Crain's Detroit Business, March 10, 2014 by Crain's Detroit Business

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www.crainsdetroit.com Vol. 30, No. 10

MARCH 10 – 16, 2014

$2 a copy; $59 a year

GLENN TRIEST

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‘Mardi Gras for the Irish’: How green are their coffers Tigers’ success keeps Fox Sports pitch in strike zone

JON BROUWER

CRAIN’S MICHIGAN BUSINESS

Charter school soars using aviation as theme, Page 19

Royal Oak reboot

BY CHAD HALCOM CRAIN’S DETROIT BUSINESS

JACOB LEWKOW

BY KIRK PINHO CRAIN’S DETROIT BUSINESS

GLENN TRIEST

TECH TRANSFER

the city’s high office vacancy rate. “People generally aren’t shopping at night because of the heavy parking demand of the bars,” said Bill Harrison, an associate with IBI Group Inc., formerly Giffels LLC/IBI Group Inc., and a member of the Royal

A list of the ith its more than 70 creative/tech bars and restaurants, companies that downtown Royal Oak is have opened in or moved to known more for its lively downtown Royal nightlife than as an employment Oak, Page 29 center. That won’t change any time Oak Downtown Development Authority soon. But real estate experts and city board. downtown development authority offi“We need to have people downtown cials say a wave of creative and techduring the day. When they are shopping nology companies setting up offices and eating, it makes the town more vidowntown over the past four years able during the daytime.” continues to diversify the Oakland County hot spot and help chip away at See Royal Oak, Page 29

Suburban businesses and residents could have to pay $60 million or more per year into the coffers that pay retired Detroit employees if their elected leaders cannot agree on the creation of a new regional authority to take over the Detroit Water and Sewerage Department in the next several weeks. The money apparently would pay the annual contributions of all city workers in the General Retirement System over the next 10 years, not just DWSD’s own emRegional leaders said a ployees. post-bankruptcy Detroit The bankrupt city’s Water and Sewerage proposed plan of ad- Department would add justment under re- nearly $67.5 million a view before Judge year to its expenses, with Steven Rhodes calls little or no ability to raise for the city to pull $675 capital and no significant million from the new revenue coming from city customers. That DWSD by 2023 to fund leaves one revenue its General Retirement stream: the suburbs. System — the pension plan for most of its 9,300 active city employees and 21,000-plus retirees — if no authority is formed. That clause by itself might not draw much attention, but if Rhodes confirms the plan, then another section of it authorizes Detroit to “begin planning a rate stability program for city residents” in the system, which can in turn “provide for affordability of retail rates to be taken into account in the development of whole-

IF AUTHORITY ISN’T FORMED ...

Mark Lantz, founder and executive creative director of Factory Detroit Inc., considered locating in Midtown and Ann Arbor, but chose Royal Oak for its central location, among other reasons.

Second Stage

How to think like a link in the supply chain, Page 11

DWSD suburban users may be on hook for $675M for city pensions

Known as an epicenter of nightlife in metro Detroit, Royal Oak, version 2.0, now has become a hot spot for creative and tech firms

See Water, Page 27

Humane Society CEO search reignites euthanasia debate BY SHERRI WELCH CRAIN’S DETROIT BUSINESS

THE MICHIGAN DEAL 2013 was a seller’s market as deals across Michigan totaled $45 billion. The Michigan Deal covers the deals and dealmakers across the state. And 2014 is shaping up to be a busy year, too. See Page 3.

The departure of the Michigan Humane Society’s longtime CEO in January has reignited debate over its euthanasia rates. Three years ago, four of the 18 board members of the state’s largest animal shelter resigned over the issue. Now, following the departure of former CEO Cal Morgan, an animal advocacy group is calling for

the society to hire a new leader who will be focused on increasing the number of animals saved. In an open letter to the MHS board of directors last week, the Bloomfield Hills-based Michigan Pet Fund Alliance challenged MHS to appoint a CEO “who makes no excuses.” “As fiduciaries for those who entrust homeless animals to your care and/or donate their time and money ... your hiring decisions

and operating policies can reduce the number of homeless animals in your service area and substantially increase the numbers that find new homes.” MHS said saving as many animals as possible has always been its mission, and its national search for a new CEO aligns with that. The MHS euthanasia rate has been declining. In calendar 2010, the nonprofit reported to the state

that it euthanized 69 percent of the animals it took in. Calendar 2013 numbers won’t be available until the end of the month, but for the fiscal year ended Sept. 30, MHS took in nearly 28,000 animals and euthanized 43 percent of them, said Michael Robbins, vice president for marketing and chief marketing officer. That was down from 55 percent during fiscal 2012.

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See Humane, Page 26

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March 10, 2014

CRAIN’S DETROIT BUSINESS

MICHIGAN BRIEFS A U.S. District Court jury in Grand Rapids found that workers at a Sara Lee Corp. plant in Zeeland were owed wages for the time they spent putting on and taking off protective work clothes before and after their shifts, Law360 reported. Jurors found that the company, now known as Hillshire Brands Co., violated the Fair Labor Standards Act. A trial will determine back pay and damages for the workers.

Muskegon ‘shoppers’ docks’ aim to turn boaters into landlubbers Muskegon waterfront property owners, downtown businesses and the city plan a series of “shoppers’ docks” at Hartshorn Marina, The Muskegon Chronicle reported. Boaters on Muskegon Lake can tie up at the marina for a few hours to walk the Lakeshore Trail or patronize businesses and activities in downtown Muskegon. The city will set aside half a dozen docks to remain open for temporary tie-up and charge a small fee for the service, City Manager Frank Peterson said.

Studio 28 86ed: Onetime world’s largest theater to be torn down It’s curtains for a Grand Rapidsarea cinema that once boasted it

GM’s Flint paint shop: No pigment of the imagination General Motors Co. broke ground last week on its biggest investment in Flint in more than a decade: a 600 million paint shop addition at the Flint Assembly plant, MLive.com reported. Actual construction won’t start until the second quarter of this year and isn’t expected to be operational until October 2016. But the 596,000-square-foot building will start to take shape in the summer. At its peak, GM officials said, about 280 people will work about 270,000 hours on construction. As equipment is installed, those numbers will rise to 550 people expected to work 1 million hours. Flint Assembly builds heavy-duty Chevrolet Silwas the world’s largest movie theater complex. MLive.com reported that Studio 28 in Wyoming will be torn down this month, six years after it closed. When the theater expanded to 20 screens and more than 6,000 seats in 1988, it became the world’s largest multiscreen theater complex, holding that title until 1995, MLive reported. The theater still owns the record for the most moviegoers in a day — more than 16,000 on the day after Thanksgiving 1990.

MICH-CELLANEOUS 䡲 Michigan Attorney General Bill Schuette charged Oklahoma City-based Chesapeake Energy Corp. and Calgary, Alberta-based En-

verado and GMC Sierra crew and regular cab trucks and is capable of producing light-duty Chevrolet Silverado crew and regular cab trucks. There are 2,576 hourly and 245 salaried employees working three shifts at the plant. With the new paint shop, paint sludge sent to landfills from Flint Assembly is expected to decline 90 percent, gas use to be reduced 20 percent and electricity use to drop 40 percent. GM’s spending on the paint shop is its biggest investment in Flint since Flint Engine Operations, built for about $500 million, began production in 2001.

cana Corp. with violating antitrust laws by coordinating bidding for state-held oil and gas leases in 2010, causing prices to plummet, The Associated Press reported. 䡲 The U.S. Army Corps of Engineers will spend $25 million on navigation projects in the Great Lakes, including dredging harbors plagued by low water levels, The Associated Press reported. 䡲 Detroit isn’t the only city fighting blight while under the oversight of an emergency manager. In his State of the City speech last week, Flint Mayor Dayne Walling said he wants $70 million in federal funding to tear down nearly 6,000 buildings, The Flint Journal reported. Walling also aims to get volunteers to take care

of 20,000 vacant lots in the next year, which would double the number taken care of last year. 䡲 Back in November 2011, Crain’s Michigan Business noted how the resilience of Midland’s economy stood

Find business news from around the state at crainsdetroit .com/crainsmichiganbusiness. Sign up for Crain's Michigan Business e-newsletter at crains detroit.com/emailsignup.

CORRECTIONS/CLARIFICATIONS

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out among Michigan cities. Last week, CNNMoney said Midland County, home of Dow Chemical Co., was among eight places in the U.S. “where the middle class thrives.” The county’s unemployment was 6.6 percent in December, compared with 8.4 percent statewide. 䡲 Seven Michigan companies made Fortune magazine’s list of the “World’s Most Admired Companies”: Kellogg Co. in Battle Creek, Steelcase Inc. in Grand Rapids, Stryker Corp. in Kalamazoo, Whirlpool Corp. in Benton Harbor, Ford Motor Co. in Dearborn, General Motors Co. in Detroit and TRW Automotive Holdings Corp. in Livonia.

䡲 A photo of another person was used in error for Greg Beauchemin, CEO of Community EMS, on Page 7 of the March 3 issue. The correct photo is shown here. 䡲 In a story on Page 14 of the Feb. 24 edition, Crain’s did not mean to suggest that DLZ Michigan Inc. was a defendant in the 2011 lawsuit brought by the Macomb Interceptor Drain Drainage District in federal court or that DLZ conspired with Kwame Kilpatrick. DLZ was not a party to the lawsuit and was not awarded work on that project.

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CRAIN’S DETROIT BUSINESS

March 10, 2014

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Dealmaking comes in like a lion Early moves, ready cash signal busy year for M&A BY DUSTIN WALSH AND TOM HENDERSON CRAIN’S DETROIT BUSINESS

Only months into the New Year, Michigan merger and acquisition deal flow is brimming. Holland-based Haworth Inc. announced a $270 million deal to acquire a stake in an Italian furni-

ture maker. Van Buren Townshipbased Visteon Corp. is acquiring Johnson Controls Inc.’s electronics unit for $265 million. These deals indicate an increase in deal flow for 2014, experts say, thanks to a pile of cash in waiting and willing lenders. New deals in 2014 will be a mix of strategic buyers looking to build

markets, with technology, customer access or geographical locations, and private equity seeking to use their cash reserves, or “dry powder,” said Brendan Cahill, partner Cahill and director of the automotive industry group at law firm Dykema Gossett PLLC in Bloomfield Hills. “There’s lots of money available

to be deployed, whether that’s on the balance sheet or in private equity funds, and Michigan companies are attracting strong interest,” Cahill said. “If they see opportunity, they are going to be aggressive.” The capital on the sidelines nationally is creating an eagerness to invest, according to Dykema’s Merger and Acquisitions Survey, published in October. A majority of the respondents, 68 percent, expect the M&A market to be stronger this year.

Inside

Town Center owners unlikely to hold onto it for long, Page 4

See M&A, Page 28

Company index

Tigers’ success has Fox Sports delivering an ad rate pitch BY BILL SHEA CRAIN’S DETROIT BUSINESS

PHOTOS BY GLENN TRIEST

At The Twisted Shamrock in Ferndale, owner Jim Monahan switches from more authentic Irish imported goods like the Irish teapot (below) to Detroit Irish T-shirts and green beads starting in early March to gain St. Patrick’s Day sales.

Green Christmas St. Patrick’s Day brings its own March madness to Irish pubs, restaurants, gift shops BY VICKIE ELMER AND MICHELLE HOOKS SPECIAL TO CRAIN’S DETROIT BUSINESS

all it the making of the green for Irish businesses in metro Detroit. Whether they sell Irish sweaters, Guinness Stout or corned beef and cabbage dinners, St. Patrick’s Day ranks right up there with Christmas or the North American International Auto Show as the busiest week of the year for gift shops, bars and restaurants. Jim Monahan, owner of The Twisted Shamrock in downtown Fer-

THIS WEEK @ WWW.CRAINSDETROIT.COM

ndale, is among those who call it the Mardi Gras for the Irish. He and his four part-timers are working seven days a week for three weeks to prepare for the day that brings in around one-fifth of annual revenue. It gets so busy he asks a few friends and family members to help out in the gift, jewelry and imported Irish goods shop. “Once people hear ‘March,’ people progressively come in,” Monahan said, especially on weekends. This year, St. Patrick’s Day rings registers over four or more days at local bars that initiate Irish music and green beer ahead of time. A few have established a St. Practice Day. Scheduled a few days or even a week ahead of the holiday, it’s a chance to spread out the business — and the beer deliveries — and warm up staff and customers before the busiest day of the year. See Irish, Page 28

The Detroit Tigers soon will be back on local television, and the baseball team’s continuing popularity is expected to translate into another record year of revenue for Fox Sports Detroit. The regional cable network, which pays the team $50 million annually to air its games, is forecasted to see its overall revenue grow to nearly $168 million in 2014 from last year’s $154.2 million, according to figures provided by New York City-based research firm SNL Kagan. FSD’s cash flow is expected by Kagan to improve to $43.7 million in 2014 from $39.4 million in 2013. The increased revenue is fueled by the network’s ability to eke out new advertising revenue despite a limited inventory of 30-second spots, and substantial growth in how much it collects in fees it charges cable and satellite providers for the right to carry its Tigers broadcasts. See Tigers, Page 25

American Charter Education Services . . . . . . . 21, 22 BorgWarner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 CDM Smith of Michigan . . . . . . . . . . . . . . . . . . . . 26 Conor O’Neill’s . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Con-way . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Corrigan Moving and Storage . . . . . . . . . . . . . . . . 18 County Road Association of Michigan . . . . . . . . . . . 9 Davis Aerospace Technical High School . . . . . . . . . 20 Detroit Bold Coffee . . . . . . . . . . . . . . . . . . . . . 12, 14 Detroit Medical Center . . . . . . . . . . . . . . . . . . . . . . 6 Detroit Tigers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Dick & Betsy DeVos Family Foundation . . . . . . . . . 20 Domino’s Pizza . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Donnelly Penman & Partners . . . . . . . . . . . . . . . . 28 Douglas & Maria DeVos Foundation . . . . . . . . . . . 20 Dow Chemical . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Drive Detroit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Dunleavy’s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Dykema Gossett . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Etherton Sales and Merchandising . . . . . . . . . 12, 14 Factory Detroit . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Federal-Mogul . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Ford Motor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Fox Sports Detroit . . . . . . . . . . . . . . . . . . . . . . . . . . 3 General Motors . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Great Lakes Beverage . . . . . . . . . . . . . . . . . . . . . . 28 Guardian Industries . . . . . . . . . . . . . . . . . . . . . . . 28 Huron Capital Partners . . . . . . . . . . . . . . . . . . . . . 28 Hutzel Women’s Hospital . . . . . . . . . . . . . . . . . . . . 6 ITC Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 John Cowley & Sons . . . . . . . . . . . . . . . . . . . . . . . 28 Kuka Systems North America . . . . . . . . . . . . . . . . 11 Lear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Macomb County Animal Control . . . . . . . . . . . . . . 26 McShane’s Irish Pub and Whiskey Bar . . . . . . . . . . 28 Mercury Studio . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Michigan Economic Development . . . . . . . . . . . . . 12 Michigan Humane Society . . . . . . . . . . . . . . . . . . . 1 Michigan Municipal League . . . . . . . . . . . . . . . . . . 9 Michigan Pet Fund Alliance . . . . . . . . . . . . . . . . . . 1 Michigan Small Business Development Center . . . 18 Nexteer Automotive . . . . . . . . . . . . . . . . . . . . 12, 15 NSF International . . . . . . . . . . . . . . . . . . . . . . . . . 23 Pendell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 PricewaterhouseCoopers . . . . . . . . . . . . . . . . . . . 28 Prism Plastics . . . . . . . . . . . . . . . . . . . . . . . . 12, 15 RGIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 RingSide Creative . . . . . . . . . . . . . . . . . . . . . . . . . 29 Royal Oak Downtown Development Authority . . . . . . 1 RTT USA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Saline Lectronics . . . . . . . . . . . . . . . . . . . . . . . . . 12 Satisfaction Limousines . . . . . . . . . . . . . . . . . . . . 28 Schaller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Simon, Stella and Zingas . . . . . . . . . . . . . . . . . . . 26 Southfield Town Center . . . . . . . . . . . . . . . . . . . . . . 4 Taylor Academy of Aviation and Aerospace . . . . 21, 22 Technical Training . . . . . . . . . . . . . . . . . . . . . . . . 23 TI Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 The Twisted Shamrock . . . . . . . . . . . . . . . . . . . . . . 3 United Bancorp . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Vectorform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Versicar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 West Michigan Aviation Academy . . . . . . . . . . . . . 19

Department index BANKRUPTCIES . . . . . . . . . . . . . . . . . . 7 BUSINESS DIARY . . . . . . . . . . . . . . . . 24

Justin Verlander and the Tigers have delivered for Fox Sports.

CALENDAR . . . . . . . . . . . . . . . . . . . . 24 CAPITOL BRIEFINGS. . . . . . . . . . . . . . . 9 CLASSIFIED ADS . . . . . . . . . . . . . . . . 25 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 8 LETTERS . . . . . . . . . . . . . . . . . . . . . . . 8 ASSOCIATED PRESS

Take a hide-and-drive (or is it drive-and-hide?) Dustin Walsh shows how Eagle Ottawa combines tech and TLC to make the leather that may make its way to a ... uh ... backside near you. Read his and other Crain’s blogs at crainsdetroit.com/blogs. DAVID HALL/CDB

These companies have significant mention in this week’s Crain’s Detroit Business:

MARY KRAMER . . . . . . . . . . . . . . . . . 19 OPINION . . . . . . . . . . . . . . . . . . . . . . . 8 PEOPLE . . . . . . . . . . . . . . . . . . . . . . 24 RUMBLINGS . . . . . . . . . . . . . . . . . . . 30 STAGE TWO STRATEGIES . . . . . . . . . . 18 WEEK ON THE WEB . . . . . . . . . . . . . . 24

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CRAIN’S DETROIT BUSINESS

N.Y. firm’s ownership of Southfield Town Center expected to be brief BY KIRK PINHO CRAIN’S DETROIT BUSINESS

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New York City-based real estate investment firm 601W Cos. is poised to make the largest office purchase in the Detroit market this decade when it closes on its planned $177.5 million purchase of the Southfield Town Center. While the small, four-employee company’s principals say they are optimistic about the metro Detroit office market, don’t expect a longterm relationship. The company’s ownership of the landmark Class A complex north of 10 Mile Road between M-10 and Evergreen Road is not likely to last beyond about five years. That’s par for the course, said Mark Karasick, principal of 601W, which has 14 million square feet of commercial real estate under ownership or management across the country in major cities like New York, Washington, D.C., and Chicago. About half of the 601W portfolio (the company name comes from the headquarters street address on West 26th Street) is in the Windy City, according to fellow principal Michael Silberberg. “We like to take an asset where either the market, the asset itself or the area is in decline but where we feel there is a future opportunity,” Karasick said. For example, the company purchased the 2.3 million-square-foot Starrett-Lehigh Building in New York for $151.5 million in 1998, revitalized it and sold it after 13 years for $920 million. The Starrett-Lehigh, constructed in the late 1920s, was an “old war horse-type” building on the west edge of Manhattan with rents at $5 per square foot. When it was sold in 2011, rents were in the $40 range per square foot. “We sold it and made a beautiful profit,” Karasick said. It also made $90 million selling a 1.6 million-square-foot building on West Chicago Avenue in Chicago after purchasing it for $300 million. In addition, it purchased a 331,000-square-foot building on Pennsylvania Avenue in Washington, D.C., for $156.4 million and then sold it for $220 million. Expect the same strategy for the 2.2 million-square-foot Southfield Town Center, for which 601W has a renovation budget of at least $30 million for features like lobby upgrades, parking infrastructure and elevators. Some of that budget will also be used for build-out incentives to attract tenants, Karasick said. The complex is 32 percent vacant, according to Bloomberg LP. “We are looking to get the occupancy to the mid- to upper 80s over a five-year period,” Karasick said. “We don’t think it’s going to happen overnight.” One of the complex’s draws was that no tenants take up more than 5 percent of its total square footage, meaning that if a large tenant “goes dark,” there wouldn’t be a large impact on the complex, Karasick said. “You can’t be hurt too badly by any one tenant,” Karasick said. The largest tenants are

The Southfield Town Center isn’t likely to belong to its new owner for much more than five years, said a principal of probable buyer 601W Cos.

GlobalHue Inc., with 109,000 square feet; Fifth Third Bank, 106,000 square feet; and AlixPartners LLP, 63,000 square feet, according to Washington, D.C.-based real estate information service CoStar Group Inc. The average rents at the 1000 and 2000 towers of the Town Center are $22.90 per square foot. The average rents at 3000, 4000 and 4400 Town Center are $21.90 per square foot.

The investors are buying all five office towers at the complex but not the 5000 Town Center residential tower or the Westin Southfield Detroit. Educated as attorneys, Silberberg and Victor Gerstein are principals of 601W. Karasick said he has 20 years of real estate acquisition experience, beginning his career acquiring property that was See Next Page

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CRAIN’S DETROIT BUSINESS

March 10, 2014

3 found guilty in $70 million scheme to defraud Medicare, Medicaid BY CHAD HALCOM CRAIN’S DETROIT BUSINESS

A pharmacist, a doctor and a patient recruiter all walked into a federal courtroom Friday morning and learned they could soon move on to prison, after a jury convicted the trio of multiple felonies in a far-flung $70 million Medicare and Medicaid fraud scheme. Jurors took about five days in deliberation to return guilty verdicts against Carl Fowler of West Bloomfield, Michael Thoran of Detroit and Mukesh Khunt of Toronto of a combined 12 charges after they stood trial together before U.S. District Judge Arthur Tarnow. All three were part of a larger alleged conspiracy involving a network of more than 20 pharmacies and 39 defendants including various medical doctors in Southeast Michigan accused of billing $70.9 million to the federal Medicare and Medicaid programs, under a 2011 indictment. Fowler and Thoran were each convicted Friday on all three charges they faced in court: conspiracy to commit health care fraud, conspiracy to distribute controlled

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in default along Madison Avenue in Manhattan. Harry Skydell is the company’s director of leasing and acquisitions. The Town Center is selling after a mortgage default as well. According to commercial mortgage-backed securities data from Bloomberg, current owner Blackstone Group LP is unable to pay the balance due on a $235 million mortgage on the property originated in 2004 by Irving, Calif.-based Greenwich Capital Financial Products Inc. The loan was transferred to Wells Fargo Bank NA for special servicing. A loan modification letter originally stipulated that Blackstone pay the balance by Nov. 5, 2012. The complex was appraised last summer at $177.5 million, 45 percent below a 2004 appraisal of $321 million, according to Bloomberg loan data. The sale to 601W is expected to close by the beginning of May. Pittsburgh-based HFF Inc. is marketing the complex and hired Southfield-based NAI Farbman to represent Blackstone locally in the sale. The Southfield office of CBRE Inc. is responsible for leasing the property. Among large office complexes in metro Detroit, the Southfield Town Center, built in 1975, is second in square footage only to the 5.5 million-square-foot Renaissance Center in total size. Paul Choukourian, managing director of the Southfield office of Colliers International Inc., called 601W’s planned purchase a positive sign for the market. “It’s another tremendous sign when out-of-state money is interested in Detroit,” Choukourian said. “For these guys to come and invest a substantial amount of money in Southfield, hopefully more investors will take note.” Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB

substances and conspiracy to pay or receive health care kickbacks. Jurors convicted Khunt on six counts — conspiracy to commit health care fraud, conspiracy to distribute controlled substances, and two counts each of health care fraud and distributing controlled substances — but could not agree on a seventh count involving kickback payments. Federal prosecutors contend Khunt, a pharmacist, billed Medicare, Medicaid and private in-

surers for expensive medications he never dispensed and for drugs with street value like Vicodin that were resold by marketers on the street market. Thoran was accused of acting as a patient recruiter in the scheme, and Fowler was a physician who allegedly received bribes and kickbacks from conspiracy ringleader Babubhai Patel to refer prescriptions. Patel, who was convicted at a separate 2012 trial in the same case, is serving 17 years in federal prison.

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TIME TO NOMINATE COOL WORKPLACES Crain’s biennial Cool Places to Work in Michigan awards returns this year, and Crain’s again is working with Best Companies Group of Harrisburg, Pa. The competition has two parts: one questionnaire for employers, another for employees. The combined, weighted results will determine who qualifies. Best Companies supplies participating companies — regardless of whether they win the Cool Places recognition — with a report based on employee responses to the 722014 question survey. The report can help executives identify strengths and weaknesses in their company culture and practices. To be considered for Cool Places to Work in Michigan, companies must register at coolplacestoworkmi.com by April 18. Other important dates, samples of the surveys and other information are on the website. Once registered, companies will be invited to participate in the surveys. Businesses and nonprofits can apply. Applicants must have a minimum of 15 employees working in Michigan and have been in business at least one year, among other criteria. Companies pay a fee based on company size to Best Companies to cover survey costs. The cost ranges from $610 to $895 for online surveying, and $765 to $1,660 for paper surveying.

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CRAIN’S DETROIT BUSINESS

Snyder’s stance against funding Hutzel confuses backers BY CHRIS GAUTZ CAPITOL CORRESPONDENT

Gov. Rick Snyder wants the state out of the business of subsidizing Hutzel Women’s Hospital in Detroit, but that stance is confusing proponents of the funding because the hospital is a leader in the fight to reduce the state’s infant mortality rate — a goal Snyder continues to champion. Snyder did not include $6.7 million in state funding for Hutzel — typically given in recognition of the hospital’s high volume of births and leadership in maternal-fetal medicine — in the budget he signed into

law last year that is in effect through the end of September. Why the shift? The governor’s office attributes the change to the state’s expansion of Medicaid, ownership changes at the hospital and the state not putting restrictions on what the Hutzel funding was used for. The Detroit Medical Center has been lobbying for more than a year for the state to put the funding back in the budget. When combined with $13.3 million in federal matching funds, the state funds bring in $20 million to the DMC, and have for the past 10 years. Hutzel and Wayne State University

are also home to the National Institutes of Health Perinatology Research Branch. “We’re the epicenter for this fight and research in the country,” said Conrad Mallett Jr., DMC’s chief administration officer. “It is amazing to us that we’re having this discussion with a governor who has obviously been so attuned to the health care needs of this community.” Snyder’s Press Secretary Sara Wurfel said the governor has placed significant priority on addressing infant mortality. It was something he brought up in his first State of the State address in 2011 and further outlined in a spe-

cial message on health and wellness. While Snyder permitted the funding earmark for two years into DMC ownership by Vanguard Health Systems, the administration decided it was time to phase it out. Wurfel said the Department of Community Health and the Department of Human Services are still working with organizations, especially in Detroit, on the issue. She said the Hutzel’s ownership changes have changed the conversation about state funding. In 2011, DMC was acquired by the for-profit Vanguard . Last year, Vanguard was acquired by Tenet Healthcare Corp. Providing unrestricted fund-

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ing to a private enterprise as part of its annual budget is “not typically how the state does or should operate,” she said. But Mallett said at the Michigan Economic Development Corp. that businesses are still given tax dollars to entice them to expand or move into the state. “The state of Michigan does that every day,” Mallett said. Wurfel also said with the expansion of Medicaid, it is expected that Tenet would see additional funding resources as more people will have access to Medicaid coverage. Mallett said pregnant women and children were already covered under the state’s MIChild insurance program, and said the expansion of Medicaid would not bring in the level of revenue the administration claims. In order for the DMC to receive the federal matching funds, the initial funding has to come from the state, Mallett said. It cannot put up the money itself to receive the federal funds. One plan that would have the DMC provide the state contribution funds up front but then refund the money to the health system wouldn’t work because it is illegal per federal law, said Kurt Weiss, spokesman for the Department of Technology, Management and Budget.

A last hope? A supplemental funding bill, Senate Bill 608, has been sent to a conference committee. It’s possible Hutzel funding could be packaged along with additional road funding and other items the governor does support, and that he will end up signing it in lieu of a line item veto. Sen. Roger Kahn, R-Saginaw Township, a cardiologist and chairman of the Senate Appropriations Committee, was appointed to the six-member conference committee. He said Snyder has spoken often of wanting to reduce the state’s infant mortality rate, which, at 7.3 deaths per 1,000 live births, is higher than the national average of 6.3. “This is part of being able to do that,” Kahn said. The hospital delivers more than 4,500 at-risk babies annually, according to the DMC. The Perinatology Research Branch was granted a 10-year, $165.9 million contract extension last year to continue its work at Hutzel to reduce preterm births.

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Mallett said if the money does not end up in the budget, it will not result in cutting services at Hutzel for women or babies. But the entire DMC would have to absorb a $20 million cut. It would put on hold the rollout of some community outreach programs to reduce the state’s infant mortality rate. Mallett said the DMC will discuss what to do in future years so there isn’t an annual fight. “We need to think about what our go-forward strategy will be,” Mallett said. Chris Gautz: (517) 403-4403, cgautz@crain.com. Twitter: @chrisgautz

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State immigration office goal: Fill 274,000 jobs in STEM fields by ’18 Since unveiling his plans to focus on immigration reform as an economic strategy in January, Gov. Rick Snyder has been moving quickly down that path. Through an executive order last month, Snyder created the Office for New Americans and tapped Bing Goei to be its first director. He started the job Feb. 3. Goei, 65, an immigrant whose family hails from Indonesia, worked most recently as CEO of Grand Rapids-based florist Eastern Floral. The family-owned business has six locations, all in western Michigan. Besides the flower business, Goei created the International Center for Entrepreneurial Excellence, a business incubator for young, minority and female entrepreneurs in Grand Rapids. He has also dabbled in politics, running unsuccessfully as a Republican state House candidate in 2012. Goei’s salary is $135,000. He does not have any staff, but the plan is to add someone soon, according to the governor’s office. In Snyder’s current budget proposal, he is asking the Legislature for $385,000 to run the office. Goei talked with Capitol Correspondent Chris Gautz about his new job and priorities in retaining talent in Michigan, and being an advocate for immigrants. What will this office be able to do? This office will be the chief adviser to the governor and to all state departments in matters regarding immigration issues and policies. It is also meant to be a coordinating venue for all the work that the state departments are doing. In the past, each department had pieces of the immigration issue. The governor’s expectation for this office is to make sure we look at every issue regarding immigration, both federal and state. Now we can’t do anything with the federal, but we can certainly be an advocate. And this governor has always been a strong advocate for immigration reform. We want to make sure we as a state are doing things that do not create barriers for us to grow economically. What are your priorities? We know that by the year 2018, we have to have about 274,000 jobs in the STEM fields filled (based on a report by the Global Talent Retention Initiative). We know that we need that many, and that’s why the governor said we need to find ways to bring in these talents because we don’t have enough U.S.born Michigan residents going to school for STEM degrees. The EB-2 visa program he is highlighting is

the number of well-educated certainly one way he STEM graduates that can wants to promote and utistay here? lize to fill those jobs. I am pretty optimistic He is also looking at about the fact that we can the EB-5 investment prodo this. There are 40,000 gram, and that’s why he’s EB-2 visas available. (Unasking the federal govder the governor’s proernment to designate the posal, one-quarter of state of Michigan as an those would be designatEB-5 regional center. If ed for such immigrants given, we would be only willing to live and work the second state to be givfor five years in Detroit.) en that designation; the We have to be proacother one is Vermont. It Bing Goei, tive in identifying innovwould give us some flexiative ways to get these Office for New bility in foreign investAmericans things done. (The goverments coming into the nor) thinks we can do state of Michigan. The governor calls these oppor- better in finding ways to bring tunities a way to help Detroit re- these students and keep them gain its position as an economic here. source in the state, and to use How much of your job will be educathese visa programs as way of repopulating the city of Detroit. He’s tion-related, since for many people encouraging the people that are go- when they hear “immigration reform,” ing to get these jobs in Detroit to they have images in their head of the Texas border and illegal immigrants live in Detroit. and not the type of immigration you Will this office be more about advo- are talking about? It’s going to take a lot of educacacy at the federal level, or assisting immigrants already here with prob- tion, because, unfortunately, the national discussion is pretty negalems they are having? We can certainly try and help tive about immigration. What I people to move through the system think we need to say is: The goveras much as we can, but most of the nor is looking at this as a way to time we are just a supporting grow our economy, to find innovaagency for these types of cases. tive ways to bring new jobs to the state. How much will your office’s ability We also have studies that say for to attract immigrants to the state be every STEM graduate, if they stay hampered by federal policies that limit here, they will create 2.5 new jobs

Q&A

for American-born residents. If they start a business, they can’t run the business by themselves. When that company grows, it needs additional help. Immigration is an economic strategy. It is not a zero-sum game. It’s not immigrants win and the U.S.-born people lose. We bring in new investment, we bring in new talents, we bring in new businesses and we also allow for existing businesses to have the type of talent needed for them to grow. It brings in many, many more opportunities for jobs for residents in the United States. University of Michigan professor Ann Chih Lin recently criticized the governor’s proposal, saying it was unrealistic to think the federal government would grant Michigan all of those visas. What was your response when you saw that? You will always have naysayers. The thing is about this governor is he’s thinking like an entrepreneur, and almost every entrepreneur doesn’t look at what you can’t do. The governor is going to look at what is possible to do. So the request is there. Will the federal government give us the full request? We hope so, but unless we ask, we will never know. So naysayers can say what they want, but we asked and we believe the ask is legitimate — and I think the ask is very innovative and one that can really help address some

of the challenges we have in the city of Detroit. Part of your role is also to lead the Global Michigan Initiative. What kind of feedback are you hearing from the business community and community foundations? I have heard nothing but positive comments from all those sectors. They all understand the need for different ways of re-energizing our economy. My office is getting a lot of requests for more information. We are very excited about this, and I think the governor was very visionary. It’s available to us; all we have to do is ask. Are there other states you want to emulate in terms of policies or strategies, states with a good track record of viewing immigrants as assets? I think Michigan is really at the forefront. We have had some conversations with (former New York City) Mayor Michael Bloomberg’s organization in terms of his policy and vision. We certainly want to learn from the best, but this is pretty new territory. I like that Gov. Snyder is looking at this as a very positive way of growing our economy, recognizing that we are in a global economy, and recognizing the talent pool is the world, not just where we are. Chris Gautz: (517) 403-4403, cgautz@crain.com. Twitter: @chrisgautz

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CRAIN’S DETROIT BUSINESS

OPINION

TALK ON THE WEB

New arena another chance for local jobs

From www.crainsdetroit.com

etroit will be watching. That message should be delivered to the Ilitch organization and to Detroit development officials as they begin to build the new $450 million hockey arena in downtown Detroit. Most of the decisions will be made by team owners, the Ilitch family. But the Detroit Development Authority, an arm of the quasi-public Detroit Economic Growth Corp., has clout, too. After all, public (58 percent) and private dollars (42 percent) will finance the arena construction. As has been reported, terms of the new deal are less favorable to the city than the old deal at Joe Louis Arena. JOHN SULLIVAN So it matters, from The new hockey arena site will soon be busy the contractors selectwith construction, but will the city benefit long term? ed to the goals for employment that are set. Local contractors — but especially local workers — are the big benefit to the region as this project moves forward. Between the arena, a new bridge and M-1 Rail, the opportunity to train and employ Detroiters for long-term work cannot be ignored. But so far, we haven’t seen a full public-private push to embrace employment goals. That should change before the first shovel breaks ground.

Holes in pothole funding Speaking of broken ground, winter may eventually be over, but it appears that potholes may go on a lot longer than that. As Capitol Correspondent Chris Gautz reports on Page 9, the $100 million or so in additional road funding that legislators are contemplating from the state’s $1 billion surplus would do little more than make up road budget deficits incurred over the winter. BLOOMBERG Crain’s has (repeatedly) editorially supported more tax support for roads — preferably in the form of a fuel wholesale sales tax, rather than the current tax-per-gallon model — but whether it’s that method or another, our battered roads are a reminder that the current system isn’t working.

Re: Keith Crain: The problem is wider than just potholes I cannot agree more. The bad roads have a lot more implications than just inconvenience. If I were considering moving to Michigan for a job and drive from the airport to my interview location, I think I would turn and go back to the airport. It is getting really bad out there. In my short commute to work, I have to change lanes frequently to avoid as many potholes as I can. Before this results in something really bad (some major accidents), I hope this gets the attention of our legislators, and road repairs are given the appropriate share in the budget. Quaid Saifee

Re: Tigers can expect an extra $1M with new ticket policy I really don’t think that they need to gouge the consumer to make a profit off the team. Baseball has traditionally been the Everyman’s sport, and I’m sad to see the push for profits keeping people from being able to go to the ballpark and enjoy the game. They make millions off the fans with concessions and ticket prices — why squeeze out these last few bucks? TheMightyQuackers The Ilitch organization has the best of all worlds. They receive substantial amounts from TV revenue and licensing fees. Their teams play in taxpayer-financed facilities from which they keep most of the revenue. Gimmicks such as this just gouge the people who will be paying for the Ilitch organization’s new arena. Michigan residents will pay top buck to build it and top buck to get into it. Carolyn Mazurkiewicz

Re: Reaction mixed to Duggan’s idea of city-owned auto insurance company I am told lots of people who live in Detroit also have a place in the suburbs and choose to keep their main residence listed as suburbs just for savings on auto-insurance. Tackling this would be a great help. Terry Chisholm

Re: Cadillac clears up ‘misconceptions’ about contentious ‘Poolside’ ad All advertising is meant to reach a demographic whether age, income or members of ethnic groups.

Reader responses to stories and blogs that appeared on Crain’s website. Comments may be edited for length and clarity. This one is the same. All the hubbub is the result of some shrewd political operative inventing the 1 percent. The ad is generating the buzz Cadillac wants. After all, Cadillac isn’t selling high-tech, sleek machines. It’s selling a lifestyle, the stuff of dreams come true. Jim Beckham

Re: Sugrue: Focus on Detroit’s strengths, not quick fixes, to rebound As the article said, Chicago neighborhoods look like Detroit’s, Cleveland’s neighborhoods look like Detroit’s; the common denominator is decades-long Democratic control and longtime failing public education. Liberal Democratic elites build their walled enclaves in city centers, or coastlines, and entertain themselves telling each other how good they all are and how much they care about those less fortunate. Emotion in place of fact; good intentions in place of results and accountability. Dukeoftralee What about the people? Look around at successful, vibrant cities, and it is dedicated, motivated people creating a vision that leads to success.

Schools and universities are typically a result of growth and leadership, not a catalyst. Don’t forget our history and what originally made Detroit great — people like Henry Ford and the political visionaries who made it easy to launch and grow business. Workers and infrastructure are natural results of a successful vision. Kenna

Re: CEO Susan Goodell to leave Forgotten Harvest This woman appears to have made a big difference in our community. She leaves some pretty big shoes to fill, and I hope they find someone as capable to succeed her. MikeInMI

Re: Editorial: Faculty must serve public needs, not own At OCC, it is not about resistance to change, it is about an expanding administrative bureaucracy (17 percent last year, 14 percent in 2012) that makes change impossible. The administration’s own consultants said Chancellor Meyer has no vision for student success and that the number of full-time faculty is among the lowest in the country on a per-student basis. Yet, the number of senior administrators continues to grow. 265029

LETTERS Kids deserve support Editor: I wanted to send a note of thanks to for Crain’s continued support of the children of Detroit. Mary Kramer’s Feb. 3 column, “Adults need to put kids first in education,” should serve as a reminder to all parties involved in education in our community that we must put the best interest of our children before all else. While I do believe that competi-

tion is a good thing because it pushes us to be the best, we can never lose sight of our end goal — to provide the children of Detroit with a learning environment that will foster not only academic achievement, but also personal growth. Thanks again for being a strong voice for children. Jack Martin Emergency manager Detroit Public Schools

Send your letters: Crain’s Detroit Business will consider for publication all signed letters to the editor that do not defame individuals or organizations. Letters may be edited for length and clarity. Email cgoodaker@crain.com

KEITH CRAIN: Maybe we need a different system When citizens have completely lost confidence in their elected officials, there ought to be a way to recall those officials without waiting as long as four years for the next election. It appears Detroit Councilman George Cushingberry Jr. has already lost much of the support from his constituency in the geographic district he represents. And that’s in less than three months in office. Typically, voters can initiate a recall, which requires petitions and a special election. That takes

time. But if Mr. Cushingberry’s peers deemed him too damaged to hold office, the city’s 2012 charter allows for removal of elective officers for very specific reasons, including “any other misfeasance or malfeasance.” My guess is those words apply to official actions, not Mr. Cushingberry’s problems that range from actions prior to his election in the practice of law as well as the much-reported traffic

stop just after taking office. Mr. Cushingberry notwithstanding, the city of Detroit seems to be getting its act together. Lots of good things are happening. The idea that a newly elected City Council member can throw a monkey wrench into the momentum doesn’t seem right. I hope the mayor and other council members take a look at

how best to handle such problems, whether it’s this one or something in the future involving someone else. There is no doubt that the city, in spite of all of its travails, seems to be experiencing the long-awaited renaissance. The last thing this community needs is an elected official who embarrasses us all — including the other elected officials. Maybe there’s a need for a form of censure when such cases arise. The stakes are far too high today for any single individual to do anything that can derail what we hope

is a road to success and improvement. Should elected officials be held to a higher standard? Of course they should. Members of Detroit City Council are certainly under more scrutiny than ever before. The geographic representation of elected officials and the council seems to be effective; it would be a shame if anything happens to disrupt the council’s image. Let’s hope there is a system within city government that will allow voters to correct their mistakes.

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Money for potholes would feed summer budgets be included in the suppleAs lawmakers debate The last time the state funded a how to spend some of the mental funding bill, in long-term solution for the roads by more than $1 billion in part because it doesn’t raising the gas tax was 1997, and surplus revenue, they want this to be seen as a only after the public outcry grew so will take great pains to exvictory, since it is just a loud about the conditions of the plain that at least $100 short-term solution. roads that lawmakers were forced million will be spent on to act. That sentiment was aided in “We’re spending our roads in a supplemental part when Oakland County Executime on a long-term fix,” funding bill. tive L. Brooks Patterson posed for a said Gov. Rick Snyder’s The debate over how photo while standing in a pothole. chief strategist, Bill Bill Rustem much to spend on roads So has the Snyder administration Rustem. and other items in Senreached out to Patterson and asked But that time has been Nor has he mounted the same type der’s side, Rustem said. ate Bill 608 will be Chris Gautz spent this year largely of statewide campaign for the “You’ve got to get to a point him to stand in a pothole again? hashed out in a confer“Not yet,” Rustem said, laughbehind the scenes talk- funding the way he did then. where the public completely unence committee this week. ing. “But that’s a good idea.” ing with lawmakers. While the But now, unlike last year when derstands it,” Rustem said. “We’ve While Michigan emerges from a governor still supports a long-term the roads were bad, but nowhere clearly turned a corner. The public Chris Gautz: (517) 403-4403, brutal winter and potholes are fix, he did not include it in his bud- near as bad as this winter has is understanding that we’ve got to cgautz@crain.com. Twitter: springing up just about everyget this year as he did last year. made them, the public is on Sny- fix these roads.” @chrisgautz where, motorists are angry and want to see the potholes filled. But what lawmakers aren’t saying is that the bulk of this $100 million will not go to fix the potholes on the roads right now, nor the potholes — or in some cases, craters — that will emerge on highways and local roads next month or the month after. The Michigan Department of Transportation is filling those potholes At a certain level of wealth, one’s wants, needs and desires invariably change. The merits of a family foundation, for right now with money it had budgeted for summer maintenance proexample, become clearer. Philanthropy, and the values it imparts to younger generations, takes on greater meaning. jects. It blew through its winter maintenance budget in short order And the long-term balance between family wealth and family unity becomes ever more important. These and other because of all of the snow and ice. So the additional money MDOT issues relevant to generational wealth are best served by an advisor with long-term stability, unimpeachable integrity, would receive from the state would actually be used to backfill its sumproven competence and a steady hand. In short, that is the Family and Foundation Services Division of Greenleaf mer maintenance budget so it can repair guardrails, seal cracks in the Trust. We listen, guide, educate and serve your family from today’s generation to the next in a meaningful, roads and mow the grass along the highways once all the snow has personalized manner that is remarkable for its attentive, discrete and wholly reliable service. Call us to learn more. melted. It’s in your interest, and even more so in your family’s. Without this money, those summer projects would not get done, MDOT Director Kirk Steudle has said. If the Legislature does produce the $100 million for the roads, MDOT would receive $39 million and counties would share $39 million, with $22 million given to local units of government. Denise Donohue, director of the County Road Association of Michigan, estimated that about 80 percent of the counties are faced with the same situation as MDOT. Those counties have also already blown through their winter budgets, and in some cases, their entire annual maintenance budgets, so they would also use the new money to ensure they can do summer maintenance work. “It’s a Band-Aid,” she said. “This just brings people back to where they were. And where they were doesn’t have much to do with the bunch of potholes that are about to come out.” John LaMacchia, legislative associate for the Michigan Municipal League, said he thinks many of his members would use the funds right away, though there are communities that have burned through their maintenance budgets and have dipped into street funds typically set aside to do road repair and rebuilding work during the construction season. But regardless of when this money is spent, it’s not nearly enough, he said. “The focus needs to be on the long term,” LaMacchia said.

Capitol B r i e fi ng s

We’ve clearly turned a “corner. The public is

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STAGE TWO STRATEGIES Moving firm thinks outside the box, does DIY paper-to-tech transition, Page 18

growing small businesses EDITOR’S NOTEBOOK Amy Haimerl is entrepreneurship editor. She can be reached at (313) 446-0416 or at ahaimerl @crain.com

Amy Haimerl

Entrepreneurs the rock that makes D roll Each time I think about our annual Salute to Entrepreneurs awards, my mind instantly fills with AC/DC’s “For Those About to Rock (We Salute You).” It’s an appropriate soundtrack because, to me, entrepreneurs are stars. They may not be rocking out to the guitar bite, but every day they are out there helping transform this city, whether they call tech or construction their industry. They are building opportunities for others and redeveloping Southeast Michigan one job, sale or contract at a time. Crain’s Salute to Entrepreneurs awards recognize those hustlers and dreamers in five revenue categories, from below $5 million to more than $50 million. Plus, we look for social entrepreneurs who are helping change local culture and “intra-preneurs” who are changing things from within. Last year we met four entrepreneurs who impressed To nominate for us with their Crain’s Salute to drive and Entrepreneurs: business crainsdetroit.com/ acumen. We nominate discovered how Nomination Jamie Moore, deadline: March 24 CEO of JEM Tech Group, retooled her family business, leading to 40 percent sales growth. High school math teacher John Bornoty and his wife, Beth, told us about opening The Big Salad LLC in Grosse Pointe Woods and then turning it into five more locations. Former DSO bassist Rick Robinson shared his passion for bringing classical music to the masses — and how he’s making a business out of it. Gui Ponce de Leon has spent his life running PMA Consultants LLC, which does construction project management and consulting. But then he took its technologies and created a spin-out firm. Help us find this year’s success stories. We are looking for entrepreneurs who deserve to be recognized for their innovation, problem-solving ability and sheer relentlessness. Do you know one? Or are you one? Two weeks remain for nominations. You’ll find all the information on our website at crainsdetroit.com/nominate. We salute you. Yes we do.

TIME’S A-WASTIN’

How does a small shop or startup become part of the supply chain of a big company? Crain’s asked those already there to share their mistakes made, lessons learned and tactics taken JACOB LEWKOW

As time and distractions build, common sense in supplier pitches can “go by the wayside,” says Jason Hardy, Kuka Systems North America director of purchasing.

Think like a link BY GARY ANGLEBRANDT SPECIAL TO CRAIN’S DETROIT BUSINESS

CASE STUDIES

small machine shop, a new food startup and a decades-old family-run business are likely to all feel the same way when trying to enter the supply chain of a large corporation for the first time: like they’re facing a blank monolith with no surefire way in. There’s no magic formula for how to approach a large company, and bookstores have never been in need of more grinning guys with slick-backed hairdos offering their sales pitch advice. And there is hope in the knowledge that large companies with strong supply chain management practices are always on the lookout for backup suppliers, overflow suppliers and better suppliers. Even so, missteps can happen. To gather real lessons learned, rookie mistakes and tactics that recently have

A.J. O’Neil had to grind it out to get Detroit Bold Coffee Co. on store shelves because his supply chain savvy … well, it could keep a guy up at night, Page 14.

To make sure his small parts play a big part for a customer, Prism Plastics’ Jerry Williams suggests winning over one key person, Page 15.

worked, Crain’s spoke with buyers and sellers with experience in the automotive, medical device, aerospace and food and beverage industries. Much of what they had to say could be described as predictable, commonsense ways of conducting business. And yet, predictable as they may be, these guiding principles escape many, as

evidenced by how frequently people forget them and cause headaches for buyers. One buyer said hardly a week goes by without a salesperson walking into his office with an ill-prepared pitch — even missing important details like what the selling company’s revenue is or how many production machines it has. As the work weeks pass by and people get distracted with immediate pressures, obvious practices to follow become less obvious in the heat of business. “They go by the wayside,” said Jason Hardy, director of purchasing at Sterling Heights-based Kuka Systems North America LLC. Here’s more of what buyers and sellers had to say about staying on the ball when approaching big buyers.

Relationships matter The dominant theme that arose out See Link, Page 12

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Link: Mistakes made, lessons learned in supply chain pitches ■ From Page 11

these conversations was that of relationship. They’re necessary for getting the first foot in the door and must be tended to throughout the course of a contract to make sure more keep coming. Cold calls and trade shows will only get you so far. “Relationships, relationships, and after that, relationships,” said Jerry Williams, vice president of Prism Plastics LLC in Chesterfield Township, which last year secured a contract that marked its eighth entry into a supply chain. In Prism’s case, it was the fortunate work experience of a salesperson that led to a first contract last year with Nexteer Automotive Corp. The salesperson knew someone at the Saginaw-based tier-one auto supplier from work in the past. In the case of A.J. O’Neil and his Hazel Park-based coffee roasting business, Detroit Bold Coffee Co., it was a mentor relationship that ultimately led to winning a deal to have his coffee in Meijer Inc. stores. Cost, quality and delivery are the basis of the business relationship, but honest, open communication maintains it. Hardy said honesty wins points among buyers. He offered the example of a second-generation executive of a machining business who approached Hardy at a February Pure

Michigan Business Connect event. The executive expressed frustration that his father, who still ran the shop, didn’t know how to say no to a job. The shop was running into problems as a result, and he relayed this information to Hardy despite hoping to be a potential supplier to Kuka. “He had the guts to tell me, ‘We have a massive problem.’ I respect the hell out of that guy,” and because of that, Hardy sent someone to check out the company as a possible supplier down the road. “When he gets his act together, I know he’s a guy I call and can get a quote on something and he won’t give me the salesman act.” Trevor Pawl, managing director of the Michigan Economic Development Corp.’s Pure Michigan Business Connect program, has worked with hundreds of buyers across more Pawl than 25 industries in the past year as part of the program’s work to match large corporate buyers with Michigan suppliers. The path to an actual deal may be more different than what the wouldbe supplier expected. He said that when suppliers are able to make

contact with an OEM, they should keep an open mind: A deal with the OEM directly might be out of the question, but that doesn’t mean the OEM won’t help the prospective supplier get business with suppliers further down the chain. “Sometimes suppliers don’t realize — and the ones that do are really successful — that (OEMs) can be your customer, but you need to look at them more as connectors,” he said. Pawl also suggested that suppliers keep in mind the supplier diversity teams employed by many large corporations. “Why they come to work every day is to talk to small businesses and get small businesses talking to the rest of the chain,” he said. To build a relationship with The Boeing Co., Chesterfield Townshipbased tooling and stamping company Schaller Corp. took a backdoor route through Boeing’s R&D department instead of banging on the front door of purchasing. R&D needs parts for experiments and testing — parts that don’t go on planes and so don’t need to meet rigorous industry standards. Although the jobs are small prototype runs and “nothing I’m going to retire on,” they do form the basis of a relationship with a large corporate buyer, said Timothy Wilk, Schaller’s sales representative who works the Boeing account. Schaller

now has a vendor code and people in Boeing who can vouch for it. Tending to relationships yields side benefits, too. Mario Sciberras is president of Saline Sciberras Lectronics Inc., a Saline-based supplier to medical device and aerospace companies. An assembler of electrical boards that typically have 200 parts on them, the company has many suppliers of its own. A cold-calling prospective supplier will get a much warmer reception if it happens to have a reference from someone Sciberras knows. “What works for me is when they start using some company names we work with,” he said.

Get to the point Despite years of business buzz about the “elevator pitch,” it’s still not a given that a salesperson will walk in the door and show how a product or service will make the buyer’s life easier. “Perfecting the pitch is obvious, but it’s not always something suppliers realize. They spend 10 minutes talking about the history of the company and not getting down to business,” Pawl said.

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This is a shame, since a lot of hard work probably led to that meeting. Cold callers need to come armed with an understanding of what the buyer is looking for, or at least the right questions to quickly gain an understanding, and what the plan would be to meet those needs. Another misstep is when companies send in salespeople who fail to impress by not knowing the basics. “I look at them and say, ‘What’s your annual revenue?’ ... ‘Uh, not sure,’ ” Hardy said, and then hears the same response about how many machines the company runs or what its on-time delivery performance is. “You have to have hard numbers and facts in front of you. Nobody wants a traveling car salesman sitting in front of them.” Food and beverage entrepreneurs are prone to not fully understanding what they’re getting into, since many of them got into the business for love of their product, rather than business reasons. They’re not prepared for questions from stores about product demonstrations, packaging, labeling, distribution or temporary price reductions, said Pat Beyer, owner of Grand Rapidsbased Etherton Sales and Merchandising Co. Beyer LLC, which represents 80 food companies as a selling agency to grocery chains and brokered the deal to put Detroit Bold coffee in Meijer stores. “They know food; they just don’t know the other 75 percent of how get to product on shelves. Take a company like Meijer with annual sales of $16 billion. They don’t buy a pallet, they buy a truckload. These guys aren’t prepared for a truckload,” Beyer said. What might be surprising to some rookie companies is that it’s not always about money, at least not at first. Several buyers said many make the mistake of jumping right into the topic of how much money they’re going to save the buyer, when what the buyer first wants to know is whether this business can handle the work. Location and capabilities come before price when Prism weighs a new supplier. Saline Lectronics takes a similar view. “Pricing is not the most important part of the equation. It is part of it, don’t get me wrong, but I don’t like somebody walking in my door saying, ‘I’ll take 10 percent off your costs.’ OK, sure,” Sciberras said. Experience, quality and what a caller can do for Saline is what he would rather hear. “I’ve done a lot of cold-calling in my time and ... I study a company and formulate questions as to what its needs would be before I walk in the door,” Sciberras said. Wilk at Schaller recommended a first-pitch frame of mind that’s hard to forget: “Go in there and ask them, ‘What’s the biggest turd sitting on See Next Page

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your desk stinking up your office up every day? Give me the turd and let me get rid of it for you.’ ”

Be sharp Once a relationship has been cemented with a contract, a supplier has to follow through on promises made during the pitch by hitting deliveries and being honest about capabilities. In the grocery world, deliveries are one of the most crucial things a company can mess up, Beyer said. Some of the smaller companies think it’s all right to miss a delivery by a day once in a while. But big chains hold suppliers to their stated delivery times, and some even will fine suppliers who slip up. “If your lead time is seven days, it better be there in seven days,” he said. Given the chaos a supplier can cause up the chain when it misses a deadline, a company stands to lose more in the long run by missing deliveries than by turning down work it knows it can’t handle. Resources and employees have to be redirected to make up for the foul-up, causing headaches and losses at the buyer’s end. “You don’t want to turn down orders, but I respect a supplier that says, ‘Jason, I’m not going to lie to you, I can’t make the date,’ ” and declines an order, Hardy said. It’s also not just the suppliers’ responsibility to mind deadlines. When Hardy took his position three years ago, Kuka had problems with deliveries and quality from suppliers. He held meetings with 120 suppliers and said, “You all can’t be that bad. What’s going on?” He learned that Kuka was throwing unrealistic deadlines at suppliers because the company was missing deadlines and trying to make up the difference by pushing the problem down the line. Suppliers would do the best they could to help Kuka, but would still get the blame if their parts came in late, Hardy said. Kuka since revamped its system, he said. “(Buyers) have to be very cognizant in their own process to make sure the dates they’re giving are dates (suppliers) can hit,” Hardy said.

Be patient It took four years of diligence — the kind that involves driving around giving away product — before O’Neil gained entry into a large chain. “The first two years ... you’re probably going to give away more than you sell,” he said. “You have to enter the market.” Impatient suppliers might have an expectation that a deal will come through in a month when it’s more likely that it will take a year, Pawl said. “I’ve seen some take two or three years.” Sometimes deals come through within a matter of just a month or two, but that’s usually with an existing customer, and at any rate, suppliers should be anticipating a much longer period for its planning purposes. Pawl said slowing down and taking on smaller jobs can be a way in, such as in Schaller’s R&D approach with Boeing. Schaller is

proving itself with small such jobs in the hopes of picking up more work in the future. But it still understands the reality that big orders could still be a long way off and it isn’t moving forward with any expectation of a big contract just yet. The work with Boeing is one of many irons in the fire. “I’m talking to companies every day,” Wilk said. Companies that are still getting their feet wet should try present-

ing themselves as backup suppliers, Sciberras said. Saline Lectronics is always looking for new companies to add to its customers’ approved vendor lists in case there are hiccups in supply. Suppliers can use the time to build confidence within the buyer and set the stage for more revenue down the road. It also takes time to get up to speed in an industry. For Saline Lectronics, getting work meant

meeting certain production standards, such as ISO 13485 in the medical device world or the AS9100 quality standard in the aerospace industry. It took Saline three years and $100,000 to gain these certifications. Prism aims to get into the medical device and aerospace industries this year, but knows it might have to spend some time and money just to be able to get a conversation with a buyer.

This holds true for old businesses as well as new. Automotive supply chains are now managed through software portals. And yet, some old-school shops in the area still rely on hand-delivered printed engineering sheets. “Some mom-and-pop machine shops don’t even have the Internet,” said Hardy at Kuka. Or as Sciberras said of the supply chain game: “If it were easy, everyone would be doing it.”

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Drop by drop, startup coffee seller grinds out his pitch BY GARY ANGLEBRANDT SPECIAL TO CRAIN’S DETROIT BUSINESS

When it came to entering a supply chain, A.J. O’Neil would have been hard pressed to make himself any less sophisticated with how to go about it. He was poorly dressed, unfamiliar with industry expectations and had a rambling business pitch. O’Neil is best known for the Ferndale coffee shop A.J.’s Music Cafe, he ran from 2007 through 2012 and which was the origin of his current enterprise, Detroit Bold Coffee Co. So he had a background in business, and in dealing with coffee. But that was about it when he began approaching stores to sell it. “I didn’t have the quick answers they need,” O’Neil said. O’Neil roasts his Detroit Bold brand coffee at Becharas Bros. Coffee Co., a 100-year-old commercial roaster in Highland Park. Through shoe leather and elbow grease, he was able to get his coffee into specialty shops and small grocers fairly quickly. One of them, Ferndale Foods, had been carrying his coffee since his café days. By the end of last year, his product was carried by 12 companies, some small like Mootown Creamery in Eastern Market, some larger like Westborn Market. All 12 of those came by cold call,

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A.J. O’Neil knew business and coffee, but Detroit Bold Coffee Co. required more.

but O’Neil got more results after he honed down his pitch, having answers ready for practical industry questions on inventory, the stocking of shelves, display maintenance, delivery scheduling and terms. He has spent a lot of time talking to buyers and reps. “For the most part, they’re cordial but they have a standard bottled answer — this is what you do, call this 1-800 number — which thwarts 99 percent of people,” he said. Trying to get into the Whole Foods Market chain, he went through the process, “followed every piece of protocol,” sent samples to Chicago for regional product testing ... only to get rejected in the end because he was putting 24 bags of coffee to a case instead of six, he said. It’s an industry standard he wasn’t aware of. Experts say it’s all about relationships when it comes to entering and staying in a supply chain. O’Neil had plenty of contacts from his days running the café, and that helped. But when it came to going after a big fish, Meijer Inc., he chose to buy a relationship. He got a broker. The broker is Pat Beyer, owner of Etherton Sales and Merchandising Co. LLC, based in Grand Rapids and with an office in Auburn Hills. The company acts as a manufacturer’s representative for dealing with large chains, taking a percentage of sales as commission. The commission on O’Neil’s coffee sales is 5 percent. Another key relationship for O’Neil was the one he developed with a local food entrepreneur with a reputation for mentorship, Jack Aronson at Garden Fresh Salsa Co. Inc. in Ferndale. Aronson worked with O’Neil for a year until he thought O’Neil was ready for a broAronson ker and intro-

duced him to Beyer. Beyer then worked with O’Neil for another year before he thought O’Neil was ready for Meijer. Along the way, O’Neil dropped his trademark scruffy jeans and baseball cap and began donning a tie and slacks for meetings to pitch his product. He got marketing help for packaging. He also became familiar with standard industry practices. Some stores expect him to make sure the product is displayed correctly every day. They want to know about product samples and demos. They expect him to know about SKUs (stock keeping units) and billboards (the graphic design on the front of the product) and “planograms” (mock-ups of store shelves to show how products would appear). Beyer approached Meijer in early December. Meijer already has given the go-ahead to stock Detroit Bold in about 115 stores in mid-April. A success, to be sure. But it took four years of taking thousands of half-pound bags coffee around town for no profits to get there. O’Neil said it has cost $50,000 in out-of-pocket expenses to build his business. Completely self-funded, O’Neil buttresses Detroit Bold by doing side jobs as a roofer. Last month, Warren-based distributor Lipari Foods Inc. placed its first order for Detroit Bold. O’Neil expects that deal to put his product in another 50 stores. “Instead of orders in the hundreds every month, I’m getting orders in the thousands,” he said. Last year, O’Neil’s revenue was $40,000 and it came in at a loss. But now that he’s in the chain, he expects revenue to reach at least $200,000 this year. “I’m thinking it’ll be substantially more, but I want to be conservative at this point,” he said. “I don’t want to bite off more than I can chew. That can be the biggest mistake.”

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JOHN SOBCZAK

Prism Plastics Vice President Jerry Williams knows winning over a new customer takes hard work and patience. “There’s no secret sauce,” he said.

To win over a supplier, find one key target BY GARY ANGLEBRANDT SPECIAL TO CRAIN’S DETROIT BUSINESS

Prism Plastics LLC in Chesterfield Township opened for business in 2000 and has since entered the supply chains of eight companies, all in the automotive industry. Vice President Jerry Williams said the goal he and his fellow coowners of the precision injection molding company have in mind when they set out to break into a new supply chain is to win over one key person. And you have to be willing to put in the time to do it. Usually the person sought is someone from engineering, quality, R&D or development who will visit Prism’s factory, which allows Prism to show its capabilities. To get to those people, they have to go through purchasing. If Prism can get the interest of a purchasing agent, that opens the door to get an initial quality assessment, showing the customer that they meet the requisite industry standards. “Then the best part is the technical side (people), who say, ‘These people can help us with trouble jobs.’ Then it becomes a little easier to get a contract from purchasing,” Williams said. Prism gives the buyer reps already-made parts that are similar to what the buyer is expecting to need. In some instances, Prism does a short trial run or a prototype run. But it’s that first hurdle — purchasing — that’s the trickiest. A good day is when it so happens that somebody within Prism already has a connection to the buyer, be it Williams, who had experience in plastics molding before opening Prism, or an employee who worked at the target company in the past. If not, then it’s time to hit the phones and pound the pavement, trying to get the attention of a purchasing agent. Prism on any given week is working on about 12 companies this way. The expectation is not that it will win deals with all 12 — that would overload the company — but maybe one or two. Leaving voicemails, unannounced visits, dropping off business cards —

these are the tactics at this point. Williams said there’s a fine line between being persistent and being a pest, but it does help to keep things light: Say you understand the buyer gets hundreds of calls like this, and don’t get a short tone about the lack of a call-back. Yes, there is a lot of trial and error. “There’s no secret sauce,” he said. Deals can happen in as little as a few months, but that’s usually from a company that already knows Prism. A cold-called company deal takes a year or two to develop the relationships and credibility. It took about a year to go from first call to production when Prism entered the supply chain of Nexteer Automotive Corp., a Saginaw-based maker of automotive electric power steering systems. The way was smoothed by a new salesperson who knew someone at Nexteer through previous industry work. She had an entryway that made it easier for Nexteer to say, “We’ll listen to your spiel,” Williams said. Even so, it took six months and a prototype run to first gain Nexteer’s confidence. It was almost another six months before official production began last year, a lesson for rookie businesses that these things aren’t done overnight — even when there is a trusted connection. Prism is producing a dozen molded parts for Nexteer now, and Prism’s revenue has steadily climbed since 2009 as it methodically works its way into new chains. Last year, Prism brought in $24 million in revenue, up from $18 million the year before and well above the $5 million it posted in 2009. The company’s next move is to move into the aerospace and medical device industries. Williams said the company expects that, as in automotive, it will be a matter of meeting and forming relationships with the right individuals at prospective customers. “Breaking into a new area like aerospace or medical device, I honestly believe we have to find that right body. From there, we can perform,” Williams said.

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Movers think outside box, go DIY in paper-to-tech switch Problem to be solved: It was understandable that a family-run business of 85 years had gotten a little stuck in its ways. But about eight years ago, the time had come for Corrigan Moving and Storage Co. to get with the times when it came to technology. It wasn’t unusual for moving companies and their warehouse workers to rely on pen and paper and spreadsheets A look at for the day-in, problem-solving day-out work by growing of managing companies inventory, and that’s how Corrigan did it. “It was not competitive. Customers were coming to us and asking for online visibility, bar-coding, scanning,” said Nathan Corrigan, the company’s vice president. He delved into the task of getting a software system, first by checking out off-the-shelf products. He wasn’t impressed. “I found many that solved one little problem,” Corrigan said. “As long as you could fit your business into their little box, it worked perfectly fine.” Then Corrigan hired an outside company to build one. “After six months of work, they couldn’t solve the problem,” he Nathan Corrigan said. Solution: “We built it ourselves,” Corrigan said. He researched systems and customer needs and cobbled together a team of one former employee and a contractor to do the technical work, building the system using outside software and in-house customization. A year later the company’s Warehouse Management System deployed. The total cost — including the money paid to outside developers in the first go-around — was $250,000. Truck drivers now are connected to the system through iPads, items coming into the warehouses are bar-coded and scanned, and customers can go to run reports and an online portal to see the products they have stored in Corrigan’s warehouses. “This product Nathan developed allowed us to get into what we call today logistics,” said David Corrigan, the company’s president and COO and Nathan’s father. That viewing ability opened doors to new customers — such as interior design companies that need to see what they have in the way David Corrigan of furniture and decorative pieces so they can plan for a new job, or universities that keep their office computer inventory off-site but need to see it when

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CORRIGAN MOVING AND STORAGE CO. Location: Farmington Hills Description: Moving, storage and logistics company President: David Corrigan Employees: 600 Revenue: $60 million in 2010; $85 million in 2013 planning changes. “Many of those (customers) we couldn’t have handled prior to this system,” Nathan Corrigan said. Risks and considerations: If a software firm couldn’t do it, why would a moving company be any better at it? “There’s a real chance you’re not going to be able to pull it off,” Nathan Corrigan said. If it hadn’t worked, Corrigan Moving and Storage would have wasted a year and a lot of money — and still not have what customers

wanted. Expert opinion: Arcadio Ramirez, a technology business consultant for the Michigan Small Business Development Center, said companies should carefully consider the decision to build a system in-house because once they build it, it’s on them to maintain it, and they might end up with a clunky system. “A lot of home-brewed solutions don’t have the flexibility or breadth as what’s on the market,” Ramirez said. But if a business decides to go for it, one thing it can do is to carefully write out exactly what is the business process in question, step by step, so developers don’t end up spinning their wheels. Said Ramirez: “Understanding your processes, putting them down on paper, knowing precisely what they are will be a big help for whoever is writing that software.” — Gary Anglebrandt

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PUBLISHER’S NOTEBOOK Contact Mary Kramer at mkramer @crain.com.

CRAIN’S MICHIGAN BUSINESS Mary Kramer

Powerful lesson in Calif. outage? Shortly after midnight one night last April, somebody cut telephone cables outside the Metcalf transmission substation near San Jose, Calif. A few minutes later, a gunman opened fire and took out 17 transformers that feed power to Silicon Valley. Because power was quickly rerouted to keep the supply going, the incident went unnoticed initially — except for the reported phone service outage — until The Wall Street Journal broke the story Feb. 18. Was this vandalism? Or terrorism? A dry run for something even bigger? The story has Michigan angles. We can start with the security of our own power system, including two nuclear plants on Lake Michigan and the one on Lake Erie. Second, most of us remember the rolling blackout in August 2003 that cut power to more than 50 million customers, from New York to Toronto to Detroit. Lansingbased Anderson Economic Group pegged the cost at around $6 billion — for just a few days. Third, the California power company involved is led by Tony Earley, formerly of DTE Energy Co. in Detroit, a kind of local tie-in. Finally, one of the big national electric grid operators is ITC Holdings Corp. in Novi. What does Joe Welch, chairman, president and CEO of ITC, think? Here’s the formal statement: “We have long advocated for national grid reliability standards incorporating grid security. … We will continue to take prudent measures to protect physical Welch infrastructure, with particular emphasis on the most critical assets — with the goal of deterring, detecting and mitigating impacts from any event.” Welch wouldn’t speak specifically about the California event or speculate about the shooter’s motives. But you can bet that he and others in the industry are talking privately with federal and state regulators and homeland security types. And renewed concerns on grid security could spur something else. Transmission companies have long wanted a common siting authority at the federal level for power lines, like interstate gas pipelines have with the Federal Energy Regulatory Commission. Local communities can recommend routes, but they can’t stop a pipeline. Such authority would allow companies like ITC to build more redundancy into the grid. Kind of like building another bridge to Canada. Not only can it be used now, but if one bridge is disabled, you have a Plan B. So if the California incident spurs a review of that siting authority, that sniper may have done electrical utilities and companies like ITC a favor.

PHOTOS BY JON BROUWER

West Michigan Aviation Academy student, and certified pilot, Josh Nienhaus (right) helps instruct Jacob Maloley while in the flight simulator at the Grand Rapids high school.

Winging it

Use aviation in education? Grand Rapids charter school finds that the idea can fly

BY MATTHEW GRYCZAN CRAIN’S MICHIGAN BUSINESS

alk down the halls of the

West Michigan Aviation Academy in Grand Rapids,

and often, something unusual happens. Without prompting, high school students wearing the same blue monogrammed shirts will step up, look you straight in the eye, pump your right hand with a hearty shake and introduce themselves by name. For some of the students, it has become as natural as plugging earbuds into their iPods. For others, it remains an awkward exercise to practice the basic business etiquette. But for anyone who has raised high schoolage children, it can be downright remarkable. “An education isn’t just about academics,” said Dick DeVos, founder of the public academy. “It’s about edDeVos ucation for life. Learning how to conduct yourself and create a warm and positive first impression are

Patrick Cwayna, CEO of the aviation academy, stands above the lunch area where an airplane hangs from the ceiling at the school.

valuable skills, not just for academic success but for life.” The explosive growth of the WMAA — which expects 500 students in the fall, just three years after it was launched with 80 students in what was an empty warehouse at Gerald R. Ford International Airport — has inspired a group of businesspeople in Taylor to request a charter to establish a similarthemed middle school, with hopes to launch a high school later. (See story, Page 22.) When asked why a billionaire corpo-

rate leader and onetime gubernatorial candidate would care about launching such a high school, DeVos — himself a pilot — used an aviation metaphor. “For many of our kids, the world is very small. And I’m afraid that perspective translates into goals, dreams and aspirations being small, too,” he said. “But when you fly in an airplane at 5,000 feet, your horizons move back, you can see so much more. And we need to open up their worlds to these new horizons.” See Aviation, Page 20

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PLATINUM STANDARD FRACTIONAL CTIONAL AND MANAGED BUSINESS AVIATION PROGR PROGRAMS. SERVING ALL SOUTHEASTERN MICHIGAN.

PHOTOS BY JON BROUWER

Above: Aviation Academy students pass a helicopter in the hallway as they change classes. Left: Students Lamont Love (from left), Alex Richardson and Isabelle Seeley stop to shake hands with Bob Wise, the school’s facilities director.

Aviation: Education idea takes flight ■ From Page 19 CORPORATEEAGLE.COM

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The academy bills itself as teaching kids skills for life, with particular emphasis on aviation and STEM subjects — science, technology, engineering and mathematics. It is open to any student in Michigan, and some families sacrifice time and money to transport their children from as far away as 50 miles. In a relatively short time, the WMAA has become one of largest of a handful of aviation-themed high schools across the nation, and it appears to be the only one serving the Midwest. The granddaddy of such schools is Aviation High School of New York City, established in 1925 as a trade school that has since evolved into an aviation center with more than 2,200 students. Detroit has Davis Aerospace Technical High School, which moved last year in a cost-saving measure from its location near Coleman A. Young International Airport into space occupied by the Golightly Career and Technical Center at 900 Dickerson Ave. The school, founded in 1943, is an FAA Part 147 school certified for aviation technician training and offers programs that can lead to a pilot’s license, said the high school’s principal, Nina GravesHicks. “Most of our students go to Western Michigan University and Eastern Michigan University after graduating from Davis,” she said. “The occupational outlook is positive for aviation; we are going to need to replace the current workforce in the aviation industry as it ages.” Davis Aerospace has seen declining enrollment because of the migration of families out of the vicinity of the school and other factors, she said. State records indicate the high school had 203 students in the 2012-13 school year, down from 284 in 2002-03. Graves-Hicks said the school owns four Cessna aircraft, one onsite for maintenance training and the others at the former site with plans to move them to the airport for maintenance and flight training. Other cities with aviationthemed high schools include Houston; Albuquerque, N.M.; Des Moines, Wash.; High Point, N.C.; and Newport News, Va. Just offering the cachet of piloting airplanes isn’t a guarantee of success for aviation academies. The former General Benjamin O. Davis Jr. Aviation High School in Cleveland closed in 1995, but supporters there hope to reopen the

school. Oakland Aviation High School in Oakland, Calif., opened in 2006 and closed five years later, while Aviation High School in Redondo Beach, Calif., operated from 1957 to 1982. As president of the WMAA board, DeVos, 58, knows full well that the school won’t survive by just being a novelty. Although he concedes to using theatrics occasionally to create some PR buzz — such as arriving to a school-sponsored picnic in a helicopter he pilots himself — DeVos emphasizes that it must be self-sufficient by serving parents as customers. “This is entrepreneurial philanthropy,” he said. “The school is going to have to pay for itself — I am not paying for it. We continue to help the school get on a sustainable financial footing, but it doesn’t exist because of our graciousness long term.” About $12 million in capital expenditures will have been spent on the WMAA after its fourth phase of expansion is completed this year, bringing the school up to capacity for 600 students. The Dick & Betsy DeVos Family Foundation has supported WMAA’s operations since its launch in 2010, while the Douglas & Maria DeVos Foundation has provided about $5.6 million to date in debt financing for facility construction and expansion.

In the 2013-14 school year, nearly 92 percent of the operating budget will be provided by sources other than the Dick & Betsy DeVos Foundation. Construction crews are adding 15,000 square feet to the school, on the heels of a 42,000-square-foot third-phase expansion finished in 2012. The sweet spot for sustainability will be an enrollment of 550 students — and that may happen as early as fall 2015 if the academy staff is successful in hitting its marketing goals. At the close of open enrollment Feb. 28, the academy had 157 applications for 135 seats for the 2014-15 school year.

A new school model Patrick Cwayna is in charge of the overall operations of the academy. But he is called its CEO rather than principal, and he reports directly to a board of directors. Parents and their children who attend the academy are customers, and school staff hone sales pitches for events held to inform and, they hope, attract students by touting WMAA’s advantages. DeVos said he applied the business model to the education system as a result of his experience as a See Next Page

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member of the State Board of Education. “Too many boards of education are confused about their roles,” he said. “They become far too engaged with the details and far less engaged with the results. Under the corporate model of governance, the board of directors allows the management to execute and spends its time ensuring integrity and results.” Cwayna, 62, who was principal of highly regarded East Grand Rapids High School for more than 20 years, said the DeVos approach “was a realignment — big time — on how I approached school administration. I am now a businessman, and I serve the customer. “At East or other schools, the students just come in the door. East had a quality product with a great reputation — you didn’t have to sell the school. Here, there was nothing when we started except for a brokendown warehouse and old offices.” Despite the surroundings, DeVos and Cwayna shared a vision in the spring of 2010 that inspired the imaginations of a group of curious parents and their kids that an aviation-themed school could take off

at Ford Airport. In the crowd that night was Brian Erhardt, now 18 and a senior at the academy, and his father. “When they came home that night, Brian was just so excited,” said his mother, Julie. “He was lottery No. 17 — they were only going to take 60 kids, but there were quite a few more who signed up so they held a lottery” even after school officials expanded the first class to 80. The random selection continues today, Cwayna explained, and it’s a core reason that the school never will become a haven for students of only well-heeled parents. Any family in Michigan that is prepared to abide by commitments of a school day that is one hour longer, a school year that runs through June, uniforms and seven classes a day is eligible to apply. While it won’t hold a lottery if applications are fewer than openings, the academy has had either a lottery or waiting list before the beginning of each school year. About 20 percent of those who commit in spring don’t attend in fall. With wide-open enrollment, there’s a range of high-achieving students to average students who think they can excel in the aviation magnet. To help struggling stu-

dents, teachers will conduct Saturday lessons on their own time, Cwayna said. Students from 41 school districts attend WMAA, and families have to provide their own transportation. “On a good day, it takes Brian 25 minutes to drive to school. On notso-good days, it takes an hour,” said Julie Erhardt, whose family lives in Rockford. Before Brian had his driver’s license, he would ride with another family from Sand Lake, 27 miles north of Grand Rapids, part of a car pool of a half-dozen other students. “Some kids get here in the morning by taking a bus to downtown, transfer to a bus going to Woodland Mall and transfer to a bus going out to the airport — and they go home the same way,” Cwayna said. Because it will be graduating its first class this year, the academy doesn’t have a long track record of performance, but early results indicate it is working. Cwayna said two students were granted early admission to the College of Engineering at the University of Michigan, two have nominations to service academies and other students have earned scholarships to Michigan State, Butler and Indiana State universities. The average ACT scores for WMAA students are above state and national averages in English, math, reading and science, Cwayna said. The average ACT score is 22.6, which is above the state average of 20.1 and national average of 21.

Build it and they will come Aside from it being across from the main terminal of Ford Airport, clues abound that this high school is about flying — a full-size plane hangs by steel cables from the ceiling of the lunchroom, one classroom holds a sophisticated flight simulator and the academy’s sports mascot is the Aviator. On a coat rack in the office of its dean of aviation is a helmet, oxygen mask and flight vest of a fighter pilot — George Pavey’s memorabilia of his time flying F-16 Vipers and F/A-18s as a Naval and Marine aviator. He’s a graduate of the Navy Fighter Weapons School — in other words, a “Top Gun.” Cwayna jokes that aviation “is a hook that brings them in, and we slip in math and science along the way.” The academy recognized early on that many of its students were not there to become pilots, so it expanded activities to include robotics and radio-controlled models along with cross country, basketball, soccer and volleyball. The success of WMAA has inspired the group supporting a proposed aviation-themed middle school in metro Detroit that’s tentatively called the Taylor Academy for Aviation and Aerospace — or TA3 for short, said Lorilyn Coggins, president of American Charter Education Services Inc. in Fenton and an organizer of TA3. “It’s really a great school,” said Coggins, who has visited WMAA along with prospective board members. “What’s going on in Grand Rapids is really driving what we want to do in Taylor. We want to replicate what they’re doing in curriculum and program activities” Matthew Gryczan: (616) 916-8158, mgryczan@crain.com. Twitter: @mattgryczan

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Aviation charter school set to land near Metro Airport BY MATTHEW GRYCZAN CRAIN’S MICHIGAN BUSINESS

A grass-roots organization in Taylor is preparing to launch a middle school for 235 students near Detroit Metropolitan Airport that will emphasize a science,

B UILT

technology, engineering and math curriculum based on the aviation and aerospace industries. If the proposed Taylor Academy of Aviation and Aerospace — or TA3 for short — grows as expected, the school most likely will expand into high school grades — similar to

West Michigan Aviation Academy in Grand Rapids, said Lorilyn Coggins, president of American Charter Education Services Inc. in Fenton. “We really do want to replicate what they’re doing in curriculum and program activities,” Coggins said.

Coggins said she has been working with Detroit-area supporters for the past 18 months to launch the academy, proposed to be built on a 2.5-acre vacant and improved parcel owned by businessman Djamel Tiguert near the southwest corner of Goddard and

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Telegraph roads. “This project is ready to go for 2014 opening,” said Coggins, who has been involved in the formation of 10 charter schools during the past 19 years. “If we have a green light by first of April, the modular classrooms could be in place and installed in time for a fall 2014 opening.” The academy would be using two modular buildings similar to the units used for The Dearborn Academy in Dearborn. The school, which would employ about 15 full- and part-time staff members initially, is less than three miles from Metro Airport in Romulus. Metro could serve as a training opportunity for field trips, Coggins said. In addition, school organizers envision the construction of a civilian airstrip for the academy in Belleville that students could use as the program grows. The group — made up of Tiguert, businesspeople from Taylor and two aircraft pilots — has asked Bay Mills Community College in the Upper Peninsula town of Brimley to issue a charter to form TA3. If it issues a charter, the college would appoint a board of Taylorarea residents to oversee administration of the academy and enter into contracts to launch the school. Bay Mills is also the authorizer for West Michigan Aviation Academy. “We are hoping since they authorized West Michigan, we can have our foot in the door, since we are replicating one of their existing schools,” Coggins said. The Taylor group already has cleared some hurdles. It received a federal planning grant from the Michigan Department of Education to create the academy, and it will be eligible for two years of federal implementation grant money administered by the state. That money can be used for expenses such as educational furniture and books, provided the school receives a charter. Coggins said the group already has proposed arrangements with the company that would lease the modular classrooms and a company that would become the employer of record to fund salaries for the school’s staff until state per-pupil payments could be made after October. Coggins’ company, established in 2009, would act as the back-office support to help the school meet its reporting requirements to the board and perform professional development of staff. “We learned a little bit by what West Michigan did,” said Coggins, who has visited WMAA with members of the Taylor group. “They opened with a ninth grade, and it’s a little more difficult if you bring in ninth-graders and you haven’t trained them up. So we are going to open with grades six through eight to instill in the kids the motivation to be the best that they can be.” Matthew Gryczan: (616) 916-8158, mgryczan@crain.com. Twitter: @mattgryczan

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Argentina Chile

Crain’s Crain’s Monthly Monthly World World Watch Watch report report showcases showcases companies companies that that are are already already leaders leaders in in growing growing global global markets markets — — and and those those that that are are expanding expanding operations. operations. Each Each World World Watch Watch features features aa different different country. country. IfIf you you know know of of aa Michigan Michigan company company that that exports, exports, manufactures manufactures abroad abroad or or has has facilities facilities abroad, abroad, email email Jennette Jennette Smith, managing editor, at jhsmith@crain.com.

COMING UP

Monthly

April: April: Italy Italy May: May: Spain/Portugal Spain/Portugal

WHERE MICHIGAN DOES BUSINESS South American countries Argentina and Chile are both big exporters, although their economies and economic policies differ substantially. Argentina, heavy on agriculture and industrial products, had a nominal GDP of $484.6 billion with a 3.5 percent growth rate in 2013. Itslargest industries are food processing, motor vehicles, consumer durables, textiles and chemicals, according to the CIA World Factbook. Large exports include soybeans, petroleum and gas, and vehicles. In 2012, the government expanded restrictions on imports and tightened currency controls to bolster foreign reserves and stem capital flight. Chile has a more market-oriented economy, and is a leading commodity exporter. It’s has one of the strongest bond ratings in South America, thanks to strong financial institutions and policies, according to the CIA Factbook. The country’s GDP was $281.7 billion in 2013. Copper is one of the country’s largest exports, and it accounts for 19 percent of government revenue.

Con-way Inc. Based: Ann Arbor Chile operations: Menlo Worldwide Logistics, a subsidiary of Con-way, has an office, distribution center and warehouse in Santiago. Employees: 90 Products: Warehousing, distribution management and consulting, supply chain engineering and value-added services Top executives: Julio Alvarez, senior business development manager; Gabriel Vicente, manager of regional operations More information: Menlo is a leading global provider of logistics, transportation management and supply chain services with operations on five continents.

Domino’s Pizza Inc. Based: Ann Arbor Chile operations: 18 stores in Chile Employees: 200 Products: Pizza, beverages, chicken, side items Top executive: Marcelo Salinas, CEO Clients: Retail pizza consumers More information: In 1991, Domino’s opened in Chile, and the stores are owned by three independent franchisees.

Dow Chemical Co. Based: Midland Operations: Argentina: commercial offices in Buenos Aires, and manufacturing sites in Bahia Blanca, San Lorenzo, Colon, Zarate and Venado Tuerto; Chile: commercial offices in Santiago and manufacturing site in Talcahuano Employees: Approximately 1,600 Products: Polyethylene, polyurethane, seeds, agrochemicals, latex

NSF International

CHILE

Tucuman

ARGENTINA Cordoba

COURTESY OF DOW CHEMICAL CO.

Dow Chemical employs about 1,600 in Argentina.

Top executive: Gaston Remy, president of Dow’s south region of Latin America

Federal-Mogul Corp.

Pacheco

Santiago

Buenos Aires

Talcahuano Temuco

Based: Southfield Argentina operations: Distribution center in La Plata and manufacturing locations in La Plata and Tortuguitas Employees: Approximately 250 Products: Engine bearings, pistons Top executives: Fernando Lippi, manger, Argentina aftermarket, Federal-Mogul vehicle components segment; Fernando Irigoyen, plant manager-La Plata, FederalMogul vehicle components segment

RGIS LLC

automotive market with 14.9 percent of market share in 2013.

Based: Auburn Hills Operations: Argentina: offices in Buenos Aires (Palermo and Olivos), Cordoba, Parana, Tucuman and Mendoza. Chile: offices in Santiago and Temuco Employees: 265/50 full time, 1,500 part time Products: Physical inventory and data collection, operational audits, guaranteed deliveries, fixed-asset inventories, and Smartspace space optimization method and products for the retail industry. Top executives: Alan Izcovich, country manager for Argentina; Juan Jose Wenzel, country manager for Chile Clients: Wal-Mart, Falabella, Jumbo Argentina, Easy SA, Makro, Farmacity, PepsiCo Inc., Sodimac Retail SA, Nike Inc., WM Argentina SA., Cencosud SA, Grupo SMU

Lear Corp.

Technical Training Inc. (TTi Global)

Based: Southfield Argentina operations: Manufacturing locations in Escobar, Ferreyra and Pacheco, Argentina Employees: Approximately 970 Top executive: Matt Simoncini, president and CEO of Lear Corp. Clients: Ford Motor Co., Fiat and Peugeot SA

Based: Rochester Hills Chile operations: Main office in Santiago, and training center and classrooms in San Bernardo Employees: 25 Products: Design, development and delivery of training to automotive customers nationally and regionally; staffing services for training and other operations for automotive OEM’s and distributors Top executive: Marco Ravera, country leader Clients: Ford Motor Co., S.K. Berge, General Motors Co. and Derco SA

Ford Motor Co. Based: Dearborn Operations: Argentina: plant in Pacheco on a 259-acre site that includes a body shop, stamping, painting and engine plant; Chile: business office in Las Condes, Santiago de Chile (import work only) Employees: 4,440/40 Products: Argentina: Focus and Ranger are produced locally; Ka, Fiesta, Focus, Ecosport, Ranger, Kuga, Mondeo, S-Max and Cargo Trucks are sold in the market; Chile: Fiesta, Focus, Ecosport, Edge, Explorer, Ranger, F-150, Mustang, Cargo Trucks Top executives: Enrique Alemany, president; Alberto Garasino, general manager in Chile More information: Ford has been in Argentina for 100 years.

General Motors Co. Based: Detroit Operations: Argentina: commercial offices in Buenos Aires and manufacturing plant in Rosario; Chile: offices and a small truck SKD (semi knocked down) kit plant in Santiago, 10 dealers and 40 sales and service points throughout the country. SKD kits enable vehicles to be assembled elsewhere before distribution. Employees: 3,000/172 Products: Argentina: Chevrolet Global Brand Portfolio; Chile: Opel and Chevrolet brands Top executive: Isela Costantini, president and managing director of GM Argentina, Uruguay and Paraguay; Jeffrey Cadena, president of GM Chile Other information: GM leads the Chilean

Based: Ann Arbor Chile operations: Office in Santiago Employees: 25 in Chile, in addition to a network of auditors providing services to nearly 2,000 international and local businesses and facilities throughout Argentina and Chile Products: Food safety auditing and training for the agricultural, manufacturing and retail sectors; testing and certification for bottled water, dietary supplements and other products; training, auditing and consultancy for pharmaceutical and biotech industries; management systems registration and sustainability solutions Top executives: Kevan Lawlor, NSF International president and CEO; Sonia AcunaRubio, managing director of NSF International’s Food Division in Latin America

TI Automotive Ltd.

COURTESY OF GENERAL MOTORS CO.

GM employs more than 3,000 in Argentina and Chile.

Based: Auburn Hills Argentina operations: Fluid carrying systems plant in Buenos Aires Employees: 156 Products: Rigid break lines, rigid and flexible fuel lines and bundles Top executive: Roberto Hugo Curetti, plant manager Clients: Ford Motor Co., General Motors Co., Volkswagen AG, Nissan Motor Co., Peugeot SA and Mercedes-Benz AG — Compiled by Bridget Vis

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CALENDAR TUESDAY MARCH 11 Women-Owned & Minority Business: Bringing Distinctive Solutions to the Market. 5-7 p.m. Ann Arbor Spark. One in a series of moderator-led panel discussion groups and workshops designed to offer the entrepreneur and business community advanced marketing insights, planning tools and operational intelligence. Spark Central, Ann Arbor. Free. Contact: Alissa Carpenter, (734) 372-4071; email: alissa@annarborusa.org; website: annarborusa.org.

WEDNESDAY MARCH 12 Building a Best Practice Program. 8-10 a.m. Michigan Wellness Council. Focus on tying employee wellness to benefits and best practices to solidify wellness as a viable business strategy. With Valiena Allison, president and CEO, Experi-Metal; Tammy Griffin, manager, employee health and wellness, Central Michigan University; and Dan Sikora, director of North American operations and human resources, Seco Tools. Blue Cross Blue Shield of Michigan Lyon Meadows Conference Center, New Hudson. $15. Contact: Scott Foster, (248) 906-8875; email: info@michiganwellnesscoun cil.org; website: michiganwellness council.org.

Government Marketing Strategies. 9 a.m.-noon Schoolcraft College Procurement Technical Assistance Center. Designed for businesses interested in learning how best to market to the government customer. Schoolcraft College-VisTaTech Center, Livonia. $45. Contact: Carrie Vroman, (734) 4624438; email: cvroman@schoolcraft .edu; website: schoolcraft.edu.

THURSDAY MARCH 13 Great Lakes Business Intelligence & Big Data Summit. 8 a.m.-5 p.m. Wit Inc. Presentations will include two tracks of business intelligence case studies and best practices and one track of technology innovations from companies such as Qlikview, Microsoft and iDashboards. With Rebecca Costa, sociobiologist and author of The Watchman’s Rattle; Gary Robinson, program director, IBM’s Big Data organization; Lori Wagner, business intelligence manager, Bosch; Michael Masciandaro, business intelligence di-

TAKE A LOOK AT THE REGION’S INNOVATION-LED INDUSTRIES Join members of Southeast Michigan’s technology business community and learn what’s ahead for the region’s innovation-led industries at Automation Alley’s Technology Industry Outlook Luncheon, 11 a.m.-1:30 p.m. March 27 at the Troy Marriott, Troy. The event marks the debut of Automation Alley’s 2013 Technology Industry Report. Each guest will receive a copy, and Automation Alley’s new Product Lifecycle Management Center will offer live 3D printing demonstrations. Tickets are $30 for Automation Alley members, $40 for nonmembers and $300 for a table of 10. For more information and to register, call (800) 427-5100; email info@automationalley.com; or visit the website automationalley.com. rector, Dow Chemical Co.; Shaun Connolly, vice president, corporate strategy, Hortonworks; and others. Troy Marriott, Troy. $129. Contact: Amanda Mansour, (248) 641-5900, ext. 244; email: bisummit@witinc.com; website: greatlakesbisummit.com/2014.

UPCOMING EVENTS AIAG Supply Chain Summit. 8:30 a.m.6:30 p.m. March 18. General Motors, Chrysler, Toyota, Honda, Magna, QAD. An opportunity to discuss issues, updates and solutions surrounding supply chain disruption and recovery. With keynote speaker David Cole, chairman, AutoHarvest; and Michael Robinet, managing director, IHS Automotive Consulting. $250 AIAG members, $300 nonmembers. Contact: Shannon Osburn, (248) 213-4642; email: sosburn@aiag.org; website: aiag.org. A Taste of Leadership Oakland. 4:30-7 p.m. March 20. Leadership Oakland. With

Oakland

County

Executive

L. Brooks Patterson, keynote speaker. Meet Leadership Oakland graduates and alumni and discover how the Cornerstone Program has helped them become contributors to their businesses and communities. The Townsend Hotel, Birmingham. $28. Contact: Chris Scharrer, (248) 952-6880, ext. 2; email: cscharrer@leadershipoakland.com; website: leadershipoakland.com.

PEOPLE Workplace Law Symposium: Information and Data Security. 1-6 p.m. April 2. Jackson Lewis PC. Designed to help business leaders, corporate counsel, compliance officers and human resources professionals navigate information and data security in the workplace. With keynote speaker

Barbara McQuade, U.S. at-

McQuade

torney, Eastern District of Michigan; and the following members of Jackson Lewis PC Detroit and Grand Rapids offices: Maurice Jenkins, manag-

ing shareholder; Katherine Van Dyke and Lawrence Shulman, of counsel; Roderick Gillum, shareholder; Joe Lazzarotti, shareholder and national coleader of the privacy, e-communication and data security practice; and Marlo Roebuck, shareholder. The Townsend Hotel, Birmingham. $50. Contact: Maggie Olschanski, (248) 9361923; email: olschanm@jacksonlewis.com; website: jacksonlewis.com/events/loca tions/view/2474.

Downtown Detroit Partnership Annual Meeting and Luncheon. Noon-2 p.m. April 4. Downtown Detroit Partnership. With Dave Blaszkiewicz, DDP president and CEO, providing an update on the organization’s activities and downtown development. Cobo Center, Detroit. $100. RSVP by March 24. Contact: Maryann Listman, (313) 566-8250; email: maryann. listman@downtowndetroit.org; website: downtowndetroit.org.

Crain’s M&A Awards. 5-9 p.m. April 16. Crain’s Detroit Business, Association for Corporate Growth, Detroit Chapter. Event honors companies and executives in the categories of Best Small Deal of the Year, Best Large Deal of the Year, Dealmaker of the Year – Adviser, Dealmaker of the Year – Buyer/Seller and Lifetime Achievement. Select award winners will share best practices and inside stories from their top deals. Troy Marriott, Troy. $75 ACG members or nonmembers in groups of 10 or more, $80 individual sales to nonmembers. Contact: Kacey Anderson, (313) 446-0300; email: cdbevents@crain.com; website: crains detroit.com/events.

ARCHITECTURE Jonathan Disbrow to associate and shareholder, Rossetti Associates Inc., Detroit. He remains architectural lead. Also, Denise Drach to associate and shareholder, remaining the director of business development and marketing, and Christine Pitcole to project manager and Bill Smith to project manager, from studio director, Kraemer Design Group PLC, Detroit.

CONSTRUCTION Larry Brinker Jr. to

Detroit, part of the Brinker Group, from director of development. John Gelle to chief estimator and senior project manager, G.

Brinker

field, a wealth management firm, acquired Concentric Capital LLC, Los Angeles. Terms were not disclosed. The acquisition allows Telemus, with an Ann Arbor office, to continue the expansion of its sports and entertainment industry business. Website: telemuscapital.com.

Big Family of Michigan Inc., a nonprofit serving foster children and young adults, moved its warehouse from 17560 Helro Drive, Fraser, to 41757 Irwin Drive, Harrison Township. Telephone: (586) 445-7735. Website: www.bigfamilyofmichigan.org.

NEW SERVICES

CONTRACTS

Carbon Media Group LLC, Bingham

Domino’s Pizza Inc., Ann Arbor, com-

Farms, a producer of digital content for outdoor enthusiasts, launched CarbonTV, an online outdoor lifestyle video network. Websites: carbontv.com, carbonmediagroup.com. Armada Real Estate Services, West Bloomfield Township, launched a website highlighting the company’s commercial real estate experts and services. Website: armadareal estate.com. ImageSoft Inc., Southfield, a provider of document and process management, announced the rebranding of its justice system product, formerly called ImageSoft iJustice, to JusticeTech. The company introduced a

pleted a renewal agreement with Crispin Porter + Bogusky LLC, Miami. The company has been Domino’s national agency of record since 2008 and will continue in that role through 2016. Websites: dominos.com, cpb group.com.

EXPANSIONS Powerlink Facilities Management Services, Detroit, a staffing and facilities management company, expanded operations to include a construction division and opened a satellite office at 24562 Romano St., Warren. Website: powerlinkonline.com.

product logo and 3-minute video overview of JusticeTech. Website: imagesoft.inc.com. DTE Energy Co., Detroit, is opening 19 self-service payment centers at Rite Aid Corp. stores in Michigan by late 2015. The first kiosk opened Feb. 19 inside the Rite Aid store at 3 S. Telegraph Road, Pontiac. Website: dteenergy.com. Area Agency on Aging 1-B, Southfield, a nonprofit serving seniors and adults with disabilities, launched a new website to help seniors and family caregivers in Southeast Michigan find inhome care. The website is complemented by a Facebook page that provides a forum for caregivers and family members. Websites: michi ganhomecareguide.com, facebook .com/michiganhomecareguide.

MANUFACTURING

CONSULTING

Erik Leenders to

Mark Wakefield

vice president of global sales,

EDUCATION Mark Grzybowski to director of advancement, Loyola High School, De-

Neapco ings

Leenders

to account director for the Ally Auto account team, Duf-

fey Co.,

Cheryl Gregory to director of engineering,

Rochester Hills, from transportation department manager. She continues as vice president of the firm. Also,

Sweeney

TELECOMMUNICATIONS manager, Lululemon Birmingham.

Candise Hill to transportation operations manager, Evans

Distribution Systems, Melvin-

FINANCE Tzvi

Paul Ratzmann to partner, Rader, Fishman & Grauer PLLC, Bloomfield Hills, from senior attorney.

Colleen Burke to

partner,

Collins Einhorn Farrell PC, Southfield, from associate. John Mackewich to partner, Tomkiw Mackewich PLC, Royal Oak, from associate attorney.

Ratzmann

Athletica,

TRANSPORTATION

to construction project manager, from project engineer, Tyme Engineering Inc., Livonia.

LAW

Petrosky

Farmington Hills, from engagement and planning director, McCann/MRM Worldwide, Birmingham.

Michele DeLuca to director of marketing, SunTel Services, Troy, from

Jenean Robbins

Raviv to managing director, Lis Ventures LLC, FarmingRobbins ton Hills, from director of partnership, reThink Israel, Iselin, N.J.

Belleville, from executive vice president of sales, marketing and business strategy for Neapco Europe, Duren, Germany.

Carrie Sweeney

ENGINEERING

Spalding DeDecker Associates Inc.,

HoldLLC,

MARKETING

troit, from executive director of development and director of gift planning, University of Detroit Mercy, Detroit. Robert Neumann to chief, University of Michigan Police Department, Ann Arbor, from lieutenant.

STARTUPS Simply Social Media LLC, focusing on social media strategy, training and outsourcing for small and midsize businesses, opened at 143 Cadycentre, Suite 112, Northville. Telephone: (248) 6678718. Website: simplysocialmedia.com.

Heller Machine Tools LP, Troy, has appointed Keith Vandenkieboom as the Heller U.S. president and CEO. He succeeds Robert Pelachyk, who retired. Heller supplies manufacturing systems to the heavy-duty diesel engine Vandenkieboom industry and the U.S. automotive industry. Vandenkieboom, 61, most recently was vice president of operations at Heller U.S. He joined the company in 2006 as vice president, group procurement. He earned a bachelor’s degree from the University of Michigan and an executive MBA from Michigan State University.

to managing director, enterprise improveGelle ment group, AlixPartners LLP, Southfield, from director. Also, Dan Hearsch to director, from vice president, and Jason King to director, from vice president.

BUSINESS DIARY MOVES

Fisher Construction Co., Farmington Hills, from chief estimator, Ferlito Construction Inc., Roseville.

Gregory

ACQUISITIONS Telemus Capital Partners LLC, South-

president,

L.S. Brinker Co.,

IN THE SPOTLIGHT

Hill

dale, from operations supervisor, CMAC Transportation, Brownstown Township.

PEOPLE GUIDELINES Announcements are limited to management positions. Email them to cdbdepartments@crain.com or mail notices to Departments, Crain’s Detroit Business, 1155 Gratiot Ave., Detroit, MI 482072997. Releases must contain the person’s name, new title, company, city in which the person will work, former title, former company (if not promoted from within) and former city in which the person worked. Photos are welcome, but we cannot guarantee they will be used.

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Tigers: Fox Sports finds gold in teamâ&#x20AC;&#x2122;s success on the diamond â&#x2013; From Page 3

The network declined to discuss financial specifics, but did acknowledge it is charging advertisers more for spots during its allotment of 150 Tigers games, which begin March 31. â&#x20AC;&#x153;We are getting healthy rate increases year over year,â&#x20AC;? said Greg Hammaren, the Southfield-based networkâ&#x20AC;&#x2122;s senior vice president. New advertisers are paying significantly more than those already in multiyear deals, he said. And some of those advertisers, with smaller ad buys, are paying the sort of pricier rates early in the season that otherwise would be charged for a late-season pennant race, Hammaren said. SNL Kagan estimates the network in 2014 will see $18.1 million in net advertising revenue, up from $16.7 million last year and $15.2 million in 2012. Kagan didnâ&#x20AC;&#x2122;t have a breakdown on how much of the ad revenue comes from the Tigers versus the Detroit Red Wings and Detroit Pistons, which also air on FSD, but the network did confirm that the baseball team is its largest moneymaker. The Wings and Pistons ratings are significantly smaller than the Tigers. FSD has about 150 advertisers for the Tigers season. The network has already sold 75 percent of ad inventory for the 150 telecasts, and there are enough pending and prospective orders to go beyond sold out, Hammaren said. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve been talking about Tigers

2014 since November and December of last year,â&#x20AC;? he said. â&#x20AC;&#x153;Those conversations are quickly turning into orders.â&#x20AC;? Among new advertisers this year are Rent-A-Center and Panera Bread. Both are national accounts. â&#x20AC;&#x153;Many of our advertisers are still in the middle of longer-term deals. Some come up every year,â&#x20AC;? Hammaren said. â&#x20AC;&#x153;Heading into 2014, we renewed all of them.â&#x20AC;? Last year, network executives said they were able to impose double-digit rate hikes for its Tigers telecasts on new advertisers. Fox Sports Detroit charges about $6,137 for a 30-second commercial. Television industry metrics show a new advertiser would be charged a base rate of $640 per household rating point in the Detroit market this season for a 30-second spot in the evening time slot when Tigers games typically are broadcast. Thatâ&#x20AC;&#x2122;s up from $610 last year. Each local ratings point represents 18,459 households in the Detroit market. â&#x20AC;&#x153;We sell the vast majority of inventory on a per-season basis,â&#x20AC;? Hammaren said. Because ad inventory is so limited, thereâ&#x20AC;&#x2122;s little in-season price fluctuation, he said, so discounts are seen when advertisers buy multiyear deals with locked-in rate increases. If a team is popular, as the Tigers are, the multiyear advertisers end up paying a less costly rate in-

REAL ESTATE

crease in the long run, but if the team tanks and the audience abandons the broadcasts, the advertiser still pays that rate. â&#x20AC;&#x153;We try to make an educated guess on how much the rate should rise each year,â&#x20AC;? Hammaren said. The most expensive rates are paid by advertisers looking for a short batch of ads, maybe over a couple of weeks later in the season when the team is in a pennant race. â&#x20AC;&#x153;Prices are going to rise in a hotly contested pennant race,â&#x20AC;? Hammaren said. The cost of advertising with the Tigers is why the network seeks major brands as clients rather than small businesses. â&#x20AC;&#x153;We try and go after brands that are big and have the ability to take advantage of what we deliver across the entire state,â&#x20AC;? Hammaren said.

Other revenue The majority of FSDâ&#x20AC;&#x2122;s revenue comes not from advertising, but from the per-subscriber fee it charges cable providers every month to carry the network. Kagan estimates FSDâ&#x20AC;&#x2122;s average monthly per-customer fee this year to be $3.45, an increase from last yearâ&#x20AC;&#x2122;s $3.18 â&#x20AC;&#x201D; a source of irritation for cable and satellite providers, which have been vocal in recent years about what they say are gluttonous fee hikes by regional and national networks for sports. Those fees this year will account

JOB FRONT

for $147.1 million of FSDâ&#x20AC;&#x2122;s predicted $167.8 million in total 2014 operating revenue, according to SNL Kagan. Last year, the network had $135 million in revenue from subscribers out of $154.2 million net operating revenue, Kagan said. In operating revenue, FSD ranks 22nd out of the 41 regional sports networks tracked by Kagan. On the other side of the ledger, Fox Sports Detroit is predicted by Kagan to also see a $9.3 million increase in programming expenses: $121.8 million this year versus $112.5 million in 2013. Those expenses include, among other things, the rights fee paid to the team to air its games, Kagan said. It didnâ&#x20AC;&#x2122;t have a breakdown of the fee, however. Fox Sports Detroit has 3.6 million subscribers in Michigan, according to SNL Kaganâ&#x20AC;&#x2122;s data for 2014. There are fewer than 2,000 households in Michigan that donâ&#x20AC;&#x2122;t have the network, the network said. Hammaren said the network has deals with â&#x20AC;&#x153;hundreds of cable providersâ&#x20AC;? across the state, from Comcast and DirecTV to small momand-pop operations.

Popular product What allows the network to increase rates is the teamâ&#x20AC;&#x2122;s success and popularity. It has reached the American League Championship Series the past three seasons and has a roster filled with some of

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baseballâ&#x20AC;&#x2122;s biggest stars. The Tigers have led Major League Baseball in local ratings average for the past two seasons: FSDâ&#x20AC;&#x2122;s 152 telecasts in 2013 averaged a 9.59 household rating, topping 2012â&#x20AC;&#x2122;s record 9.21. The ratings are based on data from The Nielsen Co. This year, the network will air 150 Tigers games, with the remainder split among national broadcasts on Foxâ&#x20AC;&#x2122;s main network, Fox Sports 1, and ESPN. Every game lost to another network is about $250,000 in lost revenue for Fox Sports Detroit. â&#x20AC;&#x153;Successful MLB teams can be a major driver of (regional sports network) revenues,â&#x20AC;? said Lee Berke, president and CEO of Scarsdale, N.Y.-based sports media consulting firm LHB Sports, Entertainment & Media Inc. â&#x20AC;&#x153;Baseball offers up substantial numbers of games and advertising spots, so if a team gets hot, ad revenues go up.â&#x20AC;? Hammaren cited several factors in play that make the Tigers a draw for advertisers: the ongoing national narrative about Detroitâ&#x20AC;&#x2122;s civic rebirth, the Tigersâ&#x20AC;&#x2122; huge ratings, the quality of FSDâ&#x20AC;&#x2122;s broadcasts and the networkâ&#x20AC;&#x2122;s statewide reach. â&#x20AC;&#x153;That combination is a positive aphrodisiac for almost every advertiser,â&#x20AC;? he said. â&#x20AC;&#x153;This is an important place to advertise.â&#x20AC;? Bill Shea: (313) 446-1626, bshea@crain.com. Twitter: @bill_shea19

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CRAIN’S DETROIT BUSINESS

March 10, 2014

Law firm, restaurant among Humane: Group eyes MHS transition Penobscot’s new tenants Anyone who ■ From Page 1

The Penobscot Building’s new owners have signed four new tenants, including a returning law firm tenant and a new Greek restaurant. The four tenants recently inked leases with the building owner, Toronto-based Triple Properties Inc. On the first floor, Southfieldbased Pendeli Inc. plans to open a second location for its Athens Souvlaki Greek restaurant. Athens will be located at the Fort Street entrance of the building, said Steve Apostolopoulos, managing director of Triple Properties. The restaurant will open this month. Law firm Simon, Stella and Zingas PC returned to the Penobscot Building last month by leasing more than 5,000 square feet on the 34th floor. The Penobscot was the firm’s original home more than 30 years ago, before it moved out in the early 2000s. Other new tenants include consulting firm CDM Smith of Michigan LLC, which leased more than 5,000 square feet of space on the 37th floor, and Detroit-based table tennis social club Drive Detroit LLC, which leased ground floor space for table tennis rentals, and a bar that will serve appetizers. The group is also moving its headquarters into the space. The Penobscot is currently 45 percent occupied with more than

“Anyone who works for our organization or on our board would love to get to a no-kill place,” said MHS Vice Chairman Paul Huxley, chairman of Strategic Staffing Solutions Inc. But MHS’ role as a shelter of last resort, given its policy to accept all animals, is at odds with the concept of “no-kill,” he said. “The practicality of how you get to that continues to be a problem when the community continues to breed more animals than there are homes for.”

Taking action

COSTAR GROUP

The Penobscot Building is currently 45 percent occupied, with more than 1,000 tenants.

1,000 tenants, Apostolopoulos said. The leasing agent is Fred Klugman, president of Detroit-based Klugman Commercial Properties LLC. Triple Properties acquired the Penobscot Building in Detroit in April 2012 for $5 million in cash and has retail, office and entertainment developments in Toronto, Chicago and New York City. — Dustin Walsh

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MHS said it has taken steps to save more animals in recent years, paying for independent audits of its shelter operations to improve them, launching a shelter medicine program to provide dedicated health care to shelter animals and giving owners the option to come back and get their pet if it was found not to be adoptable by anyone else. But perhaps the most significant among the new strategies is shifting its intake process for animals surrendered by their owners to appointment only because the vast majority of the animals that arrive at MHS are surrendered by owners — 70 percent of the 24,681 animals it took in during fiscal 2012 and 56 percent in fiscal 2013. Appointments ensure each animal receives prompt, thorough evaluations of health and temperament and enables MHS to identify the issues that led to the animal’s surrender. It can then offer owners options to help resolve those, which leads to some owners taking their pets back home. And it enables more expedient treatment for the animals that are surrendered. The approach enables shelter staff to better manage their time and to dedicate more resources to animals that need it to become more adoptable. MHS changed its intake process to appointment-only after benchmarking another of the country’s largest open-admission shelters, the Animal Humane Society. The Minneapolis-area organization decreased its euthanization rates from 37 percent in 2009 to 19 percent in 2013. Implementing the appointmentonly intake process has freed up staff time and resources, enabling the Animal Humane Society near Minneapolis to develop many of the same customized care programs for animals, said director of communications Jeff Moravec. They range from teaching cats to use the litter box to dissuading dogs from aggressive food bowl behavior to dedicating the increased time it takes to find homes for animals suffering from feline leukemia or feline immunodeficiency virus rather than euthanizing them. With the shifted intake process, “we can help regulate the flow of animals into the shelter, so we’re not under- or over-crowded, which really reduces the stress on management of the shelter,” he said. That’s helping get the animals adopted out at a higher rate, reduc-

“

able animals is to look at it as a community,” Robbins said. “Otherwise, certain organizations are only taking certain animals.” MHS would welcome solutions to the overpopulation problem at its shelters, Huxley said. “Come help; come pick up some animals, treat them and get them homes.” “Don’t sit on the sidelines and criticize the organizations that are actually doing that,” he said.

works for our organization or on our board would love to get to a no-kill Critics point to Macomb place. The efforts at MHS are too little

”

Paul Huxley, Michigan Humane Society vice chairman

ing the length of time animals are in the shelter, said Kathie Johnson, senior director of operations at Animal Humane Society. “We can help more animals because they are moving through our system a lot faster.”

Internal evaluation MHS looked inward in 2012, paying for two independent evaluations of its operations, one by a certified animal behavior consultant to evaluate its canine evaluation process and the other of its shelter care by Maddie’s Shelter Medicine Program at Cornell University. Among other things, those evaluations spurred better personality matching for people seeking to adopt dogs, the creation of a new advisory body comprised of five national animal medicine and welfare experts to review its evaluations and recommend changes to its board, and the launch of a shelter medicine program to improve the health of the animal population at MHS by providing dedicated care to the homeless animals. It teamed up with Michigan State University’s College of Veterinary Medicine to gain extra hands with high-volume spaying and neutering and contacted owners if a pet was found not to be adoptable and they wanted to pick it back up. MHS became a noticeable attendee of animal adoption fairs around the area, and, according to Robbins, it now works with more than 100 other organizations to get more animals placed in new homes or with rescue groups. To try to cut down on the number of animals surrendered and abandoned, MHS offers low-cost spaying and neutering, free food to low-income owners and $5 vaccinations at events in Detroit parks during the warm weather. Those efforts have helped it make significant progress toward a stated goal of eliminating the euthanization of treatable animals by 2015, Robbins said. In 2010, the organization euthanized 57 percent of the treatable animals at the shelter because of resource issues, Robbins told Crain’s in 2011. Just under six months into its fiscal 2014, MHS has adopted out more than 95 percent of its treatable dogs and more than 60 percent of its treatable cats, he said. MHS’ euthanization rate was down to 33 percent in fiscal 2013. “The only way you can truly adopt out all healthy and treat-

and taking too long to have impact, said Debbie Schutt, chairwoman of the alliance, which had fiscal 2012 revenue of about $88,500, about twice the year before, and interim executive director of the Woodward Avenue Action Association. If overpopulation at MHS shelters is a problem, then “let’s stretch; let’s do something we’ve never done before. That’s what needs to happen,” she said. Michigan shelters are collectively killing half as many animals today as they were six years ago, Schutt said. “That’s incredible progress, but we have the largest organization in the state, with the deepest pockets, that has not made that progress.” On its federal tax form, MHS reported total revenue of $15.6 million and an operating loss of nearly $1.2 million for fiscal 2012 ended Sept. 30, with reserves of just under $22.3 million. That compared to total revenue of $11 million and an operating loss of $97,469 the year before. Schutt points to the work Macomb County Animal Control in Clinton Township has done to drop its euthanasia rates. Over the past two years, it’s decreased its euthanization rates from 68 percent in 2011 to 28 percent last year, said Jeff Randazzo, who joined the organization as chief animal control officer last year. The county took in 3,093 animals in 2013. Randazzo said he’s lowered rates largely through the trap, neuter/spay and return of feral or stray cats to their home neighborhoods, rather than euthanizing them. “They’re flourishing out in the neighborhoods,” he said. “This is controlling the population long term.” He also began providing medical care for animals at the shelter and programs to modify negative behaviors in dogs and socialize shy cats, all with the aim of making those animals adoptable and getting to a no-kill level where animals are only euthanized when it’s truly the humane thing to do. In addition to promoting the adoption of animals on Facebook, he is sharing monthly reports on the number of animals the county takes in, number returned to owners, transferred to rescue groups, adopted and euthanized. “It’s our responsibility to be transparent,” he said. “It’s the community’s shelter; they need to know what’s going on and to get active in their community animal control.” Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch

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Water: Regional talks affect funding â&#x2013; From Page 1

sale rates across the system,â&#x20AC;? which are the rates charged to suburban communities. In other words, regional leaders said, a post-bankruptcy DWSD would add nearly $67.5 million per year to its expenses, with little or no ability to raise capital for it in the bond markets and no significant new revenue coming from city retail customers. That really leaves only one other revenue stream. â&#x20AC;&#x153;Right now, from what weâ&#x20AC;&#x2122;ve heard, they (DWSD) are only putting in about $10 million to the plan right now. This calls for a prefunding commitment if the authority is not created, and itâ&#x20AC;&#x2122;s got to come Provenzano from an increase in rates,â&#x20AC;? said Macomb County Finance Director Peter Provenzano, who is part of the ongoing talks between city and suburban leaders â&#x20AC;&#x153;And a majority of the suburbs are the ones taking the hit on that, in what they pay as wholesale customers.â&#x20AC;? Oakland County Deputy Executive Robert Daddow last week submitted a report to the other regional leaders in those talks, citing his business issues and questions raised by Detroitâ&#x20AC;&#x2122;s Feb. 21 plan of adjustment. Among them are that the plan doesnâ&#x20AC;&#x2122;t say where the DWSD gets its $675 million or whether it will pay the retirement system in one lump sum or in annual installments. Daddow and Macomb County Assistant Executive Melissa Roy told Crainâ&#x20AC;&#x2122;s last week that there was never a mention of a $675 million payment by DWSD to the pension in their ongoing authority talks with the city before the plan of adjustment surfaced in court. It still has not been fully explained to the regional leaders, they said. â&#x20AC;&#x153;If no authority is to exist, the DWSD would be expected to adDaddow vance fund this amount over the next 10 years, which would then allow the cityâ&#x20AC;&#x2122;s general fund to avoid having to make pension plan contributions. That money they pay into the plan now would be freed up to buy improvements in technology and infrastructure,â&#x20AC;? Daddow said. â&#x20AC;&#x153;But why is the DWSD expected to be able to come up with this extra money for the rest of the city, when it (the department) already has about $2.5 billion to $5 billion of capital improvement needs itself?â&#x20AC;? Department spokesman Bill Johnson and COO William Wolfson referred calls seeking comment on the pension payment last week to Detroit Emergency Manager Kevyn Orr, who submitted the cityâ&#x20AC;&#x2122;s plan of adjustment, and his communications manager, Bill Nowling. Nowling told Crainâ&#x20AC;&#x2122;s the city is not able to discuss the pension payment or â&#x20AC;&#x153;rate stabilityâ&#x20AC;? proposals within the plan because they are part of ongoing negotiations with neighboring county officials discussing the authority.

â&#x20AC;&#x153;The simple answer is that many of those (plan) details are yet to be determined or fleshed (out) beyond negotiation points,â&#x20AC;? he said via email.

At a loss The department, which services a nearly 1,100 square mile area and 43 percent of Michiganâ&#x20AC;&#x2122;s population, had operating income of about $140.2 million before debt service and investment losses during the fiscal year ended last June 30, according to preliminary unaudited budget figures submitted to the departmentâ&#x20AC;&#x2122;s Board of Water Commissioners last month. With debt interest payments, depreciation, lost investments and other nonoperating costs, the departmentâ&#x20AC;&#x2122;s 2013 net loss was actually $146.6 million. Net losses in 2012 were about $39.5 million, and Daddow in his March 3 report to the other negotiators in authority talks estimates that the department has lost $1.5 billion over seven years or more than $200 million a year. The debt load that creates the departmentâ&#x20AC;&#x2122;s current loss would be considerably reduced if Rhodes approves the cityâ&#x20AC;&#x2122;s current adjustment plan. Six classes of water and sewer bondholders who collect debt interest payments from the city now become impaired creditors, who would take less than what theyâ&#x20AC;&#x2122;re owed from the city on those bonds. Daddow said the suburban payers would still have to cover whatever net loss remains for the department post-bankruptcy, plus another $67.5 million per year if the department has to raise the extra funds for the pension plan by 2023, over and above a $29 million credit that city customers already receive on their rates, offset by wholesale customer rates charged to suburbs. The city has about 9,300 active employees, including 1,531 watersewer employees, who are covered by either the general retirement system or the Police and Fire Retirement System now. But the restructuring plan calls for the DWSD to be the sole city agency paying into the general system for about 10 years after the city exits bankruptcy.

Tactic for talks? Suburban leaders said the proposal, besides freeing up some general fund money that the city contributes to the general retirees plan now, may also be a tactic by the city to keep regional talks moving to form a Great Lakes Water and Sewer Authority that would lease department assets and assume its costs. That authority would lease the assets for a minimum of $47 million a year over 40 years â&#x20AC;&#x201D; although past proposals in talks have called for as much as a $9 billion lease over the same period, or more than $220 million per year. News that water-sewer bondholders will take a haircut in the plan isnâ&#x20AC;&#x2122;t well received everywhere. Fitch Ratings Ltd. downgraded the departmentâ&#x20AC;&#x2122;s rating on senior and second lien water and sewer bonds from BBB+ to BB+ and BBB to BB, respectively, on Feb. 28 and said a confirmation of the plan could only push the departmentâ&#x20AC;&#x2122;s rating deeper into junk status.

â&#x20AC;&#x153;Fitch would almost certainly view the courtâ&#x20AC;&#x2122;s confirmation of the (plan) or a similar variation whereby bondholders are impaired, as a distressed debt exchange leading to a ratings downgrade to as low as D,â&#x20AC;? Fitch said in a statement on the downgrade. Bond attorneys contacted by Crainâ&#x20AC;&#x2122;s last week said they could not recall any Michigan municipal government or authority being able to issue bonds with a C or D junk rating, and regional leaders said borrowing to cover the pensions essentially would be off the table. If the new authority takes over the department, it can create its own pension plan and freeze the current defined benefit plan covering current department employees, Daddow said. But regional leaders believe it would also need the funding to cover at least $2.5 billion in vital infrastructure improvements. â&#x20AC;&#x153;Theyâ&#x20AC;&#x2122;re looking to whack the current bondholders in the plan, but one of the things we understand if an authority is formed that investors are probably not too eager to reinvest in you at a new, lower rate,â&#x20AC;? Provenzano said. â&#x20AC;&#x153;There is also information we still need from the city and havenâ&#x20AC;&#x2122;t received yet. Because one of the assumptions in helping to fund the new authority is that the new authority would get an A bond rating. Weâ&#x20AC;&#x2122;re doing some research on that because we donâ&#x20AC;&#x2122;t know that thatâ&#x20AC;&#x2122;s necessarily the case. And if it isnâ&#x20AC;&#x2122;t, then our borrowing costs only get higher.â&#x20AC;?

Exploring options Daddow said Oakland County is in meetings with bankruptcy attorneys to consider its options about the adjustment plan, including whether it has any standing to object to it in court. He and Provenzano both said if no authority is created by April 14, then presumably all creditors vote on a restructuring that keeps the DWSD as a city department when ballots go out to creditors that month. Roy said Macomb County is in talks with officials in Lansing about its options as well, and itâ&#x20AC;&#x2122;s possible that the cityâ&#x20AC;&#x2122;s plan could be open to a challenge under Section 904 of the U.S. Bankruptcy Code, which prohibits the court from interfering with a debtorâ&#x20AC;&#x2122;s revenues or property without its consent. She also said Macomb County residents are sympathetic to the plight of Detroit pensioners but have concerns of their own. â&#x20AC;&#x153;These are people who live in places like Martin and Gratiot (Avenue), or 12 Mile (Road) and Groesbeck, and have to cover this out of the bills they pay every day. This canâ&#x20AC;&#x2122;t be about whether we ought to shore up these people (pensioners) by making other impoverished people suffer for them,â&#x20AC;? she said. â&#x20AC;&#x153;And we still, when this is all done, have to remain a competitive region in terms of economic development by what we charge to water and sewer customers. Otherwise we are going to risk impoverishing more people with lost job opportunities and investment.â&#x20AC;? Chad Halcom: (313) 446-6796, chalcom@crain.com. Twitter: @chadhalcom

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M&A: Stashes of cash propel companies to seek acquisitions ■ From Page 3

Richard Hilgert, automotive securities analyst for Morningstar Inc. in Chicago, said the substantial cash held by Michigan’s public companies is “burning a hole in their pockets.” Shareholders are pressuring these companies to use the cash, forcing companies to seek acquisition growth versus raising shareholder dividends. “Companies don’t want to raise dividends too substantially; they don’t want to get into a situation where they have to roll them back later if we enter another downturn, which would upset investors,” Hilgert said. “They have to put that money to use, and if they don’t have significant debt to pay down, they will go out and start pounding the pavement for acquisitions.” Chet Mowrey, partner at PricewaterhouseCoopers LLC’s transaction service in Detroit, said the quest for technology will push deals in 2014. The focus across most industries is technology; that’s what is propelling businessMowrey es now and in the future,” Mowrey said. “We’re seeing companies looking for technologies that exist and are proven, but not massively distributed,

which are getting bought and exploded into a macro space by M&A.” According to PWC’s 17th Annual Global CEO Survey, released earlier this year, 57 percent of U.S.based CEO respondents “would like to or have plans to change M&A approaches” based on how they implement technology. “We’re very open if it’s drivetrain or engine and wherever it may be in the world. That gives us some flexibility,” Auburn Hillsbased BorgWarner Inc. CEO James Verrier said in the survey. “We have about 30 possible target companies that we’re evaluating. Some are very preliminary; some are getting much closer toward potential transaction.” Analysts expect the trend of mounting M&A activity in the automotive and health care industries, but also expansive deal making in the banking industry in 2014 as banks consolidate. The banks that survived the recession proved their staying power. But the increased cost of compliance as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act has many smaller banks looking for acquirers to achieve economies of scale. That national industry trend, coupled with a much stronger Michigan economy, should mean more acquisitions here along the

lines of the $173 million acquisition in January of Ann Arbor-based United Bancorp Inc. by Evansville, Ind.based Old National Bancorp (Nasdaq: ONB), according to John Donnelly, a managing director in the Grosse Pointe investment banking firm of Donnelly Penman & Partners. “The United Bank deal kicked the lid off the can. Every bank board room in the state is studying that deal,” said Donnelly. “That was for more than two times tangible book value. It was a wowee deal. It was a very nice property that brought a very nice price, and you’re going to see other big deals moving forward.” Much of the transaction action may come from large private equity investors looking to enter the now stable Michigan market, Cahill said. Investible private equity, or “dry powder,” swelled to more than $1 trillion, according to the Global Private Equity Report, released by Boston-based firm Bain & Co. last week. “We see an uptick in deal activity and ferocious competition on the horizon …,” Hugh MacArthur, Bain’s global head of private equity, said in a news release. Brian Demkowicz, managing partner of Detroit-based Huron Capital Partners LLC, annually the most active private equity firm in Michigan, said 2014 will be an active year

for M&A, with higher valuations, due to new funds and better access to debt. “There are a number of funds nearing the end of their terms, and they either have to get an extension from the limited partners or figure out how to get companies sold,” he said. Typically, funds raise money based on a 10-year life cycle, with the first six years or so spent buying companies and improving their bottom lines, then the next four years are spent on selling them and returning money to the funds’ investors. Firms near the end of one fund’s cycle will be out raising money for a new fund, and that money is harder to raise if their limited partners are still waiting to get paid and they have companies yet to be sold. Another big driver is more senior debt available for private equity firms to leverage, Demkowicz said. “There is a lot of money chasing deals, fueled by the credit market,” Demkowicz said. “Banks are as active as they have ever been; they’re flush with cash and loosening their lending standards. That’s fueling the fire.” Finally, he said, stock markets at all-time highs are driving deal prices higher. Last January, Huron closed on its fourth and largest fund, passing

its target of $400 million and raising $500 million. Another trend pushing private equity-led deals is firms pushing for current stakeholders to “leave chips on the table” to ensure a growth plan, Cahill said. He said many deals will involve private equity taking a majority stake while asking management or the current owners to maintain a smaller stake in the company. A recent example is the majority shareholder stake of Auburn Hillsbased Guardian Industries Corp. KGCI LLC, a subsidiary of Wichita, Kan.based Koch Industries LLC, acquired in late 2012. The deal made Koch the largest individual shareholder of Guardian, reducing the stakes of longtime Guardian executives and founding family members. Koch’s 44 percent stake allowed the firm to take control of Guardian while diversifying the ownership stakes of Karen Davidson, widow of founder Bill Davidson, who died in 2009, and his adult children. “We’re seeing more relationship-based transactions; private equity is spending a lot of time getting to know people and the companies,” Cahill said. “This proves the seller has faith in the future of the company, and PE loves that.” Dustin Walsh: (313) 446-6042, dwalsh@crain.com. Twitter: @dustinpwalsh

Irish: So is St. Patrick’s Day big for many a business? O’yeah ■ From Page 3

In at least one Detroit neighborhood, a much older tradition takes priority and pulls in crowds. “If you own an Irish bar in the city of Detroit, your year is made on Sunday and Monday – parade day and St. Patrick’s Day,” said Howard Wolpin, president of Detroit-based Great Lakes Beverage Co., whose truck drivers deliver Budweiser, New Belgium and Guinness to bars and liquor stores throughout Wayne County. The St. Patrick’s Day parade in Corktown, scheduled for March 16, clogs streets and draws in thousands of spectators decked in shamrock-shaped sunglasses and green shirts that say “Lucky Me.” This creates a two-day extravaganza of Michigan and imported beer and Irish whiskey — and plenty of Irish and quasi-Irish food. “It’s kind of crazy,” said Ryan McShane, who with his brother and best friend bought and renamed McShane’s Irish Pub and Whiskey Bar about two years ago on Michigan Avenue. They’re ordering five times as much beer as they normally do and just about as much extra food. “It’s in every little nook and cranny in the bar,” he said. Outside, they also request an extra dumpster for all the parade leftovers. This year, especially, bars need the boost after a slow, snowy, bitter winter. “It bails us out of January and February, probably the two slowest months,” said McShane. Most weekends, his pub may have 300 to 400 guests, but on St. Patrick’s Day weekend, that bal-

If you own an Irish bar in the city of “ Detroit, your year is made on Sunday and Monday – parade day and St. Patrick’s Day.

”

Howard Wolpin, Great Lakes Beverage Co.

loons to 1,400 or so, he said. Wolpin said his volume increases by about 3 percent for the week of St. Patrick’s Day, or a 5 percent to 6 percent gain at bars and restaurants. One reason it’s not more, he said, is customers flock to Irish pubs while the rest may be a bit quieter than normal. Opening Day for the Detroit Tigers is the busiest bar day in Wayne County, Wolpin said, and it brings in the business for everyone, not just the Irish. While they all want consumers’ greenbacks, not all of the Irish pubs pour green beer. “Green beer just gives you a hangover,” said Caroline Kaganov, general manager of Conor O’Neill’s in Ann Arbor. And Brian Dunleavy, co-owner of Dunleavy’s in Allen Park, sneered: “What’s green beer?” At McShane’s, the owners try to turn St. Patrick’s Day guests into repeat patrons by offering a $100 gift card drawing. Email addresses collected are useful to invite people back for the Tigers’ home opener or the Corktown pub crawl, McShane said. Conor O’Neill’s St. Patrick’s

schedule starts Thursday and goes through Monday with Irish music scheduled every night. “Saturday will be 50 percent more than a normal Saturday,” Kaganov said. She estimated that St. Patrick’s Day itself will bring in the equivalent of a week of revenue but said they didn’t track the amount of beer or traditional Irish breakfasts sold. Among the items are black and white pudding, a sort of Irish sausage, served with eggs and potatoes. At John Cowley & Sons Pub in downtown Farmington, the pub puts aside its full menu for a slimmed-down menu, including hot corned beef sandwiches on rye bread and a half pound burger or chicken tenders. “People don’t want to stand around and eat a full meal, so we give them a special menu so they can eat and get back to their drinks,” said executive chef Brendan Cowley, grandson of the pub founders. The third-generation family business expects to serve 800 to 1,000 people a day on the big Irish

weekend, up from the 300 to 350 it feeds on a normal weekend. St. Patrick’s Day brings in 2 percent of its annual sales, Cowley added. Retailers and bars across the U.S. will rake in about $4.8 billion from St. Patrick’s Day, about the same as in 2013, according to the National Retail Federation. About a quarter of consumers will buy items to decorate their home or office, and more than 80 percent will wear green. At The Twisted Shamrock, the inventory switches from more authentic Irish imported jewelry to Detroit Irish T-shirts and crazy green beads and hats starting in early March. Monahan starts buying inventory six months in advance, and every year goes to trade shows including Dublin’s Showcase Ireland in January. After owning and running the shop since June 2005, he knows “which vendors ship fast and slow.” Best sellers leading up to St. Patrick’s Day are Irish jackets, glitzy sparkly green accessories, and Irish or Celtic jewelry and pottery that true Irish families buy each other as gifts, he said. The blarney around the Irish holiday accounts for 15 percent to 20 percent of the store’s total revenues. That puts it just behind Christmas, which brings in 20 percent to 25 percent of the Twisted Shamrock’s annual sales of $300,000 (the tougher years of 2008-11) to $500,000 (the good times of 2005-07). Not everyone sees an Irish blessing from the holiday falling on a Monday. Robert Hamilton, manager of family-owned Satisfaction Lim-

ousines in Lenox Township in northeast Macomb County, said business has fallen off in the last few years. The company used to be able to charge premium prices around St. Patrick’s Day when demand was higher, Hamilton said, but now normal rates apply. That means six hours of bar hopping in a 10person limousine costs $465, including the tip. Even if limos are not loaded up, Irish bands are booked at bars, private parties and more, and many command higher rates than usual. A good Irish band, with two to four members, may earn $200 to $400 an hour, said Maggie McCabe, a Royal Oak Celtic, blues and jazz musician. “On St. Patrick’s Day, we make what we should be making every day of the year,” she said. “I think the most I did was three shows in one day” a few years ago. This year, she has about six shows leading up to the holiday, including her annual appearance at Danny’s Irish Pub in Ferndale, and expects a few last-minute gigs. McCabe savors the joy of her audiences, even if she never drinks on St. Patrick’s Day and sometimes throws in a German polka or a tune by soul singer Al Green. She wishes the area could create a second Mardi Gras of the Irish, a day known as Halfway to St. Patrick’s Day. “It’s been a long time since I’ve done one,” she said regretfully. “I can’t always market my Irish music the rest of the year.”

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Royal Oak: Creative, tech companies moving in

www.crainsdetroit.com EDITOR-IN-CHIEF Keith E. Crain GROUP PUBLISHER Mary Kramer, (313) 446-0399 or mkramer@crain.com ASSOCIATE PUBLISHER Marla Wise, (313) 4466032 or mwise@crain.com EXECUTIVE EDITOR Cindy Goodaker, (313) 4460460 or cgoodaker@crain.com MANAGING EDITOR Jennette Smith, (313) 4461622 or jhsmith@crain.com MANAGER, DIGITAL STRATEGY Nancy Hanus, (313) 446-1621 or nhanus@crain.com MANAGING EDITOR/CUSTOM AND SPECIAL PROJECTS Daniel Duggan, (313) 446-0414 or dduggan@crain.com SENIOR EDITOR/DESIGN Bob Allen, (313) 4460344 or ballen@crain.com SENIOR EDITOR Gary Piatek, (313) 446-0357 or gpiatek@crain.com WEB EDITOR Kristin Bull, (313) 446-1608 or kbull@crain.com WEST MICHIGAN EDITOR Matt Gryczan, (616) 9168158 or mgryczan@crain.com DATA EDITOR Brianna Reilly, (313) 446-0418, bjreilly@crain.com WEB PRODUCER Norman Witte III, (313) 4466059, nwitte@crain.com EDITORIAL SUPPORT (313) 446-0419; YahNica Crawford, (313) 446-0329 NEWSROOM (313) 446-0329, FAX (313) 4461687 TIP LINE (313) 446-6766

■ From Page 1

Nearly 30 creative and technology companies have set up offices downtown since 2010 — some founded there, others expanding or moving from nearby communities like Oak Park, such as RingSide Creative LLC, and Ferndale, like Mercury Studio LLC and others still local offices of national or global companies like Hulu LLC. Some owners say they considered downtown Detroit, Ann Arbor and Birmingham, but opted for Royal Oak because of issues like safety concerns about Detroit and a central location with better freeway access than Birmingham for quick commutes to business hubs like Southfield, Troy, Auburn Hills and Detroit. Mark Lantz, founder and executive creative director of advertising agency Factory Detroit Inc., considered space in Midtown and Ann Arbor. He said the decision to open his business in 4,500 square feet of second-floor office space at 215 S. Center St. in Royal Oak was based on a combination of all those factors. “If we were bigger, maybe we would have opened in Detroit,” Lantz said. “But I was still concerned about crime. (Detroit-based Lowe) Campbell Ewald can afford fulltime security. We can’t.” Lowe Campbell Ewald moved its operations in January from Warren to new offices built inside Detroit’s Ford Field. Versicor LLC, a maker of electronic control units for medical device manufacturers, opened its offices in June in the 42,000-square-foot former St. Mary’s High School building at 333 W. Seventh St. Christie Coplen, the president of Versicor and a former Chrysler Group LLC engineer, said her company chose Royal Oak because of easy access to freeways and for its reputation for being hip and cool. “It’s a hot spot that allows us to recruit younger folks,” she said. “I don’t want this to be taken the wrong way, but technology can’t just be about Ann Arbor or downtown Detroit.” According to data provided by the Southfield office of Colliers International Inc., there is 477,000 square feet of office space — almost exclusively Class B and Class C — in downtown Royal Oak. Of that, 150,000 is vacant, giving the market a 31 percent vacancy rate. That also tends to make Royal Oak more affordable than some markets because Class B and C office space offers fewer amenities and high-end finishes and systems and so commands lower rents than Class A office buildings, such as the Liberty Center in Troy ($21 per square foot) or the American Center in Southfield ($17.62 per square foot). Average rent in downtown Royal Oak is $16.62 per square foot, according to data provided by Colliers. Average rent for Class B space in Birmingham is $23.85 per square foot and $21.87 per square foot for Class C. In Troy, Class B space is $18.54 per square foot and Class C space is $15.71 per square foot. Royal Oak isn’t the right space for every creative/tech company, though, partly because of the lack of Class A office space downtown, said Peter Jankowski, senior associate in the Detroit office of Colliers.

TECHNICALLY SPEAKING, ROYAL OAK IS POPULAR The following creative/tech companies have opened in or have moved to downtown Royal Oak since 2010: Aquent, marketing and creative staffing. Space: 1,540 square feet in 106-110 S. Main St. Owner: John Chuang. Royal Oak employees: 12. Beast Detroit, television editing. Space: 12,000-square-foot building at 209 W. Sixth St. Owner: Burbank, Calif.-based Deluxe Entertainment Services Inc. Royal Oak employees: 25. Brilliant Chemistry, online marketing and app development. Space: 2,600 square feet in 333 W. Seventh St. Co-founders: Mike Wille, Scott Garretson. Royal Oak employees: N/A. Crowdrise LLC, online fundraising agency. Space: 2,000 square feet in 301-303 W. Fourth St. Owners: Robert Wolfe, Edward Norton. Royal Oak employees: 19. DataXu Inc., online marketing and data analytics. Space: 1,000 square feet in 333 W. Seventh St. Owners: Boston-based Atlas Venture; Bostonbased Flybridge Capital Partners; Menlo Park, Calif.-based Menlo Ventures; and Redwood City, Calif.-based Thomvest Ventures. Royal Oak employees: Four. Factory Detroit Inc., advertising agency. Space: 4,500 square feet in 215 S. Center St. Owner: Mark Lantz. Royal Oak employees: Eight. Hulu LLC, Detroit office of the Internet content provider. Space: 2,300 square feet in 333 W. Seventh St. Royal Oak employees: N/A. Jeff Fontana Designs Inc., interior designer. Space: 1,700-square-foot building, 500 W. 11 Mile Road. Owner: Jeff Fontana. Royal Oak employees: One. Jumpstart Automotive Group, digital automotive marketing. Space: 4,000 square feet in 1037-1041 S. Main St., 26,000 square feet. Owner: Detroit office of a division of Hearst Magazines. Royal Oak employees: N/A. Lux Interactive LLC, Web and mobile software developer. Space: 2,200 square feet in 300-302 S. Main St. Owner: N/A. Royal Oak employees: N/A. Mercury Studio LLC, website developers. Space: 5,000 square feet in 112 S. Main St. Owners: Zac and Josh Ball. Royal Oak employees: Eight. Millennial Media, digital advertising. Space: 1,700 square feet in 306 S. Main St. Owner: Royal Oak office of Baltimore-based company. Royal Oak employees: N/A. Mousetrap Mobile LLC, mobile marketing. Space: 1,200 square feet in 104 W. Fourth St. Owner: Greg Nasto. Royal Oak employees: Three. Reach Influence, marketing. Space: 3,500 square feet in 104 W. Fourth St. Owner: Bloomfield Hills-based Vineyard Capital Group LLC. Royal Oak employees: 25. RingSide Creative LLC, integrated media studio. Space: Unknown square footage in 1037-1041 S. Main St. Owner: Partnership of Steve Wild, Brian Efrusy and Chicago-based creative agency Cutters. Royal Oak employees: N/A. Ron Rose Productions, audio/video production. Space: 14,000 square feet in 1037-1041 S. Main St. Owners: Ron and Chris Rose. Royal Oak employees: 28. Round Table Six LLC, marketing agency. Space: 1,800 square feet in 333 W. Seventh St. Owner: Steven Pitsillos. Royal Oak employees: Nine. RTT USA, 3-D visualization. Space: 32,000 square feet in 400 W. Fourth St. Owner: Royal Oak office of Munich-based company. Royal Oak employees: 150. Teich Group, interior design. Space: 800 square feet in 333 W. Seventh St. Owner: Steven Teich. Royal Oak employees: N/A. The Berline Group Inc., advertising, marketing and digital media. Space: 6,500 square feet in 423 N. Main St. Owner: James Berline. Royal Oak employees: 20. TMV Group LLC, marketing. Space: 10,000-square-foot building at 124 E. Hudson St. Owners: Bill Morden, Scott Thornton and Mike Vogel. Royal Oak employees: 32. TRU Design and Marketing. Space: 2,600 square feet in 306 S. Washington St. Owners: Adam Steinberg, Tracey Wolf and Lisa Lasso. Royal Oak employees: 12. TruReview LLC, consumer review software producer. Space: 700 square feet in 309 S. Main St., 5,000 square feet. Owner: Dwight Zahringer. Royal Oak employees: Four. Vectorform LLC, software design. Space: 20,000 square feet in 500 S. Main St. Owners: Jason Vazzano and Kurt Steckling. Royal Oak employees: 62, adding 75 over next three years. Michigan Economic Development Corp. funding: $375,000. Versicor, electronics for medical devices. Space: Unknown square footage in 333 W. Seventh St. Owner: Royal Oak-based Third Shore Group LLC. Royal Oak employees: 10. VSA Partners Inc., marketing. Space: 4,100 square feet in 360 N. Main St. Owner: Local office of Chicago-based company. Royal Oak employees: N/A. Sources: CoStar Group Inc.; Jay Dunstan; Jim Johnson, owner of Royal Oak-based CJD Inc.

The only Class A space is 28,000 square feet of a 58,000-square-foot mixed-use building at 360 N. Main St. north of 11 Mile Road, according to Washington, D.C.-based real estate information service CoStar Group Inc. It is 75 percent occupied. In addition, blocks of 5,000-plus square feet for bigger tenants are mostly unavailable. Sometimes

that means creative/tech companies coming to downtown go largely unnoticed because the leases aren’t as eye-catching, Jankowski said. Many of the companies also occupy upper-level space, which makes their presence less evident. “The trend in office use is not as apparent to others as was the bar explosion in the late 1980s or

REPORTERS

NATHAN SKID

Colliers International Inc. reports that 31 percent of the 477,000 square feet of office space in downtown Royal Oak is vacant.

1990s,” Harrison said. Royal Oak-based Vectorform LLC is another company opting for downtown space. The digital products design firm, which will move into 20,000 square feet of the Barnes & Noble Inc. building at the corner of Main and Fifth streets, will be on the second floor of the 49,000square-foot building after being awarded a $375,000 grant from the Michigan Economic Development Corp. to stay in Michigan. Barnes & Noble, which occupies the first floor, plans to close in early April. Jason Vazzano, co-founder and CEO of Vectorform, said the company considered moving to downtown Detroit and Ann Arbor before choosing downtown Royal Oak. Among the key factors in the decision were the central location and a parking subsidy from the Royal Oak City Commission for employees and clients. The largest new creative/tech office tenant is the Royal Oak office of Munich-based RTT USA, a 3-D software company with 32,000 square feet on Fourth Street between South West Street and Lafayette Avenue. The company moved into the vacant space in 2013. It most recently had been occupied by National City Bank, according to Steve Eisenshtadt, vice president of brokerage services for Farmington Hills-based Friedman Integrated Real Estate Solutions LLC, which represented RTT. Marketing company Group eX LLC occupies the entirety of a 20,000square-foot building on East Hudson Avenue east of South Main, where it has been for some time. Jay Dunstan, chairman of the DDA board and director of digital services for Troy-based Midcoast Studio Inc., said the DDA is considering incentives for creative/tech companies like subsidies from tax increment financing dollars for rent or space build-outs. In the end, that would help the downtown’s bread and butter — its restaurants, bars and shops. “One of the reasons to bring in office people is that they are there during the day and can support the restaurants and retailers,” Harrison said. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB Tom Henderson contributed to this report.

Jay Greene, senior reporter: Covers health care, insurance, energy utilities and the environment. (313) 446-0325 or jgreene@crain.com Amy Haimerl, entrepreneurship editor: Covers entrepreneurship and city of Detroit. (313) 4460416 or ahaimerl@crain.com Chad Halcom: Covers litigation and the defense industry. (313) 446-6796 or chalcom@crain.com Tom Henderson: Covers banking, finance, technology and biotechnology. (313) 446-0337 or thenderson@crain.com Kirk Pinho: Covers real estate, higher education, Oakland and Macomb counties. (313) 446-0412 or kpinho@crain.com Bill Shea, enterprise editor: Covers media, advertising and marketing, the business of sports, and transportation. (313) 446-1626 or bshea@crain.com Nathan Skid, multimedia editor: Also covers the food industry and entertainment. (313) 446-1654, nskid@crain.com Dustin Walsh: Covers the business of law, auto suppliers, manufacturing and steel. (313) 4466042 or dwalsh@crain.com Sherri Welch, senior reporter: Covers nonprofits, services, retail and hospitality. (313) 446-1694 or swelch@crain.com LANSING BUREAU Chris Gautz: Covers business issues at the Capitol and utilities. (517) 403-4403 or cgautz@crain.com

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CRAIN’S DETROIT BUSINESS

RUMBLINGS

WEEK ON THE WEB FROM WWW.CRAINSDETROIT.COM, WEEK OF MARCH 1-7

Retired prof fears progress in Ukraine in peril krainian-born Vera Andrushkiw, a retired University of Michigan and Wayne State University professor, helped pioneer free-market economics education in her homeland following its 1994 independence after the communist Soviet Union splintered. Today, the Troy resident fears her work could be undone by whatever follows Russia’s prospective annexation of Ukraine’s Crimean Peninsula. Andrushkiw, whose family escaped Nazi worker camps during Germany’s invasion of the USSR in World War II, emigrated to the U.S. in 1949. She helped launch a business internship program between Wayne State and the Lviv Institute of Management in the Ukraine. The program, which ran from 1994 to 2000, brought 189 students to Detroit from the Ukraine to learn Western business practices. “The first group came three weeks after Ukraine declared its independence,” she said. “This was a very dramatic time for this type of program; we had these students learning about market economics and the capitalist system.” Wayne State business professors also taught at Lviv. The program shaped Lviv’s business curriculum, said Andrushkiw, who is vice president of foreign relations of the Washington, D.C.-based nonprofit U.S.Ukraine Foundation. “This was a boost in the

arm and a real beginning for the Lviv Institute,” she said. “They made courses very similar to the ones at Wayne State.” Now Andrushkiw worries for Ukraine’s fate amid Russia’s actions and whatever may come next. She’s spent the last week giving media interviews. “The Ukrainian people, this in the demonstrations, have had enough of the corruption and have said they want to live under European values, which is a statement for democratic values and human dignity,” she said. “This demonstration has been ongoing for three months, but now only the last week and half has the media been involved. There has to be violence before people pay attention, and I’m very concerned.”

Detroit bids farewell to bridge backer Norton Business leaders in metro Detroit said goodbye to Canadian Consul General Roy Norton last Thursday night at a dinner hosted by the Detroit Regional Chamber. Norton is moving to Chicago to represent his country as consul general. His mandate in Detroit was to get the new bridge approved. Now, it’s likely he will be a key figure in moving the Keystone XL Pipeline forward. The $5.4 billion plan by TransCanada Corp. to pipe fuel from Alberta to Gulf Coast refineries has languished in a fierce energy-vs.-environment debate.

Norton told the crowd Thursday that he recently heard Gov. Rick Snyder tell students at the University of Michigan: If you want to be a yuppie, move to Chicago. If you want to make a difference, move to Detroit. “I wondered if he was talking about me,” Norton said, deadpan.

EMU credit union becomes part of UM credit union What’s in a name? Everything. The Eastern Michigan University Credit Union has been taken over by the University of Michigan Credit Union, after seven months of negotiations and a vote by members at the EMU credit union. Although it’s giving up its independence, it’s holding on to some of its identity. The single-branch EMU credit union, at 761 Jenness St. in Ypsilanti, will be rebranded with the wordy name of: Eastern Michigan University Financial, a branch of the University of Michigan Credit Union. Tiffany Ford will remain as president and CEO of UMCU.

BITS & PIECES 䡲 Keith Crain, chairman of Detroit-based Crain Communications Inc. and editor-inchief of Crain’s Detroit Business, Automotive News and Autoweek, was elected to the Automotive Hall of Fame. He will join three other Crain inductees at a ceremony July 24 at The Inn at St. John’s in Plymouth. 䡲 General Motors Co. President Dan Amman will succeed Ford Motor Co. COO Mark Fields as chairman of the United Way for Southeastern Michigan’s annual Torch Drive campaign.

BEST FROM THE BLOGS READ THESE POSTS AND MORE AT WWW.CRAINSDETROIT.COM/BLOGS

Which came first, chicken or egg? Finding the master in leather arts

“

I always wanted to use that as a lead, but never thought it applied to a story — until now. However, in the case of Blue Cross Blue Shield of Michigan terminating its participation in the MIChild program for kids, the dilemma could apply.

”

Jay Greene’s blog about health care, insurance and the environment can be found at www.crainsdetroit.com/greene

“

There’s no other part to an automobile that drivers, and passengers, interact with more than the seat. … Very often, a leather seat.

”

Dustin Walsh’s blog on auto suppliers, the business of law, Detroit schools, steel, and Livingston and Washtenaw counties is at www.crainsdetroit.com/walsh

Another fire burns Heidelberg Project house house covered in stuffed animals and dolls that was a key part of the Heidelberg Project in Detroit became the latest casualty Friday in a 10-month string of suspicious fires that has devastated much of the long-running art installation, AP reported.

THE TIME HAS COME

ON THE MOVE 䡲 David Ripple, vice president for development and alumni affairs at Wayne State University and president of the Wayne State University Foundation, is leaving to become vice president of development at Ohio State University, effective May 2. Chacona Johnson, associate vice president for principal gifts and executive vice president of the WSU Foundation, will assume Ripple’s vice presidential duties in the interim. 䡲 Southfield-based accounting and business advisory firm Plante Moran PLLC named Paul Blowers chief information officer to replace Doug Brady, who plans to retire. Blowers had been chief architect and senior director of enterprise architecture and business solutions at Troy-based Kelly Services. 䡲 Dearborn-based nonprofit Friends of the Rouge, which promotes restoration and stewardship of the Rouge River ecosystem, named Aimee LaLonde-Norman executive director, filling a seat vacant since 2008. LaLonde-Norman, 34, was development officer at Bloomfield Hills-based The Roeper School.

COMPANY NEWS 䡲 Detroit-based Lutheran Social Services of Michigan acquired Clinton Townshipbased physical, occupational and speech therapy provider Total Rehab Services. Terms of the deal were not released. 䡲 Wal-Mart Stores Inc. reopened a Warren store in the same location it pulled out of in 2003. The expanded, 24-hour Walmart Supercenter, at 12 Mile Road and Van Dyke Avenue, features a full-line grocery department. 䡲 UST Global’s workforce training program, Step IT Up America, is coming to Detroit with an official launch Tuesday at the Westin Book Cadillac Detroit. The program is part of the Aliso Viejo, Calif.-based information technology company’s

ANJANA SCHROEDER

Shinola/Detroit LLC celebrated the unveiling of four city clocks Friday morning with a short ceremony outside Cobo Center — the site of one of the clocks. Other clocks can be found at Eastern Market, at Cass Avenue and West Canfield Street in Midtown near Shinola’s Detroit headquarters, and at West Milwaukee Street and Cass Avenue outside the College for Creative Studies. goal to train 1,000 AfricanAmerican women students in 10 U.S. cities within 10 months. 䡲 Detroit-based DTE Energy Co. chose 122 solar energy projects in the third of four offerings of its SolarCurrents pilot, which offers customers financial incentives to install solar panels on homes and businesses. 䡲 The nonprofit PlayPlace for Autistic Children is offering naming rights to donations to help finance $1.3 million in renovations to its new 25,000-square-foot facility in Sterling Heights. 䡲 The Washington, D.C.based Women’s Business Enterprise National Council named metro Detroit-based Ford Motor Co., General Motors Co., Chrysler Group LLC and Kelly Services Inc. among the 45 top U.S. companies to integrate women-owned firms into their supply chains. 䡲 Detroit-based Quicken Loans Inc. added Yahoo Sports as a co-sponsor and technology provider of an online contest that splits $1 billion between participants who accurately predict the winners of all 63 games in the NCAA men’s basketball tournament.

OTHER NEWS 䡲 New York City-based

Syncora Guarantee Inc. said it may oppose Detroit’s plan to pay $85 million to end interest-rate swaps, Bloomberg reported. Syncora, which insures some city bonds, derailed a previous attempt by the city to get out of the swaps contracts with UBS AG and Bank of America Corp.’s Merrill Lynch unit.

䡲 The National Hockey League, the Detroit Red Wings and Olympia Entertainment are splitting the cost of the new grass field to be installed at Comerica Park before the Detroit Tigers’ season opener March 31. 䡲 The government could spend as much as $130 million to upgrade the 80-yearold federal courthouse in downtown Detroit, AP reported. 䡲 Detroit City Council voted unanimously to put a proposed Downtown Business Improvement Zone to a vote of area property owners. It would be only the second such zone in Detroit and Michigan. 䡲 The former Tushiyah United Hebrew School in Midtown will be turned into 25 market-rate apartment units as part of a $6.9 million redevelopment, now that Detroit-based Hosey Development LLC has closed on project financing. 䡲 Detroit Central City Community Mental Health Inc. opened a health center in Midtown. A planned 5,000square-foot expansion to the 1,000-square-foot center is slated for later this year. 䡲 The Michigan Senate approved a 10-bill package designed to eliminate organized opposition to the repeal of the state’s industrial personal property tax. Senate Bills 821-830 guarantee full reimbursement of revenue to local governments as the tax is being phased out between 2016 and 2023. 䡲 At PNC Bank’s annual economic luncheon at the Detroit Athletic Club, PNC Financial Services Group Inc. chief economist Stuart Hoffman said 2014 will be the best year for the U.S. and regional economies since the recession began in 2007. 䡲 A new 3-on-3 basketball tournament, the MetroPCS Motor City Hoops Classic, will be played June 7-8 on the Detroit riverfront. Presented by Opportunity Detroit, the event benefits the Detroit Goodfellows and Detroit RiverFront Conservancy. 䡲 The Southeast Michigan Purchasing Managers Index for February dipped to 47.3, down from 52.3 in January. 䡲 State Sen. Rebekah Warren will not run for the U.S. House seat being vacated by the retirement of John Dingell, the Ann Arbor Democrat announced on Facebook and on her exploratory committee’s website.

OBITUARIES 䡲 Bernard Winograd, a retired Prudential Financial Inc. executive who helped devise the initial public offering for Bloomfield Hillsbased luxury-mall developer Taubman Centers Inc. in 1992, died March 1. He was 63.

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For the second consecutive year and fourth time in the competition’s seven-year history, a Walsh team has won the Association for Corporate Growth (ACG) Detroit Cup, a mergers and acquisitions case competition among business graduate students. We think that says a lot about our students. We applaud the efforts of teams from Michigan’s most respected business schools, including the University of Michigan and Michigan State University. walshcollege.edu/ACG ®The yellow notebook design is a registered trademark of Walsh College. And the campaign is a creation of Perich Advertising + Design. Thanks to the ﬁne folks at Walsh for letting us say so.