merck & Co. agreeing to help produce the Johnson & Johnson single-dose vaccine, and Johnson & Johnson, in

turn, beginning to operate its manufacturing facilities 24/7. We’re getting closer to ending the misery of these rotten past 12 months. But the work is not done. Variants of COVID-19 produce new threats. As Robert Wachter, chairman of the department of medicine at the University of California, San Francisco, told Bloomberg last week, “We’re now dealing with a virus that’s better at its job than the one we were dealing with a few months ago, so it makes it even more irresponsible” to reopen immediately. The reopening debate obscures progress Ohio has made in getting back to normal. We no longer have stay-at-home orders or a curfew. Restaurants, bars and gyms are open, albeit with some restrictions. Sports and entertainment venues are back with capacity limits. The path to a full return to normal, DeWine emphasized, is for “each of us getting vaccinated when we can, and by each of us wearing masks in public.” About 17,000 Ohioans have died from COVID-19, a terribly high number. To keep it from going much higher, we have to be more vigilant than ever. Be patient. This looks to be almost over. We applaud DeWine for standing up to political pressure to keep the state safe for a while longer.

Do it. Finally A

bipartisan group of Ohio House and Senate members last week announced the intention to reintroduce the Ohio Fairness Act — legislation that would grant nondiscrimination protections to the LGBTQ community in employment, housing and public accommodations. We’ve previously supported this legislation, as have business groups, and continue to do so. This will be, embarrassingly, the 10th time lawmakers have tried to get the Fairness Act through the General Assembly. Ohio is behind the curve in offering the basic protections needed to make the state a desirable place to live and work. In discussing a planned state marketing campaign to attract people here, DeWine said he considers Ohio to be “progressive.” Definitions can vary, but passing the Fairness Act would send a strong message that Ohio is open for business and welcomes everyone.

Executive Editor: Elizabeth McIntyre (emcintyre@crain.com) Managing Editor: Scott Suttell (ssuttell@crain.com) Contact Crain’s: 216-522-1383 Read Crain’s online: crainscleveland.com

Smart technology has made it so consumers can control nearly everything about their homes from their devices, including locks, doorbells, cameras, lights — all products that help make them feel safe, offer convenience and provide peace of mind. However, a lot of consumers aren’t aware that water damage is five times more likely to occur than theft, according to the Insurance Schum is vice Information Institute, and water is one president of of the most-used resources in our product homes. Managing it remotely and sim- development at Moen and a ply is critical for homeowners. Businesses that are water-specific, member of the like the Moen brand, focus on helping Cleveland Water preserve and protect our planet’s most Alliance. precious resource — water — while improving how people interact with it in their daily lives. This includes developing innovative products that not only deliver water beautifully but also help customers better manage and protect it. Quite simply, innovation drives product development and impacts customer adoption of water-smart goods and services. The research found that today’s customers are more educated, more connected and more interested than ever in many aspects of water in their homes, including water con- QUITE SIMPLY, servation, water quality, water INNOVATION DRIVES control, water usage data and more. That’s why for- PRODUCT ward-thinking companies stay DEVELOPMENT AND laser-focused on developing innovative products that en- IMPACTS CUSTOMER able consumers to better conADOPTION OF WATERtrol, conserve and manage their water. SMART GOODS AND As a company devoted to staying at the forefront of water SERVICES. innovation and technology, and to take advantage of a broad range of ideas and resources, we joined the Cleveland Water Alliance (CWA), a nonprofit organization that brings together the public and private sectors to leverage technology to drive economic development and spark innovation around water in Northeast Ohio. CWA fosters ways for entrepreneurs and inventors to access a company with the size and scale like Moen to co-develop ideas, test prototypes, conduct consumer research and more. At the same time, Moen benefits by gaining access to innovative ideas at a much broader scale working with entrepreneurs, inventors and universities who partner with CWA. It’s a win-win for companies and innovators alike, as well as for Cleveland and the surrounding region. The Cleveland area, because of its proximity to Lake Erie, is a hub for a thriving water economy, boasting a vast network of academia, public utilities and private companies, all in the water sector. Cleveland is already globally recognized as a center for medical care and research. It is not a far stretch to see connections and possibilities for Cleveland as the recognized leader in the water economy with all of these assets at its disposal. Moen is excited to be a part of this innovative city and effort, which is key to the future of our region.

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing ClevEdit@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes.

Sound off: Send a Personal View for the opinion page to emcintyre@crain.com. Please include a telephone number for verification purposes.

6 | CRAIN’S CLEVELAND BUSINESS | March 8, 2021

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The Biden administration and Democrats in Congress have proposed another round of nearly $2 trillion of COVID-19 stimulus, with $350 billion earmarked for bailing out state and local governments. But the state bailouts, however well-intended, are flawed — giving far too much money to states that don’t need it and rewarding other states that have mismanaged their own finances. The price tag, earmark formulas and disincentives are all wrong. For starters, Washington’s latest jackpot giveaway to states is based on outdated, pessimistic economic forecasts made last summer. Many states struggled during much of 2020, of course, as economies closed and tax revenues plunged. States like Ohio watched as projected revenues took a swan dive from a projected surplus into a gaping deficit. Spending on Medicaid and new COVID programs drained some state coffers, and the National Governors Association asked Washington for $500 billion to offset predicted shortfalls. But a lot has changed since then. Many businesses have reopened, while others never closed. State economies have rebounded faster than expected, and state tax revenues have been a pleasant surprise. J.P. Morgan now projects that state revenues in 2020 declined only one-tenth of a percent compared with 2019. And fiscal policy groups like the Tax Foundation,

American Enterprise Institute and the Brookings Institution have lowered their state-level fiscal loss estimates. Not only are states dispelling gloomy economic forecasts, but many, including California, now expect budget surpluses. We may all still be in the same COVID storm, but not all states are sinking in it. Unfortunately, the DemHederman is the ocratic proposal fails to make that rather important distinction. Instead, executive the proposed bailout funding formudirector of the la turns on population and the unEconomic Research Center employment rate, rather than financial need. So California, even with its and vice expected surplus, may still receive an president of www.naipvc.com extra $41 billion in federal aid — policy at the whether it needs the money or not. Buckeye The latest federal bailout — based Institute in on old, inaccurate forecasts for states Columbus. that don’t need it — gets even worse. It tempts states to spend without discipline, rewarding yesterday’s poor fiscal management and all but ensuring more mismanagement tomorrow.

BY REA S. HEDERMAN JR.

Don’t bail out ships that aren’t sinking

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OPINION

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The West Side Market has anchored Ohio City for more than a century and is still a reason many visit the neighborhood, but the location could be even more of a draw if it were advertised, according to Brad Glazer. | DAVID KORDALSKI/CRAIN’S CLEVELAND BUSINESS

Why not try advertising the West Side Market? I am growing so very, very tired of reading of the continued woes of the West Side Market and proposed solutions, such as hiring a “fix-it” consultant, etc. (Feb. 15 Crain’s editorial: “City is in the market for help at the West Side Market”). And I don’t know what the answers are to this dilemma. But let me put this to your readership: When was the last time you saw an advertisement of any kind to draw shoppers? NEVER may be the answer for most. ... I know I can’t remember anything of the kind in my 40-plus years living here. Most of the Cuyahoga County disposable income is outside the city limits, not to mention surrounding areas that could shop there. How about some TV commercials now and then? We see them for Marc’s, Giant

Eagle, Walmart and Heinen’s. Why do they spend their money doing this? Because it works for them. OK, I am a bit biased, as I have been in the media field for more years than I care to remember. But “advertising doesn’t cost, it pays.” I’d really have liked to see the city of Cleveland put its money into some kinds of media programs first, before hiring its consultant, and see if it built traffic. For most shoppers, going to the West Side Market is an excursion, unlike most of our shopping, which is less than 10 minutes away from our homes. Why not remind the populace of the existence and great offerings of the West Side Market? Brad Glazer University Heights MARCH 8, 2021 | CRAIN’S CLEVELAND BUSINESS | 7

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SPORTS BUSINESS

Top team executives reflect on a year unlike any other

From remote operations to vastly reduced attendance, leaders look back on the last 12 months BBY KEVIN KLEPS

One of the Cleveland Indians’ most important decisions of 2020 was made in a rental car. Tribe president of business operations Brian Barren was riding with Paul Dolan, the club’s owner, last March. The pair had just left the Indians’ spring training facility in Goodyear, Ariz., and had been in contact with Chris Antonetti, who leads the baseball side of the front office, and top officials from Major League Baseball. “We made a decision between two and three stoplights out in Goodyear that, hey, effective Friday morning, we’re going to communicate broadly that we’re shutting down spring training and we’re going to close our office,” Barren said. On March 11, 2020, the same day as a rental car experience Barren won’t soon forget, Utah Jazz center Rudy Gobert tested positive for COVID-19. That sent the sports world reeling and delayed the NBA season by almost five months. The Cavs, CEO Len Komoroski said, went to a remote operation “overnight.” In the almost 12 months since, the organization has “become more productive, more communicative and able to create a high level of impact even in this setting,” the 18-year veteran of the Cavs’ front office said. “And now it really poses questions going forward relative to how we optimize what we’ve learned in this virtual world.” The many ways in which the Browns, Cavs and Indians have dealt with the pandemic was a prominent topic in the Crain’s Sports Forum on March 2. The one-hour virtual session featured Barren, Komoroski and David Jenkins, the chief operating officer of the Browns. With the Cavs not part of the NBA bubble at Walt Disney World and the Indians playing the 2020 season before only team staffers, the media and cardboard cutouts, the Browns were the first of the big three teams in Cleveland to welcome fans during the pandemic. The club’s first two home games had a maximum capacity of 6,000 fans. The tally was doubled for the final six contests during a campaign in which the Browns made their first playoff appearance in 18 years and recorded their first postseason victory in 26 campaigns. The biggest challenges, Jenkins said, were “making sure you have all of the protocols in place, the preventative equipment that’s needed, the hand sanitizer stations, the directional signage — just making it as easy as possible for fans to come in and have a seamless experience.” Faced with a situation that was new to everyone, the three clubs worked together as they never had before. “The amount of collaboration that’s gone on in our industry has actually been stunning. ... In a lot of respects, we’re so much better than we ever have been because it’s unlocked so many doors,” Komoroski said.

The 10,500 cap on attendance is 38% lower than the Indians’ 16,924 gate average for 10 home dates in April 2019. That season, the club’s 24 weekend games from June forward generated an average attendance of 29,050. The Indians are optimistic that the capacity could increase as the pandemic’s impact lessens. “Our hope is for continued progress on the vaccination front, and we’ll do our best to stay out in front of the mutations of the coronavirus,” Barren said. “Those are things that we certainly can’t control, but we need to react to. And if conditions improve on the health and safety front more broadly in society, we would hope to increase attendance as the season unfolds.”

New ways to work

The Indians, after playing 2020 with no fans in attendance, will begin 2021 with a gate limit of about 10,500. | JASON MILLER/GETTY IMAGES

“IF CONDITIONS IMPROVE ON THE HEALTH AND SAFETY FRONT MORE BROADLY IN SOCIETY, WE WOULD HOPE TO INCREASE ATTENDANCE AS THE SEASON UNFOLDS.” ——Brian Barren, Indians president of business operations

“I’M LOOKING FORWARD TO 67,000 SCREAMING FANS PUSHING US TO A DIVISION TITLE.” ——David Jenkins, Browns chief operating officer

“THE AMOUNT OF COLLABORATION THAT’S GONE ON IN OUR INDUSTRY HAS ACTUALLY BEEN STUNNING. ... IN A LOT OF RESPECTS, WE’RE SO MUCH BETTER THAN WE EVER HAVE BEEN BECAUSE IT’S UNLOCKED SO MANY DOORS.” ——Len Komoroski, Cavaliers CEO

300, but has since increased three times. The current maximum gate of 4,100 has been set below the state’s 25% capacity limit to give the organi-

zation sufficient room for all of the health and safety protocols, including social distancing between seating pods.

“Throughout our league, the level of fan satisfaction and feeling safe at the venue is incredibly high, upward of 90-plus percent,” Komoroski said. The Indians’ home opener on April 5 will mark the organization’s first with fans at Progressive Field in more than 18 months. The state’s 30% max for outdoor facilities will mean a gate cap that is about 10,500, which Barren said is slightly higher than the organization’s tally of full-season-ticket equivalents. The club is in the process of reseating its core customer base to allow for the necessary space between fans. By now, the vast majority of the customers likely are aware of the protocols — mandatory face masks, no eating and drinking in the concourse, hand sanitizer stations — that will be in place. An “added twist” for the Tribe, Barren said, is that this season the club has to ensure that the ingress and egress of players, coaches and staffers doesn’t overlap with that of the fans. That, too, is part of the game’s health and safety guidelines for 2021. “There’s a big chunk of work behind the scenes that’s ongoing right now,” the Tribe’s president of business operations said.

Playing in a pandemic: Year 2 When the 2020-21 season tipped off, the Cavs were among just a handful of NBA teams that played before fans. Attendance at Rocket Mortgage FieldHouse initially was limited to

The capacity for the 2020 Browns’ final six home games was doubled to 12,000. | GREGORY SHAMUS/GETTY IMAGES

The attendance limit for Cavs games at Rocket Mortgage FieldHouse recently was upped to 4,100. | JASON MILLER/GETTY IMAGES

The attendance limit, in addition to cutting off access for tens of thousands of fans during the Browns’ best season in almost three decades, meant the organization had to get creative in satisfying corporate partnership commitments. The team pumped up its digital content, which led to a league-leading number of YouTube views and social media data that shattered totals from the previous season. “You have to find new ways to engage people, new ways to communicate and fundamentally prioritize those relationships,” Jenkins said. Other challenges were even more personal, as the pandemic turned internal communication at many businesses into an all-encompassing virtual experience. “One of the biggest inefficiencies that we experienced as an organization is the challenge of growing and developing our employees in a virtual environment, with that lack of connection,” Barren said. “You think about that walk down the hallway and naturally bumping into people. You can listen and learn or ask a question. That’s gone, at least temporarily.” Komoroski thinks some changes to the work dynamic, such as a decrease in business travel, are here to stay. But the Cavs CEO isn’t eager to spend another year on web-conferencing platforms. “We really feel at the end of the day that there’s no substitute from a cultural end of having that in-person connectivity. ... The energy, the buzz, the incidental contact of running into people along the way and having that side conversation and the ability to convene people together, it’s tough to replace that,” Komoroski said. The three team executives, after a year unlike any other, had the same wish — packed houses at Cleveland’s three major sports facilities — when asked for a team-related development they were eager to see later in 2021. “I’m looking forward to 67,000 screaming fans pushing us to a division title,” said Jenkins, the Browns’ longest-tenured executive. A game played before a capacity crowd “is coming here sooner than we think, and we’re committed to getting there as quickly as we can,” Komoroski said. Kevin Kleps: kkleps@crain.com, (216) 771-5256, @KevinKleps

8 | CRAIN’S CLEVELAND BUSINESS | March 8, 2021

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DEVELOPMENT

Taking advantage of industrial real estate boom requires taking some risk out of development

Ohio Site Inventory Program helps streamline process BY KIM PALMER

Businesses looking to move headquarters or expand operations have shortened their timelines, taking advantage of the massive amounts of online data to research, vet and narrow down possible locations before economic development groups like Team NEO are brought into the decisionmaking process. Previously, Team NEO — the Northeast Ohio arm of a network of business development organizations funded by JobsOhio — and similar organizations would be the first call for a company looking to expand or relocate to the region, but things have changed. “These companies are now online shopping. Years ago, we used to have two, three weeks to collect a lot of data and to send information based on some specs regarding their decision,” said Christine Nelson, Team NEO vice president of project management, site strategies and talent. “What we are seeing now is they have done all their research online and when they come to us, they have really specific questions that they were not able to answer online, and they are going to be in town in three days.” As those time frames have condensed, the needs, particularly in the industrial market, for both new con-

struction and renovation have grown exponentially, Nelson said. “As the pandemic hit the United States, industrial real estate has started to become one of the strongest sectors in the real estate field,” she said. Northeast Ohio ticks off a lot of boxes for industrial companies looking to move closer to a manufacturing supply chain, reshore operations or fill the warehousing and logistical gaps created during the pandemic as a result of a surge of online shopping and delivery. To react to the real and perceived deficits in the state’s commercial real estate availability, the Ohio Site Inventory Program, which began as a JobsOhio pilot program in 2016, was created. “These companies want to know how fast they can be up and running and part of that is pulling together all of a site’s disparate information into one place,” Nelson said. “They want to know everything they can possibly know before they make a decision, so there’s no surprises. It’s all about being able to get everything online fast.” The program acts as a clearinghouse that highlights the state’s construction-ready industrial sites by identifying developable land and, if needed, funds improvements such as environmental testing, remediation, infrastructure buildout and other costs.

The program provides JobsOhio grants up to $2 million in grants, and up to $3 million in loans, to be spent on properties that fit a criteria for industrial development without the guarantee of an identified end-user, Nelson said. Grants are awarded to offset the costs associated with demolition, environmental remediation, building renovations, site preparation and infrastructure improvements. “Our role really is to help identify locations, to line them up against the criteria competitiveness, to understand what the gaps are and to determine and the cost of those gaps,” Nelson said. Developable land then can qualify for authentication and be listed in the SiteOhio database. To be eligible the land must have a minimum of 30 acres and be appropriate for use in one of the JobsOhio listed target industry sectors: advanced manufacturing; aerospace and aviation; automotive; autonomous mobility; energy and chemicals; financial services; food and agribusiness; logistics and distribution; or technology. JobsOhio provides grants to ensure the site is shovel-ready. Team NEO authenticates that utilities are mapped out, due-diligence studies are completed, and state and federal requirements are met. To date, there have been 28 total

sites throughout the state that have been authenticated. Six are currently under review in Geauga, Stark and Trumbull counties. Team NEO supported development on three sites that represent more than 650,000 square feet of new industrial space and have more than 95 acres available for future development. “It has been a very successful funding cycle for Northeast Ohio,”

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Nelson said. “We are going to introduce three new construction projects and then we are currently working on a very large renovation project out in Erie County. The site inventory program will be close to introducing over 1.5 million feet of new and renovated product in Northeast Ohio this year and into next year.” In February, the SiteOhio Continuum program was added to ramp up cut services or raise taxes during hard times. In that respect, tax-andsave plans are prudent bookkeeping policy. But if states turn to Washington for bailouts rather than rely on their own rainy day funds even when it’s raining, then the states are double-dipping and the taxpayers are (once again) being bilked. The solution is a more strategic COVID spending bill that helps the countless families and businesses

Many states prepared for economic hardships, revenue shortfalls and worst-case financial scenarios. They made hay while the sun was shining and saved some of their revenue for a “rainy day.” These rainy day funds help states weather economic storms, and almost half have used these reserves to stop-gap shortfalls or prop up fuIN EFFECT, WASHINGTON’S LARGESSE WILL ture budgets. But with the DISCOURAGE STATES FROM CONTINUING TO promise of even TAKE THE FISCALLY PRUDENT STEP OF SAVING more free federal money flowing FOR A RAINY DAY — BECAUSE UNCLE SAM WILL from Washington, BAIL THEM OUT ANYWAY — OR IT WILL some states do not ENCOURAGE STATES WITH RAINY DAY plan to use their rainy day fund at SURPLUSES TO FORGO USING THEM WHILE all. Why should THEY CONTINUE TO TAX THEIR HOUSEHOLDS they? AND BUSINESSES AS IF THEY WERE PREPARING In effect, Washington’s largesse FOR AN ECONOMIC HURRICANE. will discourage BOTH SETS OF INCENTIVES ARE BAD. states from continuing to take the fiscally prudent truly battered by the pandemic’s step of saving for a rainy day — be- storm. Local restaurants, mom-and-pop cause Uncle Sam will bail them out anyway — or it will encourage stores, hotels, entertainment venstates with rainy day surpluses to ues and furloughed workers have forgo using them while they contin- been devastated, their own rainy ue to tax their households and busi- day accounts dwindling or depletnesses as if they were preparing for ed. They are the ones in need of an economic hurricane. Both sets federal financial aid, not states that have suffered less than a 1% dip in of incentives are bad. Rainy day funds tax households their tax revenues. And there is certainly no need for and businesses more than necessary during economic good times, taxpayers to bail out ships that arso that the state does not have to en’t even sinking.

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The loca part CONT

troects g on ut in procing enothis

The Cuyahoga Valley Industrial Center is located in Cleveland. The 59-acre parcel is part of the Ohio Site Inventory Program. | CONTRIBUTED

supply to meet the industrial property demand. Its goal is to add properties that might not meet all of the thresholds for what has previously been classified as the “best and highest use,” but because of size and location are still highly marketable sites that can increase the state’s overall competitiveness. Ohio’s program is not entirely unique, said Dennis McAndrew, president of Silverlode Consulting, a firm that consults businesses on site selection. He said many of the states with similar programs, including North Carolina, South Carolina, Georgia, Alabama, Kentucky and Indiana, are some of Ohio’s biggest competitors. “A big part of what drove the states to create these programs was when they were trying to assemble mega-sites for automobile assembly plants that might require 1,000 acres,” McAndrew said. “In order to be in the running for that a site also needs to have the utility infrastructure ready to go, or at least a plan for getting it there quickly because time is of the essence.” Industrial real estate requires large tracts of land. Thirty acres usually is the minimum, where a single-story building with high ceilings can be constructed, McAndrew said. The existence of large “clean slate

“AS THE PANDEMIC HIT THE UNITED STATES, INDUSTRIAL REAL ESTATE HAS STARTED TO BECOME ONE OF THE STRONGEST SECTORS IN THE REAL ESTATE FIELD.” — Christine Nelson, Team NEO vice president of project management, site strategies and talent

parcels” is one of the advantages non-legacy and minimally built-out states in the South and Southwest have when it comes to industries looking for construction-ready space — even when land costs are similar. As much as the cost involved in getting a site ready to build is a factor, so is the risk of delay and previously undeveloped or underdeveloped land poses less of that risk. “Once companies make a decision on the site, they want to start moving dirt immediately, because they’re trying to meet some sort of a business need and they just don’t have months let alone years to deal with environmental remediation or to build out infrastructure,” McAndrew said. Not knowing if a property will need

environmental remediation or if a community will greenlight a large development are other risks that companies contend with, McAndrew said. Being proactive about environmental remediation, and being able to do it on a speculative basis when redeveloping legacy properties, is key to bringing in new development, said Tracey A. Nichols, director of financial services at Project Management Consultants. Nichols for nearly nine years was director of economic development for Cleveland Mayor Frank Jackson. She used the Clean Ohio Fund, which was a statewide program developed in the early 2000s and the predecessor to JobsOhio’s program, to clean up and redevelop large swaths of leg-

“A BIG PART OF WHAT DROVE THE STATES TO CREATE THESE PROGRAMS WAS WHEN THEY WERE TRYING TO ASSEMBLE MEGASITES FOR AUTOMOBILE ASSEMBLY PLANTS THAT MIGHT REQUIRE 1,000 ACRES.”

acy and brownfield properties throughout the city. Grants that provide the amount of funding JobsOhio offers are necessary if a legacy city like Cleveland is going to be able to attract the kind of development needed to build up the concentrated job hubs the state is looking to foster, Nichols said. “The sweet spot for these developers is 30 acres, but you need that 30acre site to be well located, near a highway and near a workforce hub,” she said. “But the cost of construction in Cleveland’s pretty high, and you’re not going to see a return on your investment without these types of programs.” Nichols praised JobsOhio for providing the funds to deal with brownfields and wetland mitigation. But with cities that have centuries of development and decades of neglect, she worries the programs only scratches the surface. “Cleveland’s a great city, and so is Dayton and so is Cincinnati, and all these other places. But they need some help,” Nichols said. “The answer is not to just give up on land and move away. The answer is, how do we clean it up, assemble it and get a company to come in and take it?” Kim Palmer: kpalmer@crain.com, (216) 771-5384, @kimfouroffive

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MIDDLE MARKET

OVERDRIVE TURNS THE VIRTUAL PAGE With a new owner, digital lending broker finds new gear in stay-at-home economy ``BY JUDY STRINGER |

When doors to libraries and schools closed last March, the floodgates for digital borrowing swung wide open. Almost overnight, administrators escalated spending on e-books, digital audio and other digital media, creating an unprecedented spike in demand for Garfield Heights-based OverDrive’s market-leading virtual lending platforms. “For us, it was go time,” said founder and CEO Steven Potash. “Libraries, schools, educators — all these public institutions that we’ve served for decades — they relied on us. One major [library] market director said to me ‘Steve, e-books isn’t just a thing now, it’s the only thing.’ ” 2020 was dotted with records for OverDrive checkouts, circulation, first-time users, and downloads and installations of its Libby app, which acts as a digital library card providing users access to e-books, audiobooks, videos and magazines, free of charge. The company added 60 employees, bringing its headcount to around 400, according to Potash, and ended 2020 with a record topline revenue “over $400 million.”

Last year also included a major liquidity event, with OverDrive changing hands from previous owner Rakuten, a $7 billion Japanese online retailer, to New York City-based mega investment firm KKR. Terms of the KKR deal — announced in December 2019 — were not disclosed, but market watcher Marshall Breeding said a value of about $775 million “can be inferred” by combining the $410 million Rakuten paid for OverDrive in 2015 with the $365 million gain it reported last year on the investment. Breeding, who is founder and editor of Nashville-based Library Technology Guides, thinks Rakuten’s relatively short-period ownership suggests anticipated synergies between the two companies’ distribu-

tion platforms did not come to pass — likely, he said, because they have mismatched objectives. “It makes sense to me that it is quite a bit different to be a company that negotiates with publishers on behalf of libraries that lend to the public for free than to be a consumer-oriented company that is selling digital content to the consumer audience in a for-profit model,” Breeding said. Potash acknowledges “we never felt that we were culturally well suited with our prior sponsor [Rakuten].” “Our culture is trust, privacy for all citizens who want to borrow a book, a high degree of responsibility for student privacy and being a trusted resource for local, state and federal agencies who are using taxpayer dollars to deliver [literacy

12 | CRAIN’S CLEVELAND BUSINESS | March 8, 2021

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“WE JUST WENT LIVE WITH 3,000 MAGAZINES, SO YOU CAN NOW FLIP THROUGH EVERYTHING FROM TABLOIDS TO THE ECONOMIST TO THE NEW YORKER.” — OverDrive founder and CEO Steven Potash

Upward of 95% of public libraries in the U.S. and Canada contract with OverDrive for digital lending and other services, making it “far and away” the leading commercial distributor of e-books and other digital content to libraries, according to David Burleigh, director of brand marketing and communication for the company. “That 95%, however, refers to public libraries that are our customers,” he said. “We don’t get 95% of their digital budget.” Growth in the North American

library space, therefore, hinges primarily on adding new digital lines to its collection. A good example of that occurred as part KKR’s buyout. The New York investment firm transferred its portfolio company RBmedia’s library business to OverDrive during the summer, providing Libby users a wider variety of audiobooks and magazine titles. “We just went live with 3,000 magazines,” Potash said, “so you can now flip through everything from tabloids to the Economist to the New Yorker.” Yet, OverDrive’s biggest growth opportunity lies in the education space. Just look at the U.S., Potash said, where there are roughly 12,000 to 13,000 unique public library districts, but more than 100,000 unique school systems or schools. See OVERDRIVE on Page 16

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MARCH 8, 2021 | CRAIN’S CLEVELAND BUSINESS | 13

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FOCUS | MIDDLE MARKET | TAX TIPS

Employer retention tax credit is now more accessible BBY JONATHAN CICCOTELLI

The new Consolidated Appropriations Act 2021, signed on Dec. 27, has brought welcome changes for businesses seeking continued financial support during the COVID-19 pandemic. With expanded eligibility for the employee retention tax credit (ERC) and a second round of Paycheck Protection Program (PPP) loans available, businesses should consider the following key updates as they continue to face challenges powered by the pandemic.

Expanded provisions of the ERC The ERC provides eligible businesses with a refundable credit against employment taxes on qualified wages paid to employees they retained during the pandemic. The Consolidated Appropriations Act made significant changes to the availability of the ERC. One of the most favored of these changes now allows employers to both claim the ERC and receive a PPP loan, as long as the “qualified wages” used to determine the ERC are not also being used as authorized costs for forgiveness on the PPP loans. Originally, as unveiled in the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was passed in March 2020, the ERC was only applicable to businesses that

did not receive a PPP loan. Employers, even those who received firstround PPP loans, can now claim the tax credit retroactively to March 13, 2020. Ciccotelli is The Consolidat- partner-ined Appropria- charge for tions Act also Meaden & extended ERC Moore’s Tax availability. The Services Group. credit was initially set to expire at the end of last year, but was extended the credit through June 30. Not all businesses with employees are eligible for the credit, and the requirements for being an eligible employer differ depending on the tax year. For both 2020 and 2021, a reduction in gross receipts is a component of eligibility. However, for 2020 only, businesses may also meet the eligibility requirements for the credit if they were subject to a mandated shutdown by government at any time during the year.

Gross receipts test eased As we saw in the CARES Act, to be eligible for the ERC based on the gross receipts test, a business needed to report more than a 50% decline in

THE CONSOLIDATED APPROPRIATIONS ACT MADE SIGNIFICANT CHANGES TO THE AVAILABILITY OF THE EMPLOYEE RETENTION TAX CREDIT (ERC). ONE OF THE MOST FAVORED OF THESE CHANGES NOW ALLOWS EMPLOYERS TO BOTH CLAIM THE ERC AND RECEIVE A PPP LOAN, AS LONG AS THE “QUALIFIED WAGES” USED TO DETERMINE THE ERC ARE NOT ALSO BEING USED AS AUTHORIZED COSTS FOR FORGIVENESS ON THE PPP LOANS. gross receipts in 2020 compared with the corresponding quarter in 2019. This changed for 2021 when the Consolidated Appropriations Act lowered the gross receipts eligibility threshold from 50% to 20%. Businesses now only have to show a 20% decline in gross receipts as compared with the same quarter in 2019 to satisfy eligibility.

Qualified wages limit increased The 2020 ERC provided a refundable credit amount of up to 50% of qualified wages for a maximum credit of $5,000 for each full-time employee for those kept on payroll between March 13 and Dec. 31. The Consolidated Appropriations Act raised this wage threshold, granting a credit of

up to 70% of qualified wages for a maximum credit of $14,000 for each employee retained between Jan. 1 and June 30, 2021.

Threshold change Another significant piece of the Consolidated Appropriations Act is the revised definition of a large employer. The measure raised the large employer threshold from 100 fulltime equivalent (FTE) employees to 500 FTE employees. This threshold is important because large employers must calculate their credit based only on the wages of employees who are “not providing services,” while small employers can calculate their credit based on the wages of all employees. By raising this threshold, more businesses qualify as small em-

ployers and can expand their wage base off of which the credit is calculated.

Eligibility for second draw PPP If your business continues to be impacted by COVID-19 and faced with financial constraints, the Small Business Administration is now accepting second draw PPP loan applications through March 31. A borrower is generally eligible for a second draw PPP loan if the business: ``Employs no more than 300 employees (reduced from 500) or meets an alternative size standard; ``Can show at least a 25% reduction in gross receipts in 2021 during comparative quarters in 2019; ``Has used or will use all of its first draw PPP loan funds.

Next steps While there are still several areas in which the IRS needs to provide further clarification, this newly revised legislation has broadened accessibility to both the ERC and the PPP, and it is an appealing additional benefit to many businesses in need of additional relief. Every business is experiencing COVID-19-related setbacks, but every business is also unique and requires its own set of strategies to address specific circumstances. SPONSORED CONTENT

ONLINE TOOL FROM GCP OFFERS SOLUTIONS, INSTANT ACCESS FOR BUSINESSES BY ANNIE ZALESKI Crain’s Content Studio-Cleveland Progressive is known to be a top employer in Northeast Ohio, with the company regularly included on best workplaces lists, including multiple appearances on Fortune’s 100 “Best Companies to Work For” feature. Even so, the Mayfield Heights-based insurer — which has been on quite a hiring spree in recent years — is not immune from the challenges that all businesses face with finding the right employees. "Working in insurance might not be immediately top of mind for talent when, in fact, we’ll hire over 1,000 people locally for roles in IT, analytics, sales, service, claims, marketing, legal and more this year," said Neil Lenane, business leader, talent acquisition at Progressive. For help in its recruitment and hiring, Progressive turned to the Greater Cleveland Partnership (GCP) and its INGEAR initiative. "INGEAR has made it easier for us to connect with local talent — and vice versa. At Progressive, we’re always looking for ways to make job seekers’ lives easier, so our alignment with GCP makes a lot of sense," Lenane said. Launched in 2020, INGEAR is an online business

resource portal that features an Employers Now Hiring page directing job seekers to companies hiring in the region. INGEAR also includes project management, site selection services, energy solutions and public sector coordination. ‘POSITIONING COMPANIES FOR SUCCESS’ INGEAR grew out of conversations GCP had while formulating its strategic plan. "GCP's Business Growth Services focus on positioning companies for success and profitability," said Deb Janik, senior vice president at GCP. "The companies we work with need access to and an understanding of the resources, monetary and non-monetary, that are available, to help them grow and thrive in Greater Cleveland," she said. "GCP provides the expertise businesses need to expand existing or establish new operations in Greater Cleveland," Janik said, “including project management services designed to navigate the broader economic development system and connect with our public and private partners.” However, most companies' immediate needs center around specific operational activities or investments: The manufacturer looking to hire machinists and access funds for employee training, or the food production company needing to replace $2 million of

equipment and seeking financing options. GCP works to build relationships, serves as a trusted advisor and identify solutions that ultimately cultivate expansion or attraction projects. TAILORED SOLUTIONS For businesses not sure of where to turn, INGEAR's responsiveness is another plus. Visitors are greeted by a chatbot monitored by GCP staff, so questions or requests for assistance receive a response quickly. This business-first approach was invaluable to Prince & Izant, a provider of precious metal and brazing alloy solutions. When the Cleveland-based company started exploring growth options, GCP helped it navigate government programs and economic development entities that could help. "Based on some financial incentives, we decided to stay here — and not just stay here, but expand our footprint," said Phillip Eckenrode, general counsel at Prince & Izant. "We have new building plans being drawn up as we speak." Among other things, he credits the company’s long-term relationship with GCP as crucial throughout the entire process both now – and in the future. "GCP, and now through this tool they have, they're really the clearinghouse, or the quarterback, or whatever the analogy you want to use," he said.

WHAT IS INGEARTM? • Developed by the Greater Cleveland Partnership and launched in 2020, the information-rich INGEAR (Industry Growth, Expansion, Attraction, Retention) online portal is a one-stop resource for businesses of all sizes and industries. • The website — gcpingear.com — provides immediate access to GCP’s advisory services, covering areas such as project management, site selection, talent, energy solutions and public sector coordination, as well as a job board and company spotlights. • INGEAR also helps companies schedule meetings and calls with GCP team members, who possess the knowledge and relationships to help businesses access and navigate the broader regional economic development system.

This advertising-supported feature is produced by Crain’s Content Studio-Cleveland, the marketing storytelling arm of Crain’s Cleveland Business. The Crain’s Cleveland Business newsroom is not involved in creating Crain’s Content Studio content. 14 | CRAIN’S CLEVELAND BUSINESS | March 8, 2021

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FOCUS | MIDDLE MARKET

Erdie Industries supports innovation with flexible strategy Lorain packaging manufacturing company expects new container to boost sales BY DOUGLAS J. GUTH

Erdie Industries co-founder Jason Erdie has innovation in his blood. His grandfather, John, was one of the developers of the Pillsbury dough can when he worked for the food production giant in the 1950s. Granddad’s creative streak continues at Erdie, buoyed by a flexible business strategy adjusting to the introduction of new products. The packaging manufacturing company — which already held two industry patents prior to this year — will roll out a new hybrid packaging container in April that combines a box and tube-shaped shipping container. On-site engineers modeled the “Alta Box” at the company’s 50,000-square-foot manufacturing and warehouse facility in Lorain. Erdie said the invention resembles a long tube, but it can be folded at the ends to provide additional protection. The folded-up recyclable tube requires 1,000 pounds of force to open, crucial for safeguarding wine bottles, fishing poles, golf equipment and other items that may break when shipped in common tubes and boxes. “Boxes work great, but a corrugated box loses its strength when it gets long,” said Erdie, who started the company in 1983 with his father, John Stephen Erdie. “If you send your favorite golf club in a regular box, it’ll get bent up on a conveyer belt. The Alta Box protects against that side impact — it has the strength of a tube with the ease of a box.” Erdie said he expects the Alta Box, which can be manufactured at any

Erdie

Erdie Industries created its Alta Box to protect golf clubs, fishing poles and other fragile items during shipping. | CONTRIBUTED

length, will increase the company’s revenue by 30% to 40% over the next few years. Although its introduction was stalled by the coronavirus pandemic, the innovation is well-supported by modified operation and production practices. The company’s open-capacity floor allows for added equipment, while a second shift will focus directly on Alta Box production. Erdie expects a 30% to 40% uptick in manufacture out of the Lorain facility, with the company hiring 10 to 15 machine operators and additional staff before year’s end, adding to the 30 workers already on hand. Erdie, who declined to disclose the company’s annual revenue, said production costs will be comparable to

the Twist-n-Pull mailing and shipping tube, a capped round tube patented by the company in 2007. “We’re eliminating the cap costs, but there will be more processes in forming and notching the box,” Erdie said. “It’s harder to produce and we’ll have to buy new automated equipment.”

Meeting challenges As an independently owned firm, Erdie Industries must stay nimble to compete with vertically integrated behemoths moving tons of paper per month. In the early 1990s, the company migrated from the commodity side to a space where it could build value through innovation.

Izquierdo

“We have 16 or 17 patented products; two of those we’ve been able to monetize and reproduce today,” said Erdie. “That’s a pretty good ratio, but there’s a lot of heartache in the products that don’t get patented.” Alongside the capped tube, Erdie Industries produces the Tri-Hex shipping tube which — as its name suggests — is a triangular packaging product built stronger than traditional round mailing tubes. Tri-Hex also performs better on conveyer systems, as it’s easier to scan and doesn’t roll like its cylindrical sibling product. The new Alta Box is the type of innovation needed to meet nagging packaging challenges facing the industry, said Jorge Izquierdo, vice president of market development for the Association for Packaging and Processing Technologies, an industry group based out of Herndon, Va. Such brainstorms should find success in an era where e-commerce remains at the forefront of retail. Consumers spent $861.1 billion online with U.S. retailers last year, up 44% from 2019, per data from Digital Commerce 360. Even if online spending dissipates slightly in step with a receding pandemic, people will still be seeking to

send their packages safely and securely. “As the situation with the virus starts to improve, some changes like an increase in e-commerce will stay in place,” said Izquierdo. “It’s a good opportunity for companies to grow in the market.” Fragile items like wine need high-impact support without skimping on sustainability. A typical corrugated box may contain Styrofoam packing, where a hybrid tube and box should be strong enough not to require environmentally unfriendly filler material. “New formats and new packaging systems can lend themselves well to the marketplace,” Izquierdo said. “Companies will have to modify formats in the shift from retail to e-commerce.” This transition is where innovation is vital: Erdie inherited his grandfather’s creative side, even if he didn’t know the man in life. Along with helping design that fun-to-pop Pillsbury can, John Erdie patented a blinker for a car bumper as well as a few other inventions that never got officially produced. Inventor’s heartbreak hasn’t stopped Jason Erdie from continuing to innovate and create in a top-heavy marketplace. “We have a high-service model that’s opposite of the big companies that just want to move paper,” he said. “We want to create value by innovating without having to commoditize everything.” Contact Douglas J. Guth: clbfreelancer@crain.com

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FOCUS | MIDDLE MARKET

Gasser Chair on the edge of its seat awaiting a comeback Manufacturer that supplies casinos, restaurants expects pent-up demand post-pandemic BBY DOUGLAS J. GUTH

Design and engineering have been bywords for Gasser Chair Co. since brothers Louis, George and Roger Gasser founded the enterprise in 1946. Gasser’s products are also built to take a beating, courtesy of the hundreds of posteriors they host daily at hospitality and casino venues worldwide. In the company’s early days, George Gasser sold bar stools to a Marine club in California. Designing a stool to withstand rough-and-tumble military treatment proved a high, but not impossible, bar for George to meet. “Customers in this club were having bar stool races where they’d hop from one end of the room to another, so that set the standard for durability,” said president Mark Gasser, who leads the company with his brother, Gary, who are the second generation of Gassers to run the business. “Whether our products will last in a commercial environment is our primary concern.” Gasser Chair offers a 10-year warranty for custom-built seating manufactured in a 200,000-square-foot production space in Youngstown, part of a property that started life as a sheep barn. At its height before the lateaughts recession, the company had 250 employees and accrued $30 million in annual revenue. Today, Gasser Chair employs 80 people and brings in $15 million to $25 million yearly while coping with a virus crisis that closed its doors for six weeks in 2020. The company contributed to personal protective equipment production in COVID’s early months, processing mask and face-shield materials for local hospital systems. Dropoffs of 50% in its regular business led Gasser Chair to furlough staff, a temporary measure officials hope to reverse later this year. Since reopening, the company has focused on customer-driven basics that saw it previously provide handcrafted gaming and slot stools to JACK Cleveland Casino as well as the Thistledown Racino. Built-to-order seating can also be found at restaurants, country clubs and event centers, with all parts — from aluminum base construction to foam cushions — developed inhouse. The nearly 1,200 slot stools supplied to the racino in 2013 were manufactured with aluminum base construction, contour seating and flex-back technology. Such careful design harkens back to Gasser Chair’s decades-long gaming history, when George Gasser loaned Harrah’s

OVERDRIVE

From Page 12

Currently K-12 districts and colleges make up about 44,000 of OverDrive’s 65,000 customers around the world, he said. “A majority of all of our revenue is from selling the content, or e-books, and in schools that is our only source of revenue. For schools, we have no hosting or service fees” Potash said. “So, the significant majority of the entire enterprise business is based on book publishers, and for almost all the major publishers, we are one of their top distribution partners for growth and reve-

Gasser Chair employee Dave Shacklock sprays stain to the back of a barstool at the company’s Youngstown factory. | CONTRIBUTED PHOTOS

“I’VE KNOWN PLACES THAT HAVE USED GASSER CHAIRS FOR 25 YEARS. IT’S JUST A WELL-MADE PRODUCT.” ——Daniel Denihan, general manager at Westwood Country Club

Building around gaming

Employee Bob Sanna applies powder coat to Gasser Chair’s Georgetown stack chair.

Casino in Las Vegas 10 chairs to place at slot machines, a game at the time traditionally played standing up. “Our dad pointed out that players

were pulling chairs from tables to sit down at the machines,” said Mark Gasser. “People who sat down would stay longer and play longer.”

nue domestically and abroad.” Most of those sales go through OverDrive Marketplace, an online platform not unlike Amazon’s marketplace. On the site, institutional users — such as New York City public schools or Princeton University — can search, browse and purchase rights to digital media, access critical reviews and receive artificial intelligence-powered and professionally curated recommendations and reading lists based on interests, academic level or topics. “Twenty-four hours a day, every second we are delivering 50 books around the world,” Potash said. “I can’t tell you how many authors come to us because we are an extraordinarily powerful

“TWENTY-FOUR HOURS A DAY, EVERY SECOND WE ARE DELIVERING 50 BOOKS AROUND THE WORLD.” ——Steven Potash, OverDrive founder and CEO

channel to the institutional buyers in libraries and school systems.” Breeding said the KKR deal did “trigger alarm bells” among public entities like libraries, which tend to be skeptical of both private equity and industry consolidation in the publishing space. But he thinks an owner that is committed to enhanc-

Early support of gaming catapulted Gasser Chair into casinos in Europe, Macau, South Africa and South America. CEO Gary Gasser said gaming floors get refurbished once a decade, a cycle the company relies on considering the longevity of its products. “Even in our early years, guaranteeing our furniture for 10 years was unheard of,” Gary Gasser said. “We’ve had competitors with lifetime guarantees that are no longer in the business.” Today, Gasser Chair’s revenue is split approximately 50/50 between gaming and hospitality. Mark Gasser points to the protective edge around the perimeter of banquet chairs as ing OverDrive’s clout is actually good for institutional buyers. According to Breeding, Potash and his team often negotiate for better digital licensing and pricing terms on behalf of their customers “in this ecosystem dominated by a few very large publishers.”

Contracted success Looking ahead, Potash said he is most excited about how many Libby users who were turned onto digital reading as a result of the lockdown — particularly older adults — are staying engaged with the app even after libraries reopened.

just one innovation that lent to the company’s growth. “We also have solid vinyl extrusions we offer in multiple colors and design treatments,” he said. “Manufacturing in-house has helped us with response in meeting customer needs.” Daniel Denihan, general manager at Westwood Country Club in Rocky River, has a relationship with Gasser Chair dating back to a previous position at Crestview Country Club. At Crestview, Denihan bought several hundred dining room chairs. Upon arriving at Westwood, he helped oversee a clubhouse and ballroom revamp that included the purchase of about 600 Gasser-made chairs. “We put a new order in last January right before lockdown,” said Denihan. “(Gasser Chair) had to be shut down, but they still produced our chairs, and we got them that spring.” Denihan met the Gasser Chair owners in the late 1990s at a local trade show. A regional manufacturing focus keeps Westwood coming back, as does the product sturdiness that allowed the club to resell a set of chairs it used for 11 years. “Any product with that durability is unusual,” Denihan said. “I’ve known places that have used Gasser chairs for 25 years. It’s just a well-made product.” With the hospitality business slowly emerging from COVID-19 stay-athome orders, Gasser Chair currently has some projects on hold, where other customers have pulled the trigger on various expansion ventures. Staffing up to meet invigorated demands stands as one of the firm’s biggest challenges for 2021, Mark Gasser said. “This is a multidisciplinary operation where we work with wood products, and do our own steel and aluminum stamping and pour our own foam and vinyl extrusion,” he said. “We don’t expect to pull people regionally, so it will be about finding folks locally to get the help we need.” Meanwhile, Greg Gasser is looking forward to an industry rebound that could give “the Roaring ‘20s” whole new meaning. “There’s going to be pent-up demand once people are comfortable going out,” Greg Gasser said. “There are restaurants in Youngstown that have stayed open and are overwhelmed with business. The minute places open up, people will be gnawing at the bit to get back some sense of normalcy.” Contact Douglas J. Guth: clbfreelancer@crain.com The same could be said of teachers and other educational customers, he added, who now have a better appreciation of the power of academic content that is available to students “anywhere, anytime.” “The effect of the pandemic on our business was a significant spike to the consistent double-digit growth we’ve experienced over the past decade,” Potash said. “We accelerated several years of success into one, and now in 2021 serve thousands of new school and library partners and their communities of readers.” Contact Judy Stringer: clbfreelancer@crain.com

16 | CRAIN’S CLEVELAND BUSINESS | March 8, 2021

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CRAIN'S LIST | ENGINEERING FIRMS Ranked by number of local registered engineers

RANK

COMPANY

LOCAL ENGINEERS 1-1-2021 REGISTERED/ TOTAL

TOTAL LOCAL STAFF 1-1-2021

2020 LOCAL ENGINEERING BILLINGS (MILLIONS)

NOTEABLE 2020 PROJECTS

TOP LOCAL EXECUTIVE(S)

GPD GROUP 520 S. Main St., Suite 2531, Akron 330-572-2100/gpdgroup.com

180 275

580

$92.5

NEORSD West Creek stream restoration, city of Cleveland general engineering services, city of Akron Gorge Dam removal

Darrin Kotecki, president

AECOM 1300 E. 9th St., Suite 500, Cleveland 216-622-2300/aecom.com

61 115

204

$79.0

Fitzmaurice Hall Renovation, ODOT CAV engineering analysis, Doan Valley Relief and Consolidation Sewer

Molly E. Page, vice president

OSBORN ENGINEERING 1100 Superior Ave., Suite 300, Cleveland 216-861-2020/osborn-eng.com

53 116

148

$24.6

UH Ahuja Medical Center Phase II, Irishtown Bend in Cleveland, Electric Gardens

Gary F. Hribar, CEO

CT CONSULTANTS INC. 8150 Sterling Court, Mentor 440-951-9000/ctconsultants.com

42 62

144

$25.2

Ohio Route 20 reconstruction in Lake County, Mosquito Creek Wastewater Treatment Plant improvements in Trumbull County, Euclid Wastewater Treatment Plant

David Wiles, president

MIDDOUGH INC. 1901 E. 13th St., Suite 400, Cleveland 216-367-6000/middough.com

40 100

130

$21.0

Miscellaneous national projects for the process, energy, industrial and facility markets

Ronald R. Ledin, chairman, CEO

HWH ARCHITECTS ENGINEERS PLANNERS INC. 600 Superior Ave. E., Cleveland 216-875-4000/hwhaep.com

29 46

$8.0

Industrial facility and process systems upgrades, retooling and expansions

Joseph J. Matts, chairman

MICHAEL BAKER INTERNATIONAL 1111 Superior Ave., Cleveland 216-664-6493/mbakerintl.com

28 32

$9.4

Opportunity Corridor Phase 3, Vrooman Road Bridge over the Grand River, Towpath Trail Stage 3

Jeff Broadwater, vice president, office executive

STANTEC 1001 Lakeside Ave., Suite 1600, Cleveland 216-454-2150/stantec.com

25 32

$8.5

Northeast Ohio Regional Sewer District Superior Stones Canal CSO improvements; Cleveland Division of Water general engineering services; Yale University, Yale Science Building

Michael Reagan, vice president, science and technology

DLZ 614 W. Superior Ave., Suite 1000, Cleveland 216-771-1090/dlz.com

25 31

$13.6

Cleveland Water Deptartment general engineering services, Summit County Jail HVAC and plumbing improvements, city of Parma general engineering services

Vickie L. Wildeman, vice president

MS CONSULTANTS 4608 St. Clair Ave., Cleveland 216-658-2512/msconsultants.com

25 31

$5.9 1

West 130th Street Bridge, Regional Lakefront Transportation Connections Study, ODOT rest area design

Jeanne Mosure, vice president of public affairs

NEXUS ENGINEERING GROUP LLC 1422 Euclid Ave., Suite 1400, Cleveland 216-404-7867/nexusegroup.com

24 95

156

$24.2

Ohio refinery upgrade; chemical company plant expansion; multiple projects related to safety instrumented systems

Jeffrey O. Herzog, president Marianne C. Corrao, executive VP

KARPINSKI ENGINEERING 3135 Euclid Ave., Cleveland 216-391-3700/karpinskieng.com

23 68

$9.2

Baldwin Wallace Math & Science Building, MetroHealth Campus Transformation, Revere High School

James T. Cicero, president

THE AUSTIN CO. 6095 Parkland Blvd., Mayfield Heights 440-544-2600/theaustin.com

23 43

114

—

NASA Glenn Aerospace Communications Facility, Amazon MultiFacility project, Project Emerald bacon processing plant

Michael G. Pierce, president

MANNIK & SMITH GROUP INC. 20600 Chagrin Blvd., Suite 500, Shaker Heights 216-378-1490/manniksmithgroup.com

20 34

$5.2

Welton's Gorge; Toyota Huntsville, Ala., plant; Hopkins Road Bridge; Water Street Bridge

Mark A. Smoley, senior vice president

HDR 1100 Superior Ave. E., Suite 650, Cleveland 216-912-4240/hdrinc.com

19 29

—

Richard G. Atoulikian, VP, Northeast client service manager Jennie Celik, Joanne Shaner, associate VPs

CHAGRIN VALLEY ENGINEERING LTD. 22999 Forbes Road, Suite B, Oakwood Village 440-439-1999/cvelimited.com

18 24

—

Shaker Boulevard storm, sanitary/pump station rehabilitation; Pepper Creek stream restoration; Lake Avenue rehabilitation

Donald F. Sheehy, President

SCHEESER BUCKLEY MAYFIELD LLC 1540 Corporate Woods Parkway, Uniontown 330-526-2700/sbmce.com

15 23

—

Louis Stokes Veterans Affairs Pharmacy and ER; Ohio CAT Perrysburg complex; Cabarrus, N.C., courthouse addition/ renovation

Chris Schoonover, President

MOTT MACDONALD LLC 18013 Cleveland Parkway, Suite 200, Cleveland 216-535-3640/mottmac.com

15 21

$7.3

NEORSD Shoreline Consolidation Sewer; Sprague Road (CR-67) improvements; Ohio Route 91 improvements in Hudson

Michael G. Vitale, senior vice president

DLR GROUP|WESTLAKE REED LESKOSKY 1422 Euclid Ave., Suite 300, Cleveland 216-522-1350/dlrgroup.com

14 23

$11.0

Cleveland Museum of Natural History; Ohio State University Department of Theatre, School of Music and Wexner Medical Center Ambulatory Centers; Ismaili Center Houston

Paul E. Westlake Jr., senior principal, global cultural; Phil LiBassi, senior principal, global healthcare; Matthew Janiak, senior principal, northeast region leader

R.E. WARNER & ASSOCIATES INC. 25777 Detroit Road, Suite 200, Westlake 440-835-9400/rewarner.com

13 30

—

FirstEnergy, BWXT Technologies, Capital One

Theodore A. Beltavski, president

EUTHENICS INC. 8235 Mohawk Drive, Strongsville 440-260-1555/euthenics-inc.com

13 19

$3.8

East 75th Street Bridge Replacement, Ohio 18 safety corridor improvements, North Main Street Bridge inspection

Alan R. Piatak, president

E2G|THE EQUITY ENGINEERING GROUP INC. 20600 Chagrin Blvd., Suite 1200, Shaker Heights 216-283-9519/e2g.com

12 43

—

David A. Osage, president, CEO

MCHENRY & ASSOCIATES, INC. 25001 Emery Road, Suite 200, Warrensville Heights 216-292-4696/mchenryassociates.com

11 18

—

Nursing and memory care facility in Huntsburg, industrial plant in Cleveland, Dicks Sporting Goods nationwide locations

Michael Bandwen, president

PTA ENGINEERING INC. 275 Springside Drive, Suite 300, Akron 330-666-3702/ptaengineering.com

10 19

—

Major communications data center in Tampa; PurFoods facility expansion; NEOMED Research Building 4th floor build out

Patrick W. Klanac Michael J. Casseday, principals

BARBER & HOFFMAN INC. 2217 E. 9th St., Suite 350, Cleveland 216-875-0100/barberhoffman.com

10 12

—

MetroHealth new outpatient tower, Ohio University Heritage College of Osteopathic Medicine Phase I expansion

Mike R. Miller, president

Research by Darleen White (dmwhite@crain.com) and Chuck Soder (csoder@crain.com) | To prevent ties, companies with the same number of local registered engineers are then ranked by total local engineers. Information is supplied

by the companies. NOTES: 1. Company estimate

Get 41 firms and +170 executives in Excel format. Become a Data Member: CrainsCleveland.com/data March 8, 2021 | CRAIN’S CLEVELAND BUSINESS | 17

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RENAISSANCE

From Page 1

Toronto-based Skyline, whose shares are publicly traded on the Tel Aviv Stock Exchange, is being tightlipped. In regulatory filings dating back several years, the company has alluded to a planned overhaul of the Renaissance’s conference spaces, common areas and rooms. But the project, a significant undertaking for the company, hasn’t materialized. Before the novel coronavirus pummeled the hospitality business, Skyline was exploring a potential sale of the Renaissance. Over the last year, though, the company’s plans changed. “The pandemic hit and, obviously, nobody’s looking to buy hotels. Any buyers have gone away,” said a person close to the company who would discuss the project only on the condition of anonymity. Now Skyline, which owns the Renaissance through a 50-50 joint venture with a silent partner, expects to keep the hotel and to cobble together the complex financing to spruce it up. In addition to state tax credits — awarded twice a year through a competitive process — the project will involve federal historic tax credits. The Renaissance, which opened in late 1918 as the Hotel Cleveland, appears on the National Register of Historic Places as part of the multi-building Tower City complex. Skyline also could generate funding for the renovations through placing a preservation easement on the hotel. Such legal agreements permanently protect buildings and, in turn, offer tax breaks to owners who give up their rights to demolish, build atop or otherwise modify the exterior of historic structures. “There’s a lot of people involved, and there’s a lot of things that have not been finalized, so to go beyond what you’ve seen, I can’t necessarily do,” said the source close to Skyline. “But we’re very excited about the hotel and what it could bring to the city when the renovation is completed.” The last major remodeling of the

VFA

From Page 1

Carrie Murphy, VFA’s Cleveland-based vice president for community partnerships, said VFA wants to help the next generation become leaders capable of launching their own companies — creating opportunities for themselves and adding value to their local communities. “Basically, our mission as an organization is to work on creating economic opportunity in American cities by mobilizing this next generation of entrepreneurs and also being an on-ramp to entrepreneurship for those who have historically been excluded from that opportunity,” Murphy said. “We are intentionally in cities (to grow) their entrepreneurial ecosystem — so (cities like) Cleveland, Detroit, Birmingham, New Orleans. We are not bringing fellows to New York or San Francisco or Austin.” Since the program came to Cleveland, VFA has brought to the city 109 fellows who have worked at 46 companies and organizations. Five, including Pena, Cleary and Stern, have been founding partners of companies. Of the 2020 class of 25 fellows, 58% are women and 60% were from racial or ethnic minorities. Nationally, 29% of all VFA fellows have started their own companies. The local program is sponsored by the Burton D. Morgan Foundation,

The Renaissance Cleveland Hotel sits on Superior Avenue just off Public Square, facing the future site of the Sherwin-Williams Co.’s corporate headquarters. | MICHELLE JARBOE/CRAIN’S CLEVELAND BUSINESS An early rooms, in a later phase of construcphotograph of the tion that could involve a second state Hotel Cleveland tax credit application. offers a view of the The total cost of the project isn’t property before clear. And Skyline hasn’t said whethTerminal Tower er it intends to swap out the Renaiswas constructed sance flag, a Marriott International next door. The Inc. franchise, for another brand. hotel opened in “I know they’ve been looking at late 1918 on a site some ideas for the past couple of years. where the city’s Some of them have included a possible first lodging house brand change,” said David Sangree, once stood.

Renaissance’s ballrooms and common areas took place in 1990, according to historical documentation prepared by Cleveland-based Sandvick Architects, which is working on the project. Skyline, which paid $18.6 million for the hotel, has spent millions of dollars already to upgrade

heating, cooling and ventilation systems, to replace the roof and to repair the building’s white brick façade. Those improvements, though essential, are largely unseen by guests — and don’t provide the owner with much ground to increase rates. Skyline still plans to renovate the guest

president of Hotel & Leisure Advisors, a consulting firm based in Lakewood. Marriott has been pushing Skyline to revamp the Renaissance, said Sangree, who is not involved with the project. If the ownership group manages to secure state tax credits and start construction soon, the timing will be ideal, he said. “When you do a big renovation like this, you have to close off floors and inconvenience guests, and it’s far better to do it when you don’t have

the George Gund Foundation, KeyBank and the Ohio Third Frontier program. Pena is co-founder of The Opportunity Exchange, an online platform that proMurphy vides tools and resources to bring together economic development organizations, investors and developers. It began initially to attract local and national investment into Opportunity Zones, the federal program that seeks to spur development in economically distressed areas, but it has broadened its scope. During his VFA fellowship in 2016, Pena worked at Votem Corp., a startup working on mobile and online voting services that has struggled of late. “When I first came to Cleveland in 2016, I was the second employee at Votem,” said Pena, a graduate of Cornell University. “So that was an experience of building a company that I don’t think I would have gotten elsewhere if it wasn’t for Venture for America.” Pena said that while at Votem, he found himself hiring people with more business experience than he had, and that being able to turn to the VFA network for advice was invaluable. He said it was an experience that, as a recent college graduate, he wouldn’t have gotten elsewhere.

After his Votem experience, Pena was looking for what he should do next. Then he met Peter Truog, with whom he would found Opportunity Exchange. “Peter and I had met through a happy hour that was organized by a VFA fellow for young professionals in Cleveland,” he said. “So we got pizza and then started talking about what we wanted to build and how to do it.” Cleary earned his degree in economics and political science from Case Western Reserve University before becoming a VFA fellow in San Antonio in 2017. He worked at a San Antonio venture capital organization after that and got a master’s of liberal arts management through the Harvard University Extension School before returning to Cleveland. He’s chief operating officer of FloatMe, which is designed to help primarily millennials manage their money, starting with covering cash gaps with cash advances and saving for emergencies. “I tried starting a company before VFA, but it didn’t end up working out, and I was able to go into the fellowship with an understanding of some of the things I wanted to learn, where some of my gaps were,” Cleary said. “So the next time … you know, the jury’s still out, but I at least have a good path here.” FloatMe was one of six nascent companies from around the country that were a part of VFA’s national busi-

ness accelerator program in 2019. Another Cleveland company selected for the accelerator program was Gather, which has an app that assists businesses in what it calls “people operations” — things like hiring and arranging parental leave. The four-month program brought six VFA alumni with six business ideas to town to help the startups get traction before moving on to programs more focused on things like fundraising. It was housed at the MidTown Tech Hive, a four-story coworking space at East 69th Street and Euclid Avenue. “Venture for America was a great partnership,” said Dorothy Baunach, CEO of DigitalC, a nonprofit that is working to improve internet service in Cleveland and close the digital divide. DigitalC created the tech hive and supported VFA. “It was a group of innovative students who came from all over the country,” Baunach said. The accelerator is just one example of the scope of the training and exposure to entrepreneurship that makes up VFA. During their two years with VFA, fellows will have to face challenges to the validity of their business ideas and even pitch competitions for small grants to further their ideas. “We look for those people that have some of the right skill set and experiences to be successful in a high growth entrepreneurial environment,” Murphy said. “And then

THE CLEVELAND PRESS COLLECTION

guests to worry about,” Sangree said, citing anemic hotel occupancy in the midst of the pandemic. “They really should have done it last year. But of the next five years to do it, this would be the best year.” Analysts don’t expect the hospitality industry to fully recover until 2023 to 2024. Upscale properties like the Renaissance have suffered more than their lower-cost peers. Downtown hotels are feeling particularly acute pain from canceled meetings, events and corporate travel. In October, occupancy at Skyline’s two full-service hotels in the United States — the Renaissance and the nearby Hyatt Regency Cleveland at the Arcade — was 23.2%, according to the company’s most recent quarterly report. Revenue per available room, a key industry metric, was down dramatically, to $24.93. During the last week of February, the occupancy rate at Cleveland area hotels was 40.1%, according to research firm STR. When the convention business does bounce back, a refurbished Renaissance would help Cleveland secure bigger and better gatherings, Sangree said. The hotel, with a five-story addition constructed in 1962, features about 65,000 square feet of meeting space, including a ballroom that can seat 2,900 people. Attached to the city’s central public transit hub at Tower City, the building also contains street-level storefronts and shuttered restaurants. Skyline’s plans are “very compatible and very appropriate for what’s proposed nearby,” said Tom Yablonsky, executive director of the Historic Warehouse District Development Corp. and executive vice president of the Downtown Cleveland Alliance. “I think it’s a very strategic site,” he said, noting the recent renovation of Public Square, office-to-apartment conversions of nearby buildings and the looming Sherwin-Williams project. “It’s situated in probably a great spot, long term, when the market rebounds.” Michelle Jarboe: michelle.jarboe@ crain.com, (216) 771-5437, @mjarboe throughout the two years of the fellowship program, and even one once they’re alumni, we have entrepreneurial programming to help them continue to learn how to think like an entrepreneur and solve problems like an entrepreneur.” Stern, like Pena, has a degree from Cornell and is a Votem alum, in addition to his 2016-2018 VFA fellowship. He is a co-founder and product manager at Axuall, which is developing a blockchain-based digital network for verifying identity, credentials and authenticity of doctors and others in the health care field. He connected with Axuall because of people who moved on from Votem to Axuall. But in his spare time, he has hooked up with Upside.fm, an organization that is developing Ohio-focused podcasts. Stern’s podcast is “Lay of the Land,” which he runs with 2019 VFA fellow Tagan Horton. The podcast consists of interviews with local business people and is designed to give listeners some sense of what opportunities are available to them in the Cleveland business world. “Intellectually, I’m drawn to the world of startups and entrepreneurs,” he said. “We’ll see how big we can grow ‘Lay of the Land.’ We’re on the precipice of a few things in Cleveland, you watch.” Jay Miller: jmiller@crain.com, (216) 771-5362, @millerjh

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AKRON MANUFACTURING

Goodyear puts Akron on a smart road

Tiremaker’s local R&D center focuses its technology on autonomous and electric vehicles BBY DAN SHINGLER

Akron appears to be at the center of something big in the world of tech — something with a huge, imminent market. Something that’s going to require years, if not decades, of research, development and testing. Something that will help drive the city’s future economy. Tires. If your eyes are rolling like a steel-belted radial, well, that might be the problem right there. But you’re thinking of your father’s tires. Those dumb rubber doughnuts might have been good enough for the old man’s Oldsmobile, but they aren’t going to cut it in a world full of electric and driverless cars, Goodyear executives and auto technology experts say. Tomorrow’s tires will have a host of sensors and be almost as smart and sophisticated as the cars and interconnected information systems with which they will constantly communicate, said Chris Helsel, Goodyear’s senior vice president of global operations and chief technology officer. “There are a lot of reasons you want intelligence with tires,” Helsel said. Systems to constantly monitor tire pressure have become as common as power windows. Helsel said the next step will be to make tires that monitor and report temperature, their own tread wear and condition, and then even how much grip a road surface is providing via coefficient of friction measurements. Such sensor-based technology is either in use or soon will be on Goodyear’s test tracks in Akron and San Angelo, Texas, he said, but it won’t stop there. “I believe it will be coming to all tires that everybody buys,” Helsel said of the developing technology. “When you’re driving, not to freak everybody out, but you basically drive on four palm-sized pieces of rubber that hit the road. … At that interface is the critical information that says: ‘Am I gripping or am I slipping?’ Think about being able to put all that information into traction control.” Automakers are already thinking about it and will demand such features from their original equipment tire suppliers in the future, Helsel said. They want to make their cars safer, and smart tires will be the key to getting the most out of things like anti-lock brakes and traction-control systems, he said. And that’s just in the near term. In the years ahead, autonomous vehicles (AVs) are not only going to need more information from their tires, they’ll be able to do more with that information with their faster-than-human reflexes and ability to analyze conditions. “People are going to want autonomous vehicles to drive safely in the rain, the snow and ice, just like they do today,” Helsel said. Lawrence Burns agrees smarter tires are key to that being a reality. An author and consultant for companies working on AV technology, including Goodyear, he’s also the former head of research and development for General Motors and a bit of driving futurist. Burns sees a world in which tires don’t only communicate with the

Goodyear’s test track in Akron is part of the tiremaker’s R&D operations in the Rubber City. | GOODYEAR

“WHEN YOU’RE DRIVING, NOT TO FREAK EVERYBODY OUT, BUT YOU BASICALLY DRIVE ON FOUR PALM-SIZED PIECES OF RUBBER THAT HIT THE ROAD. … AT THAT INTERFACE IS THE CRITICAL INFORMATION THAT SAYS: ‘AM I GRIPPING OR AM I SLIPPING?’ THINK ABOUT BEING ABLE TO PUT ALL THAT INFORMATION INTO TRACTION CONTROL.” ——Chris Helsel, Goodyear senior vice president of global operations and chief technology officer

cars to which their attached, but their data will also go into larger, shared systems. He envisions riding — “I think of cars as ‘riding machines,’ not ‘driving machines,’ ” he said — in cars that use real-time weather data to anticipate frozen road surfaces. Eventually, they’ll also get shared data from the tires on other cars ahead of them on the highway, Burns said. So, if ice actually exists, every car will know exactly when the road will turn slick. Future cars will combine that data with things like tire pressure and tread wear to provide the most effective braking and cornering and the safest ride possible, according to Burns. “What an exciting time to be in the tire business,” Burns said. “The tire industry today is not a mature rust belt industry, but a technology-driven, very dynamic industry that’s going to have a lot to say about how this (AV) industry plays out. … This, I think, bodes well for tire companies that embrace it.” Georges Aoude, co-founder and CEO of Derq, an AI-driven intelligent transportation company in Dubai and Detroit, also works on self-driving technology and agrees that tires will be critical to AVs’ success. “They are super important,” Aoude said of the newest and next genera-

tions of smart tires. “Advanced tire-sensors fall under the (category of ) in-vehicle sensors and would allow the AVs to proactively understand the ‘health’ of their tires. More specifically, detecting potential tire-related problems before they happen will help them navigate safely and improve their productivity,” Aoude said via email. Burns and Aoude also think such technology will become more important as more passenger vehicles belong to fleets, possibly being used by consumers who won’t buy their own vehicles but will subscribe to a vehicle-sharing service. The owners of those fleets will want to keep their vehicles as safe as possible to protect their customers and avoid liability, as well as to manage their costs more effectively by knowing exactly when to buy new tires. “They’re going to want the safest tire and to know that every time they put a fleet vehicle on the road, it’s prepared for the road … and also gives the most optimized cost per mile,” Burns said. Goodyear gets some less obvious benefits from its R&D work as well. For instance, it’s one reason the company’s acquisition of Cooper Tire in Findlay makes sense, Goodyear CFO Darren Wells said shortly after that deal was announced in February.

“(Cooper’s) R&D footprint is not asNours. really C Rnearly A I N ’ S as C Lbroad EVELA D B U They SINES S |

don’t have the equivalent of our fundamental research,” Wells said. But by applying its technical expertise to Cooper’s tires, Wells said, Goodyear “can use the additional scale to get more benefit from that work.” All of this bodes well for Akron, which may have lost Goodyear’s consumer tire production shops decades ago, but still hosts what are arguably the company’s most important R&D and testing facilities. “We have 700-plus engineers and scientists working in the Akron area,” Helsel said. Akron’s importance was evidence when Goodyear recently invested in new simulators to help it test and develop tires. The company purchased

three of them in January. Luxembourg, Goodyear’s other technical hub, got one, but Akron got two — and only Akron got the more sophisticated, dynamic simulator that Helsel said can more realistically mimic nearly any vehicle for the test drivers that use it. Luxembourg will probably also get one of the dynamic simulators later, he added. He declined to specify what Goodyear spent on the high-grade simulator — the first to be used in the tire industry — but said “you’re talking about millions” of dollars. Buying one of those simulators for Akron only made sense, Helsel said. “All of the consumer tire and truck tire (R&D) work for the Americas is done out of here, as well as some consumer stuff for the rest of the world,” Helsel said. This isn’t lost on city officials grateful for Goodyear’s allegiance to the town, including Akron Deputy Mayor for Integrated Development James Hardy. “I think a lot of people don’t know how much R&D infrastructure Goodyear has in the city — we have more than 700 Goodyear employees focused on R&D every day in the city. They have the test track, the labs, the innovation lab — and there are only four of those in the company,” Hardy said. “When you start to think about what it means to our local economy, it’s huge.” R&D |that S E PThe T E Mneed B E R 3for - 9the , 2 018 PAGoodG E 21 year conducts in Akron is only going to increase, too, say those following the company and the AV industry. “This is not, ‘I solve it over two years, and I’m done,’ ” Burns said. AVs will continue to need more and more information from their tires in the future, he said. “Moore’s law keeps playing out, so the onboard processors keep getting smarter.” Akron will continue to play a leading role in Goodyear’s R&D efforts, too, according to Helsel. “Our commitment to this area is huge — because it’s a huge part of what we do,” he said. Dan Shingler: dshingler@crain.com, (216) 771-5290, @DanShingler

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3/5/2021 4:16:56 PM

SUPPLY CHAIN

From Page 1

“The good thing about this is it’s not isolated,” said MVP Plastics president and CEO Darrell McNair. “It’s all the way through.” MVP Plastics is part of the supply chain for its customers in markets like automotive, consumer and HVAC. McNair said it’s been a matter of being “in sync” on delivery plans all the way through the chain. At manufacturer and distributor K-J Fasteners, president Kirk Stonebrook has been reminding employees that they’re the link between customers and the market, and they need to educate customers on the factors contributing to cost increases. It’s a matter of building trust, he said. In the fall, the company’s customers increased inventory because of the ongoing uncertainty. More recently, K-J has been trying to stock up on products that are locked in on older pricing in the hopes of riding out the increases. Stonebrook said K-J Fasteners also is setting long-term buying options with customers, looking at ways to amortize or absorb the current increases. Based on his research, he expects the supply chain problems — and the subsequent prices — to ease, though it could take months. Mark Vickers, client executive at Sedlak Supply Chain Consultants in Highland Hills, said companies have been increasing the amount of inventory they keep on hand. Before COVID, Sedlak would have encouraged customers to reduce on-hand inventory to

K-J Fasteners Inc. is doing its best to communicate more than ever with customers amid supply chain challenges. | CONTRIBUTED

cut the costs associated with storing it, but in this time of disruption, having extra inventory is a must. Another trend Vickers has seen is more investment in technology. Companies were adopting technology to meet increased customer demands before the pandemic, Vickers said. But the pandemic encouraged companies to pick up the pace, as social distancing-driven e-commerce increased business at the same time as labor disruptions due to COVID-19 grew. More automation helps companies address both needs. “If you’re not automating some or most of your labor, you’re getting crushed right now,” Vickers said. It’s to the point where automated systems aren’t seen as an investment,

“IF YOU’RE NOT AUTOMATING SOME OR MOST OF YOUR LABOR, YOU’RE GETTING CRUSHED RIGHT NOW.” ——Mark Vickers, client executive at Sedlak Supply Chain Consultants

he said; they’re just a cost of doing business. Sedlak Supply Chain Consultants offers distribution center design and supply chain optimization services. Locally, one of the companies it has worked with recently is SupplySide Group in Beachwood, a maker of packaging and storage products.

The

ROI

Changes in delivery models and the growth of online ordering caused big changes for the company during the pandemic, said chairman Ansir Junaid. Orders have increased, but become smaller. And to ship more efficiently, many customers started shipping directly from SupplySide’s sites instead of their own stores, said senior vice president of Supply Side USA Ibrahim Shamsi. That meant SupplySide had to become more efficient, too. SupplySide worked with Sedlak on automation, as well as ensuring the company had flex space for the future, so it could diversify or take on special projects where it saw fit, Shamsi said. Bill Koehler, CEO of economic development organization Team NEO, said he has heard larger companies talk about plans to restructure or invest in technologies to tackle supply chain challenges this past year. On the technology side, companies have been seeking more visibility in their supply chains and finding ways to better manage data, he said. Those trends were underway preCOVID, but have been accelerated by the pandemic. Another potential solution to some of the problems in the supply chain could be reshoring products from overseas. A recent report from Heartland Forward, an Arkansas-based think tank, makes that case. Specifically, it calls for bringing more products back to the middle of the country, noting the “culture, skilled labor pool and training programs, as well as infrastructure to support production facil-

ities” in the region because of its historical dependence on the sector. The report, which was funded in part by a grant from statewide economic development nonprofit JobsOhio, said that reshoring can protect intellectual property and shorten supply chains. The COVID-19 pandemic created the need for shortened or redundant supply chains, as labor market shortages arose and cargo and travel embargoes were put in place, the report stated. Reshoring some products from overseas could be an option, Koehler said, but determining what products would be a fit requires visibility of demand across companies. To make it worthwhile, a product would have common features. Koehler said that has happened with products like personal protective equipment, where the desired features for masks and gowns were common. It’s more difficult to find common components across industries like automotive, where automakers and product lines are more differentiated. The problems filling today’s supply chain have been building for years. And there are no easy answers. But Northeast Ohio’s manufacturers are staying agile and looking for solutions for both the short term and the long. This is the second part in a two-part series looking at the impact COVID19 has had on the supply chain. Rachel Abbey McCafferty: (216) 771-5379, rmccafferty@crain.com

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