Crain's Detroit Business, April 7, 2014 by Crain's Detroit Business

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www.crainsdetroit.com Vol. 30, No. 14

APRIL 7 – 13, 2014

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Page 3 Crittenton turns over cancer center to St. John

Tax credits: Give and take BY CHRIS GAUTZ CAPITOL CORRESPONDENT

How UM alum helped bring Europe’s ‘football’ to Big House Barra’s Washington performance reviewed

Advanced Manufacturing Four firms find new ways to grind it out, Page 11

This Just In German 3-D printing company to open in Canton

NEWSPAPER

The first U.S. facility for a German 3-D printing company is expected to open in Canton Township in the third quarter. Kristen Thomas, economic development manager for the township, said Voxeljet AG will move into a 50,000square-foot vacant building in the Haggerty II Corporate Park, west of Haggerty Road and north of Michigan Avenue. Haggerty II is owned by Frankel Associates. The service center will let Voxeljet print parts, molds, cores and models designed with 3-D CAD software for automotive and other customers, a release said. The auto industry is Voxeljet’s largest customer, CEO Ingo Ederer said in a news release. Gov. Rick Snyder said last week that Friedberg-based Voxeljet’s opening of its first U.S. service center will create 15-20 high-tech manufacturing jobs in the first three years. Sara Wurfel, Snyder’s press secretary, wrote in an email to Crain’s on Friday that Voxeljet’s initial investment is $3 million. — Kirk Pinho

Tax credits granted during the Granholm administration are the gifts that keep on giving to the 3,500 state businesses who have earned them, but they’re a continuing headache for the group of state employees who have to predict how much money Michigan has to spend. Sometimes it works out — more than $400 million of the fiscal 2013 $1 billion budget surplus is due to

$5 billion in credits still loom from Granholm years credits the state thought would be claimed but weren’t. But in future years, a bad estimate could end up as a budget deficit, threatening Michigan’s ability to fund big-ticket items such as roads, education and public safety. And the $400 million not claimed in fiscal 2013 could still be claimed

in the future. “This is undoubtedly the biggest risk to the budget forecast,” said Jim Stansell, senior economist for the House Fiscal Agency. In two of the biggest categories of credits, there are $527 million in credits related to investments in the battery industry that can be

Mixed catch JOHN SOBZAK

he state of Michigan’s fishing industry is analogous to some of its most sought-after catch. There’s the bass, known for putting up a fight. There’s the resourceful muskellunge, which requires patient trolling to reel in. Keeping Michigan’s fishing industry ecosystem thriving is, similarly, a complex proposition that involves managing everything from environmental factors to marketing. Despite fewer issued fishing licenses, anglers are spending more money, and the state’s

taken through 2020. MEGA credits of more than $5.4 billion potentially can be taken through 2036, although most would be taken well in advance of that. The uncertainty arises because companies have some discretion about when to claim the credits — typically up to four years after becoming eligible — and in some cases have to achieve benchmarks to become eligible to do so. Last year, when the House and See Credits, Page 29

JOSE JUAREZ

Anne Varra of Clinton River Watershed Council says good marketing is as important as keeping up with demographics and ecological change.

BY DUSTIN WALSH

O OT PH

Troy and Grand/Sakwa Properties continue to negotiate a deal that could open the new transit center.

Spending up, but even state’s fishing industry needs a business plan

CRAIN’S DETROIT BUSINESS

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40,000 square miles of lakes, ponds and rivers are a draw for major tournaments and fly fishing excursions. And the numbers are still high: An estimated 1.2 million anglers will descend on Michigan lakes, rivers, creeks and ponds this year as temperatures continue to rise. The promotion and maintenance of state waterways falls to a range of stakeholders, from governments to nonprofits to charter boat services and equipment shops. As they look ahead to this season, they consider it an industry in evolution.

SPENDING GONE WILD Total wildlife-related spending 䡲 U.S.: $144.7 billion 䡲 Michigan: $6.1 billion Wildlife-watching spending 䡲 U.S.: $54.9 billion 䡲 Michigan: $1.23 billion Hunting-related spending 䡲 U.S.: $33.7 billion 䡲 Michigan: $2.34 billion Fishing-related spending 䡲 U.S.: $41.8 billion 䡲 Michigan: $2.43 billion Source: U.S. Fish and Wildlife Service (2011 data)

Federal funds, new offer could end transit center dispute BY CHAD HALCOM CRAIN’S DETROIT BUSINESS

A transit center held hostage by a 3-year-old legal dispute between the city of Troy and Grand/Sakwa Properties LLC may yet be liberated, with the aid of nearly $2 million in unspent federal funds. At stake is a publicly financed center for bus and rail passengers behind the Midtown Square shopping center and condominium development built by Grand/Sakwa. The Troy City Council is to vote April 7 on a renewed offer to Grand/Sakwa based on an appraisal from Allen & Associates Appraisal Group Inc. in Troy that values the transit center site at $1.05 million. That compares with a $550,000 offer last November based on an earlier appraisal. The first offer sparked a condemnation lawsuit by the city in

See Fishing, Page 27

Finding and Securing Economic Development Incentives for Auto Suppliers (see our ad on pg 2) AT T O R N E Y S AT L AW

See Transit, Page 26

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MICHIGAN BRIEFS Rich DeVos memoir: Co-founder of Amway shares family stories

Albion students stay on track after Marshall merger

MLive.com notes that Rich DeVos, one of the co-founders of Adabased Amway Corp., has a memoir on bookshelves (you remember those, right?) and online. Simply Rich: Life and Lessons From the Cofounder of Amway debuted last week. Dick and Doug DeVos, sons of the author, told MLive that their favorite story in the book involves their father and his best friend and Amway’s other co-founder, Jay Van Andel, and the time they tried to sail around South America, only to have their boat capsize. Which suggests that even someone worth an estimated $6.9 billion can’t buy immunity from his children’s abuse. Another story in the book: Rich DeVos giving a pep talk to grandson Rick DeVos, best known for founding ArtPrize, after he complained that his high school friends were teasing him about the DeVos name being on too many buildings. To which the grandfather observed: “I would treat it, Rick, as a blessing that you are in a family of people who do things that are worthy of being talked about.” Kids.

in the United States when measured by production. It also was ranked 13th for overall brewing, moving up one spot from 2013. The Colorado-based Brewers Association, a trade association that represents small and independent American craft brewers, last week released its annual list of the top 50 craft and overall brewing companies in the United States. Grand Rapids-based Founders Brewing Co. was the only other Michigan brewery to make the list, rising four spots on the craft brewing list to 26th place.

Bell’s retains its spot among nation’s biggest craft brewers

Small village faces prospect of losing insurance coverage

Comstock-based Bell’s Brewery Inc. remains the No. 7 craft brewer

The Saginaw County village of Oakley faces losing its insurance

Last spring, the Albion Public Schools Board of Education closed the district’s high school because of budget troubles and, starting this school year, sent its ninth- through 12th-graders to nearby Marshall High School. So how’s the consolidation going? The Battle Creek Enquirer took a look. On one hand, the rate of punished students has risen, although Albion students aren’t getting into any more trouble than when they were in their own high school. Albion students’ overall grade-point average dropped from 2.61 at the end of the last school year in Albion to 2.52 at the end of the first semester

in Marshall. But Albion awarded extra points for an A-plus, while Marshall does not. Of particular concern of Albion residents: Mostly black, low-income Albion combined with almost allwhite, middle-class Marshall and how their students would be treated in the new environment. One of the biggest critics of the merger, Albion City Councilman Maurice Barnes, now says he is “just shocked and amazed” at the atmosphere at the school, adding that after seeing the students interact, “I had to say, ‘Maurice, you need to get yourself out of the way.’ ”

coverage over issues that include lawsuits against city officials and the police chief. Oakley’s insurance provider, the Michigan Municipal League, plans to drop the policy for the village of 300 when it expires July 1, The Saginaw News reported. The Municipal League said the decision is based in part on the frequency of claims and what it called a lack of cooperation and commitment with risk management efforts.

Hathaway Inc. bought HJ Heinz Co. last year, said Christopher Rich, head options strategist at JonesTrading Institutional Services LLC in Chicago. 䡲 Wyoming-based Gordon Food Service Inc. said it has acquired Houston-based Glazier Foods Co., a food service distributor, MiBiz reported. The acquisition would

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 䡲 A story on Page 14 of the March 31 issue should have said the Detroit Collision Works hotel project in the planning stages would have 46 rooms rather than 36, and it should have said Koop architecture + media is the architect rather than the contractor for the project. 䡲 Because of incorrect information provided to Crain’s, a March 31 People item should have said that Andy Molokac, a senior manager at UHY LLP, Sterling Heights, was previously employed as a director at Orion Solutions Group LLC, Troy.

MICH-CELLANEOUS 䡲 Shares of Battle Creek-based Kellogg Co., maker of breakfast cereals and other packaged food, rose 6 percent Thursday, the most in almost five years. The options trading signaled activity similar to what happened right before Berkshire

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mark Gordon Food’s first foray into Texas. Terms were not disclosed. 䡲 Kettering University in Flint has the best return on investment among Michigan colleges and ranks 41st nationally, according to annual rankings compiled by Payscale.com. Rankings are based on total cost and the earning potential of alumni. 䡲 This is as close as Michigan gets to the Final Four this year: The floor being used for the games was put together in the Upper Peninsula town of Amasa in a plant owned by Salt Lake Citybased Connor Sport Court International. It takes at least 30 trees to manufacture the floor, which consists of 350 4-by-7-foot panels.

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Crittenton turns over cancer center Financial struggles led to deal with St. John BY JAY GREENE CRAIN’S DETROIT BUSINESS

St. John Providence Health System last week signed a five-year management agreement with Rochester Hills-based Crittenton Hospital and Medical Center to lease the former 30,000-square-foot Crittenton Cancer Center. Under the agreement, St. John will manage the center and offer radiation oncology, chemothera-

py, medical oncology, clinical trials, research and imaging services at the newly named St. John Hospital Cancer Center at Rochester Hills, said Jean Meyer, St. John’s CEO. Roy Powell, Crittenton’s CEO, said the hospital and its cancer center has been financially struggling for several years. “When I got here (in 2013), we needed to address clinical services, and cancer care needed

some work,” Powell said. Powell said the arrest last August of Farid Fata, a medical oncologist who practiced at Crittenton and is accused of bilking $225 milPowell lion from Medicare, had little to do with the deci-

sion to seek an outside cancer care partner. Fata leased office space at the Crittenton Cancer Center and owned Michigan Hematology Oncology Centers. He was arrested under allegations he intentionally misdiagnosed patients and exposed some unnecessarily to toxic cancer treatment. Jury selection for Fata’s trial is expected to begin in August. “Fata was the smallest piece of the equation. We have a lot of sur-

Inside

Can you be glutton without gluten? Pizzeria tries, Page 4

See Crittenton, Page 29

Company index he alumnus who has donated more money than anyone else to the University of Michigan is now staging a world-class soccer match at the school as part of his plan to capitalize on the sport’s growing American popularity. Billionaire real estate investor Stephen Ross, a 1962 UM grad who has donated $313 million to the university, two years ago launched an investment and marketing firm, New York City-based RSE Ventures. Last year, a subsidiary, Relevant Sports, organized the International Champions Cup. On Friday, it was announced that soccer powerhouses

See Soccer, Page 28

UM alum Stephen Ross’ latest venture puts big-time soccer in the Big House

INSIDE Quite a kick: Real Madrid, Manchester United financials make head spin, Page 28 Big House, big ambitions? The UM is interested in leasing its stadium for big sporting events — but not too often, Page 28

A foot in the door

Manchester United and Real Madrid will play at Michigan Stadium on Aug. 2 as part of the eight-team, 12-city round-robin exhibition tournament that will culminate in a title game Aug. 4 at Sun Life Stadium in Miami. Ross owns Sun Life Stadium and its main tenant, the Miami Dolphins of the National Football League. He thinks the U.S. is ripe for more soccer. Ross and Matt Higgins, formerly executive vice president of business operations for the New York Jets of the NFL, co-founded RSE Ventures in 2012 to focus on sports, entertainment and technology.

Real Madrid (in green) and Manchester United met on the pitch in March of last year in the Champions League tournament, which brings together Europe’s best club teams.

BY BILL SHEA CRAIN’S DETROIT BUSINESS ASSOCIATED PRESS

Barra’s review, from those who’ve been on hot seat BY AMY HAIMERL CRAIN’S DETROIT BUSINESS

As General Motors Co. CEO Mary Barra faced congressional panels last week, she may well have felt like it was a firing squad. The members of the House Energy and Commerce Committee’s oversight panel grilled her, demanding answers — now! — about why it took the automaker more than a

decade to recall 2.6 million vehicles over a faulty ignition switch that has been linked to 13 deaths. “Unless you’ve been in front of Congress, you don’t now how grueling it can be,” said Davia Temin, who owns New York City-based crisis management firm Temin and Co. Inc. “It is a spectacle beyond all spectacles. You might as well be in a Roman coliseum.” It didn’t end well for one of her

predecessors, former CEO Rick Wagoner, whose congressional panel derided him for flying down in a corporate jet, with the company’s hand out for a bailout. “The most seasoned CEOs quake at something like this,” Temin said. “In that light, I think she did a spectacular job.” That kind of grilling is a nightmare scenario for any CEO, but there are lessons to be drawn from

Barra’s grace under pressure. First, experts said, there is a playbook for managing any kind of crisis: admit, apologize, humanize, and take action. “I think she’s been amazing. It’s been a textbook performance,” said Matt Seeger, dean of Wayne State University’s College of Fine, Performing and Communication See Barra, Page 26

These companies have significant mention in this week’s Crain’s Detroit Business: 5ME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Allen & Associates Appraisal Group . . . . . . . . . . . . 1 Anderson Economic Group . . . . . . . . . . . . . . . . . . 29 Annie Mac Financial . . . . . . . . . . . . . . . . . . . . . . . 10 Arboretum Ventures . . . . . . . . . . . . . . . . . . . . . . . 25 Barbara Ann Karmanos Cancer Institute . . . . . . . . 29 Basco of Michigan . . . . . . . . . . . . . . . . . . . . . . . . 20 Belle Isle Conservancy . . . . . . . . . . . . . . . . . . . . . 26 Caponigro Public Relations . . . . . . . . . . . . . . . . . . 26 Center for Healthcare Research & Transformation . 19 Citrin Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Clinton River Watershed Council . . . . . . . . . . . . . . 27 Comerica Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Crittenton Hospital and Medical Center . . . . . . . . . 3 DeNovo Sciences . . . . . . . . . . . . . . . . . . . . . . . . . 25 Detroit Medical Center . . . . . . . . . . . . . . . . . . . . . 18 Diet Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Doctors for Kids . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Dykema Gossett . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Eagle Ottawa . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Fanuc America . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 First Martin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 General Motors . . . . . . . . . . . . . . . . . . . . . . . . 3, 28 Grand/Sakwa Properties . . . . . . . . . . . . . . . . . . . . 1 Gregory J. Schwartz . . . . . . . . . . . . . . . . . . . . . . . 10 HandyLab . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Harper University Hospital . . . . . . . . . . . . . . . . . . 18 HealthPlus of Michigan . . . . . . . . . . . . . . . . . . . . 19 Henkel AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Hospitality Advisors Consulting Group . . . . . . . . . . . 6 Jones Lang LaSalle . . . . . . . . . . . . . . . . . . . . . . . . 21 Loomis, Sayles . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Managed Assets Portfolio . . . . . . . . . . . . . . . . . . . 10 McLaren Health Plan . . . . . . . . . . . . . . . . . . . 17, 29 Medical Weight Loss Clinic . . . . . . . . . . . . . . . . . . 19 Michigan Association of Health Plans . . . . . . . . . . 17 Michigan Economic Development . . . . . . . . . . . . . 29 Michigan Manufacturers Association . . . . . . . . . . 15 Michigan State University . . . . . . . . . . . . . . . . . . . 27 Mindfield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 NeuMoDx Molecular . . . . . . . . . . . . . . . . . . . . . . . 25 Oakwood Healthcare . . . . . . . . . . . . . . . . . . . . . . 18 PNC Wealth Management . . . . . . . . . . . . . . . . . . . 10 Princeton Enterprises . . . . . . . . . . . . . . . . . . . . . . 20 Renee’s Gourmet Pizzeria . . . . . . . . . . . . . . . . . . . . 4 Robinson Capital . . . . . . . . . . . . . . . . . . . . . . . . . 10 St. John Providence Health System . . . . . . . . . . . . . 3 Savorfull . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Schultz Outfitters . . . . . . . . . . . . . . . . . . . . . . . . . 27 Society of Manufacturing Engineers . . . . . . . . . . . 14 TechTown Detroit . . . . . . . . . . . . . . . . . . . . . . . . . 26 Termar Charters . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Third Shore Group . . . . . . . . . . . . . . . . . . . . . . . . . . 5 UBS Financial Services . . . . . . . . . . . . . . . . . . . . . 10 U.S. Steel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 University of Michigan . . . . . . . . . . . . . . . . . . . 3, 28 Venture Investors . . . . . . . . . . . . . . . . . . . . . . . . . 25 Versicor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Wayne State University . . . . . . . . . . . . . . . . . . . . . . 3 Wolverine Venture Fund . . . . . . . . . . . . . . . . . . . . 25 WOW – With Out Wheat Deli . . . . . . . . . . . . . . . . . . 4

Department index BANKRUPTCIES . . . . . . . . . . . . . . . . . . 6 BUSINESS DIARY . . . . . . . . . . . . . . . . 23 CALENDAR . . . . . . . . . . . . . . . . . . . . 24 CLASSIFIED ADS . . . . . . . . . . . . . . . . 25 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 8 LETTERS . . . . . . . . . . . . . . . . . . . . . . . 8

THIS WEEK @ WWW.CRAINSDETROIT.COM

Baseball season’s here ... watch out for southpaws Crain’s sports business reporter Bill Shea had his claws out on opening day. Read what he saw and his take about Cabrera’s contract at crainsdetroit.com.blogs. NATHAN SKID/CDB

OPINION . . . . . . . . . . . . . . . . . . . . . . . 8 PEOPLE . . . . . . . . . . . . . . . . . . . . . . 23 RUMBLINGS . . . . . . . . . . . . . . . . . . . 30 WEEK ON THE WEB . . . . . . . . . . . . . . 30

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Troy gourmet pizzeria tests market with menu totally gluten- and nut-free BY BRIDGET VIS SPECIAL TO CRAIN’S DETROIT BUSINESS

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The menu at Renee’s Gourmet Pizzeria offers the usual pizzeria fare, including calzones, salads and flatbread. It’s what the newly opened Troy pizza place doesn’t serve that is its marketing proposition: It’s entirely gluten- and nut-free. Industry experts say they don’t know of another such pizzeria in metro Detroit — or in Michigan. Co-owner Gabe Hertz named the restaurant for his 14-year-old daughter, who has a severe nut allergy along with celiac disease, the gluten intolerance affecting around 1 percent of Americans. After several years of watching his daughter become sick from cross-contamination after eating out, Hertz decided to leave his position as co-owner of a Bloomfield Hills Relax The Back franchise and open the pizzeria in February with business partner Tim Karapici at 1937 W. Maple Road, in the Cambridge Crossings shopping center. Hertz had no formal culinary education or restaurant experience; his only connection to the food industry was a catering business his mother owned years ago. He invested $300,000 into opening Renee’s and spent a year developing his gluten-free pizza dough — a blend of rice, tapioca and bean flour. “I figured if I could make dough that did not taste like cardboard, and actually tasted really good, then I could not only attract people who were gluten- and nut-free, but also regular customers who want to eat gourmet pizza,” he said. Items are homemade and screened to be free of contamination from nuts and gluten. Signs are posted on the door prohibiting customers from bringing in food containing those ingredients. “We had a couple sneak in baby food that was processed in a facility that had nuts, and we had to sanitize the whole area,” he said. “We can’t take any chances.” Hertz said he knew the pizza also had to be price-competitive. The 12inch specialty pizza is $12.99 and the 16-inch is $16.99. He said he sells between 80 and 150 pizzas a day. The menu also includes chicken strips made with Fritos in the breading, french fries and family-recipe Hungarian goulash with dumplings along with cinnamon rolls and an assortment of other baked goods. Stacy Goldberg, founder and CEO of Detroit-based Savorfull LLC, which connects businesses and organizations with allergen-free foods, said Renee’s is targeting the two populations most in need of restaurant dining options. But the key to success, she said, will be getting the word out to the gluten- and nut-free communities. Steve Pollard, owner of a Guido’s Premium Pizza Inc. franchise in Okemos and the adjoining WOW-With Out Wheat Deli, Michigan’s only restaurant to be certified glutenfree through the National Foundation for Celiac Awareness, said he supports Hertz’s effort, but cautioned about pricing and only of-

BRIDGET VIS/CDB

Renee’s Gourmet Pizzeria in Troy sells between 80 and 150 gluten-free pizzas a day, its co-owner says.

fering gluten-free items. Pollard said he would not be able to stay in business if not for his regular pizza business, even though sales of his gluten-free pizzas have increased 70 percent since he began serving them seven years ago. “There would not be enough customers to support a separate enti-

ty,” he said. WOW’s offerings are prepared in a gluten-free facility next to Guido’s but are served to customers seated in the main dining area, so there is no separate dining space. Due to the cost of gluten-free products, Pollard said he has to charge more for them. A regular 12-inch specialty pizza at Guido’s is $12, while a WOW 12-inch specialty pizza is $22. Pollard sells about 70 regular and about 22 gluten-free pizzas daily. Hertz, however, said he doesn’t intend to expand into the regular pizza business; he is able to keep costs down, he added, by making everything from scratch — including milling his own flour. Though he has no revenue projections, Hertz has a goal of getting his pizza into schools and stores such as Whole Foods Market and Trader Joe’s. “Right now, this is all passion; it’s not about making money,” he said.

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Idled engineers find jobs – with own tech, investment firms BY TOM HENDERSON CRAIN’S DETROIT BUSINESS

In March 2012, four engineers who had been laid off from Chrysler LLC in 2008 and had just been idled again by Bright Automotive, an Indiana startup trying unsuccessfully to make plug-in electric vehicles, decided they were tired of being hired hands amid the vagaries of the automobile industry. They decided to become entrepreneurs instead. “We weren’t interested in finding another job. We liked working with each other, and we wanted to do something entrepreneurial,” said Christina Coplen, one of the four. Today, they have their own investment firm, Third Shore Group Coplen LLC, pooling their own money to offer funding to early-stage tech companies, generally in the range of $50,000 to $250,000. And they have their own tech company: Versicor LLC, which makes electronic control units for startup medical device, clean-tech and transportation companies and provides consulting and engineering services. Both are based in downtown

Royal Oak, in the basement of the former St. Mary’s High School on West Seventh Street. When Coplen, Mike Donoughe, Chris Kondogiani and Tom Sawarynski founded Third Shore after being laid off a second time, they envisioned a holistic offering of services. They would provide funding, their own engineering expertise and access to a network of engineers and supply-chain manufacturers they had met over the years. Last June, they founded Versicor. Coplen is president and Sawarynski is chief technology officer. The company, which employs six, had revenue of $672,000 last year and projects revenue of $2.1 million this year. “Our goal is breaking down the barriers to innovation,” said Coplen. A major barrier to fledgling medical-device companies is the cost of designing and making electronic control units and writing the software to make them work properly. “We can let them do a plug-andplay with our off-the-shelf units,” Coplen said. “They can spend their time and money much more efficiently if they don’t have to keep re-creating the wheel.” Doug Thomson is founder and chairman of EcoDual LLC, a company founded three years ago in Beaufort, S.C. It makes an after-market fuel

system for heavy-duty diesel trucks that allows them to operate on a combination of diesel and natural gas. He said Third Shore’s holistic approach has paid off for his firm. First, Third Shore provided funding for EcoDual. As part of that investment, Donoughe was brought in as interim CEO last May. “Tom came in and did a real good assessment of where things stood. It was clear we needed a version 2.0 of our product,” said Thomson. EcoDual is raising a round of capital to fund future growth, and without the 2.0 version, fundraising would have been impossible, he said. Versicor was hired to design that version. “It was a crazy timeline. They started work on it last Aug. 1 or so, and we had a system operating on a truck by late September. They didn’t just design the electronics and write software, but they got the manufacturing sourced for us, too. They took it all the way through development.” Third Shore’s other portfolio companies include San Franciscobased BRD Motorcycles, which makes electric bikes for the racing circuit and whose latest control system was designed by Versicor; Soloshot Inc., an Austin, Texasbased maker of small robotic cameras that help people film their activities; and Sight Machine, a San

Francisco-based company with a development office in Ann Arbor that uses open-source software to help manufacturers integrate cameras and sensors into the production systems. Orfin Ventures LLC of Bloomfield Hills was a co-investor in Sight Machine. Ami Mavani, M.D., is another Versicor client. She gives the company credit for a medical device that wasn’t made. The owner of her own pediatric practice, Doctors for Kids PLC of Rochester Mavani Hills, she applied for a device for easier and safer removal of warts in children. Mavani said the Versicor team then designed the device and made a prototype, using a 3-D printer. As part of its due diligence in preparing to help her get approval from the U.S. Food and Drug Administration, the Versicor team found a competing device on the market that her patent attorney had missed. “It didn’t make any sense to spend all the money to get FDA approval if there was already a successful device on the market,” Mavani said. She killed the project. Mavani said she plans to use

Versicor again soon. She said she is developing a board game aimed at modifying children’s behavior called Ticket Please, which she hopes to begin marketing in May. Once the board game is available, she said, she will hire Versicor to develop a mobile-app version. Versicor also offers consulting and design services to technology incubators. It has begun working with the Rocky Mountain Innosphere Incubator in Fort Collins, Colo., and is about to enter into a formal relationship with the Michigan Life Science and Innovation Center, an incubator in Plymouth Township that is owned by the Michigan Economic Development Corp. Andrew Meadow, director of medical device and biotech ventures for the MEDC, said he was introduced to Versicor last December. “They had a long slide presentation, but by the fifth or sixth slide, I knew I was in the presence of something special,” said Meadow. “We’re going to have something formalized soon. They’ll have a presence here and be a key part of what we are offering. “Versicor fills a gap in the development life cycle that I think will significantly reduce the risks that early-stage companies face.” Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

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First Martin awaits OK for downtown Ann Arbor hotel project BY KIRK PINHO CRAIN’S DETROIT BUSINESS

First Martin Corp.’s $20 million hotel development, shown in a rendering, is expected to be approved by June or July. COURTESY OF FIRST MARTIN CORP.

First Martin Corp. is planning its first hotel development, a $20 million mixed-use project including a high-end extended-stay property in downtown Ann Arbor, and intends to announce the hotel flag within the next month. Ann Arbor-based First Martin

submitted site plans to the city for review last week. Michael Martin, vice president of the company, said he expects city approval by June or July and construction to begin immediately after on the 0.48-acre site at 116-120 W. Huron St., between North Ashley and North Main streets. Planning Commission and City Council approval of the site plans

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are still needed. The planning department is currently reviewing them. If approved, the project would be completed in the fall of 2015. First Martin was founded by former University of Michigan Athletic Director Bill Martin, Michael’s father, and has more than 1 million square feet of office and retail space and 400 apartment units under ownership and management. The company hopes to announce the hotel flag for the 110-room hotel project in the next month, Michael Martin said. He said it would be an upscale hotel but would not say which franchise it would be. Downtown hotels are normally 50 percent to 60 percent occupied, compared with 69 percent for Washtenaw County as a whole, said Chuck Skelton, president of Ann Arbor-based hotel consulting firm Hospitality Advisors Consulting Group Inc., which does feasibility studies, appraisals, valuations and management consulting for hotel clients around the country. Retail frontage would be along Huron, while the entrance for core hotel functions would be along Ashley. In addition to about 6,000 square feet of retail and possible restaurant or bar space, the first floor would also include the hotel lobby, meeting rooms, office space, an exercise room, patio, pool, and kitchen and laundry space. The top five floors would be for hotel rooms, which would be studio and one- and two-bedroom units. Financing for the project has yet to be determined, Martin said. The site is currently home to the Greyhound Bus Depot and the Ann Arbor Area Convention and Visitors Bureau. Both will relocate. The Ann Arbor office of Colliers International Inc. will market the retail space to tenants, Martin said. The site is adjacent to an 800car parking structure at Ashley and Ann streets. There is also surface parking northeast of the site and on the south side of Huron Street. Architects on the project are Fairfax, Va.-based Zivic & Hurdle Architects PC and Ann Arbor-based Hobbs & Black Architects. Ann Arbor-based Midwestern Consulting LLC is the project engineer, surveyor and landscape architect. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB

BANKRUPTCIES The following businesses filed for protection in U.S. Bankruptcy Court in Detroit March 28-April 3. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation. Adnan Trucking Services Inc., 7839 Calhoun St., Dearborn, voluntary Chapter 7. Assets: $0; liabilities: $34,554.21. Arella Studios Inc., 50218 Cherry Hill Road, Canton Township, voluntary Chapter 7. Assets: $2,033; liabilities: $239,182. Landstar Enterprises Inc., 9182 Greenfield Road, Dearborn, voluntary Chapter 11. Assets: $1 million; liabilities: $781,000. — Anjana Schroeder

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U.S. Steel Corp., the country’s largest producer of the metal, idled half of its domestic capacity after a fatal accident at an Ecorse plant and unusually icy conditions on Lake Michigan delayed raw-material shipments to another facility. At U.S. Steel’s Great Lakes plant in Ecorse, a contract worker operating a crane at the site of the collapse at the No. 2 basic oxygen furnace died in an accident Friday, the company said in an emailed statement. The three blast furnaces at the plant were down after a March 27 roof collapse, the company said. It marked the second fatal accident at the plant in recent months. Pittsburgh-based U.S. Steel idled its Gary Works in Indiana, its largest plant, because of the ice, the company said in an April 2 letter to customers that was obtained by Bloomberg News. The Great Lakes saw 91 percent ice cover in early March, the second-highest level on record, according to the National Oceanic and Atmospheric Administration. “These severe ice conditions have not occurred on the Great Lakes for more than three decades,” U.S. Steel said in the letter. Gary has 7.5 million tons of annual steelmaking capacity, and the Michigan plant has 3.8 million tons, according to a company filing. U.S. Steel’s domestic capacity is 22 million tons. The company’s U.S. mills produced 17.9 million tons in 2013.

3 downtown Detroit buildings win regional awards Three downtown Detroit buildings have received regional The Outstanding Building of the Year (TOBY) awards in the Building Owners and Managers Association’s annual competition. TOBYs were awarded to the Madison Building at 1555 Broadway St., the Chrysler House at 719 Griswold St. and the Coleman A. Young Municipal Center at 2 Woodward Ave. The Dan Gilbert-owned Madison Building won in the category for buildings under 100,000 square feet. The Chrysler House, also owned by Gilbert, won in the category for renovated buildings, and the Coleman A. Young Municipal Center, owned by the Detroit-Wayne Joint Building Authority, won in the category for historical buildings. Regional award winners advance to the international competition in Orlando, Fla., at the BOMA International Every Building Conference & Expo in June. Contest judges evaluate factors like tenant relations programs, emergency preparedness and security standards, and continuing education for building personnel, according to a news release. — Kirk Pinho

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OPINION

Pothole plan paves way for more deals? T

hanks to our prolific potholes, state lawmakers may finally be getting it right. Late last week, House Republicans unveiled a proposal to replace the state’s per-gallon sales tax with a 6 percent tax on the wholesale price of gas. As gas prices go up, more money will flow to maintain and improve Michigan’s roads and bridges. If adopted, it could mean an extra $450 million for road funding in 2015. That is far short of the $1.2 billion Gov. Rick Snyder has proposed. But it’s a start. The GOP plan also would require a minimum five-year warranty on road projects, something prompted by furious taxpayers frustrated by deteriorating roads that had just gotten the orange barrel treatment. The plan would also increase fees on permits for overweight trucks. The good news? Democrats said they could work with their Republican counterparts to finesse and push the proposal through. If both parties can work on this deal, maybe we can finally get some traction on other transportation issues — like transit funding for Detroit.

Biz can learn from GM crisis Speaking of rough roads: Members of the U.S. House and Senate — few of whom have ever run anything but their mouths — castigated General Motors Co. CEO Mary Barra last week for not having enough answers to the ignition switch crisis. Many of the questioners were less interested in answers than they were in their own grandstanding. (The award for most-irritating most certainly goes to Sen. Barbara Boxer, D-Calif.) Although this is GM’s crisis, the lessons apply to any company, any industry that makes and sells products. First, the lead of the investigation of a decade of actions involving the ignition switches reports to the board — not to the CEO and executive team. It’s important to keep that communication line free of even perceived interference or sanitizing at the executive-suite level. Second, this may be an example of how a CEO can use a crisis to accelerate cultural change. The investigation results could result in everything from firings to criminal charges. But at the minimum, it can be a powerful hammer to pound away at needed culture changes. Finally, every organization needs a way for people at the lower rungs to be able to safely report what they perceive to be safety or operational problems. The key word is “safely” — as in without repercussions. GM may not have that now, but such a process may well be in its future.

LETTERS Consider retirees before nonprofits Editor: Two articles in Crain’s on March 31 reported on or endorsed reinstating Michigan’s charitable tax credits for donations to a variety of “nonprofits” that were eliminated a couple of years ago for the state to save money (“Senate bills would restore charitable tax credits for some donations,” Page 5; “Charitable credits can save money,” editorial). As part of that same sweep of savings, the Michigan Legislature and governor eliminated tax exemptions for retirees’ pensions and virtually eliminated the Homestead Property Tax Credit that hurt retirees as well. Everyone was to share the pain, right? Are there any bleeding hearts endorsing reinstating either of these two takeaways from hundreds of thousands of retirees in Michigan? There is a correla-

Crain’s Detroit Business welcomes letters to the editor. All letters will be considered for publication, provided they are signed and do not defame individuals or organizations. Letters may be edited for length and clarity. Write: Editor, Crain’s Detroit Business, 1155 Gratiot Ave., Detroit, MI 48207-2997. Email: cgoodaker@crain.com tion between the drop in charitable contributions and the adverse effect that the takeaways from the seniors have had. Seniors who typically do donate to charities now find themselves with appreciably less disposable income. Couple that with the dramatic increases in food and energy prices, and a large part of the drop in charitable donations can be accounted for.

Many of these “nonprofits” have many other sources of revenue, notably from other government agencies. Public universities receive sizable government funding, have huge endowment funds, and routinely raise tuition. Public broadcasting entities receive government funding and “advertising” dollars, and sponsor fundraisers. Everyone would like to have their cake and eat it, too. Who worries about seniors’ ability to cope? If the state now has surpluses, let’s reinstate some of the takeaways from seniors and then re-evaluate the “nonprofits” fates. By the way, let’s direct most of the surpluses toward fixing Michigan’s roads. Dramatically more residents, including seniors, would benefit, not just a chosen few “nonprofits.” Joseph Majcher Orchard Lake

KEITH CRAIN: Michigan roads: Pay now or pay later If you want to get the best bang for your buck, then you fill some potholes and cover them with asphalt. If you want to do a decades-long fix, you dig down a couple of feet and pretend it’s a new road and you build up from the base and make it sturdy for a long time. It takes more time and money. And you should set the maximum weight limits in line with the rest of the country. If you ever have had the opportunity to drive in Europe, such as on

the German autobahn, then you’ve traveled a very good highway. When it needs repair, they dig down to the core and repair it permanently. I have no doubt that it is very time-consuming and very costly. But it creates some of the best roads in the world. I hope, aside from changing the truck weight limits,

that is what is being planned for the repair of I-96, from the roadbed to the overpass bridges. I assume that is why it is taking so long and will cost a lot more money rather than a resurface. I don’t envy our state transportation department. It has far too many lousy roads and far too little money. Do we want them to do a lot of

roads with a cheap fix that won’t last very long OR do we want them to do fewer roads and do them right so they will last for decades but create a lot of inconsistency and higher cost? I think the residents of Michigan deserve to weigh in with their opinion as to the right path to follow. It may well be that a combination of both processes makes the most sense and, depending on location, would determine the best construction process.

I can’t help but think that as the orange barrels start going up for construction, there are plenty of opinions. It is not an easy call, and I would suggest that our folks in Lansing need a lot more input from us. As we all spend the spring dodging potholes, more than ever we’ve got strong opinions about what to do and how to do it. Somehow the Michigan Department of Transportation has to create a method to hear from all the residents.

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Oakland studies suburban water, sewer system Oakland County is on the verge of telling Detroit to take its ball and go home. That ball is the Detroit Water and Sewerage Department. Last week, the Oakland County Board of Commissioners’ finance committee voted unanimously to create a $3 million fund to study developing an independent water and sewer entity. DWSD serves 85.6 percent of Oakland residents and 4 million customers in Southeast Michigan. As part of Detroit’s bankruptcy proceedings, Wayne, Oakland and Macomb counties have been negotiating with Detroit Emergency Manager Kevyn Orr to create a regional Great Lakes Water Authority. The new entity would lease the city’s water and sewer assets at an annual price tag of $47 million. The city itself would become a wholesale customer of the authority. But those discussions have stalled. The counties say the city hasn’t provided the necessary documents to evaluate the deal. Additionally, the commissioners are fearful of DWSD’s hefty $6 billion of debt as well the cost of coming into compliance with Environmental Protection Agency rules. Finally, as part of the proposed bankruptcy settlement, the new authority would still have an obligation to fund a portion of the city’s pension bill. “It is fundamentally unjust and unfair to force DWSD wholesale rate-payers to fund basic city of Detroit services unrelated to water and sewer services by diverting revenues out of the DWSD system, thereby forcing substantial rate increases to raise the additional revenue necessary to fund operations, maintenance and improvements already required to maintain the system in compliance,” reads the resolution the Oakland finance committee approved. Orr sent a rejoinder letter to all of the county executives, challenging a number of points, including assertions that the city has not provided necessary documents to evaluate

the proposed Great Lakes Water Authority. “Throughout this period, the city has done its level best to provide the information as expediAmy Haimerl tiously as possible and conduct its discussions and negotiations with you in the sequence and manner requested by the counties. … To now suggest that the city somehow drew a line

in the sand on this transaction is simply inaccurate and not supported by the facts.” Oakland County Executive L. Brooks Patterson made the first threat, arguing at his State of the County address in February that the county could create a separate water and sewer authority. “Instead of sending billions of dollars to help the Detroit Water and Sewerage system come into compliance with the EPA standards, why not use those billions to build our own water and sewer authority?” he asked the crowd. As negotiations fell apart, Orr announced he would seek bids from

private companies interested in buying or leasing and managing the system. Those are due June 1. “We continue to believe an authority may well be the best outcome for everyone,” Orr wrote in his letter to the county executives. “But given that there is not a majority consensus on whether to move forward with our discussion, we have no alternative but to pursue other options to maximize the value of this critical enterprise for the benefit of the city, its creditors, customers, employees and retirees.” Of course, private-sector interest could be limited by the specter of 1 million customers suddenly pulling

away and creating their own water and sewer system. (Possibly even more if other counties join Oakland in this quest, as the Detroit Free Press has reported is possible.) Whether that is feasible is uncertain, but the political will to find out is strong. The full board of the Oakland County Commission is to vote on the resolution April 17. However, all 21 commissioners had signed the resolution as of April 3. To get started, the finance committee authorized $500,000 that could be spent researching options. A version of this column originally appeared as a blog at crainsdetroit.com.

NOMINATE FOR 40 UNDER 40 Since 1991, Crain’s Detroit Business has gathered 40 of the community’s overachievers for a special salute. Past winners have started companies, found success at a young age at established businesses and made nonprofits stronger. Crain’s is seeking nominations for the 2014 class of 40 under 40, which recognizes young achievers based on factors such as financial impact and community leadership. Winners will be profiled in the Oct. 6 issue of Crain’s and will be honored at the awards event in November. With more than 640 alumni invited, the event brings together the current class with colleagues, clients, family and friends to celebrate. To be eligible, nominees must be 39 or younger as of Oct. 6, 2014. Nominations must be received by April 14. For questions regarding the nominations, contact Bill Shea at bshea@crain.com or (313) 4461626. For technical questions regarding the nomination form, contact Ashley Henderson at ahenderson@crain.com or (313) 446-1685.

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Money managers see Ukraine turmoil as buying opportunity BY TOM HENDERSON CRAIN’S DETROIT BUSINESS

Area money managers say the ongoing turmoil in Crimea and Ukraine presents buying opportunities — both in Russia, where public stocks have taken a sharp hit, and here, where oil and gas companies may be able to capitalize on European fears of relying too heavily on energy supplies from Moscow. For the most part, they think events will play out without longterm impact to markets or major financial dislocations. Short-term, though, there are some strategy shifts to hedge investments for some advisers. Russia’s annexation of Crimea “was the major event of the first quarter, but ultimately it won’t have much impact,” said David Sowerby, portfolio manager in the Bloomfield Hills office of Loomis, Sayles & Co. “From a global perspective — I’m not being dismissive of Crimea, where life-changing events have taken place — but these types of events have little long-term impact,” he said. “The problems in the Ukraine and in Russia and all the dislocation that is taking place are not coming as a surprise to us and haven’t made any changes in our allocations,” said Dennis Johnson, a senior vice president at Comerica Bank and chief investment officer at the Comerica Asset Management

Group. “There will be some volatility, but I don’t see any disruptions in markets.” Others who agree that this too shall pass are, nonetheless, making investment decisions in reaction to Russia’s moves in the region. John Schindler, a senior vice president of investments at UBS Financial Services, says he has added gold to his clients’ portfolios since Russia entered Crimea, in part to serve as a hedge in case events there disrupt world markets. He said he is bullish on U.S. energy stocks, both because consumers of Russian energy will be looking for more stable sources in the event of possible European embargoes, and because proposed legislation in Washington would allow the export of natural gas to Europe. “If we can get the politics straightened out, U.S. energy stocks will be a great place to be,” he said. Schindler also said UBS continues to like U.S. equities, despite the big run-up in stock prices in 2013. “Crimea is just another step in a theme that has been playing itself out for a while. The U.S. continues to benefit from events globally. Money will continue to flow here,” he said. A big trade-off in Russian stocks in early March, after the takeover of Crimea, was a buying opportunity for Jim Robinson, the former CEO of Birmingham-based Munder Capital Management and Southfieldbased Telemus Capital Partners LLC

who now has his own firm, Grosse Pointe-based Robinson Capital LLC. He didn’t invest directly in Russian stocks but in indices that trade in public companies in the so-called BRIC countries of Brazil, Russia, India and China. Bill Stone is chief investment strategist and executive vice president for PNC Wealth Management. He said the arrival of spring limits concern about oil and gas supplies to Europe, and that “with Russia integrated into the world economy, now, there’s an incentive for (Russian President Vladimir) Putin to act rationally.” Stone said one of his investment strategies is to look for good companies in countries that are in turmoil, which applies to Russia, which he thinks will fall into recession in the aftermath of what has happened in Crimea. Jonathan Citrin, founder and executive chairman of the Birmingham-based Citrin Group LLC, is more concerned than other investment managers interviewed by Crain’s that trouble in Ukraine may eventually lead to a major economic collapse. He said with U.S. markets at alltime highs, he is worried that investors are looking for a reason to take their profits will fuel a sell-off that could feed on itself. “Could Crimea be the tip of the iceberg that leads to another recession? I hope not, but it has the potential,” he said. “It could start a huge

sell-off. I can see a lot of hurt coming if there isn’t a resolution soon.” Citrin said his firm has beefed up its allocation to hedging activities as a protection against such a sell-off. About one-third of his portfolio is now in what he considers various hedges — buying gold, shorting oil stocks and taking long positions on the yen, the dollar and the pound sterling. Anne MacIntyre, president and CEO of Annie Mac Financial LLC of Sterling Heights, doesn’t see events in Ukraine leading to a major selloff. But energy stocks could make sense as a result of legislative changes. “One of the things that might come out of this is the natural-gas situation domestically. Congress is ramping up legislation to allow the export of natural gas, and that will take several years to put in place, but it makes energy stocks a good long-term play,” she said. Michael Dzialo, president and MacIntyre chief investment officer of Rochester-based Managed Assets Portfolio LLC, is bullish on oil and gas, too. He has a big position in Statoil ASA of Norway and owns two other European stocks, Total SA of France and Eni SpA of Italy. “The economic map of the world involves getting oil from point A to

point B, and buying oil stocks is an insurance policy if things heat up in Russia. Statoil has a nice valuation and a nice dividend yield, and it has reserves in a face part of the world. I’m buying it for new accounts,” he said. He also thinks a modest stake in gold as a hedge makes sense. “Gold has some merit,” said Dzialo, who has been buying stock in the Central Fund of Canada, a gold and silver depository. Peter Schwartz, a principal in the Bloomfield Hills firm of Gregory J. Schwartz & Co., think Crimea is just the latest of regional worries such as Syria and North Korea that briefly effect the market without much lasting result. He said that if things heat up elsewhere in Ukraine, it will likely cause investors to take profits and sell off some holdings, but any decline in the market “will present a buying opportunity. For the longterm investor, bad news can be your best friend as you buy off the lows,” he said. Schwartz said he remains bullish on emerging markets, despite trouble in the “R” part of the BRIC countries. “There’s strong data that the growing middle class in emerging markets are becoming consumers of goods and services,” he said. “If there’s a bargain out there, it’s foreign markets.” Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

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Crain’s biennial Cool Places to Work in Michigan awards returns this year, and once again Crain’s 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 for Cool Places designation. Best Companies supplies all participating companies — regardless of whether they win the Cool Places recognition — with a Best Companies Group employee feedback report based on employee responses to the 72-question survey. The report can help company 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 www.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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REPORTER’S NOTEBOOK Dustin Walsh writes about auto suppliers, manufacturing, the steel industry and the business of law. Call (313) 446-6042 or write dwalsh@crain.com

Page 11

Focus

ENGINEERED TO EMPLOY Crain’s list of the largest engineering companies in Southeast Michigan, Page 16

advanced manufacturing

Dustin Walsh

New newsletter for a changing industry In Diego Rivera’s famous mural, “Detroit Industry,” denim-clad workers with calloused hands are seemingly destined to forge metal into engine parts. But these are no longer the badges of Detroit’s working class. The state lost nearly a million manufacturing-related jobs since 2008. Those workers and their factories were disappearing far ahead of General Motors Co.’s bankruptcy. Jobs were shipped south. Automation replaced workmanship. Words like “efficiency” and “streamlining” became part of the manufacturing vernacular. Yet, this is Detroit. We know about reinvention. Jobs are returning, albeit different types of jobs. From the smallest metal stamper to the largest automaker, new business practices and manufacturing processes have been implemented out of necessity. That’s why Crain’s Detroit Business will launch its newest e-newsletter next week covering the region’s manufacturing industry. The newsletter, “Crain’s Manufacturing” (we keep it simple around here), will document the monumental shifts in thoughts, beliefs and the practices of making things. You’re still going to see our traditional coverage of the business of manufacturing. But you’ll also be able to keep abreast of the news in a weekly newsletter. We plan to cover the faces and art of manufacturing, from the sophisticated to the primitive. We’ll still be heavy-handed on the dollars and cents of manufacturing, but with the understanding that it’s the people who spin the wheels. The e-newsletter will feature a monthly video show off some of the region’s most innovative or even oldtimey manufacturing methods. If your employees are hunched over a hand lathe or are using technology to revolutionize a process, we want to hear from you. Useful statistics will also be a large part of our coverage. We’ll bring you easy-to-read statistical information on purchasing patterns and job postings. You’ll also get a weekly blog from yours truly containing insights, concepts and interesting tidbits on the region’s industrial might. Have an idea for our manufacturing coverage? Contact me at dwalsh@crain.com.

A cut above

The heat is off: 5ME LLC shoots liquid nitrogen – temperature: minus 321 degrees – through the tip of a cutting tool, which keeps the metal from becoming brittle and keeps the cutting tool cool.

5ME LLC Liquid nitrogen turns hot process into a cool tool he phrase “parts machining” conjures up images of thunderous contraptions designed to cut hardened components from even harder metals. It’s usually a hot process with tool bits spewing near-molten shards of metal. But at the Warren technical center of 5ME LLC, tools and their bits are cool — minus 321 degrees Fahrenheit cool. Formed in July 2013 from divested units of MAG IAS, 5ME is using its patented cryogenic tooling to advance the speed and efficiency of parts machining. Liquid nitrogen, the same substance used to preserve Ted Williams’ head, has been used in parts manufacturing for 50 years, but 5ME pushed the process in a new direction, said Bill Horwarth, president of the Cincinnati-based company. Instead of spraying liquid nitrogen directly onto a cutting surface or cutting under a liquid nitrogen bath, 5ME’s process runs liquid nitrogen through the machine to the tool tip. This keeps the nitrogen from making the metal brittle and keeps the cutHorwarth ting tool cold, Horwarth said. The spinning cryogenic tool extrudes liquid nitrogen away from the part it is cutting during operation. The process releases a steamy vapor as the nitrogen turns back into a mostly harmless gas upon meeting oxygen. The result is a machine that operates free of toxic waterand oil-based coolants. Liquid nitrogen costs 6 cents per

es, “advanced manufacturing” is about robots and computers and composites and technology and other processes far removed from the smokestacks of yore. But it’s also applying existing technology in new ways and learning to be thrifty with what was formerly considered waste materials. This report, prepared by Crain’s manufacturing reporter Dustin Walsh, showcases companies getting creative, from 5ME LLC’s cryogenic tooling, which offers precise cutting via deep-freeze temperatures, to Eagle Ottawa’s blended leather product, which makes use of leather scraps to create a leather alternative for automakers. Stories begin on this page and continue to Page 14.

liter, cheaper than many coolants on the market, Horwarth said. The nitrogen-cooled tools allow metal and other hard composites such as carbon fiber to be cut at increased speeds without damaging the product or the tool. In a testing contract with Bethesda, Md.-based Lockheed Martin Corp., 5ME’s cryogenic machining technology doubled machine output for titanium bulkheads and other parts for the F-35 Lightning II fighter jet. For engine block test contracts, the cryogenic tools have quadrupled machine output. Horwarth said the cryogenic technologies’ ability to cut hard metals and composites at such high speed opens up new opportunities for manufacturers. “Being able to cut with this technology, we’ll see more materials being used than we’ve never seen before,” Horwarth said. “Universities are already testing our process, cutting materials we’ve never heard of; this technology is the future.” 5ME has sold two cryogenic units but has test contracts with Ford Motor Co., The Boeing Co., Daimler AG and several others. — Dustin Walsh COURTESY OF 5ME LLC

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Focus: Advanced Manufacturing

Fanuc America Corp. Rochester Hills company creates arc-welding robot to keep small manufacturers competitive SME connects all those who are passionate about making things that improve our world. At SME, we are making the future. Together. sme.org

lobal demand for industrial robots reached an all-time high in 2013 — and it shows no sign of slowing down. Despite the shaky economies of Europe and North America’s new footing, sales shot up 5 percent last year and up 12 percent since 2010, according to the International Federation of Robotics. The question is, as manufacturers continue to invest in technology, are small manufacturers missing out on the automation boom? Fanuc America Corp. in Rochester Hills thinks so, and it created an entry-level arc-welding robot to boost productivity for the privately held manufacturers that can’t invest like mega-corporations. In November, Fanuc introduced its Arc Mate 0iB robot at the Fabtech trade show in Chicago. The robot is smaller and less expensive than Fanuc’s traditional models, but it offers the same technology, said Mark Scherler, director of Fanuc America’s materials joining segment. “We’ve always maintained highquality, reliable Scherler robots, but never for the entry-level price,” Scherler said. “Now we can give those markets advanced manufacturing capabilities that we typically only provided to larger manufacturers.” The base price for the Arc Mate 0iB is $45,000, roughly 20 percent cheaper than its other models, Scherler said.

As manufacturers continue to invest in technology, are small manufacturers missing out on the automation boom? The robot is equipped with sensors to ensure accurate welds on every part, which is monitored through a Web-based tool. The Arc Mate is faster and more reliable than manual welding techniques used at many small shops, Scherler said. While automation is a contentious issue among laborers, Scherler said using robotics can lower manufacturing costs and create more jobs in the long term. “We’re targeting smaller automotive suppliers and general industry customers who have hesitated using robotics or automation because of cost,” Scherler said. “If we can get this into smaller manufacturers and have them automate more processes, they can be competitive and we can bring more manufacturing back to the U.S.” — Dustin Walsh

Fanuc America’s arc-welding robot

COURTESY FANUC AMERICA CORP.

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Focus: Advanced Manufacturing

Eagle Ottawa LLC To trim industry waste, supplier reclaims scraps to create a leather alternative

single cowhide creates enough leather for 12 NCAA basketballs or one automotive bucket seat. However, as much as 15 percent of leather from each hide is scrapped and, typically, disposed in a landfill. In the industry, they call this waste stream. Auburn Hills-based Eagle Ottawa LLC, the largest automotive leather supplier in the world, recently launched a process to recycle the scrap hide into a traditional leather alternative for the auto industry. Eagle Ottawa began designing the process, which was created by England-based E-Leather Ltd. for the aviation industry, in 2011. The idea was to create a viable, eco-friendly product for customers looking for leather alternatives, said Surbrook Steve Surbrook, vice president of innovation at Eagle Ottawa. “Customers weren’t asking for it, but we saw an opportunity,” Surbrook said. The price of leather

PHOTOS BY DAVID HALL/CDB

At the Eagle Ottawa plant in Rochester Hills, cowhide rests (left) between drying and coating treatments, and is showcased (above) in leather swatches after paint and perforation work. Video: Read Dustin Walsh’s March 6 blog about Eagle Ottawa and how leather is hardly a hidebound business, crainsdetroit.com/video

was increasing, and some of the luxury carmakers were looking for alternative materials to vinyl on entry-level models. E-Leather reuses the leather scraps by using them as a base for new composite material. The scraps are shredded, then turned

into a knitted base through the process of hydroentanglement, which uses pressure and water to transform fibers into a nonwoven material. Eagle Ottawa then finishes the product with the same painting and coating materials used on its

leather lines. The end result is a fabric that matches “genuine” leather much closer than vinyl does in touch and texture, Surbrook said. Eagle Ottawa invested $3 million into its plant in Rochester Hills to build its Natalle recycled composition leather line. The 330-foot Natalle line is the first of its kind in automotive and is capable of generating 22 million

square feet of composite leather material for the industry annually. “We achieve a lot of the same characteristics of leather, but it’s less dense offering customers a mass reduction,” Surbrook said. “What we’ve done is find a clever way to add coatings to make the product durable and make it look and feel like genuine leather.” Where vinyl is typically used on the sides and headrests of leather seats, the Natalle product can be used everywhere, including the seat itself, Surbrook said. Surbrook said the Natalle product also has brand potential for automakers looking to market the use of sustainable materials without sacrificing the characteristics of leather. The supplier is launching the product on an entry-level vehicle later this year. Eagle Ottawa has two customer contracts, which weren’t revealed due to contract requirements. The Natalle line will contribute $5 million to Eagle Ottawa’s bottom line in 2014, but is expected to reach $50 million over the next five years and represent 5 percent of the company’s $1 billion revenue. — Dustin Walsh

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CRAIN’S DETROIT BUSINESS

cl Reg as is se te s rf to or da y!

Focus: Advanced Manufacturing

Henkel AG Adhesives speed production of composite materials, open doors to more contracts

Automation Alley

At Oakland University Offering affordable training for digital design and manufacture of the future. www.automationalley.com/plmcenter 248-648-4701 Oakland University OU INC One Golfview Lane | Rochester, MI 48309

Product Lifecycle Management Center

lternative materials to steel, aluminum and magnesium are on the rise in manufacturing, specifically automotive manufacturing. The Chevy Corvette and BMW, for example, feature carbon fiber. Yet carbon fiber, fiberglass and other materials that offer stronger, lighter alternatives have limitations — mainly cost and production speed. A sheet of carbon fiber can take as long as a day to cure, a shortcoming in the just-in-time massproduction philosophy of the automotive world. Engineers at the North American headquarters of Henkel AG & Co. KGaA in Madison Heights uncovered a way to speed things up. A variation of Henkel’s aviation bonding adhesives can be used to create faster production of new composite materials. Using a modified resin transfer molding machine, Henkel can shoot its Loctite Max Series polyurethane adhesive, instead of epoxy, at an increased rate, boosting production time. Much of the epoxy-based carbon fiber or fiberglass applications for automotive have been used in small-production models due to time limitations. But Henkel’s Loctite product can allow manufacturers to go after more mass-produced contracts. “Composites have been held back by getting to mass scale with a resin-based system using epoxy,” said Kevin Roslinski, se-

COURTESY OF HENKEL AG

Henkel AG’s high-pressure resin transfer molding system is intended to work faster than traditional production of lightweight composite materials.

nior application engineer for Henkel’s adhesives steering unit. “There hasn’t been anything to take production to the 100,000 unit (vehicle platforms) or beRoslinski yond, but we’re pushing the envelope toward mass production.” German supplier Benteler Inter-

national AG is using the Loctite product to supply fiberglass leaf springs for the Daimler Sprinter in Europe. Other automakers and suppliers are investigating the viability of Henkel’s product. The only thing holding the process back is the price of materials, but Roslinski said as prices of carbon fiber continue to drop, sales of Henkel’s adhesive product will grow. — Dustin Walsh

Learn trends in advanced manufacturing at Big M Advanced manufacturing is a complicated process. What better way to understand the newest innovations than experiencing them firsthand? The Society of Manufacturing Engineers’ The Big M event at Cobo Center on June 9-12 will showcase the latest in manufacturing trends to educate industry leaders and educators. The exhibit space at The Big M event will host live manufacturing operations to showcase advanced technologies and processes, such as cybersecurity, advanced materials, 3-D printing and modeling. The showcase is designed to educate attendees on the changing manufacturing landscape. The conference sessions will feature speakers from General Electric Co., Ford Motor Co., Steelcase Inc., Siemens AG, Dow Chemical Co. and more. Attendees can also tour Southeast Michigan plants, such as General Motors Co.’s Chevy Volt plant, the Comau SpA robotics research and development center, and others. “The Big M communicates a strong message to the market-

place about innovation and technology,” Debbie Holton, SME’s managing director of industry strategy and events, said in a

B UILT

news release. For more information, visit sme.org and click on “events.” — Dustin Walsh

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April 7, 2014

Page 15

Focus: Advanced Manufacturing

Not making money now? ‘Better check your business plan’ In 2012, Michigan’s manufacturing output totaled $66.2 billion, up from $58.2 billion in 2009, according to the National Association of Manufacturers. Those numbers illustrate how the state’s manufacturing is on a strong upward trend, as auto suppliers and others seek to keep up with customer orders and find new talent. Crain’s manufacturing reporter, Dustin Walsh, spoke about the state of the state’s manufacturing industry with Chuck Hadden, president and CEO of the Lansing-based Michigan Manufacturers Association.

the industrial personal property tax. We need a “yes” vote in August to eliminate the burden. We’re trying to get the message out to everyone that new taxes won’t arise from its elimination, that it’s covered with a redirection of the use tax and being paid for by the elimination of the tax loopholes. Manufacturers hesitate to buy new equipment because of the tax. It’s a never-ending tax. If you’re going to pay sales tax on the equipment, then get the PPT tax at the

end of the year, you’re going to rethink new equipment. This is a real opportunity to get rid of a very onerous and old tax. Equipment has always been a staple of manufacturing, but advancements in automation and efficiency make it even more important today, correct? All of manufacturing is turning into advanced manufacturing at this point. You can’t compete any other way. The manufacturers are asking their suppliers for creative

What’s the general health of manufacturing in Michigan? It’s never been healthier than it is right now. Manufacturers that survived the recession, they lost some competitors. If you’re not making money right now, you have to check your business plan. This has been a good time for Michigan, its manufacturers and workers. There’s a lot of overtime being put in right now.

ways to better the processes. The suppliers are part of the creativity of the maker. They need to keep coming up with new ideas. One thing they learned during the recession is that they can run lean, and they will continue to work their costs. Robotics is a way to get costs back quickly, and we’re seeing more and more of robotics use down the chain. What are the national and global issues facing the industry? In Michigan, many of our manu-

facturers didn’t know how to export. That’s changing. There were grants available, and we’ve held a number of classes. We’ve seen a lot of manufacturers begin exporting and taking advantage of the new markets and new customers globally. At the federal level, we still need to do something to be more competitive with our tax structure. We continue to have the highest corporate tax — and it’s not helping Michigan’s manufacturing base.

Keep your business heading in the right direction.

What is the biggest bottleneck to continued success? Talent. It just isn’t there to meet the needs. I have people who don’t have machines running because they Chuck Hadden, can’t find the Michigan right talent to Manufacturers operate them. Association It’s nobody’s fault. Who wanted to go into manufacturing in 2008 when the bottom was falling out? There weren’t any jobs, the pipeline dried up, and now we need to restock it again.

Q&A

What can manufacturers do to solve that problem? There’s a variety of issues out there, but they need a plan. Some of them are doing apprenticeship programs, some are reaching out in K-12 programs, and others are paying students to work for them while they are in college. There are a lot of ways to get talent. There’s a creative way at Grand Rapids Community College where students work during the day and go to school at night. The students are being paid to work, and the manufacturers are paying for their college. I think it is a good model that others can learn from. There are four or five companies that are doing it in Grand Rapids, but the others haven’t caught on. We’re seeing a community college offer a welding class, get only five students sign up and then cancel the class. Companies need to work with the colleges and find students outside of the normal areas to fill these programs. Are there regulation or taxation issues slowing growth? Yes. I think the other big impact we’re working on is the change to

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

CRAIN'S LIST: LARGEST ENGINEERING COMPANIES Ranked by number of local engineers Company Address Rank Phone; website

Top executive(s)

Total number of local engineers Jan. 2014/2013

Local licensed engineers Jan. 2014/2013

Revenue ($000,000) 2013

Revenue ($000,000) 2012

Engineering disciplines

Tata Technologies Ltd.

Warren Harris president and COO

625 620

NA NA

$376.0 B

$376.0

Automotive, aerospace, construction and heavy equipment

Ghafari Associates LLC

Yousif Ghafari chairman

525 496

57 54

125.6

110.3

Civil, conveyor, electrical/controls, industrial, manufacturing, mechanical, packaging, paint process, process product, quality, structural

Altair Engineering Inc.

James Scapa chairman and CEO

507 428

NA NA

238.0

Product design research and engineering, industrial design, simulation-driven design, program management, product development and test, software engineering, computer-aided engineering, high-performance computing, information technology, enterprise analytics, data management, business analytics

FEV North America Inc.

Patrick Hupperich president and CEO

450 C NA

NA NA

Engine development, transmission and driveline, powertrain integration, vehicle development, electronics/controls, telematics/infotainment, value engineering, test systems

Rapid Global Business Solutions Inc.

Nanua Singh president and CEO

418 375

6 5

74.9

64.5

Automotive, aerospace and general engineering services; product design and development, finite element analysis and computational fluid dynamics engineering services

Geometric Americas Inc.

Michael Pelkey president

248 225

NA NA

94.0

Industrial engineering, product design, packaging, tooling, product life-cycle management, computer-aided design, computer-aided manufacturing products and services

Ricardo Inc.

Thomas Apostolos 40000 Ricardo Drive, Van Buren Township 48111 president (734) 397-6666; www.ricardo.com

200 200

NA NA

60.7

55.3

Vehicle, powertrain, transmission, hybrid and electronic controls design and engineering

URS Corp.

Robert Vensas vice president and office manager, Michigan

168 158

37 32

61.1

58.4

Mechanical, electrical, structural, civil, plumbing/fire protection, water/ wastewater, transportation, environmental and communications

ESG Automotive Inc.

Steve Polakowski president

167 146

NA NA

Consulting and benchmarking, electrical system development, system integration, test and verification, diagnostic and technical services

10.

Black & Veatch

James Coyle senior vice president

149 148

NA 121

192.8

171.0

Mechanical, electrical, instrumentation and controls, civil/structural, chemical, wastewater, telecom

Danlaw Inc.

Raju Dandu chairman and CEO

142 135

NA NA

58.0

30.0

Vehicle telematics for insurance and fleet vehicle electronics design and manufacturing, engine control unit communications and diagnostics, embedded software development, automotive software testing and verification, hardware in the loop testing, software in the loop testing

BAE Systems Inc.

Mark Signorelli vice president and general manager, combat vehicles

140 120

0 0

Provide technology solutions, systems integration capabilities, flexible manufacturing capabilities and integrated logistics support throughout the product life cycle; engineering and prototype facility has development labs and vehicle assembly bays for combat vehicle and weapons system assembly, integration and testing

Meritor Inc.

Ike Evans chairman, president and CEO

110 110

NA NA

3,701.0

4,418.0

Axle, brake and suspension solutions to original equipment manufacturers and the aftermarket for the transportation and industrial sectors

Jacobs Engineering Group Inc.

Steve Arnette general manager and vice president

104 104

13 14

170.0

160.0

Eicher Engineering Solutions Inc.

Chris Theisen director of business development

100 80

3 5

10.0

8.0

Computer-aided design, computer-aided engineering, prototyping, staffing, highperformance computing

16.

RedViking D

Randy Brodzik president and CEO

98 96

4 4

Mechanical, software, controls, computer, electrical and manufacturing engineering

17.

Tetra Tech of Michigan PC

James Rydquist vice president

95 91

48 48

42.4

41.2

Water and wastewater, environmental, instrumentation and controls work, design/build projects, stormwater, combined sewer overflow elimination and transportation

18.

Daifuku Webb Holding Co.

Brian Stewart chairman, president and CEO

94 106

4 3

556.0

487.6

Designs, engineers, installs and supports integrated material handling systems such as baggage handling, conveyor, storage and retrieval systems

19.

Conestoga-Rovers & Associates Inc.

Scott Adamowski vice president

80 54

56 44

28.0

24.0

Environmental, geotechnical, civil, wastewater, energy

Orchard, Hiltz & McCliment Inc. (OHM Advisors)

John Hiltz president

76 63

46 42

25.3

20.2

Civil, architectural, survey, construction, environmental, water, transportation

21.

IBI Group

Todd Hoisington office manager

70 70

31 30

11.2

15.0

Civil, structural, mechanical, electrical, transportation

21.

Link Engineering Co.

Roy Link chairman and CEO

70 60

5 5

74.0

72.0

Manufacturer of testing systems and provider of commercial testing services

Hubbell, Roth & Clark Inc.

George Hubbell president, chairman and CEO

64 65

56 57

19.6

Civil engineering, wastewater and combined sewer overflow collection/ treatment, water treatment/distribution, structural engineering, road and bridge engineering, traffic engineering, environmental engineering, watershed management, architectural services, electrical engineering, geographic information systems, construction services, surveying, materials testing, easement/right-of-way services

Sidock Group

William Sidock president

63 60

30 27

13.6

11.5

Civil, structural, architectural, interior design, landscape, electrical, mechanical, process piping, environmental, chemical, instrumentation and controls, tank inspection, crane engineering, 3-D design and rendering, cost estimating, scheduling, valve engineering, LEED

SmithGroupJJR Inc.

Jeffrey Hausman Detroit office director and Carl Roehling president and CEO

61 56

30 36

163.0

166.6

Civil engineering, electrical engineering, mechanical engineering, structural engineering, drainage and hydrology engineering, forensic engineering, site engineering, soils engineering

11. 12. 13. 14. 15.

20.

23. 24. 25.

41050 W. 11 Mile Road, Novi 48375-1302 (248) 426-1482; www.tatatechnologies.com 17101 Michigan Ave., Dearborn 48126 (313) 441-3000; www.ghafari.com 1820 E. Big Beaver Road, Troy 48083 (248) 614-2400; www.altair.com

4554 Glenmeade Lane, Auburn Hills 48326-1766 (248) 373-6000; www.fev.com 31791 Sherman Drive, Madison Heights 48071 (248) 589-1135; www.rgbsi.com 50 Kirts Blvd., Suite A, Troy 48084 (248) 404-3520; www.geometricglobal.com

27777 Franklin Road, Suite 2000, Southfield 48034 (248) 204-5900; www.urscorp.com 1391 Wheaton, Suite 700, Troy 48083 (248) 246-2220; www.esg-usa.com 3550 Green Court, Ann Arbor 48105 (734) 665-1000; www.bv.com 41131 Vincenti Court, Novi 48375 (248) 476-5571; www.danlawinc.com

34201 Van Dyke Ave., Sterling Heights 48312 (586) 795-2220; www.baesystems.com

2135 W. Maple Road, Troy 48084 (248) 435-1000; www.meritor.com 30800 Telegraph Road, Suite 4900, Bingham Farms 48025 (248) 633-1440; www.jacobs.com

23399 Commerce Drive Suite B-8, Farmington Hills 48335 (248) 478-0134; www.eicherengineeringglobal.com 46247 Five Mile Road, Plymouth 48170 (734) 454-0500; www.redviking.com 65 Cadillac Square, Suite 3400, Detroit 48226 (313) 964-0790; www.tetratech.com 34375 W. 12 Mile Road, Farmington Hills 48331 (248) 553-1000; www.daifukuwebb.com 14496 Sheldon Road, Suite 200, Plymouth 48170 (734) 453-5123; www.craworld.com

Scientific and specialty consulting, as well as all aspects of engineering and construction, and operations and maintenance

34000 Plymouth Road, Livonia 48150 (734) 522-6711; www.ohm-advisors.com

25200 Southfield, Suite 200, Southfield 48033 (248) 936-8000; www.ibigroup.com 43855 Plymouth Oaks Blvd., Plymouth 48170 (734) 453-0800; www.linkeng.com 555 Hulet Drive, P.O. Box 824, Bloomfield Hills 48303-0824 (248) 454-6300; www.hrc-engr.com

45650 Grand River Ave., Novi 48374-1351 (248) 349-4500; www.sidockgroup.com

500 Griswold St., Suite 1700, Detroit 48226 (313) 983-3600; www.smithgroupjjr.com

This list of engineering companies is an approximate compilation of the largest such businesses based in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. It is not a complete listing but the most comprehensive available. Unless otherwise noted, information was provided by the companies. Companies with headquarters elsewhere are listed with the address and top executive of their main Detroit-area office. NA = not available. B Company estimate. C DGE Inc. became a subsidiary of FEV North America after FEV GmbH acquired the Rochester Hills-based company in May 2013. D RedViking merged with SuperiorControls Inc. in February 2014. LIST RESEARCHED BY BRIANNA REILLY

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April 7, 2014

IRS: McLaren Health Plan may lose 501(c)(3) status BY JAY GREENE CRAIN’S DETROIT BUSINESS

Flint-based McLaren Health Plan faces the possible loss of its 501(c)(3) tax-exempt status after receiving a letter last month from the Internal Revenue Service telling the 15-year-old health maintenance organization that it may no longer qualify. While McLaren officials declined to discuss the reasons that its 144,000-member health plan could lose its 501 (c)(3) status, Doug Mancino, McLaren’s lawyer from Los Angeles-based Hunton and Williams LLP, said the HMO would appeal any revocation or simply refile as a 501(c)(4) tax-exempt entity. Mancino said he had a “wideranging discussion” with the Detroit IRS audit team last week. “I think they began to see our view as to why the plan should remain exempt and c3,” he said. Mancino expects a final decision to be made by the first week of May. “We told them that McLaren Health Plan is more than 80 percent Medicaid, and they should be exempt under the relief-of-poverty benefit, a policy the national IRS office has long recognized,” he said. Most nonprofit HMOs in Michigan — including Health Alliance Plan, HealthPlus and Blue Care Network — are 501(c)(4) organizations. HAP lost its 501(c)(3) tax-exempt status in 2004. Several other HMOs are for-profit companies, including Meridian Health Plan and Molina Health Plan. The chief difference between a 501(c)(3) (public charity or foundation) and a 501(c)(4) (social welfare organization) is that the former entity is allowed to extend federal and state tax deductions for charitable donations. Another difference is that 501(c)(3) organizations are not allowed to engage in political activities, whereas 501(c)(4) entities are. Kevin Tompkins, vice president of marketing for McLaren Health System, said the recent proposed revocation letter from IRS to the health plan came out of a routine audit of the 11-hospital system. “We don’t agree with that proposed position at all,” Tompkins said. “We want to understand more about their thinking.” Legal experts told Crain’s that a private letter ruling released March 21 by the IRS appears similar to the facts surrounding the proposed revocation of the 501(c)(3) status of McLaren Health Plan. “You do not meet the community benefit standard because you primarily operate to benefit your member enrollees and not the community as a whole,” the IRS said in its letter to the unidentified HMO. McLaren Health Plan had operated as a 501(c)(4) until 2012, when it acquired CareSource of Michigan, a 501(c)(3) HMO created in 1996 by several qualified health centers. It filed the merged entity with the IRS as a 501(c)(3); the letter is in response to that filing. Rick Murdock, executive director of the Michigan Association of Health Plans, said the association has begun an effort to update the state’s insurance code to further

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Enhancing Michigan’s Quality of Life ACEC Michigan: Award Winning Engineering & Surveying Projects Top Award Winners:

strengthen the language that constitutes a nonprofit health plan. “There is nervousness” about whether the IRS will also begin to scrutinize 501(c)(4) health plans, which could subject them to federal and state income and insurance taxes, Murdock said. “We are putting together a package to reform Michigan insurance code,” Murdock said. “It is something we didn’t do as part of the Blue Cross Blue Shield of Michigan (conversion into a mutual insurance company in 2013), but we need to update the code.” Any update of the insurance code, however, would require legislative action. “We are talking with several potential sponsors,” Murdock said. Chapter 35 of the state insurance code, which governs HMOs, also needs to be changed to “level the playing field” with Blue Cross, he said. Changes are likely to include streamlining the premium rate and provider contract filing process, permitting HMOs to provide services to self-funded employers and affording HMOs flexibility in designing benefit packages. Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

West Bay County Wastewater Treatment Plant Improvements > Fleis & VandenBrink Engineering

Kalamazoo River Bank Stabilization > Fleis & VandenBrink Engineering

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Worth the weight loss Programs combating obesity expect to gain under Obamacare as covered patients lose Healthy Michigan program over the next several years.

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Weight-loss outpatient clinics emphasizing healthy diets and bariatric surgery hospital programs in Michigan stand to be big winners under the Affordable Care Act with improved insurance coverage for services and procedures. With 31.1 percent of the state’s population considered obese, Michigan has the 10th-highest percentage of obese people in the nation. Louisiana is first with 34.7 percent. At 31.4 percent, Indiana is the only Midwestern state higher than Michigan, according to the U.S. Centers for Disease Control and Prevention. Michigan insurance experts project that up to 1 million people will either purchase private insurance under the Affordable Care Act’s expanded benefits or gain Medicaid coverage through the state’s

Hospital programs “Not only will Detroit Medical Center see an uptick in (obesity-related) services, but all hospitals” will generate more business, depending on what health insurance plans they purchase, said Don Gulish, program manager of service line develGulish opment with Harper University Hospital, which is part of the eight-hospital DMC. Other hospital-based systems in Southeast Michigan with weight loss, diet, nutrition counseling and bariatric programs include Beau-

mont Health System, Henry Ford Health System, St. Joseph Mercy Health System, St. John Providence Health System, Botsford Hospital and University of Michigan Health System. Dearborn-based Oakwood Healthcare is expanding its bariatric surgery and weight loss program with physicians to provide more comprehensive options for patients, said Daniel Bacal, M.D., medical director of the Oakwood Bariatric Program. Bacal said it is unclear how many newly insured patients will seek bariatric surgery or nutrition counseling services under health reform. “Oakwood is ready to help these newly insured patients,” said Bacal. “Some of these plans require a very high deductible, so it is unclear if that may ultimately discourage patients to seek medical or See Next Page

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surgical treatment for weight loss.” Average costs for bariatric services, depending on the type of procedure, range from $18,000 to $30,000. Insurance coverage also depends on the amount of deductibles and coinsurance, or the percentage amount a patient pays against charges. Gulish said the Harper Bariatric Medicine Institute, which conducted about 350 bariatric surgeries last year, projects a 5 percent to 10 percent increase this year from health reform, a recovering economy and a referral contract with Southfieldbased Medical Weight Loss Clinic Inc.

Outpatient clinics Last month, DMC and Medical Weight Loss Clinic signed an agreement to refer patients to each other. Patients who purchase services at Medical Weight Loss Clinic will be able to seek consultation with DMC’s bariatric surgeons. “This is the first health care system partnership in Medical Weight Loss Clinic’s nearly 30year history,” said David Paull, the company’s president. Gulish said DMC also will use Medical Weight Loss Clinic services to fulfill insurance company requirements that patients seeking bariatric surgery prove medical necessity by first sucPaull cessfully completing a six-month to one-year weight-loss program. “Patients who want surgery meet with a surgeon who explains (the weight-loss) process” and then take pre-surgery medical health tests,

said Gulish. “They are referred to Medical Weight Loss Clinic and put on a diet. After they complete the prerequisites, they are sent back to us for cardiac clearances.” However, some patients will take off enough weight during the diet program that bariatric surgery is not required, Gulish said. A weight-loss program normally includes people attending regular meetings, eating prescribed foods and taking nutritional supplements. Medical Weight Loss Clinic opened its 34th center in Royal Oak earlier this year. The clinic offers patients customized programs based on individual needs and uses common food purchased from grocery stores or farmers markets, Paull said. “We are projecting anywhere between $15 million to $16 million in revenue this year,” Paull said. “We had a little dip last year after grossing $16 million in 2012.”

Obesity screening Under the Affordable Care Act’s 10 essential benefits, insurance companies that sell ACA-compliant products on or off the healthcare.gov marketplace must cover obesity screening and nutritional counseling, said Bryan Cole, director of product development with Flint-based HealthPlus of Michigan. Michigan requires additional benefits that include physician-supervised weight loss services, Cole said. Obese individuals with a body mass index of 35 or greater are at increased risk of diabetes, cardiovascular disease, hypertension and cancer, according to a January report by the Center for Healthcare Research & Transformation. Obese patients also spend 50 per-

cent more on health care costs — more than $7,100 more per year — than people of normal weight, the Ann Arbor-based center said. Marla Kaminsky, owner of West Bloomfield-based Diet Center, said she opened the 1,200-square-foot center in January to capitalize on health reform and the increasing use of worksite wellness programs. “It is becoming more common that insurance is covering weight loss programs,” said Kaminsky, adding that she is a preferred provider for Detroit-based Health Alliance Plan Advantage members. “Losing weight is preventive care, and it costs employers and insurers less money when someone takes responsibility for their health,” Kaminsky said. The Diet Center, a franchisee of the 57-center national chain based in Akron, Ohio, has 40 clients and projects to have more than 100 by the end of the year, Kaminsky said. Besides the Diet Center, national chains like Weight Watchers and Jenny Craig Weight Loss Center also have a variety of clinics in Southeast Michigan. The Medical Weight Loss Clinic, which employs nearly 200, also projects to grow over the next several years from the DMC contract, health reform and ongoing clinic expansion, Paull said. Paull said the 28-year-old company invested in a new information technology system and introduced an updated menu developed with patient feedback. The menu includes lean proteins such as venison and quinoa. Just as the nutritional industry and individuals’ needs have evolved over time, so must the company, Paull said. Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

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Small investors making inroads, impact in Detroit CBD’s office building market BY KIRK PINHO CRAIN’S DETROIT BUSINESS

Roger Basmajian has quietly started putting his fingerprints on Detroit’s central business district in the last nine months with the purchase of three office buildings. With the downtown purchases now under his belt, he is just one of the smaller investors whose deals real estate experts say are key indicators of the CBD office market’s rebound. Basmajian’s Class B office buildings, which total 104,000 square feet, also offer a glimpse into what smaller players can do to spur investment and redevelopment in a market currently dominated largely by one owner: Dan Gilbert. “They are the perfect complement to (Gilbert’s) Bedrock (Real Estate Services LLC) because they will pour their heart and soul into their investments, and they will determine where the needs are and where the demand is,” said Matt Lester, founder and CEO of Bloomfield Township-based Princeton Enterprises LLC, which last year entered the CBD office market with its purchase of the 177,000square-foot Grand Park Centre Building at 28 W. Adams St. “We are always excited when investors of any size are willing to

deploy their capital and time into downtown Detroit,” Jim Ketai, managing partner of Bedrock, said in an emailed statement to Crain’s. “The amount of investment is not as relevant as the intentions of the people behind the investment.”

Upgrades ahead Basmajian has spent about $2.7 million on his buildings, located at 607 Shelby St., 751 Griswold St. and 220 W. Congress St. “My background is in architecture, so I’ve always been enamored with these gorgeous buildings we have downtown,” he said. “In the last few years, we saw a lot of good signs that things were on the uptick, and we thought it would be a good time to start jumping in.” He paid $1.31 million for the 50,000-square-foot Shelby Congress Building in November, according to Washington, D.C.based real estate information service CoStar Group Inc. In October, he paid $570,000 for the 35,000square-foot Sterling Building on Congress Street. In May, he bought the 19,000-square-foot Olde Building on Griswold for $800,000, he said. Basmajian isn’t the only smaller

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Tom Carleton

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investor dipping his toes in the CBD market. Tom and David Carleton, partners with Detroit-based media firm Mindfield Inc. own the 30,000-squarefoot building at 1250 Library St. and the 25,000-square-foot Grand Army of the Republic Building, at 1942 Grand River Ave. Sean Emery, a partner with Mindfield, is also an owner of the GAR Building, which was built in 1899 and which the Carletons and Emery bought for $200,000 in November 2011. The Carleton brothers purchased the Library Street building in 1992 for $120,000. Mindfield will occupy the top two floors of the GAR building, while the second and third floors will be for office tenants. The ground floor will be for restaurant tenants, The Republic Tavern and the Parks and Rec Diner. The GAR Building and the Library Street building are their only properties, but the Carletons don’t rule out future investments downtown. “I think development like that becomes a bug,” David Carleton said. “Once you’re bitten, you always half keep an eye out where other opportunities are. I don’t think we’d walk away from another opportunity to create a development of our own sort of scale.” Similarly, Basmajian ventured into Detroit building investment after working on deals in Ferndale and Royal Oak. He was one of the forces behind persuading Buffalo Wild Wings to open a restaurant in one of his downtown Ferndale buildings when the area was sorely lacking in economic development and vacancy rates were as high as 40 percent, Basmajian said. Basmajian, a University of Michigan graduate with degrees in business and architecture, founded Southfield-based Basco of Michigan Inc. — eerily on Sept. 11, 2001, no less, according to state records — with his father, George. In addition to its Detroit holdings, Basmajian said, Basco also has about 100,000 square feet under ownership in downtown Royal Oak and Ferndale. The portfolio is valued at about $20 million, he said. Basmajian plans at least $7 million in renovations at his downtown buildings. The Congress Street building will receive $3 million in renovations. A renovation budget for the Shelby Street building has not yet been finalized, he said. At 751 Griswold, Basmajian plans $4 million in renovations and improvements that would inSee Next Page

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clude a restaurant on the first floor and office space for tech companies above it. He also plans shared office space for startup companies and more traditional office space at 220 W. Congress, where a Subway restaurant has signed a lease, he said. Tenants are already in 607 Shelby, where Basco is relocating its three employees into 2,500 square feet from Southfield. Common areas, bathrooms, elevators and the building’s upper floors are being updated, Basmajian said.

Renderings of the three buildings that Roger Basmajian has purchased in downtown Detroit in the past nine months: 220 W. Congress St. (inset), 751 Griswold St. (above) and 607 Shelby St. (below).

Building blocks It can be a difficult journey for the smaller office investor. For example, Basmajian said his largest hurdle is financing his projects. Along with private investors, he is relying on historic preservation tax credits and is applying for Community Revitalization Program grants, he said. A.J. Weiner, executive vice president of the Detroit office of Jones Lang LaSalle, said other hurdles sometimes include a lack of a proven redevelopment success story and property management background, and identifying the right investment. “I think the second hurdle is finding the right match for a deal, whether it’s building size or condition, or a realistic seller,” he said. Tom Carleton said the downtown market is becoming more competitive than it was more than two decades ago, when he and his brother bought the 30,000-squarefoot Library Street building. It has six residential lofts and other tenants including Vincente’s Cuban Cuisine, Apigee Co. and Octane Design Inc., David Carleton said. “There is a healthy but limited stock,” Tom Carleton said. “It’s becoming a better marketplace for the people that are in it. “But the bad news is that it’s getting harder and harder and more expensive to get in, which will wean out some of the more boutique opportunities. Some are getting priced out of that because the market values are increasing.” Still, smaller buyers remain optimistic. “I have a small niche, and I believe in what I do and that’s why I’m good at it,” Basmajian said. “I know where the future is, and it’s in more urban settings.” Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB

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Energy Dept. to suppliers: Funds available for efficient-vehicle programs BY GABE NELSON CRAIN NEWS SERVICE

The U.S. Department of Energy wants auto suppliers to know it still has $16 billion in low-interest financing available to support efficient-vehicle programs, and it wants them to step forward for a share of those funds. The department’s lending authority comes under the Advanced Technology Vehicles Manufacturing Loan Program, which Congress created in 2007. Early in the Obama administration, the Department of Energy used the program to lend about $8.4 billion to Ford Motor Co., Nis-

san, Tesla Motors and Fisker Automotive. Suppliers were always eligible, but none secured funding. Now, under Energy Secretary Ernest Moniz, the program is being overhauled to make it easier to fund production of technologies such as lightweight materials, efficient engines and low-friction tires. Moniz announced the program changes last week during a speech to the Motor & Equipment Manufacturers Association, a trade group representing auto suppliers. “The U.S. auto industry has evolved since the ATVM program was established,” Moniz said in a

Today, we are presented with an “ opportunity to hit the accelerator on U.S. auto manufacturing growth. ” Ernest Moniz, U.S. Energy Secretary

statement. “Today, we are presented with an opportunity to hit the accelerator on U.S. auto manufacturing growth.” One supplier is in active talks about a loan, Peter Davidson, executive director of the DOE’s Loan Programs Office, said in an inter-

view. He would not identify the company. Davidson said the department has been making the rounds with other suppliers to inform them that the automotive program is not dormant — even though it hasn’t approved a loan since March 2011.

“People have been very appreciative,” Davidson said. “They didn’t seem to realize that we were still open for business. Now they know: We are open for business.” The changes that Moniz announced include legal clarifications to show that suppliers are eligible for the program, a promise to respond more quickly to applicants and the creation of a new online application portal. “We are pleased that the secretary is reaching out to the supplier industry,” Ann Wilson, vice president of government affairs at MEMA, wrote in an email. “We continue to believe that this is an important program of which suppliers must be an integral part.” The program has had ups and downs. Tesla received a $465 million loan from the program in January 2010 to launch the Model S electric sedan. The car’s warm reception has made Tesla a darling of investors, and the Californiabased company repaid its loan last year, nearly a decade ahead of schedule. But another of the Energy Department’s loans, for $529 million, was given to plug-in hybrid maker Fisker Automotive, which recently went through bankruptcy restructuring. Fisker drew down $192 million before the department stopped providing funding to the struggling California company. The government recovered $53 million of those funds in Fisker’s bankruptcy proceedings, which culminated in the sale of the company to Chinese auto-parts conglomerate Wanxiang Group. The ATVM program was created in 2007 with firm backing from environmental and labor groups. Environmentalists saw the program as a way to put cleaner cars on the road, while labor groups viewed it as a way to spur investment in U.S. manufacturing. The department received $25 billion in lending authority. To qualify for a loan, a company would need to contribute to vehicles that are 25 percent more efficient than equivalent vehicles made in 2005. Davidson said the DOE is clarifying that even if a component is sometimes used in vehicles that don’t meet that standard, it will still consider a loan, and will simply prorate the loan amount to reflect the components used in eligible vehicles. Roland Hwang, director of the transportation program at the Natural Resources Defense Council, said environmental advocates used to worry that suppliers would receive funding for parts that were used to make cars more powerful — not more efficient. But now that stricter fuel economy standards are in place, he said, those concerns have dissipated. He praised the DOE’s plans. “We’re increasingly seeing suppliers shoulder a heavier burden in meeting these new fuel economy standards,” Hwang said. “They’re facing increasing demand for these components and bottleneck situations in terms of their capacity. Focusing on suppliers seems like a very appropriate use for this program.” From Automotive News

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PEOPLE EDUCATION

Rasor

Janicki

Robin Rasor to managing director of licensing, University of Michigan Tech Transfer, Ann Arbor, from director of licensing.

Greg Janicki to director, Broad Executive Weekend MBA, Michigan State University, Troy, from executive director, marketing and communication, Original Equipment Suppliers Association, Troy.

ENGINEERING Michael Park to senior project manager, Giffels Webster Engineers Inc., Detroit, from project manager, Somat Engineering Inc., Detroit. Also, Mark Lloyd to lead planner, from community development director, city of Inkster, and Jim Renshaw to senior engineer, from freelance engineer, Atlanta, Mich.; and Justin Wellman to senior project manager, Birmingham office, from engineer, city of Royal Oak.

FINANCE

LAW

IN THE SPOTLIGHT St. Frances Cabrini Clinic, Detroit, has named Kelly Herron executive director. She had been project manager for Early Childhood Investment Corp., Lansing. Herron, 43, succeeds Sister Mary Ellen Howard, who will retire this summer after 19 years as executive Herron director. Before working at Early Childhood Investment, Herron was director of recruitment and mission integration at the Society of St. Vincent de Paul in Detroit and an administrator for worship and Christian service at St. Columban Roman Catholic Church in Birmingham. She received a master’s degree in pastoral studies from Sacred Heart Major Seminary, Detroit, and studied clinical pastoral education at Beaumont Hospital in Royal Oak.

Chris Nemeth to senior director of social enterprise, Forgotten Harvest, Oak Park, from regional manager, Hibu Inc., Novi.

president.

REAL ESTATE

TECHNOLOGY

Henry Argasinski to vice president, property management, Liberty Property & Asset Management LLC, Troy, the property management arm of L. Mason Capitani, from senior property

Donald Stilwell to vice president of

manager.

Mikalonis

SERVICES Kimberly Coots to president, RCS International Inc., Livonia, from vice

sales

and

business

development,

Saphran Solutions Inc., Franklin Village, from product lifecycle management account manager, Tata Technologies Inc., Novi.

Berger

Lisa Rycus Mikalonis to partner, Rader, Fishman & Grauer PLLC, Bloomfield Hills, from partner, Sommers Schwartz PC, Southfield. Kimberly Berger to principal, Miller, Canfield, Paddock and Stone PLC, Detroit, from senior attorney; Marc Swanson to principal from associate; and Eric Bartley to principal, Miller Canfield, Troy, from associate. Jennifer Garofalo to director of call center operations, 1-800-LAW-FIRM PLLC, Southfield, from call center supervisor, Sedgwick Claims Management Services Inc., Southfield; Kevin O’Connor to director of marketing and sales, from consultant, Independent Marketing Solutions LLC, Shelby Township; and Larry Snider to business development officer, from president, LIS-ETS Inc., West Bloomfield.

Loan Servicing LLC, Fort Washington, Pa.; Zahira Gonzalvo to first vice president, operational risk management office, from operational risk director, Ally Financial Inc., Detroit; and Ken Creech to first vice president, enterprise data warehouse department, from business solution manager, global business services, IBM Corp., Southfield. Marianne Lilly to partner, ShindelRock, Novi, from senior manager.

NONPROFITS

HOSPITALITY

de Movellan

Myers

ness development manager, King Par LLC, Flushing. Cindy Myers to chief human resources officer, Flagstar Bank, Troy, from vice president, human resources, RGIS LLC, Auburn Hills; Russ Fowlie to executive vice president and director of mortgage servicing, from vice president, loss mitigation, Ocwen

Haithco

to regional kitchen manager,

Cheryl Haithco to vice president of development, Big Brothers Big Sisters of Metropolitan Detroit, Detroit, from de-

Team Schostak Family Restaurants, Livonia,

Christopher de Movellan to director, Angle Advisors-Investment Banking LLC, Birmingham, from global busi-

from assistant general manager, Bar Louie, Rochester Hills.

Jacob Williamson to executive chef,

Rodriguez

Nichols

Andre Rodriguez

Wolfgang Puck Steak and Wolfgang Puck Pizzeria & Cucina at MGM Grand Detroit, from

chef de cuisine.

velopment director, Japhet School, Clawson. Carlynn Nichols to chief clinical officer, The Children’s Center, Detroit, from director of children’s initiatives, Detroit Wayne Mental Health Authority, Detroit. Christina Holman to director of integrated marketing and mail, Salvation

Army Eastern Michigan Divisional Headquarters, Southfield, from direct marketing manager.

BUSINESS DIARY ACQUISITIONS & MERGERS GreenPath Inc., Farmington Hills, a nationwide nonprofit consumer credit counseling agency, dba GreenPath Debt Solutions, acquired Consumer

Credit Counseling Service of Greater San Antonio, San Antonio, Texas. Website: greenpath.org.

Arbor and planning to hire more than 50 people. Website: xanedu.com. Dickey’s Barbecue Restaurants Inc., Dallas, is opening a Dickey’s Barbecue Pit location at 41700 Garfield Road, Clinton Township. Telephone: (586) 286-4400. Website: dickeys.com.

MOVES

CONTRACTS

Berline Group Inc. moved its head-

Casadei Steel Inc., Sterling Heights,

quarters from 70 E. Long Lake Road, Bloomfield Hills, to 423 N. Main St., Royal Oak. Website: berline.com. Flagstar Bancorp Inc. relocated its Rochester Hills branch from the WalMart store at 2500 S. Adams Road to 2744 S. Adams. Website: flagstar.com.

was awarded the structural-steel and miscellaneous-metals contract to construct the U.S. Army Corps of Engi-

neers Special Operations Forces Battalion Operations Center at Fort Bragg, N.C., for the project’s general contractor, Archer Western Ltd., Atlanta, Ga., a subsidiary of the Walsh Group. Website: casadeisteel.com.

EXPANSIONS XanEdu Publishing Inc., Ann Arbor, a producer of print and digitized custom course materials for educators, students and bookstores, is consolidating its Michigan and Kentucky operations into its Ann Arbor headquarters, investing more than $1 million in Ann

NEW PRODUCTS Con-way Freight Inc., Ann Arbor, a less-than-truckload carrier and subsidiary of Con-way Inc., announced the deployment of Drive Safe Systems, a suite of technologies designed to enhance safety performance and operating efficiency of the 15,000 professional drivers operating the company’s 8,600-truck fleet. Website: con-way.com.

Exceptional Leadership. NEW SERVICES The Work Department, Hamtramck, a communication design and development studio, launched a new website for Mt. Elliott Makerspace, Detroit, a neighborhood workshop. Website: mtelliottmakerspace.com. VendTek Wholesale Equipment Inc., Wixom, a wholesale distributor of vending machines, launched its Inventory Management website, specific to using vending machines to control and manage inventory levels and costs. Website: specialtyvendingsys tems.com. Gameplans LLC, Rochester Hills, a human resources firm, expanded its services to include customer engagement forums, strategic plan alignment and business process design, and launched a new website. Website: gameplansllc.com.

STARTUPS

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Strome Actuarial Services opened at 31313 Northwestern Highway, Suite 114, Farmington Hills. Telephone: (248) 461-3620. Website: stromeactuari al.com.

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CALENDAR TUESDAY APRIL 8 Leadership Detroit Class XXXVI Informational Breakfast. 8:30-10 a.m. Detroit Regional Chamber. Learn about the chamber’s Leadership Detroit class, the application process and program benefits. PNC Bank Top of Troy, Troy. Free. Contact: Dan Piepszowski. (313) 596-0315; website: detroitcham ber.com/ld.

Grow Global: Doing Business Internationally. 9 a.m.-noon. Michigan Association for Female Entrepreneurs. Learn about doing business in Canada and other international markets and meet with trade experts who will share tips and resources for taking a

company global. Automation Alley, Troy. $20. Contact: Tonya McNealWeary, (313) 363-4075; email: info@mafedetroit.org; website: mafedetroit.org.

Women on the Move SE — Motivating Others ... and Yourself! 6-7:30 p.m. Inforum. With Marilyn Opdyke, Inforum member and owner and principal consultant, Opdyke Consulting Group Inc., taking a look at the latest research on motivation and how one can use it to keep focused during transition. Opdyke will focus on the key elements behind motivation identified in Daniel Pink’s book Drive: The Surprising Truth About What Motivates Us. Brightwing, Troy. Free. Contact: (877) 633-3500; email: womenonthe move2010@gmail.com; website: info rummichigan.org.

WEDNESDAY APRIL 9 Member Orientation. 8-10 a.m. Automation Alley. Assure that your organization is getting everything it can out of its Automation Alley membership; session will provide a comprehensive overview of benefits and services. Automation Alley, Troy. Contact: (800) 427-5100; email: info@automationalley.com; website: automationalley.com.

THURSDAY APRIL 10 Embracing Diversity, Empowering Communities. 8:30 a.m.-4 p.m. NAACP, Radius of Arab American Writers,

SERMetro-Detroit Jobs for Progress Inc., University of Michigan, UMDearborn Center for Arab American Studies. A day of discussion intended to engage the Arab-, African-, Asianand Hispanic-American communities. With keynote speaker Edward James Olmos, actor and activist; Heaster Wheeler, assistant CEO, Wayne County; Sayed Badreya, actor, producer, filmmaker; Suheir Hammad, poet, author, political activist; Matthew Seeger, dean, College of Fine, Performing and Communication Arts, Wayne State University; and Frances Kai-Hwa Wang, writer, activist, lecturer at the University of Michigan. Byblos Banquets, Dearborn. $125; $100 each, group of five or more; $35 student. Contact: (313) 910-1955; email: imagesandper ceptions@3Dconsults.com; website: 3dconsults.com/images.html.

CRAIN’S M&A AWARDS Join Crain’s Detroit Business and the Association for Corporate Growth – Detroit Chapter 5-9 p.m. April 16 for the Crain’s M&A Awards, honoring companies and executives in the following categories: 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. The event takes place at the Troy Marriott, Troy. The title sponsor is Honigman Miller Schwartz and Cohn LLP, Detroit. Tickets are $75 for ACG members or nonmembers in groups of 10 or more, or $80 for individual sales to nonmembers. For ticket information, call Kacey Anderson at (313) 446-0300, email her at cdbevents@crain.com, or visit crainsdetroit.com/events. Join the conversation with #crainsma.

UPCOMING EVENTS

First Place Now proud Bank. to be Talmer Bank and Trust. While our name may be different, the

names of the people who take care of

you, and the personalized service they provide, are still the same. So is our strong commitment to this community.

What Are Investors Looking For? 11:30 a.m.-1 p.m. April 23. Automation Alley. With Thomas Anderson, Automation Alley senior director, discussing how businesspeople can position themselves to get attention from key investors. Anderson oversees Automation Alley’s technology business accelerator programs, helping entrepreneurs obtain external reviews of their technology and business plans by experts and mentors from respective technology fields. Automation Alley Detroit Office, Detroit. $10 in advance, $20 at door. Registration closes April 21. Contact: (800) 427-5100; email: info@automationalley.com; website: automationalley.com.

M-1 Light Rail, Blight Removal and Urban Farming — Moving Detroit Forward. 11:30 a.m.-1:30 p.m. April 30. Detroit Economic Club. With Matt Cullen, president and CEO, Rock Ventures LLC and M-1 Rail; John Hantz, president and CEO, HantzGroup Inc.; and Glenda Price, co-chair, Blight Removal Task Force; moderated by Tom Walsh, business columnist, Detroit

In fact, the name “Talmer” is a tribute by the Bank’s two principals to their grandfathers (named Talmage and Merzon), who both dedicated their lives to community service.

Free Press. The featured leaders will discuss the latest updates and sustainability effects of their respective projects. Westin Book Cadillac Detroit. $45 DEC members, $55 members’ guests, $75 nonmembers. 11:30 a.m. speaker reception open only to board, life and gold members. Contact: Detroit Economic Club, (313) 963-8547; email: info@econclub.org; website: econclub.org.

What’s more, Talmer Bank, just like First Place, is a Midwest-based community bank—and one with demonstrated ﬁnancial strength. So you can count on us to take care of your business needs for many years to come.

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Please stop by soon. You’ll quickly discover that we’re now an even greater asset to your community.

www.talmerbank.com | 855-882-8824

If you want to ensure listing online and be considered for print publication in Crain’s Detroit Business, please use the online calendar listings section of www.crainsdetroit.com. Here’s how to submit your events: From the Crain’s home page, click “Detroit Events” in the red bar near the top of the page. Then, click “Submit Your Entries” from the drop-down menu that will appear and you’ll be taken to our online submission form. Fill out the form as instructed, and then click the “Submit event” button at the bottom of the page. That’s all there is to it. More Calendar items can be found on the Web at www.crainsdetroit.com.

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HandyLab founders hit milestones in their new companies

DeNovo was founded in 2010 by two former interns at Esperion Therapeutics, Priya Gogoi and Chris Siemer, and one of Gogoi’s former classmates at Eastern Michigan University, Saedeh Sepehri.

Esperion and DeNovo are headquarters of an inch by half an inch, quartered in the Michigan Life Sci- containing a total of 56,000 small ence and Innovation Center in Ply- chambers. mouth Township, an incubator Circulating tumor cells in the owned by the Michigan blood, which Economic Development have been Corp. Roger Newton, shed by the Esperion’s founder primary tuand chief mor, are rare technology ofand have been ficer, was an difficult to deearly angel tect, even investor in though they DeNovo. are much bigHandique ger than most joined the blood cells. DeNovo helps company as detect the president and presence of CEO in 2011. early-stage tuHe said DeNovo, mors by which employs seven, catching has raised $3.3 milsome of the lion, including the circulating Accelerate Innovatumors in the tion award and $2.8 blood. million in angel inJim Adox, Venture Investors It takes vesting. about six minHandique said loutes to run cal venture capitalists are aware of DeNovo’s blood through the glass plate and progress, but he has held off on ex- about two hours to analyze the rechanging more equity for capital. sults. Helping Handique sell devices He said if sales go as expected, he might be able to fund growth out in San Diego will be a peer-reviewed research paper published of revenue. The company has eight patents this month in the International pending and has trademarked two Journal of Oncology. A joint probrand names for its devices. The ject by DeNovo and Tucson, Ariz.Jetta will retail for about $75,000 based Ventana Medical Systems Inc., and the VanGuard for about a member of the Swiss-based Roche $85,000, he said. Both are about the Group, the paper documents the speed and accuracy of DeNovo’s size of large breadboxes. At the heart of the technology is devices. Tom Henderson: (313) 446-0337, a small glass slide through which blood is drawn. Each slide has two thenderson@crain.com. Twitter: rectangular areas about three- @tomhenderson2

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Sundaresh Brahmasandra and Kalyan Handique, the founders of Ann Arbor-based HandyLab Inc., went their separate ways after the medical device company was sold for $275 million in 2009. Separate, but similar. Last week, both hit dramatic milestones in the growth of their new companies, both of which make bench-top devices for fast and early detection of diseases. On Tuesday, Ann Arbor-based NeuMoDx Molecular Inc., where Brahmasandra is president, announced it had closed on a Series B venture capital round of $21 million, led by Pfizer Venture Investments of New York City, the investment arm of Pfizer Inc., and joined by three Ann Arbor investors, Arboretum Ventures LLC, Venture Investors LLC and the Wolverine Venture Fund of the University of Michigan’s Ross School of Business. That is one of the largest rounds of venture capital for a state company in recent years. The money is intended to fund further product development and the clinical trials needed to get regulatory approval for the company’s devices, which involve RNA- and DNA-based assays for fast and accurate detection of genetic disorders, cancers and a wide range of communicable diseases. According to Brahmasandra, the company hopes to be in the market in 24-26 months. He declined to say how much a device will likely sell for. On Saturday, Handique, CEO of

Brahmasandra

Handique

Plymouth Township-based DeNovo Sciences Inc., was to be in San Diego taking the company’s first product orders at the American Association for Cancer Research, which attracts about 18,000 attendees. DeNovo first achieved notice in 2011 when it won $500,000 as the winner of the Accelerate Michigan Innovation contest; its devices detect early-stage cancer by trapping cancer cells floating in blood. The devices, which don’t need regulatory approval from the U.S. Food and Drug Administration because they are being sold to researchers, will cost between $75,000 and $85,000, depending on the model and its capabilities. Handique said he hopes to generate revenue this year of $500,000, which will fund the clinical trials needed later this year or next to get approval to sell to hospitals and other medical facilities to diagnose patients.

‘Serial entrepreneurs’ Former HandyLab CEO Jeff Williams is the CEO at NeuMoDx. The company employs 13, many of them former HandyLab employees. Brahmasandra said the com-

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The Crain’s reader: 29.2% are with companies contemplating moving/ expanding. Help them ﬁnd you by advertising in Crain’s Real Estate section. 313.446.6068 • FAX: 313.446. 034 7 E-Mail: cdbclassif ied@crain.com

pany plans to double employment this year. “Jeff and Sundu are two of the best serial entrepreneurs I’ve worked with in 15 years as a venture capitalist. They really know this market,” said Jim Adox, a managing partner at Venture Investors. He was at Ann Arborbased EDF Ventures in 2000 when it became the first investor in HandyLab. Adox was the company’s first CFO. After HandyLab was sold, Williams was recruited as CEO of Ann Arbor-based Accuri Cytometers Inc., which made a desktop device to help researchers do cell analysis. After Accuri was sold for $205 million in 2011, Williams and Brahmasandra were reunited at Life Magnetics Inc., a UM spinoff that was the first tenant of the tech incubator on the school’s north campus research complex. Life Magnetics hoped to market a device that could detect a single bacteria cell by measuring the change in velocity of tiny magnetic beads in a magnetic field, but in 2012, Williams and Brahmasandra decided the cost and time to get to market were too much, and the company was killed. The two then formed NeuMoDx and got a Series A round of $5 million led by Arboretum.

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CRAIN’S DETROIT BUSINESS

Barra: Those who have been on hot seat review her D.C. visit ■ From Page 3

Arts who teaches crisis communication. “She has managed to humanize this and be responsive. She’s been extremely calm and thoughtful. She hasn’t gotten angry — even though the questions in some cases have been politically motivated.” Staying calm is critical. As the old Dry Idea antiperspirant ads implored, “Never let them see you sweat.” Throughout Barra’s performance, she was calm and poised. She didn’t rise to any baiting, either in her language or in her composure, said Jeff Caponigro, founder of Southfield-based crisis management firm Caponigro Public Relations Inc. “I liked her body language,” he explained. “You want to look like you are under control. Don’t look like you’re fidgety. She didn’t do anything that looked defensive or nervous, especially when the legislators might have started getting a little biting or cutting her off.” Caponigro also commended Barra for not smiling, something that wouldn’t be instinctive to CEOs unfamiliar with this kind of hot seat. “It was interCaponigro esting because there were times when the legislators complimented her or said something that in a normal situation you clearly would have said, ‘Thank you,’ and smiled,” he said. “You could tell she was coached that if you smile, chances are there will be a still photograph of that in a newspaper or website, completely out of context.” Still, if Caponigro were coaching Barra, he would have had a few

came across “asShe in control and thoughtful and not reactionary. I think we should all try to emulate that. ... But she trended dangerously close to not enough passion and outrage.

”

BLOOMBERG

Leslie Lynn Smith, TechTown Detroit

Mary Barra, CEO of General Motors Co., speaks with the media after testifying at a House Energy and Commerce Committee hearing with Mark Reuss (right), president of GM North America.

pointers. Primarily, he said, have key messages and try to stick to them while still being authentic. “The news conference after the testimony at the House, you could tell that her team talked to her and said, ‘Let’s wrap this up with three key messages: No. 1, that we’re sorry; No. 2, that we’re dedicated; No. 3, that we’ll be transparent.’ ” Her performance fell flat in places for Leslie Lynn Smith, president and CEO of TechTown Detroit, who has had to deliver her fair share of bad news to boards of directors. Smith wanted a bit more passion and outrage, a commitment to solve the problem — not just investigate. But she appreciated Barra’s calm presence.

“I loved how she kept a real kind of pulse and pace to her presentation and speaking,” she said. “She came across as in control and thoughtful and not reactionary. I think we should all try to emulate that. She did it better than most I’ve seen. But she trended dangerously close to not enough passion and outrage.” Of course, while maneuvering the technical and human details of a massive recall and public spectacle, Barra also has the additional notoriety of her gender. As the first female CEO of a very maledominated industry, watchers from all corners wanted to see how she would maneuver the power dynamic. Would she come across as

bossy or firm? Milquetoast or compassionate? “For women, there is a narrower band of an acceptable band of leadership,” Temin said. “In a crisis, that band gets smaller and smaller and smaller. You have to negotiate being human and real and authentic.” For Seeger, being a woman CEO worked to Barra’s advantage. “It allowed her to immediately distance the company from its traditions,” he said. “It allowed her to credibly communicate that this is a different company. This is not the old GM.” Of course, even experts disagree. So when thinking about what to do in a crisis, be true to

yourself and your company brand. Be authentic. Because for Smith, for example, the New GM/Old GM argument was not effective — female or not. “I was not 100 percent comfortable with that strategy,” she said. “It’s easy to Monday morning quarterback, but it’s not like they hired her three months ago from Toyota. She was a high-powered executive on that side of the shop.” For Caponigro, the real litmus test is whether Barra came across as a leader, a CEO and someone you trust. “I think she did that,” he said. Amy Haimerl: (313) 446-0416, ahaimerl@crain.com. Twitter: @haimerlad

Transit: Federal funds, new offer could end transit center dispute ■ From Page 1

December after Grand/Sakwa didn’t respond. Oakland County Circuit Judge Leo Bowman dismissed the case on Feb. 21 because the appraisal was based on land valuations in 2010, when the transit site was still undeveloped. The new appraisal reflects 2014 land values and the $6.3 million transit center that was substantially completed last fall. If the developer takes the offer, the city reacquires land that the Michigan Court of Appeals found had reverted to Grand/Sakwa ownership in June 2010. Then, presumably, Troy can open the center that’s been sitting dormant for months. If the offer is rejected or goes unanswered, both sides can expect to be back in circuit court for round two of condemnation before the end of the month. City Attorney Lori Grigg Bluhm said negotiations have been ongoing, which Alan Greene, a partner at Detroit-based Dykema Gossett PLLC and attorney for Grand/Sakwa, and Troy Mayor Dane Slater confirm. But Greene said what the land is worth is only one issue. “Money’s not necessarily the dri-

ving force,” he said. Other issues include hours of operation for the transit center and how bus traffic would affect the shopping center. A 2008 report submitted to Greene Troy officials estimates more than 160 buses could enter and leave the transit center each 24-hour day — but Troy Director of Economic and Community Development Mark Miller said that information is dated. “There’s just a laundry list of issues that were important to us that never got resolved. We’ve got a $75 million shopping and (residential) center we spent a lot of time and money on, and we want to make sure to protect its use,” Greene said. A source knowledgeable about both sides of the negotiations told Crain’s that Gary Sakwa, Grand/Sakwa co-founder and managing partner, does not want to settle unless Troy puts up some of its

own money, not just federal dollars. But Greene said where the money to acquire the land comes from is not relevant to Grand/Sakwa.

The road to court The transit center and Grand/ Sakwa development have been tied together from the beginning. Under the terms of a 2000 court agreement, Grand/Sakwa transferred title on 2.7 acres of the sprawling Midtown Square property southwest of Maple Road and Coolidge Highway to Troy in 2001 in exchange for obtaining the rezoning it needed to develop the project. “There was a real conscientious effort on our part to reach out to Grand/Sakwa to address any concerns, and make sure the center would be an asset to the site and not a detriment in any way,” said Michele Hodges, president of the Belle Isle Conservancy who was president of the Troy Chamber of Commerce at the time the center obtained federal funds and council support. “We also reached out to our own membership on how to come to

our own position about the center. It was very clear then that there was support from a diverse group of companies and advocacy groups.” But that agreement also called for the transit center land to revert to Grand/Sakwa by June 2010 if the city hadn’t funded a transit center project by then. The city and neighboring Birmingham had lined up several funding sources by that time, to collaborate on the center, which straddles the border of those cities. But Birmingham withdrew its support in 2011; Troy and Grand/Sakwa had contrasting views about what “funding” the center meant, and the developer took the city to court. Last May, the Michigan Court of Appeals agreed with Grand/Sakwa. The state Supreme Court declined to revisit the opinion in November after construction on the center had largely wrapped.

Talks gear up Meanwhile, the Troy City Council is opposed to using any city budget funds to repurchase the

transit center, meaning the only available funding source could be federal transportation grants awarded for the center, Slater said. A $1.05 million offer should get council support, the mayor said, because it falls within the estimated $1.85 million in federal funds Troy has been told is available for a land acquisition. Slater said he has been having discussions with Gary Sakwa and he expects those talks to continue. So far, he and Greene said, the two have not delved into specifics. “Whether the company would accept less than the fair market value, either to be a good citizen or resolve those other nonfinancial issues, is something that hasn’t been decided yet,” Greene said. “But where the money comes from is not really relevant. What is relevant is coming up with a settlement that’s fair and reasonable to both sides, and is acceptable to Troy and the property owner, and resolves all these concerns or as many of them as possible.” Chad Halcom: (313) 446-6796, chalcom@crain.com. Twitter: @chadhalcom

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Fishing: Spending up, but ecosystem shifts cast concerns in state ■ From Page 1

Good marketing is as important as keeping up with demographics and ecological change, said Anne Vaara, executive director of the Rochester Hills-based nonprofit Clinton River Watershed Council. “The promotion of our water resources, as beautiful as they are now, really helps,” Vaara said. “People are looking for more and more things to do outdoors, and fishing is pretty affordable, certainly more affordable than golf.” The Clinton River, the 760square-mile watershed in Macomb, Oakland, St. Clair and Lapeer counties, was cited as the most polluted river in the U.S. in the 1970s. But an expansive, decades-long cleanup effort, including work done by the watershed council, cleared the way for the river’s fishing future. The 1,000-member group now hosts family outings and fly-fishing classes to build use of the Clinton River and its tributaries. Promotional and educational efforts by other nonprofits, government-led groups and entrepreneurs are working to keep anglers happy and active on Michigan’s waters.

Return on investment But there must be fish to catch before anglers open their wallets. Fish stocking led by the state ensures that waters are flush with the big catch, keeping anglers on the fish and spending at Michigan shops, restaurants and hotels. The DNR Fisheries Division stocks approximately 40 million adolescent fish, including walleye, trout and salmon species, muskellunge and others, at 800 locations across the state to support the fishing industry, said Gary Whelan, program manager of the Fisheries Division. As many as 40 percent of fish caught in 2014 will come from Michigan’s fish hatchery system, Whelan said. The Fisheries Division will spend $9.4 million to operate the state’s six hatcheries, where it breeds fish to be released from midMarch through September in Michigan waters. “It’s a damn good return on investment,” Whelan said. “Most of our waters have self-sustaining fish populations; we restock for a few different reasons, and sport fishing is definitely one of them as it draws large numbers to our lakes and rivers.” Stocking of salmon, trout and steelhead has already begun. The Fisheries Division’s 160 employees manage roughly 58,000 square miles of water, more than Alaska per employee, on a total budget of $28.8 million for 2014.

The economy of fishing Michigan has the third-largest fishing economy in the U.S., behind Florida and New York. Roughly 1.74 million anglers spent $2.5 billion on fishing-related expenses in 2011, according to the latest available data from the U.S. Fish and Wildlife Service. Michigan also draws the secondmost nonresident anglers to its waters, behind Florida. More than 347,000 out-of-state anglers fished Michigan waters in 2011, spending $326.3 million.

In 2013, more than 1.28 million fishing licenses were purchased from the state Department of Natural Resources, down from 1.4 million in 2000.

COURTESY SCHULTZ OUTFITTERS LLC

In 2013, more than 1.28 million fishing licenses were purchased from the Michigan Department of Natural Resources, but that figure was down from 1.4 million in 2000. Licenses range from 24-hour licenses to seasonal all-species licenses with specialized tags for lake sturgeon and muskellunge. Michael Jones, professor and codirector of the Quantitative Fisheries Center at Michigan State University, said the decline in licenses, even though active anglers are spending money, is a concern to the state’s recreational fishing industry down the road. “Fewer people are buying licenses and drifting away from recreational fishing; that worries us a lot,” Jones. “We spend a lot of time in my field to see what’s causing that. It’s hard not to believe that people are becoming separated with the outdoors.”

Casting for customers Sometimes the answer comes down to a building a little buzz. There have been fewer boat and slip rentals on Lake St. Clair in recent years, leading to a reduction in tourism dollars for adjacent businesses, said Greg Esler, the city of St. Clair Shores parks and recreation director. To boost revenue, St. Clair Shores opened a private boat ramp on Nine Mile Road to the general public in 2012. The result was an extra $100,000 in boat ramp fees. But the boon came in April of last year, when Bassmaster Magazine named Lake St. Clair the top bass fishing lake in the U.S. The ranking brought more anglers to Lake St. Clair and St. Clair Shores businesses, Esler said. The city responded by hosting a bass tournament, Monster Quest 8, on the lake. The tournament received entries from North Carolina, Kentucky, Georgia and elsewhere for the grand prize of $10,000. In total, 93 boats entered the tournament, Esler said. St. Clair Shores’ restaurants and gas stations have benefited, and developers are looking to add hotels in the area, Esler said. The next bass tournament is planned for June. There are more than 1,000 bass fishing tournaments in Michigan in any given year. “Warm temperatures and lake levels give us an advantage,” Esler said. “When (anglers) come into town, they are amazed at how many fish they can catch.” Lake St. Clair, which is connected to Lake Huron and Lake Erie by the St. Clair River and Detroit River, respectively, averages only 10 feet in depth, which creates the warmer waters that bass species prefer.

The Detroit River and Lake Erie draw thousands of anglers each year, many to participate in various fishing tournaments. In August, Trenton will host the FLW Outdoors Bass Fishing League’s Detroit River Bass Fishing Tournament, with a first-place prize of $9,500. Lake Erie boasts several tournaments, including the Great Walleye Tournament and the Great Lakes Largemouth Series. Despite fewer licenses, anglers are spending more money. Anglers spent $843 million more in 2011 than in 2006. Of all fishing-related expenditures in 2011, 46 percent or $1.1 billion was spent on equipment, such as reels, rods, lines, etc. Ypsilanti-based fly fishing shop Schultz Outfitters LLC, which has been in operation since 2012, is competing for those dollars. But fly fishing is a niche within sport fishing with national sales in 2011 totaling just $748.6 million among 2,378 retailers, according to a study by Southwick Associates. Fly fishing sales make up a mere 1.6 percent of overall fishing-related sales of $47.7 billion in the U.S. For Schultz Outfitters, success has meant new strategies. The shop took to Facebook and Twitter to stay in contact with its customers and puts on events to get money in the door. Last week, the shop wrapped its second year of its weekly “Bar Flies” series, which draws customers to Sidetrack Bar & Grille in Ypsilanti to learn to tie flies from highprofile guides. Schultz charges customers a $20 entry fee, which goes directly to the tying expert, but then opens up the shop immediately following to sell tying equipment and materials. “We created Bar Flies because people get cabin fever, and not everybody likes to go winter steelhead fishing,” said Mike Schultz, owner and fly fishing guide. “It’s fairly affordable and it benefits us, the bar and Ypsilanti; we keep everyone happy.” The shop is targeting more groups and corporate-sponsored guide trips, many down the Huron River, Schultz said. Past corporate clients include Deloitte LLP and the Detroit Athletic Club, Schultz said. “The corporate outings are great for us and the clients,” he said. “It’s a set cost, there’s no travel or lodging expenses; it’s a one-day deal and more memorable than golf.” Schultz Outfitters is also targeting women, who are seeing increased numbers in the sport, Schultz said. He said his shop is taking more and more women on guiding trips; however, they aren’t spending in the shop.

“We carry women’s gear, the rods with smaller handles and clothing, but we’ve had trouble cracking that demographic,” Schultz said. “Women are savvy shoppers; they don’t care about the latest Simms shirt like men do.” Schultz hopes the launch of an ecommerce website will expand the shop’s clients and sales. The site is expected to launch in the next 12 weeks, he said. “The Internet has impacted us all because now you can get gear from anywhere,” Schultz said. “People come to Schultz for the service, but we’ve also had to embrace technology.”

Great Lakes struggles But the greatest challenge to the state’s multibillion-dollar fishing economy is ecological change brought on by invasive species. The zebra and quagga mussels, not native to the Great Lakes, have decimated Lake Huron’s charter boat fishing industry, which was dominated by salmon fishing. The invasive species feed on the plankton that lives in the water column. Since 2000, cladoceran zooplankton, a dominant prey fish food source, has declined by more than 90 percent, according to the Great Lakes Fishery Commission. Without the plankton, the salmon’s primary food source, the alewife began to disappear as well. The alewife was introduced to Lake Huron more than 150 years ago and led to strong salmon populations when that species was introduced in great numbers in the 1970s. But by 2004, the alewife didn’t exist in strong numbers and couldn’t sustain a salmon population, Jones said. “The king salmon was the king in Lake Huron, but when the ecosystem flipped, the fishing economy went into an upheaval,” Jones said. “When the most prevalent prey fish in the Great Lakes disappeared, Lake Huron (fishing) went in the tank.” There’s been a 74 percent drop in anglers fishing Lake Huron since 2004, said Terry Walsh, president of the Michigan Charter Boat As-

sociation and operator of Termar Charters in Standish. “Lake Huron used to produce a greater catch than Lake Michigan, but when the salmon collapsed, that was it,” Walsh said. “When the anglers leave, charter boat captains go out of business, motels close, tackle shops close, marinas close. … A colossal amount of money is permanently lost to the lakeshore communities.” Charter boats brought in $1.1 million annually to Harrisville in northern Michigan on Lake Huron. But the 35 charter boats that operated in its marinas are no longer there, Walsh said. The depleted salmon population in Lake Huron has decreased licensed charter boat captains from more than 900 to near 500 statewide, Walsh said. Walsh ran 80 charters a season. He now only runs 30 to 35 trips, he said. The DNR stocks Lake Huron with walleye, which have managed to thrive in Lake Huron. But walleye don’t draw the anglers, Walsh said. “There isn’t a port on Lake Huron that doesn’t have a great walleye fishery, but walleye aren’t a fighting fish,” Walsh said. “The species makes all the difference; the macho fisherman, they came to Lake Michigan to catch salmon, not walleye.” Whelan said that while invasive species plague the Great Lakes, most anglers continue to seek panfish, perch, muskellunge and pike on Michigan’s inland lakes and rivers. “There will always be pressures on our habitats, and we won’t always have self-sustaining populations, but cool (warm) water fishing will continue to grow,” Whelan said. “We have a lot to deal with concerning climate change and invasive species, but we’ve still got wonderful resources that support a large economy in Michigan.” Dustin Walsh: (313) 446-6042, dwalsh@crain.com. Twitter: @dustinpwalsh

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UM has small ambitions for Big House as major venue The University of Michigan is interested in leasing its football stadium for high-profile sporting events — but not too often. “We don’t want to take business risks on athletic events. We’re a nonprofit auxiliary unit of a public university,” UM Athletic Director David Brandon said. “We’re not in the business of being a promoter for outside events. We basically lease out the stadium, provide other services in conjunction with the stadium.”

The venue this year will have hosted two major nonuniversity sporting events. Michigan Stadium will host Manchester United and Real Madrid in the exhibition InterBrandon national Champions Cup on Aug. 2 in a deal announced Friday.

Lease details have not yet been disclosed. The UM board of regents will vote on the lease. The National Hockey League leased the stadium for $3 million for one month to stage the Winter Classic game between the Detroit Red Wings and Toronto Maple Leafs on Jan. 1. The game drew 105,491. Michigan Stadium’s normal capacity is 109,901 and its record attendance 115,109, set when UM beat Notre Dame in football last September.

The soccer lease will be less than $3 million but at least $1 million, Brandon said. UM isn’t keeping any revenue from the game itself. Brandon said the plans for August mark the first time the stadium has hosted an association soccer match. The deal includes a one-day liquor sales license and putting temporary real grass over the artificial football turf. “Soccer at that level needs to be played on natural grass,” Brandon said.

While the university may want more major events, it’s not actively marketing the stadium. “Fundamentally, we’re relying on, and finding to be successful, word of mouth and observation as our marketing” for the stadium, Brandon said. “As people out there who are looking at promoting really large events at a really large stadium, we hope they’ll talk to us. If it works, we’re certainly happy to do it.” — Bill Shea

Soccer: Stephen Ross looks to give big-time soccer leg up in U.S. ■ From Page 3

They see soccer as a moneymaker in the U.S., where the Fox network has begun broadcasting the English Premier League and Major League Soccer continues to see attendance, ratings and market expansion. “It was really Steve’s idea,” Higgins said. Ross said last fall that he wants a new MLS team for South Florida. The league folded the poorly attended Miami Fusion, which played in Fort Lauderdale, in 2001 after four seasons. The belief is that the timing is better now for Miami. Sun Life Stadium sits mostly empty since the Florida Marlins of Major League Baseball moved to their own venue in 2012. The stadium has hosted several soccer matches that have attracted huge crowds, including Brazil beating Honduras 5-0 in front of 71,124 people in November.

How money is made Relevant Sports contracts with the association teams — that’s what professional soccer teams are called, as opposed to national teams — to play in the International Champions Cup, Higgins said. He declined to disclose how much the teams are paid. Relevant Sports makes money by selling the domestic and inter-

national television broadcasting rights along with corporate sponsorships and tickets. The Fox network is paying Relevant Sports to televise the games domestically. Hong Kong-based Catalyst Media Group, owned by RSE Ventures, is selling the rights overseas, Higgins said. Irish beer giant Guinness is the title sponsor and Chevrolet the official car of the tournament. General Motors Co. has a sevenyear, $559 million jersey sponsorship deal with Manchester United that begins this year. The tournament will be the first matches for the team in the Chevy jerseys. It was GM that approached UM last year about hosting a match at the Big House, Brandon said. Higgins called GM’s involvement in the tournament instrumental to making it happen. “They’ve been a big driver of it,” he said. “Manchester United is a big partnership, so this is a great showcase.” Higgins said the July-August time frame was the only window available to have European teams play in the U.S. before their regular seasons begin. To get genuine competitionquality play, the decision was made to create an internationally broadcast tournament that also could act as a training warm-up to

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the teams’ league seasons. “What we’re bringing is compelling. We can make these matches actually stand for something,” Higgins said. “If the matches are more meaningful, players play harder. The business side gets to put their brand in front of U.S. consumers in a meaningful way.” The tournament will include 38 of the top 100 players in the world. “Steve believes in doing everything best in class,” Higgins said. The tournament comes on the heels of the World Cup, which ends July 13 in Brazil.

Teams, attendance Other teams in the tournament include Liverpool and Manchester City of Great Britain’s Premier League; AC Milan, AC Roma and Inter Milan from Serie A in Italy; and Olympiacos from Superleague Greece. In last year’s International Champions Cup title game, Real Madrid beat Chelsea 3-1 on Aug. 7 in front of 67,273 at Sun Life Stadium. The only U.S.-based team last year, the Los Angeles Galaxy of Major League Soccer, finished fourth. Last year’s matches averaged 41,048 fans. The worst attendance in the U.S. was 22,208 for Everton’s 6-5 shootout victory over Juventus at San Francisco’s AT&T Park on July 31. Overseas, Milan’s 2-1 victory over Valencia on July 27 drew 17,000 at Mestalla Stadium in Spain. That was the lone non-U.S. match in last year’s tournament. This year, matches will be played entirely in the United States. The tournament replaces a similar series of preseason exhibition games played in the U.S. from 2009 to 2011: the World Football Challenge. For the Ann Arbor game, VIP presale tickets kick off April 7. The general public can buy tickets, which start at $45, beginning at 8:30 a.m. Thursday via MGoBlue. com/tickets. More comprehensive ticket packages will be sold through InternationalChampionsCup.com.

Ross: A Michigan (money) man

CORPORATEEAGLE.COM

Having a match played in Ann Arbor is an added bonus for Ross. “Stephen Ross is quite passionate about Michigan,” Higgins said, noting that Ross’ cellphone ringtone is “The Victors.” The athletic department and

2 powerful, popular teams score on financial playing field RSE Sports is paying the world’s two most popular soccer clubs to play at the Big House. The teams are financial juggernauts. Real Madrid, which plays home matches at the 85,500-seat Estadio Santiago Bernabeu, is the most valuable soccer team in the world — worth $3.3 billion, according to Forbes.com. Forbes.com said the club had $170 million in operating income on revenue of $650 million in 2012. Ownership of the team is divided among more than 60,000 supporters who buy memberships and elect a team president, who is forbidden to invest his own money in the club. Real Madrid has won 32 titles in its league, Spain’s La Liga. The team’s superstar is Cristiano Ronaldo, who in September signed a five-year, $206 million contract extension that runs through 2020. Adidas pays the team about $40 million annually to sponsor its jersey through 2020. The other team playing in Ann Arbor is Manchester United, which has won 13 English Premier League championships since its 1992 launch and is second on Forbes’ list at $3.165 billion. “Man U,” which plays at 76,000seat Old Trafford, generated $144

million in operating income on $502 million in revenue in 2012. It also trades on the New York Stock Exchange under the ticket symbol MANU. American billionaire Malcolm Glazer, who also owns the Tampa Bay Buccaneers of the National Football League, bought the controlling stake in Manchester United for $1.5 billion in 2005. Manchester’s top player is Wayne Rooney, who has scored 208 goals in 430 games. He signed a four-year contract extension in February that will pay him $26 million a year through 2019. Beginning this summer, Chevrolet will become the primary sponsor of Manchester United’s jersey logo, replacing Nike. It will pay $70 million to have the Chevy logo on the team’s kit — as soccer uniforms are called overseas. General Motors Co., which sells the Opel and Vauxhall brands in Europe but not Chevy, has drawn criticism for the sponsorship. Man U has struggled on the pitch this season and may not qualify for even the second-tier Europa League tournament. It usually plays in the far more visible European Champions League tournament. — Bill Shea

business school are splitting $200 million that Ross pledged to the university in September. His name also is on the 6,000-student Stephen M. Ross School of Business. Ross earned an accounting degree from Michigan in 1962 after transferring from the University of Florida, followed by a law degree from Wayne State University in 1965 and a master’s of law degree the next year from New York University. He is chairman and majority owner of The Related Cos. LP, the real estate development firm he founded in New York in 1972. Forbes estimates Ross’ worth at $4.4 billion. He’s a Detroit native who grew up in Miami Beach and lives today in New York. His uncle was the late Max Fisher, the noted Detroit philanthropist and industrialist.

Ross began his career as a tax attorney with the Detroit office of Coopers & Lybrand, which later became PricewaterhouseCoopers.

Red-tape delays The Big House game was briefly advertised on the tournament’s website in February, garnering some local media attention, but the information was quickly taken down. All of the other venues were announced months ago. Brandon said the delay in getting a deal worked out at Michigan was due to the internal approvals required — and working out the many logistical details. Bill Shea: (313) 446-1626, bshea@crain.com. Twitter: @bill_shea19

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Crittenton: Hospital to lease cancer center in deal ■ From Page 3

geons interested in referring cancers to an analytic center” that is fully staffed now with St. John oncology specialists, Powell said. Meyer said St. John has been interested in the Rochester area for some time and approached Crittenton about a year ago. The St. John Hospital Cancer Center at Crittenton is St. John’s sixth oncology ambulatory care center. Powell said Crittenton had several options to jump-start its cancer center, including expanding the program itself or creating a joint venture with another company. “We want to grow medical oncology. We have a strong surgery program, but we have had financial issues the last several years, and the cancer center was part of that. We have a very expensive building. We were looking for the fastest way to move the program forward,” Powell said.

A new partner In July 2011, Detroit’s Barbara Ann Karmanos Cancer Institute and Crittenton Hospital dissolved their joint venture agreement of the previously named KarmanosCrittenton Cancer Center. The $16 million center, which opened in January 2010, was built by Crittenton-Karmanos Health Services LLC. Officials for Crittenton and Karmanos declined to discuss why their joint venture failed, but Crittenton began to seek another joint venture partner in earnest last August after Powell was hired as CEO. In seeking a new oncology partner, Powell said Crittenton evaluat-

ed two medical groups, including a small internal oncology group, and 21st Century Oncology of Michigan, a division of Farmington Hills-based Michigan Healthcare Professionals. Amr Aref, M.D., chief of radiation oncology at the new St. John cancer center, said the cancer center at Crittenton has state-of-the art building design and equipment and is accessible to the more than a dozen St. John physicians who will staff it. “Radiation oncology will be open five days a week for treatment and on Saturdays for consultation,” said Aref, who said three radiation oncologists will provide coverage at Crittenton. But Aref said it could take up to three months to build trust with patients in the Crittenton area after the reputation of the cancer center was sullied by the Fata fraud allegations. “The Dr. Fata situation has presented some issues” at other St. John clinic locations, Aref said. “Patients ask us (in so many words): How do I know you are giving me correct treatment and not doing something like Dr. Fata? We are lucky all the members of our group have solid reputations.” These types of affiliations between smaller hospitals and larger cancer programs are becoming increasingly common to tap into medical and management expertise, said Justin Klamerus, M.D., chief of oncology with 11-hospital McLaren Health Care in Flint. “It makes sense to affiliate with major cancer centers and also with comprehensive cancer centers,” said Klameras, noting that McLaren acquired Barbara Ann Karmanos

Cancer Institute last year. To be successful, however, Klameras said, Crittenton Hospital will have to develop a larger network of primary care physicians to generate greater patient volume. That’s in the plans, Powell said.

Plan for Crittenton From 2008 to 2012, Crittenton’s operating losses totaled more than $55 million, according to Medicare cost reports provided by Louisville, Ky.-based Cost Report Data Resources. Once investment income is accounted for, the net loss over that period was $26.6 million. In 2013, Crittenton lost about $21 million on operations and recorded a net loss of $4.7 million, Crain’s previously reported. Last fall, Moody’s Investors Services downgraded Crittenton’s bond rating to Baa3 from Baa2 on $107.3 million bonds issued by the Michigan State Hospital Finance Authority. Moody’s said the hospital “has endured a trend of unfavorable financial performance, a balance sheet that has eroded over the last several years and additional debt that leverages the hospital.” The center, paid for in conjunction with Karmanos, cost $16 million. The hospital also opened a new $65 million patient tower earlier this year. During its first year of operation, Meyer said, St. John is looking to increase patient visits at the cancer center to 13,000, up from 11,000. The system will spend about $300,000 to $500,000 in equipment and information technology, she said. By year two, said Meyer, St. John is hoping to break even financially

at the Crittenton-based center. “It is a startup. We need to gain patients, establish relationships with the community,” Meyer said. Managers of the St. John Cancer Center include Aref; Kathy LaRaia, vice president of oncology; Ayad Al-Katib, M.D., medical director of oncology; and Robert Leonard, M.D., president of Great Lakes Cancer Management Specialists. Powell said Crittenton’s 12 cancer surgeons are eager to start working with St. John physicians. “They have been imploring me since day one to get this going,” he said. “The cancer center program is largely outpatient,” Powell said. “Medical oncology procedures are done at the cancer center, but when the surgeon identifies cancer, the patients go to Crittenton (for surgery).” Powell said Crittenton estimates 1,000 annual surgical procedures under St. John management, up from about 750 annually the previous several years. An average procedure generates about $10,000. While Crittenton has discussed a sale in the past with Vanguard Health Systems Inc., the former owner of Detroit Medical Center; Beaumont Health System; and McLaren Health Care, Powell said the independent nonprofit hospital isn’t talking with anyone at the moment. “We like who we are dealing with at St. John’s,” Powell said. “It is only natural we will look at other potential (clinical) relationships (with St. John).” Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

Credits: Biz benefits, but state frets over guesswork ■ From Page 1

Senate fiscal agencies and the Treasury Department came together at the May revenue estimating conference, which provides the numbers lawmakers use to set the budget, they estimated the state would pay out $490 million in refunds and credits to businesses. But the state ended up paying out just $75.8 million. The estimate for fiscal 2014 is $440 million. “There is a risk that the $490 million was correct, but we just got the timing wrong,” said David Zin, the Senate Fiscal Agency’s chief economist. Alex Rosaen, senior consultant at the East Lansing-based Anderson Economic Group, said the inability to predict “is a genuine problem.” Given the potential liability going forward, the state might want to consider forming a rainy-day fund just for the MBT credits, he said. “Setting aside enough once should do the trick and then rolling those amounts over,” he said.

REPORTERS 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

ADVERTISING SALES INQUIRIES (313) 446-6052; FAX (313) 393-0997 SALES MANAGER Tammy Rokowski SENIOR ACCOUNT EXECUTIVE: Matthew J. Langan ADVERTISING SALES Christine Galasso, Jeff Lasser, Sarah Stachowicz CLASSIFIED SALES Angela Schutte, manager, (313)-446-6051 DIRECTOR OF MARKETING AND EVENTS Elizabeth Buscher DIGITAL MARKETING MANAGER Jennifer Chinn AUDIENCE DEVELOPMENT DIRECTOR Eric Cedo EVENTS MANAGER Kacey Anderson SENIOR PRODUCER FOR DIGITAL/ONLINE PRODUCTS Pierrette Dagg SENIOR ART DIRECTOR Sylvia Kolaski SALES SUPPORT Suzanne Janik, YahNica Crawford PRODUCTION MANAGER Wendy Kobylarz PRODUCTION SUPERVISOR Andrew Spanos

CUSTOMER SERVICE

GRANHOLM TAX CREDITS PENDING The following is a list of state tax credits pending from the administration of Gov. Jennifer Granholm and the last year in which the companies that received them can become eligible to claim them. Companies then have four more years in which to actually claim the credit. The potential remaining liability for the MEGA Employment credit is $5.4 billion. It’s $527 million in potential credits for the battery industry. Amounts for the other credits were not available. 2012: NASCAR credits 2016: Battery credits 2017: Anchor company payroll credits 2022: Historic preservation credits 2022: Anchor company taxable value credits 2026: Brownfield rehabilitation credits 2032: MEGA Employment credit Source: Treasury Department, MEDC

Change in policy In 2011, when Gov. Rick Snyder took office, he largely eliminated credits and replaced the Michigan Business Tax with a 6 percent income tax on C-corporations that

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 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

doesn’t allow for the credits. Businesses with existing credit eligibility were allowed to continue filing the MBT until their credits are used up or the time period

for exercising them expires. In fiscal 2012, there were 3,533 businesses still filing an MBT return. Mark Morante, senior vice president of special projects at the Michigan Economic Development Corp., said since the MEGA program began in 1995, about 35 to 40 percent of the eligible credits have been claimed. In the early 2000s, state law limited the number of MEGA credits annually to 25, but eventually the cap was lifted. And when the recession hit in 2008, the MEDC was handing out more than 80 per year to entice companies to move or stay in Michigan. After typically handing out $100 million worth of MEGA credits per year a decade ago, in 2010 the value of the MEGAs, some of which have 20year windows in which to be redeemed, topped $2.5 billion.

Lack of information The MEDC has a spreadsheet, which it shares with the Treasury Department, that maps out each company and its tax credit’s total value and how many years it can still claim it, Morante said. Morante said House and Senate fiscal agencies would have access

to the amount and length of the tax credits, but not the actual performance of a company on a year-toyear basis that would indicate whether it will be able to claim a credit for a particular year, because that is confidential. Stansell said he and several colleagues once tried to go through every credit given out to each company and map out the potential liability to the state, but they didn’t get far. “We finally just threw our hands up in the air because we just didn’t have the information,” he said. Treasury does provide the agencies with some aggregated data that explains the reasoning behind their number, which can help influence the budget, but Stansell said even with the information Treasury has, it is difficult to predict with much accuracy. Morante, who is one of two people at the MEDC authorized to sign off on credit eligibility, said just last week he signed a company’s certificate for a credit it earned in 2010. “Who knows why they took so long to claim it?” Morante said. Chris Gautz: (517) 403-4403, cgautz@crain.com. Twitter: @chrisgautz

MAIN NUMBER: Call (877) 824-9374 or write customerservice@crainsdetroit.com SUBSCRIPTIONS $59 one year, $98 two years. Out of state, $79 one year, $138 for two years. Outside U.S.A., add $48 per year to out-of-state rate for surface mail. Call (313) 446-0450 or (877) 824-9374. SINGLE COPIES: (877) 824-9374 REPRINTS: (800) 290-5460, ext. 125; (717) 505-9701, ext. 125; or lindsay.wilson @theygsgroup.com TO FIND A DATE A STORY WAS PUBLISHED: (313) 446-0406 or e-mail infocenter@crain.com CRAIN’S DETROIT BUSINESS IS PUBLISHED BY CRAIN COMMUNICATIONS INC. CHAIRMAN Keith E. Crain PRESIDENT Rance Crain TREASURER Mary Kay Crain Executive Vice President/Operations William A. Morrow Executive Vice President/Director of Strategic Operations Chris Crain Vice President/Production & Manufacturing Dave Kamis Chief Information Officer Anthony DiPonio G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) EDITORIAL & BUSINESS OFFICES: 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly, except for a special issue the third week of August, and no issue the third week of December by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Entire contents copyright 2014 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is strictly prohibited.

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RUMBLINGS Um, please pass that humble pie

WEEK ON THE WEB FROM WWW.CRAINSDETROIT.COM, WEEK OF MARCH 29-APRIL 4

Fender strums for Tigers

Wanna let the crowd at your next gig know you’re a Detroit Tigers diehard? Then Fender has you covered — for $799. The iconic Scottsdale, Ariz.-based guitar maker, formally known as Fender Musical Instruments Corp., has included the Tigers among its initial line of Major League Baseball-licensed Fender Stratocasters. few national retail$23.6 million from DeThe solid-body electric ers are eating slices troit’s General Retireguitar in Tigers colors is of humble pie as ment System. festooned with the team they look upon the Gateway Congress auname logo, the Old English Marketplace on Detroit’s thorized the D, and a RenCen silhouette. northern border. Why? The credits in The company humble New Markets Tax 2000, and specs also call Credit. since then for an alder For years, some of the Detroit has body maple country’s largest big-box received $387 neck with modshops soundly told developer million to help ern “C” shape, Southfield-based Redico LLC fund 26 projects, 21 medium jumthey weren’t interested in including Gatebo frets, three the 360,000-square-foot retail way Marketstandard sincenter planned for Eight place, the gle-coil Strat Mile Road and Woodward Westin Book pickups and Avenue. Cadillac Deother stanAlmost nine months after troit, renodard feathe $72 million center vating the tures. opened, anchored by a $20 Broderick Fender is million Meijer Inc. Super Cen- Tower, and making Stratoter, some of them are apthe Argonaut casters for 11 othproaching Redico and asking Building, which COURTESY FENDER MUSICAL er teams, plus a Minif there is any room for would become the INSTRUMENTS CORP. nesota Twins All-Star them. home of the ColGame version this year. “A lot of people queslege for Creative Studies’ They’re all at Fender.com. tioned the viability of this Taubman Center and also The Stratocaster model, project, but you can see the houses Shinola. introduced in 1954, has been viability,” said Ken Till, seused by music legends such nior vice president of develas Eric Clapton, Jimi Hendrix, opment at Redico, at a Bonnie Raitt, George Harrison roundtable discussion last and Buddy Holly. week about the New Markets The familiar scores of “The connections are inTax Credit Program that Hollywood movies includtrinsic — baseball bats and made the project possible. ing “Jaws,” “Star Wars” guitars are both made from “Meijer has said, ‘We’re and “Raiders of the Lost maple and ash, and tons of hitting it out of the park,’ ” Ark” will fill Orballplayers are guitar playTill told the invitachestra Hall for one ers,” Justin Norvell, Fender tion-only crowd at night in June, unmarketing vice president, the Gateway Marketsaid in a statement. “We’ve der the direction place, which includhad more casual or inforof composer John ed U.S. Rep. Gary mal connections with playWilliams, who will Peters, D-Mich., and ers and teams for years, so be joined by OsDon Graves, who is car-winning direc- this further solidifies a relaPresident Barack tionship we’ve long valued tor Steven Obama’s man in and enjoyed.” Spielberg. Plus, Detroit as well as the Stratocasters range from executive director of two Detroit busia $179 “mini” version to the President’s Coun- Spielberg ness “leading con$15,000 for a special Eric cil on Jobs and Competitiveductors” will be honored. Clapton model. The guitars ness. The Detroit Symphony Orare manufactured in Baja Till added that the Marchestra is hosting the faCalifornia, Mexico. shalls store at Gateway is mous Hollywood luminarTJX Cos. Inc.’s No. 1 location ies for a June 14 in Michigan, while the K&G fundraising concert, which Fashion Superstore has the will be followed by its HeMichigan native, artist best sales in the nation. roes Gala Dinner honoring Gateway Marketplace alRock Ventures Chairman Dan and activist Mary Fisher, daughter of Marjorie Fisher most didn’t happen. Gilbert and President and and her husband, the late It languished for nearly a CEO Matt Cullen for their Max Fisher, is encouraging decade until Redico took on support of the orchestra people to do anonymous good the project and applied for and Detroit as a whole. deeds and support at-risk New Markets Tax Credit to Gilbert and Cullen assistwomen in Africa, Haiti and make the financing possible. ed in the mediation process The New Markets Tax Credit between the DSO and its mu- other countries by purchasProgram helps small busisicians in 2011, arranged the ing their handmade “100 nesses and large developGood Deeds” bracelets, orchestra’s 2012 Kid Rock ments in economically disconcert, which raised $1 mil- based on her designs. tressed areas, such as Fisher is selling the lion, and are “generous conDetroit, by offering a 39 perbracelets, made of 100 glass tributors” to the orchestra. cent federal tax credit that is Tickets to the events go on beads and which include a taken over seven years. sale April 14 at www.dso.org. rubber band to keep track of For the Gateway project, your good deeds, for $30 The gala, which includes that meant securing $57.6 through the Abataka Foundaentrance to the concert, will million in credits, which altion, launched to help African cost $500 to $10,000, while lowed Redico to obtain a women with HIV/AIDS. See tickets to the concert alone general construction loan of www.100gooddeeds.org. will range from $50 to $250.

Concert to honor Spielberg, Rock Ventures execs

Bracelet marks good deeds

Survey: Minimum wage hike little bother to state biz possible increase in the minimum wage is of little concern to owners of Michigan small and midsize businesses, according to an annual spring survey by Pittsburgh-based PNC Financial Services Group Inc. Only 6 percent of respondents said an increase would cause them to reduce staffing, and 69 percent said it would have no impact.

ON THE MOVE 䡲 U.S. Rep. Dave Camp,

chairman of the House Ways and Means Committee, announced he will retire after 24 years of representCamp ing Michigan in Congress. Camp, 60, is a Republican. 䡲 Jeff Wattrick, most recently a columnist with DeadlineDetroit.com and formerly a writer with MLive.com, was named managing editor of ClickOnDetroit.com, the website for local NBC affiliate WDIV-Channel 4. Wattrick, 36, replaces Lisa Ray, who left for Denver’s KDVR-TV as an executive producer.

COMPANY NEWS 䡲 The Detroit News, Oakland Press, Daily Tribune and Macomb Daily soon could go up for sale with other newspapers owned by New York City hedge fund Alden Global Capital LLC, said a report published by Harvard University’s Nieman Journalism Lab. 䡲 Restaurant/entertainment complex Punch Bowl Social announced plans to open in November inside The Z, the Detroit parking garage collaboration between Bedrock Real Estate Services and fine art gallery Library Street Collective. 䡲 General Dynamics Land Systems in Sterling Heights landed a $74.7 million contract from the U.S. Marine Corps Systems Command for upgrade kits for infantry vehicles, and the U.S. Army Tacom Life Cycle Management Command in Warren was awarded a $47.7 million modification to a previous contract for Oshkosh Defense to build 231 new vehicles by August 2015. 䡲 French automotive supplier Actuaplast plans to set up a new plant at an unnamed Detroit-area loca-

tion, European Plastics News reported. 䡲 Arotech Corp., the Ann Arbor-based military contractor and battery systems maker, acquired Hanahan, S.C.-based UEC Electronics LLC for $28 million cash and over $4 million in stock. 䡲 The nonprofit Kronk Gym Foundation signed a five-year lease for part of the Detroit-owned Considine-Historic Little Rock Family Life, Education and Recreation Center, intending to open it to the public in May with equipment donated by the World Boxing Organization. 䡲 Chicago-based airline Lakeshore Express Aviation — which offered service between Oakland County International Airport, Pellston Regional Airport and Chicago Midway International Airport — suspended operations. 䡲 Two Michigan-based clean energy companies won awards at the Clean Energy Challenge of 2014 in Chicago. Black Pine Engineering of Michigan State University won the $100,000 U.S. Department of Energy Student Challenge Prize for designing a mechanical pump to remove harmful gases from geothermal power plants. Greenlancer of Detroit won the $50,000 Clean Energy Trust Business Model Innovation Prize for developing a network of oncall engineers to help with solar installations. 䡲 Forbes Media opened its first airport newsstand, at Detroit Metropolitan Airport’s McNamara Terminal.

OTHER NEWS 䡲 Detroit may be able to conclude its record $18 billion bankruptcy by Oct. 15, less than 18 months after seeking court protection, Emergency Manager Kevyn Orr told U.S. Bankruptcy Judge Steven Rhodes. Meanwhile, Bloomberg reported the city proposed deeper cuts to police and firefighter pensions and some bondholders, and Rhodes gave the city approval to issue $120 million in bonds to pay for emergency vehicles and basic services. 䡲 The FBI is investigating allegations of payoffs to Detroit City Council members in exchange for their votes for council president, The Detroit News and Detroit Free Press reported. Brenda Jones was voted council president in January, edging out previous president Saunteel Jenkins in a 5-4 vote. 䡲 Dan Duggan, owner of the semipro Michigan Bucks soccer team in Pontiac, said he reached a preliminary agreement for a De-

troit team to join the USL Professional Division league in 2015 and is seeking up to 7 acres in Detroit for a 5,000-seat stadium. 䡲 The Southfield-based Specs Howard School of Media Arts will offer $125,000 in scholarships to workers seeking training in technology-driven courses. 䡲 Startups and existing small businesses in Oakland County obtained $22.7 million in loans in 2013, more than triple the amount of loans and capital formation dollars from 2012, said a report by the Oakland County Business Center. 䡲 Detroit Red Wings great Ted Lindsay and his foundation announced a $1 million donation to expand an autism program at Beaumont Hospital, Royal Oak. 䡲 Ann Arbor physician Adelina Herrero, M.D., pleaded guilty in U.S. District Court to one count of conspiracy to commit health care fraud. 䡲 California developer Stuart Lichter said he is under contract to buy 558,000 square feet of space in a Pontiac industrial complex formerly used by General Motors Co. 䡲 The Southeast Michigan Purchasing Managers Index rebounded to 55 in March from 47.3 in February. A value above 50 indicates economic growth. 䡲 The American Customer Satisfaction Index hit the high point in its 20-year history, according to the national survey released by the University of Michigan. 䡲 A U.S. district judge ruled the Michigan State AFL-CIO and other organized labor groups that sued last year can continue to pursue their claim that federal labor law preempts the right-to-work measure signed into law in 2012. 䡲 Michigan Democratic gubernatorial candidate Mark Schauer announced Oakland County Clerk Lisa Brown as his running mate. 䡲 Former state Senate Majority Leader Mike Bishop and Rochester Hills Mayor Bryan Barnett announced bids to replace U.S. Rep. Mike Rogers in Michigan’s 8th Congressional District, 䡲 Michigan House leaders proposed roads funding of at least $450 million in the 2015 budget year and at least $500 million annually by 2018, AP reported. 䡲 The newly launched Michigan Farm to Institution Network aims to increase state-produced food served in schools, hospitals and other institutions, said officials from the Michigan State University Center for Regional Food Systems and the Ann Arbor-based nonprofit Ecology Center.

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Deals worth roughly $827 million and counting …

Presenting Crain’s M&A Honoree Panel: John Weinhardt Unique Fabricating Inc. FINALIST: Deal Under $100 Million

Martin Stein Blackford Capital LLC WINNER: Deal Under $100 Million

Mark McCammon Strength Capital WINNER: Deal Over $100 Million

Wednesday, April 16 5-9 p.m., Troy Marriott

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