NEXT WEEK: IN TIME FOR THE HOLIDAYS, THE PERFECT GIFT — CRAIN’S ANNUAL BOOK OF LISTS. $2.00/DECEMBER 12 - 18, 2011
VOL. 32, NO. 50
Ben Venue idles Bedford plant temporarily Drug maker, which employs 1,300, cited by regulators for quality control failures By CHUCK SODER csoder@crain.com MARC GOLUB
Fady Chamoun, the president and CEO of Aladdin’s Eatery Systems, says policy uncertainty has caused him to exercise more caution in his expansion plans.
HOLD THE HIRES? Report: Policy uncertainty deters small businesses; locally, opinions split By MICHELLE PARK mpark@crain.com
A
recently released study by local researchers that indicates economic policy uncertainty is a drag on the expansion plans of small businesses isn’t universally affirmed by small business owners in Northeast Ohio, who seem split on the real impact of such uncertainty. The study from Federal Reserve Bank of Cleveland research director Mark Schweitzer and Case Western Reserve University professor Scott Shane, released Nov. 29, found that policy uncertainty at the federal level had statistically negative effects on small See HIRES Page 8
INSIDE THE REPORT A Federal Reserve Bank of Cleveland report from Nov. 29 posits that economic uncertainty is limiting small business hiring. A portion of the report (a full version of which can be found at http://tinyurl.com/748leag): “While the downturn and weak recovery certainly had a large negative effect on small business hiring plans, policy uncertainty has exacerbated this effect. In the summer of 2011, the net percentage of small business owners planning to hire would be 6 percentage points higher if it were not for policy uncertainty. “That is, either 6% more small business owners would be planning to hire (or 6% more small business owners would not be planning to lay off workers), were policy uncertainty not currently an issue.”
Rogue metal particles. Unsterilized gloves. A can that most likely contained urine. Dozens of quality control issues raised by regulators have pushed Ben Venue Laboratories Inc. to shut down temporarily all manufacturing and distribution operations at its headquarters in Bedford. The pharmaceutical manufacturer, which employs about 1,300, made the decision to stop producing and distributing drugs during an inspection conducted last month by regulatory agencies from the United States, the United Kingdom and France. The November inspection highlighted several quality control issues
related mainly to a sterile filling process Ben Venue uses to make injectable drugs in the North complex of its operation at 300 Northfield Road. After the inspection, the European Medicines Agency issued a recall for three drugs that were made at the plant and shipped to countries in the European Union. It also recommended that no new patients in the EU begin using a fourth drug made in Bedford. The U.S. Food & Drug Administration, which participated in the inspection, over the past year has issued two reports that identified a total of 59 quality control concerns at the plant. One of the 11 issues documented in an FDA report released last week See IDLES Page 6
INSIDE Combating the wet weather Northeast Ohio winemakers were forced to deal with a record amount of rain, but are confident their production levels won’t be affected. Read that story and more in our monthly Small Business section. PAGE 15 ALSO INSIDE: ■ In Cleveland’s Midtown neighborhood, a resurgence in commercial activity. PAGE 3
Ohio Savings reprimanded by regulator for insufficient lending By MICHELLE PARK mpark@crain.com
NEWSPAPER
Ohio Savings Bank has been informed by its regulator that its lending in Northeast Ohio is insufficient and needs to improve — a fix that the head of its parent com-
pany expects to come “relatively quickly” as the bank ramps up a new marketing strategy that’s already under way. The Federal Deposit Insurance Corp.’s evaluation of Ohio Savings, a division of New York Community Bank, hasn’t been made public.
However, a copy of the 130-page report obtained by Crain’s from the bank reveals the institution received “needs to improve” ratings in two of its five markets: Ohio and Florida. The rating is one step above the lowest rating of “substantial noncompliance.”
“The fact that this happened was a bit of a surprise,” said Joseph Ficalora, president and CEO of New York Community Bancorp. “The fact is, it’s unacceptable,” he said. “People are being delegated to fix the problem.” At issue is the bank’s performance
as it pertains to the Community Reinvestment Act, which requires that banks meet the credit needs of their entire communities, including low- and moderate-income neighborhoods, consistent with safe and sound operation. See LENDING Page 21
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CRAIN’S CLEVELAND BUSINESS
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3
So, what’ll it take to keep United hub? Companies want details of airline’s thinking before they set policies favoring its flights By JAY MILLER jmiller@crain.com
Brian McKeighen is wondering what’s next, and he is not alone. Mr. McKeighen is among a group of corporate traveler planners who
have been champing at the bit as they wait to hear from the Greater Cleveland Partnership what their companies can do to retain at Cleveland Hopkins International Airport the hub operation of the merged United Continental airlines.
So, they have begun to take matters into their own hands. “Has there been any follow-up?” Brian McKeighen, group procurement, fleet and travel leader of Westfield Group of Westfield, asked a reporter in a Dec. 1 interview. “Has anyone said what it’s going to take to keep the hub?” Mr. McKeighen said the only things he knew about a planned marketing effort by GCP, which is
Cleveland’s chamber of commerce group, to build support for the United hub came from an Oct. 3 story he read in Crain’s. The story outlined GCP’s plans for a marketing campaign that would encourage businesses to set policies allowing traveling employees to choose United for air travel even if it means paying slightly higher airfares. Mr. McKeighen said a number of his travel manager peers at other
companies know the value of the hub and have been eager for specific information on what kind of response will be needed to convince United to keep the hub. That information would help the managers set their companies’ travel policies, he noted. Consequently, Mr. McKeighen set up a meeting for 17 of his cohorts with Todd Payne, chief of See UNITED Page 4
INSIGHT
WEB OF INVESTMENTS INTERSECTS IN MIDTOWN Redevelopment within health care and technology corridor spurred by creative financing among public, private entities RUGGERO FATICA PHOTOS
Midtown Tech Park, 6700 Euclid Ave: The first tenants earlier this
year moved into this property redone by Hemingway Development, a partnership of James Doyle and the Geis brothers. The building is 70% leased, according to Hemingway.
By JAY MILLER jmiller@crain.com
C
an there be any surer sign that a neighborhood is attracting the interest of suburbanites than the potential arrival of a new restaurant with an outdoor patio? If that’s so, then Cleveland’s Midtown really may be on the rebound. Greg Frost, owner of Frost Building Maintenance Co. of Warrensville
Heights, said he believes a restaurant makes sense for the first floor of a building he bought earlier this year at the northwest corner of East 69th Street and Euclid Avenue. The Geauga County resident said he will put a new subsidiary of his business, which specializes in exterior rehabilitation of old buildings, on the upper floors. Mr. Frost’s work has taken him through Midtown over the years, and he has watched it change. See MIDTOWN Page 13
Agora, 5000 Euclid Ave.:
Another Hemingway project, the former concert hall is being marketed as the Offices at Penn Square.
Northwest corner of East 69th Street and Euclid Ave.:
Former Warner & Swasey building, 5701 Carnegie Ave.: Hemingway is working with the city
Businessman Greg Frost said a restaurant makes sense for the ground level of his building at East 69th Street and Euclid Avenue; a new subsidiary of his Warrensville Heights-based Frost Building Maintenance Co. will comprise the upper floors.
of Cleveland on an environmental cleanup of this site, which once housed a thriving machine tool business.
Cavs drop season, single-game prices But with ‘variable’ method, just how much remains to be seen By JOEL HAMMOND jmhammond@crain.com
Feb. 19, 7:15 p.m. You’re sitting in the lower bowl for the Cleveland Cavaliers’ Sunday night game against the Sacramento Kings, a rare laugher for the good guys. You get to talking with the fellow season ticket holder in the row behind you, and agree that the team’s decision to “significantly” decrease prices — as Cavs spokesman Tad Carper put it in the Dec. 12 edition of Crain’s Cleveland Business — after the Cavs’ lost season of 2010-11 was a wise move.
But a funny thing happens: In the course of your conversation, you find out your neighbor is paying a couple dollars less than you every game, which for your two tickets adds up over the course of the season. The Cavs make no apologies for rewarding different customers differently, based on any number of variables. And because those variables vary so much from customer to customer, the team is hesitant to place a generic figure on the amount it has lowered season ticket prices for the 2011-12 season, which has been abbreviated to 66 games from 82 because of the protracted collective bargaining dispute between NBA owners and players. Mr. Carper said the decline in prices for season ticket holders ranges in percentage terms from the
“low single digits into the low double digits.” Price decreases for single-game tickets — which went on sale last Saturday, Dec. 10 — are in the same range. “It comes back to being marketdriven and maximizing revenue,” Mr. Carper said, noting that easier ways to track consumer buying patterns make the process smoother. “Combine those things and it makes smart business sense. Ultimately, the marketplace has the ability to impact the price. Dynamic pricing asks what (are tickets) worth today? Teams just needed to get smarter about it.” The variables in figuring prices are many, and as customers meet certain requirements, the price of their season tickets is lowered incrementally. Early renewal — a way for the See CAVS Page 14
THE WEEK IN QUOTES “If you’re going to waste your time watching what the government’s going to do, you’re wasting time you could have spent growing your business.” — Tom Hobson, president, Abanaki Corp. Page One
“Employees dice, chop and prepare the romaine lettuce, but what doesn’t go into the burrito goes into the (food scraps) containers.” — Ian Rosby, sales team manager, Rosby Resource Recycling Co. Page 7
“There are some interesting opportunities for winemakers to create something special.”
“We put a lot into our party every year, the best food ... wine — we go for seven hours.”
— Donniella Winchell, executive director, Ohio Wine Producers Association. Page 15
— Rob Falls, owner, Robert Falls Public Relations. Page 15
4 CRAIN’S CLEVELAND DECEMBER 12 - 18, 2011
BUSINESS
WWW.CRAINSCLEVELAND.COM WWW.CRAINSCLEVELAND.COM
DECEMBER 12 - 18, 2011 CRAIN’S CLEVELAND BUSINESS 23
United: Hub statusTHEINSIDER key to vitality REPORTERS’ NOTEBOOK
critically important economic devel“You’re going to see a marketing and air service developtool because of the value of robust community educa- opment ment with the Cleveland Airport direct and frequent flights to busy tion campaign rolling out business travelers. The lack of an BEHIND THE NEWS WITH CRAIN’S System, which WRITERS oversees Hopkins, to get more details on their own. That airline hub at Cincinnati/Northern in the new year.� meeting was held last Wednesday, Kentucky International Airport, traditional box of chocolates or company – Rob Recker, senior vice president Dec. 7. for instance, was aand factor cited in calendar over the holidays instead give for marketing communications After that meeting, Mr. McKChiquita Brands the gift of wellness with aInternational yoga app. Inc.’s and membership development, eighen a month letter to decision lasta Cleveland month to company move to The big story: AmTrust Financial Services The Mobile Yogi, ■K&D Group CEO Doug Priceimmediately gave a plea sent ■A after a 19% jumpCleveland in marketPartnership share, Greater United president Jeff Smisek N.C., from Inc., a property and casualty insurer based in that hasCharlotte, developed a line of Cincinnati. smart phone — or perhaps a hard sell — asAirlines he spoke to ratings at established all-sports radio station of a asking for information on what it850,the New York that already has an operation in Seven applications offering yoga tips, is opening a the Greater Cleveland Mortgage Bankers AsWKNR-AM, fellexpiration in October, toshort-term 4.0 from agree‘We’re going to get there’ struck in September byof business wouldlast takeTuesday, for United to retain Hills with 245 employees, is planning to establine aimed at allowing compasociation 4.4. That the figure ment represents a 9% drop in the 2010 former Attorney The list of companiesto participating hub. He got alistening phone call lish a big office in downnies and other organizations put their Dec.Cleveland 6, at The Union audience tunedOhio in to the station, General Richard Cordray United to keep initsGCP’s hub marketing next day from Greg Hart, a United town Cleveland that evenmarks on mobile yoga apps. Withprogram Mobile Clubthe of Cleveland. according to data provided by with Baltimorethe hub at Cleveland Hopkins in how-to will beyoga publicized theofcamsenior offered to Inc. tually could house as many Yogi’s videos atwhen the heart the Most ofvice Mr.president, Price’s who based Arbitron exchange dropping paign goes public easily in can January, set uprecounted a meetingthe for travelAnd planners as 1,000 workers. Subject to apps, companies and groups add remarks it appears WKNR, for better knownanasantitrust into the merger. Under according to Mr. who said in the region with United officials. various approvals, AmTrust their own logos, links orRecker, whatever other Willoughby apartment ESPN Cleveland,investigation is getting a stiffer challenge the deal, the airlines agreed will include media Mr. Payne said he was impressed intends to set up offices content the theycampaign wish before shipping them off company’s growth from from its new competitor, CBS Radio’s newto maintain 90% of their flights at Cleveland advertising in business publications, Mr. get talk that station, inside the building at 800 as holiday gifts. eightthat units to McKeighen more than could sports WKRK-FM, though Hopkins foras two years, with maintedigitalthe business marketing and social quick of a that response so senior Superior Ave. (left) that once “It allows company to deliver the 9,000. He noted K&D’sfromWKNR still aowns the genre CBS attempts nance of the flights beyond that applications time media.with He their wouldbrand not disclose the United executive. housed the former McDonand their growth came first from to establish itself in Cleveland. Price dependent on passenger levelsmessaging,� and budgetsaid of the campaign until who after Rob Recker, vice presald Investments brokerage Sebastian Holst, loans with savingsGCP andsenior CBS’s station, better known as Sports benchmarks. it’s the been approved by the GCPDawn. board ident for financing. marketing communicafirm. An affiliate of AmTrust developed apps along with wife, loans, then via federal-backed Radio 92.3 The other Fan, saw its share climb to The United so far is living up seems this week. tions and membership bought the largely vacant “There to be a lot of interest.� The latter is now iffy because of concerns 1.2 developin October from 0.8new in September. That to thatwhat agreement. GCP will roll next ment, said last Thursday,rise Dec. 8, thatto reflect 23-story building earlier over the future of government-sponsored Mobile The Yogi plan also is pitching its out services seems Tom Herschel, When the president airline lastand September will askthat companies to add GCP’s marketing is on senior this year for $7.5 million at entities such as the Federal National Mort-campaign to localmonth yoga studios don’t have thea CBS Radio’s vice systemwide serviceresources cuts pricing guideline to company schedule and will movemarket beyond its announced an online auction and has committed to spending gage Association and Government National to develop their own appstravel but manager in Cleveland, told Crain’s of about 5%, experienced Hopkins camea through policies to allow their employees own members the broader busi- when at least $20 million to upgrade the property, Mortgage Association, better known asinto Fredwould like to offer such services to their last month, WKNR largely unscathed. The company to buy a United ticket even though community in the nextin few which includes a parking garage. die Mac and Ginnie Mae,ness respectively. customers. bump WKRK’s first full month measured also has agreed to maintain other price might be higher than a Now, Mr. Price said, weeks. local banks need to The the company launched consumer by Arbitron. Raising the stakes: As expected, the Ritzwhichfull include a maintecomparable “Right downtown now we’re crafting that operations, step forward to fund additional versionscompeting of the apps airline’s last May. Though the “(September was) the first rating Carlton hotel in Cleveland is changing hands. nance at are Hopkins five have ticket. GCP more is suggesting thatusers large total campaign whichwe’ve will had, apartments like those that K&D wants tomessage do reached than 20,000 month andoperation, people still dis- for apps Forest City Enterprises Inc. agreed to sell the years. Mr. Herschel corporations their employees unveiled in January; it’s kind — and that the market be apparently needs — around the globe, allow the idea was to refine covering the station,� 206-room Ritz-Carlton at Tower City Center to a Hopkins wasgetting home to one of threeandtovalidate pay as the much as $300 of beenlevels. the quiet phase of the due to record-high occupancy content for more users. for Thea said then. “The feedback we’re subsidiary of Rock Ohio Caesars LLC for a total hubsadvertisers of Continental, United ticket. It is to campaign,� “You can’t go to New York CityMr. toRecker get said. business model, Mr.suggesting Holst said, is from“You’re listeners and is all along Newark core of $36.5 million, which includes a $2.5 million Houston. However, with the thesmall and midsize companies going to robust positive.� community financing for these projects,� hesee said.a “It’s business-to-business services that the — Joeland Hammond payment by Rock Ohio under a previous option they approve up month. to $200 rolling out in merger, the new United has eight company up to the people in thiseducation room to docampaign it.� startedspending pitching this agreement between the two companies. Rock domestic hubs, and Hopkins is the “This more per the new year.� He closed simply: “Lend money.� is ticket. a business we’ll scale,� Ohio Caesars is the joint venture of Caesars smallest. Some observers believe the Mr. The for United� camAs he thanked Mr. Price speaking Holst“United said. “There are literally Tick,for tick, tick at Entertainment Corp. and Rock Gaming LLC, Cleveland hub is redundant because thousands paign also of suggests companies the session’s end, Jack Branden, a Guardian yoga that studios and which is owned by Cleveland Cavaliers majority of United hubs in Chicago and companies Thepresident, clock is ticking favor Cleveland they who hold A local startup is encouraging Title agent and association’s said, on■Cleveland’s aroundwhen the world owner Dan Gilbert, that is creating the HorseWashington, efforts to it’s convince to retainto shy meetings training sessions, thus companies away fromD.C. giving “Message delivered. Whether heard,United might be and interested.� — Timothy shoe Casino Cleveland in the former Higbee A the city of Cleve- Magaw the Bullard hub at Hopkins that hasemployees been spurring air traffic through Hopkins, their orconsultant customerstothe only time will tell.� — Stan Building that’s part of the Tower City complex. operated for more than two decades land, InterVistas Consulting Group where United is the dominant carrier by Continental Airlines, with which of Bethesda, Md., estimated earlier and handles about 70% of all passenBargain buy: An investor and hotel operator it reached a merger agreement in this year that if United opted to elim- ger traffic. based in Canada acquired the Old Arcade and inate the Hopkins hub operation, the May 2010. “I think we’re going in the right downtown Cleveland Hyatt Hotel for the miniOnly nine months remain before number of nonstop destinations direction,� Hopkins’ Mr. Payne said mum bid of $7.7 million at a Cuyahoga County pedometer Excerpts from from recent blog entries Cleveland could on be cut in kid-friendly, half, about wristwatch-style the GCP plan. “Maybe we’re Sheriff’s foreclosure auction. Skyline Cleveland called the CrainsCleveland.com. to 35 from 70, and the airport could notMOVband. as far along with regard to the Acquisition LLC, formed by Skyline Acquisition “The MOVband uses the technology lose as many as 120 of its 350 daily hard policies the same companies are International Inc. of Toronto, was the winning that most more-expensive flights. making, but we’repedometers going to do: get bidder for the 1890-vintage Cleveland landmark. 3D in a solid state chipset,�■GCP sees the hub at Hopkinsaas a accelerometer there.� The Arcade property was redeveloped a decade Forbes.com reported. “But its slimmedago at a cost of $60 million to accommodate the down features (the only data you can input ■Northeast Ohio is home to two of the 100 hotel, but a recent appraisal for the sheriff’s are age and the time) mean that the businesses on Forbes.com’s list of America’s office valued it at $11 million, which triggered MOVband, priced at $20, sells for about a most promising companies. the minimum selling price at $7.7 million under third of what it costs for the competing The privately held up-and-comers “have state law. Nike+ Sportband.� compelling business models, strong manageESTATE PLANNING Mr. Squires said, “Pedometers are expenment teams, marquee customers, strategic Missia H. Vaselaney Afoul of the feds: Invacare Corp. said the sive and complicated. We said there’s an partners and precious investment capital,� COMPANY: Akhia, Hudson U.S. Food and Drug Administration requested opportunity to create a better, simpler peForbes.com said. the company negotiate and agree to a consent THE OCCASION: Its 15th anniversary dometer at an inexpensive price point.� At No. 50 on the list is Mesocoat Inc. of decree related to what Invacare described as Nearly 2,000 students and faculty in ChaEuclid, which provides metal coating and “previously disclosed inspectional observations� at The public relations and marketing commu- cladding to protect pipes, plates grin Falls walked a combined the company’s corporate facility and its wheelnications agency was founded in November and bars from corrosion and wear in 187,000 miles in three weeks in Occhair manufacturing plant in Elyria. Invacare 1996 by its president, Jan Gusich (above), at extreme environments. tober as part of a program said the FDA proposed a consent decree that her dining room table. She says her goal begun by the school district two Forbes.com said Mesocoat, would require suspension of certain operations from the start was to serve clients’ needs founded in 2008, has raised $13.5 years ago to improve children’s at the facilities until they are determined by the “beyond their expectations,� and that remains million in private equity and fitness. The MOVband “helped get FDA to be in compliance. the agency’s operating philosophy. students excited about taking grants. CEO Andrew Sherman, 47, Akhia started with two employees and was appointed to the U.S. Depart10,000 steps a day.� Group effort: In its new role as the regional three clients. It now has 29 employees and Mr. Squires said he has been ment of Energy’s Hydrogen Safety office in Northeast Ohio for the state’s JobsOhio more than 30 clients. approached by a financial services Panel. Mr. Sherman also has been business development program, Team NEO For information, visit www.Akhia.com. company that wanted MOVbands FAMILY that LAW six proposals announced to stimulate job Consider your estate. Who do you want to inherit your assets? Ifinvolved you in 11 startups, founding ABSMaterials’ for its 100 employees. He’s also in three of them. Steve growth and economic development in the Carl A. Murway become incapacitated, who should handle your financial and medical talks with a Coca-Cola distributor. Spoonamore Coming in at No. 67 is ABSMateCOMPANY: National Mortuary region have received preliminary approval for Jill F. Helfman rials of Wooster, a maker of “reacfinancing from its board of trustees. Pending decisions? What about federal estate tax exemption changes? Could a Shipping, Cleveland tive glass� that separates pollutants and final documentation and approval, grants totaling second marriage complicate your decisions? THE OCCASION: Its 30th anniversary other molecules from water and air. ABSnearly $3 million will be issued by Team NEO. Materials has raised $11 million in venture The largest grant, for $2 million, would go to a ■A Wall Street Journal roundup of new estate and marital planning, to founded in 1981 by Robert capital. CEO Steve Spoonamore, 46, has The company, joint regional retention andFrom expansion program fiction included kind words for a story founded or co-founded 14 companies. P. Smith, works with hometown funeral directors involving five groups. fiduciary litigation and corporate collection from a former Clevelander — and to aid families dealing with a difficult situation Young, man in charge: succession, William A. Young the best story, apparently, turns Cleveland we Jr., counsel — clients deaththrough away from home. a former Cleveland Clinic administrator, was into a zombie wasteland. National Mortuary offers removal services, TAX step in their lives. named president and CEOeach of St. important John Medical The book is “After the Apocalypse,� by domestic shipping, international shipping, DavidinR. TavolierMr. Young, who most recently Number 50 Crain’sBlake Cleveland Business (ISSNF. 0197-2375) is published weekly, except for comCenter Westlake. Maureen McHugh. The Journal called it serial32,entrepreneur removal and embalming, livery, direct crema- ■Chagrin FallsVolume bined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, served for more than five years as chief operat“superb� and said the collection’s finest the fight against obesity tion, disinterment and graveside services, among Squires has joined the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, ing officer at the Clinic’s South Pointe and story is “The other services a funeral director might need. in a big way. OH 44113-1230. Copyright Š 2011 by Crain Communications Inc.Naturalist.� Periodicals postage paid at Cleveland, Ohio, 1VCMJD 4RVBSF 4VJUF $MFWFMBOE 0) t 1 and at additional offices.who Price per copy: The $2.00.story POSTMASTER: addressCahill, changes to Marymount Hospitals, will replace Cliff Coker, featuresSend Gerrold a Crain’s conForbes.com profiled Mr.mailing Squires, For information about the company, visit Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877#VTJOFTT BOE 'JOBODF t -JUJHBUJPO t -BCPS BOE &NQMPZNFOU t #VTJOFTT 3FTUSVDUVSJOH #BOLSVQUDZ BOE $SFEJUPST 3JHIUT who announced in April he would retire at the vict who, like other prisoners, “has been left previously co-founded Findaway, a company www.NatlMortuaryShipping.com. 824-9373. end of the year. to die in the sealed-off Cleveland Zombie that makes a digital audio book player )FBMUI BOE -JGF 4DJFODFT t *OUFMMFDUVBM 1SPQFSUZ t 5BY t 1SJWBUF $MJFOU t &OWJSPONFOUBM -BX t 3FBM &TUBUF REPRINT INFORMATION: 800-290-5460 136 called the Playaway. His new product is a Ext.Preserve.�
THEWEEK
DECEMBER 5 - 11
continued from PAGE 3
Price gets right to the point
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BEST OF THE BLOGS Let’s hear it for the 2%
Taft Attorneys Answer Important Life Questions
Be glad these aren’t your (flesh-eating) neighbors
MOVband pedometer is a step in the right direction
to hire ars past due s. But wrong. The human reganizations y hires.” d the
zation at ployees?
5%
23
51
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DECEMBER 12 - 18, 2011
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We’re looking for technology upand-comers for “Who to Watch: Technology,” slated for publication Jan. 16. If you think you know who will be among those leading the Northeast Ohio tech scene of the future, drop an email to sections editor Amy Ann Stoessel, astoessel@crain.com, or call 216-771-5155. Please send in your suggestions by Friday, Dec. 16. There are no hard and fast requirements for this section, other than the candidate needs to exhibit the kind of potential that makes him or her someone to watch in the field of technology. Mark your calendars for future sections: “Who to Watch: Finance” (April 23); “Who to Watch: Health Care” (July 16); and “Who to Watch: Law” (Nov. 26).
QUALITY IS JOB ONE
CORRECTIONS ■ A Dec. 5, Page One story on Ohio’s oil and gas business contained incorrect information with respect to the severance taxes imposed by the state on drillers. As stated in the story, drillers currently are taxed at a flat rate of 2.5 cents for every thousand cubic feet of gas that producers extract and sell. Expressions of that tax as a percent of revenues were off by a factor of 10 due to miscalculation. The effective severance tax rate is 0.75% when gas is sold for $3.30 per MCF. It would
decrease to 0.56% of revenues if the price of gas increases to $4.50 per MCF and to 0.31% at a price of $8 per MCF. ■ In a Dec. 5, Page 5 story, the name of a new joint venture between Akron General Health System and Signet Enterprises was misidentified. The correct name is Integrated Wellness Partners. Doug Ribley, Akron General’s vice president of health and wellness, also was misidentified as a doctor.
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You might think it would be easier to hire quality employees now than in years past due to the glut of unemployed workers. But according to Aon Hewitt, you’d be wrong. The consulting firm’s survey of 1,328 human resources executives found that “organizations are finding it difficult to find quality hires.” Here’s how respondents answered the following question: How effective is your organization at hiring more productive employees? Extremely effective
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United: Hub status key to vitality continued from PAGE 3
marketing and air service development with the Cleveland Airport System, which oversees Hopkins, to get more details on their own. That meeting was held last Wednesday, Dec. 7. After that meeting, Mr. McKeighen immediately sent a letter to United Airlines president Jeff Smisek asking for information on what it would take for United to retain the Cleveland hub. He got a phone call the next day from Greg Hart, a United senior vice president, who offered to set up a meeting for travel planners in the region with United officials. Mr. Payne said he was impressed that Mr. McKeighen could get that quick of a response from so senior a United executive. Rob Recker, GCP senior vice president for marketing communications and membership development, said last Thursday, Dec. 8, that GCP’s marketing campaign is on schedule and will move beyond its own members into the broader business community in the next few weeks. “Right now we’re crafting that total campaign message which will be unveiled in January; it’s kind of been the quiet phase of the campaign,� Mr. Recker said. “You’re going to see a robust community education campaign rolling out in the new year.�
Tick, tick, tick The clock is ticking on Cleveland’s efforts to convince United to retain the hub at Hopkins that has been operated for more than two decades by Continental Airlines, with which it reached a merger agreement in May 2010. Only nine months remain before
“You’re going to see a robust community education campaign rolling out in the new year.� – Rob Recker, senior vice president for marketing communications and membership development, Greater Cleveland Partnership the expiration of a short-term agreement struck in September 2010 by former Ohio Attorney General Richard Cordray with United to keep the hub at Cleveland Hopkins in exchange for dropping an antitrust investigation into the merger. Under the deal, the airlines agreed to maintain 90% of their flights at Cleveland Hopkins for two years, with maintenance of the flights beyond that time dependent on passenger levels and other benchmarks. The new United so far is living up to that agreement. When the airline last September announced systemwide service cuts of about 5%, Hopkins came through largely unscathed. The company also has agreed to maintain other operations, which include a maintenance operation, at Hopkins for five years. Hopkins was home to one of three hubs of Continental, along Newark and Houston. However, with the merger, the new United has eight domestic hubs, and Hopkins is the smallest. Some observers believe the Cleveland hub is redundant because of United hubs in Chicago and Washington, D.C. A consultant to the city of Cleveland, InterVistas Consulting Group of Bethesda, Md., estimated earlier this year that if United opted to eliminate the Hopkins hub operation, the number of nonstop destinations from Cleveland could be cut in half, to 35 from 70, and the airport could lose as many as 120 of its 350 daily flights. GCP sees the hub at Hopkins as a
critically important economic development tool because of the value of direct and frequent flights to busy business travelers. The lack of an airline hub at Cincinnati/Northern Kentucky International Airport, for instance, was a factor cited in Chiquita Brands International Inc.’s decision last month to move to Charlotte, N.C., from Cincinnati.
‘We’re going to get there’ The list of companies participating in GCP’s hub marketing program will be publicized when the campaign goes public in January, according to Mr. Recker, who said the campaign will include media advertising in business publications, digital business marketing and social media. He would not disclose the budget of the campaign until after it’s been approved by the GCP board this week. The plan GCP will roll out next month will ask companies to add a pricing guideline to company travel policies to allow their employees to buy a United ticket even though the price might be higher than a competing airline’s comparable ticket. GCP is suggesting that large corporations allow their employees to pay as much as $300 more for a United ticket. It is suggesting to small and midsize companies that they approve spending up to $200 more per ticket. The “United for Unitedâ€? campaign also suggests that companies favor Cleveland when they hold meetings and training sessions, thus spurring air traffic through Hopkins, where United is the dominant carrier and handles about 70% of all passenger traffic. “I think we’re going in the right direction,â€? Hopkins’ Mr. Payne said about the GCP plan. “Maybe we’re not as far along with regard to the hard policies the companies are making, but we’re going to get there.â€? â–
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Volume 32, Number 50 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright Š 2011 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136
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NE Ohio suits med tech startup well Entrepreneurial duo’s device for incisions could ‘change medicine’ By CHUCK SODER csoder@crain.com
Will and Patricia Moore have helped launch and sell several medical technology companies over the past 30 years. One grew to employ 750 people. Another employed about 1,000. Their newest company, Suturenetics Inc., has even more potential, according to Will Moore. “I personally believe that this one is bigger than both,” he said. Of course, it has a long way to go. The husband-and-wife team, who moved to Beachwood from California a few weeks ago, are the only two employees of Suturenetics. They expect that situation to change soon. Their first product — a handheld device designed to make the process of stitching up surgical incisions faster and easier — already has been tested on about 100 patients. Now, the duo plans to raise a few million dollars so they can start manufacturing the device and selling it in limited quantities in mid-2012. The company aims to begin a broader push to sell the product and variations of it by mid-2013. The device is shaped like a handgun with two barrels that alternately pump in and out as the surgeon squeezes and releases its handle. The clamp at the end of one barrel is used to grip the surgical needle as the surgeon guides it through the skin. Then the other barrel moves forward to grab the tip of the needle so the surgeon can pull it through. Finally, the first barrel emerges again to grab the needle and restart the process. The method is four or five times faster than stitching an incision by hand, according to early tests, and it frees the surgeon’s other hand, which could be used to hold the suture line steady. “This is going to change medicine,” Patricia Moore said.
No strangers to success The device is exciting, but the Moores’ track record is even more impressive, said Bob Johnson, vice president of business development for BioEnterprise Corp., a nonprofit that assists health care companies in Northeast Ohio. The Moores in 1989 started Natus Medical Inc. to commercialize a device designed to simplify the testing process used to determine if small children have hearing problems. The company, based in the San Francisco Bay area, went public in 2001 and had sales of about $219 million in 2010, a figure that includes revenue from several companies Natus has acquired over the past 10 years. The Moores also played key roles in launching Nellcor Inc., which created a product that takes readings of oxygen levels in a patient’s blood without penetrating the skin. The company went public in 1986 and employed about 1,000 people in the late 1980s. Today Nellcor, which also was founded in the Bay Area, is owned by Covidien plc, an Irish medical products company. Will Moore, who specializes in business management and marketing, also was one of the first employees of blood pressure monitor developer AMR Inc., which was sold to Johnson & Johnson. Patricia Moore, who
“I personally believe that this one is bigger than both.” – Will Moore, founder, Suturenetics Inc. and two other tech companies focuses more on product development, patenting and regulatory issues, was part of the startup team at four other companies that were acquired. Mr. Johnson, of BioEnterprise, has kept in touch with Will Moore since they became sales representatives for Johnson & Johnson in the mid-1970s. When he saw on LinkedIn that Mr. Moore had started Suturenetics, Mr. Johnson called him to suggest he grow the company in Northeast Ohio. “I think maybe the bigger opportunity for us is that we get him,” Mr.
Johnson said. The Moores, who previously lived by Lake Tahoe, which straddles the California-Nevada border, said they were attracted to the region because of health care institutions such as the Cleveland Clinic and University Hospitals, the area’s low cost of living and state programs that provide financing to technology companies. They also said a big reason they moved was because they wanted to help create jobs in a region that badly needs them. “That was an exciting factor for us,” Ms. Moore said. ■
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