Crain's Detroit Business, April 14, 2014 by Crain's Detroit Business

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www.crainsdetroit.com Vol. 30, No. 15

APRIL 14 – 20, 2014

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Molina to move to bigger Troy HQ Estimate: Medicaid biz could bring 150-300 jobs BY KIRK PINHO AND JAY GREENE

How did they pay for it? Some ballpark estimates CRAIN’S MICHIGAN BUSINESS

CRAIN’S DETROIT BUSINESS

The state’s third-largest Medicaid HMO plans to double down on headquarters office space in Troy to keep up with a rapidly growing workforce tied to expanding Medicaid business in Michigan. Molina Healthcare of Michigan is moving in the third quarter to a purchased 197,000-square-foot building

COSTAR GROUP INC.

Molina Healthcare of Michigan will move into the Troy Corporate Center.

in the Troy Corporate Center on West Long Lake Road east of Crooks Road. It’s planning to initially occu-

py 90,000 square feet. The company also continues to look for downtown Detroit office space for a satellite office. Sunny Yu, a spokeswoman for Long Beach, Calif.-based Molina Healthcare Inc., the parent company of Molina Healthcare of Michigan, said its operations in the state will continue to “continue to grow and hire as needed.” Michigan’s expansion of Medicaid has been a boon for business.

Tourism dollars conjure dreams of fields, Page 19

The company has about 300 employees in Troy. Yu said the company does not know precisely how many employees it will add because of state contracts “still coming down the pipeline.” Jim Berkemeier, vice president of Southfield-based Advocate Commercial Real Estate Advisors, said 90,000 square feet could accommodate 450-600 employees, or 150-300 new hires, based on the industry standard of 150-200 square feet of office space per person. See Molina, Page 33

Market rise could help restore city pension cuts

Second Stage

Families on staying in biz, staying together, Page 11

This Just In

BY CHAD HALCOM CRAIN’S DETROIT BUSINESS

Willow Run Airport names retired Marine pilot as director

NEWSPAPER

Christopher Mullin, 51, a recently retired U.S. Marine Corps pilot and aviation officer, has been appointed director of Willow Run Airport. Mullin will assume control of day-to-day operations at the commercial and cargo airport that straddles Van Buren Township and Ypsilanti Township after being hired by Wayne County Airport Authority CEO Thomas Naughton, according to a Friday statement. Mullin replaces Sean Brosnan, who was promoted to vice president of maintenance and airfield operations for both Detroit Metropolitan Airport and Willow Run. Mullin retired from the Marines in October. He was a military jet pilot and served 29 years in aviation support and planning roles. The airport authority is the seven-member board that oversees both airports. — Bill Shea

“We have stores or boutiques that you can’t find everywhere,” said Michelle Lewis, who opened Painting with a Twist in Ferndale in 2010 and expanded three years later. JOHN SOBCZAK

Finding Ferndale City’s biz-friendly moves attract companies, spur expansions BY KIRK PINHO CRAIN’S DETROIT BUSINESS

hree years after Michelle Lewis opened her first Painting with a Twist franchise in downtown Ferndale, business was so good that she needed to double the studio’s size to 5,000 square feet on West Nine Mile Road. Lewis’ story isn’t an aberration downtown, where 14 businesses have expanded into larger space during the last two years or are opening this year, according to Cristina Sheppard-Decius, executive di-

rector of the Ferndale Downtown Development Authority. In 2000, vacancy in downtown Ferndale was well over 30 percent, she said. Today, the core downtown is just 2 percent vacant, and the outskirts of the downtown are just 4 percent vacant. Small-business expansions are only part of the story in Ferndale. Industrial companies are investing in new space, a mixed-use development that will add needed office space and parking downtown is being planned, and businesses throughout the inner ring suburb are growing their workforces. City officials and business owners credit an improved Michigan economy and a simpler city business licensing and permitting process to Ferndale’s latest investment spurt. It hasn’t been easy, said Mayor David Coulter,

The pension benefit cuts Detroit has proposed for more than 21,000 retired city employees in bankruptcy court could prove fairly short-lived, depending on how quickly the pension plans get outside funding and whether the stock market continues to thrive. Much of the narrative about post-bankruptcy pension benefits has dealt in immutable numbers: Compensation cuts of 6 percent and 26 percent, respectively, for the Police and Fire Retirement System and General Retirement System, even deeper cuts if they oppose the city’s plan of adjustment in court, no cost-of-living adjustments for years to come, and a drastic overhaul of retiree health care. But the plan allows for trustees to approve restoring some lost benefits, and COLA, if at any time the more conservative projections requested by the city call for the plans to become more than 80 percent funded by 2023. And those restorations, once given, would be permanent. That sounds a long way off right

See Ferndale, Page 32

See Pension, Page 33

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MICHIGAN BRIEFS Harsh winter weather damages Michigan’s fruit trees, vines Now that the thaw is upon us to stay (pause for prayer), the state’s fruit farmers can check their trees. Some already have found damage, the Michigan Farm Bureau said in a report. “There certainly is going to be some bud damage and potential damage to the wood,” said Ken Nye, a horticulture and forestry specialist with the bureau. Michigan is the national center for tart cherry production and also a major producer of apples and sweet cherries. “Apples probably weren’t affected too much, but we’ll see some damage to cherries, peaches, grapes and blueberries,” Nye said in a statement reported by The Associated Press. The health of this year’s crop depends in part on how the spring shapes up, he said. “The best-case scenario now is for us to stay cool as long as possible.”

Surveys suggest economy’s up, poised to persist its perkiness Growth in West Michigan’s industrial sector began to accelerate in March, MLive.com reported, citing a survey conducted by economist Brian Long, director of supply chain research for Grand Valley State University. Long, who surveys the region’s

Is Buffett about to swallow Kellogg for breakfast? Stories about Kellogg Co. usually begin with some reference to Tony the Tiger and usually riffs on “they’re great!” The humor probably was lost on residents of Kellogg’s hometown of Battle Creek sometime in the mid-1970s, so let’s move on to the fact that some folks think Warren Buffett may want to add Kellogg to his holdings. Kellogg, maker of breakfast cereal and assorted snacks, surged the most since 2009 this month amid speculation it might become the industry’s next takeover target, Bloomberg News reported. The company’s well-known products may entice billionaire Buffett, who teamed with 3G Capital last year to acquire H.J. Heinz & Co., said analysts at Gardner Russo & Gardner. In his latest letter to Berkshire Hathaway Inc.’s shareholders, Buffett said he’s still looking for big industrial purchasing managers every month, said his index of new orders showed strong improvement, while his production index shows more modest gains. The employment index also improved. Another survey, this one by PNC Bank, found increased optimism and stronger hiring plans among small-business owners in Michigan for the next six months.

Grand Rapids restaurant plans to grow locally on a wall garden Well, this certainly is a new approach to locally grown ingredi-

targets or “elephants.” Kellogg also may appeal to PepsiCo Inc., owner of Quaker oatmeal, or Nestle SA, said Edward Jones & Co. Kellogg spokesman Kris Charles said the company doesn’t respond to speculation. A 3G representative declined to comment, and Buffett didn’t respond to a request for comment sent to an assistant. Like Heinz’s ketchup, Kellogg’s products probably will be around a century from now, fitting Buffett’s preference for brands with staying power, said Tom Russo, a partner at Lancaster, Pa.-based Gardner Russo & Gardner. Kellogg also meets several of Buffett’s financial criteria for acquisition candidates. He usually prefers “simple” businesses with “consistent” earnings power and “good” returns on equity while employing little or no debt, according to his annual report.

ents. The Grand Rapids Business Journal reports that The B.O.B. restaurant in downtown Grand Rapids plans to devote a chunk of a vertical garden — that is, a garden planted on the wall of a building — to 1,500 herb and vegetable plants for use by The B.O.B.’s chefs. The garden, left over from last year’s ArtPrize competition, was the creation of West Michigan artist Dave MacKenzie. The paper notes that Jared Miller, executive chef at The B.O.B., is “extremely excited.” Which probably means he’s not the guy who’s going to have to harvest the crops.

MICH-CELLANEOUS 䡲 Bank of America Corp. will sell 11 branches in central and eastern Michigan to Columbus, Ohiobased Huntington Bancshares Inc., Bloomberg News reported. Huntington’s branch network will expand into Midland, Alma, Port Huron, Gratiot, St. Clair, Algonac and Richmond and will grow in the Saginaw and Bay City areas. 䡲 Lake Michigan Carferry, operators of the S.S. Badger, say they’ve begun retrofitting the ship to allow ash from its coal-fired burners to be stored onboard while the boat hauls passengers and vehicles across

Lake Michigan, The Associated Press reported. The modifications are intended to resolve a dispute with federal regulators over dumping the ash into the lake. The 410foot Badger offers 60-mile cruises between Ludington and Manitowoc, Wis., between May and October. 䡲 Last month, Michigan Briefs noted that Kalamazoo-based Bronson Healthcare planned to open a health clinic in a Meijer Inc. store in Portage. Last week, the Grand Rapids Business Journal reported that the Walker-based retailer strengthened a relationship with New Jersey-based U.S. Vision, which operates in 50 of Meijer’s 200plus stores. Under the new relationship, U.S. Vision, the sixth-largest optical retailer, will be Meijer’s exclusive vision center. 䡲 Michigan State University is joining food and drink makers and sellers to create the Center for Research on Ingredient Safety, The Associated Press reported. MSU and the Grocery Manufacturers Association say the center “will serve as a reliable and unbiased source for information, research, training and analysis on the safe use of chemical ingredients in consumer packaged goods.” 䡲 Three months after a fire destroyed a big chunk of Fifth Third Park, home of the West Michigan Whitecaps, the team opened its 2014 season on schedule. The Whitecaps are the Class A minor-league affiliate of the Detroit Tigers.

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Arena JV shares expertise, risks Barton Malow teams with Detroit, Indianapolis construction firms BY BILL SHEA CRAIN’S DETROIT BUSINESS

The local construction giant that built the Detroit Red Wings’ current home will also build their next one. Southfield-based Barton Malow Co. was hired by the city of Detroit in 1979 to build Joe Louis Arena and is

the majority partner in a joint venture formed to construct a $450 million, 18,000-seat arena scheduled to open for the 2016 hockey season. Barton Malow-Hunt-White last week was approved by the Downtown Development Authority as the general contractor to oversee construction of the 650,000-square-foot multipur-

If you fund it ... onstruction financing for stadiums in Detroit has been a mix of public and private money — or both — since the Detroit Tigers built Navin Field (which later became Tiger Stadium) in 1912 for $300,000. The team sold the stadium to the city for $1 in 1978. Detroit paid $400,000 to raze it in 2009. Detroit itself got into the stadium business when it built Olympia Stadium

COMERICA PARK

NATHAN SKID/CDB

Cost: $326 million Team: Detroit Tigers Seats: 41,681 Opened: 2000 Owner: Detroit-Wayne County Stadium Authority Naming rights: Dallas-based Comerica Bank is paying the team $2.2 million a year until 2028 as

FORD FIELD Cost: $500 million Team: Detroit Lions Seats: 64,500 Opened: 2002 Owner: Detroit-Wayne County Stadium Authority Naming rights: Ford Motor Co. paid the team $50 million in three lump sums in 2002 for 25-year rights. The automaker agreed in 2005 to pay another $6.6 million through 2015 to add its name to the stadium roof and elsewhere on the exterior. 䡲 How it was funded:

pose center to be built west of Woodward Avenue at I-75 in Detroit. The other companies in the joint venture are Detroit-based White Construction and Indianapo- Ivanikiw lis-based Hunt Construction Group. A contract between the joint

part of a 30-year, $66 million deal inked in 1998. 䡲 How it was funded: Stadium authority bonds, paid off by rental car and hotel room taxes: $86 million Downtown Development Authority: $40 million Michigan Strategic Fund: $55 million Ilitch family financing: $145 million

DDA: $70 million City: $15 million Stadium authority: $20 million Wayne County: $20 million Corporate contributions: $50 million Lions: $325 million 䡲 How it operates: Revenue: Lions keep all Maintenance: Funded by a $300,000 annual contribution by the Lions Lease: 35 years. Six 10-year options.

Cost: $450 million Team: Detroit Red Wings Seats: 18,000 Opens: 2016 Owner: Detroit Downtown Development Authority Naming rights: Olympia Development of Michigan retains the right to sell the name. 䡲 How it will be built: $450 million in Michigan Strategic Fund bonds, to be paid off by $262 million

䡲 How it operates:

Revenue: Tigers keep all Maintenance: Funded by annual deposits of $300,000 from the Tigers and $250,000 from the DDA Lease: 35 years. Six 10-year options. Rent: The Tigers pay $1 a year for the 35-year lease, then $1 million annually for each of the six 10-year lease extension options exercised.

NATHAN SKID/CDB

䡲 How it operates: Red Wings keep all under

Cost: $30.3 million Team: Detroit Red Wings Seats: 20,066 Opened: 1979 Owner: Detroit Building Authority/Municipal Parking Department Naming rights: None 䡲 How it was built: $30.3 million in municipal bonds repaid mostly with U.S. funds

NEW RED WINGS ARENA

See Arena, Page 31

for the Detroit Red Wings for $2.5 million in 1927. Stadium projects using both public and private money became common nationwide by the 1990s, and Comerica Park and Ford Field were financed that way. The third Red Wings arena will be as well. Financial data on Comerica Park and Ford Field are vexing. The original team construction contracts don’t reflect subsequent changes. The teams don’t discuss their private financing. Public agencies said conflicting things. Below are the best numbers available, based on published data and documents from public agencies and limited information from the teams:

JOE LOUIS ARENA

NATHAN SKID/CDB

venture and Olympia Development of Michigan, the arena developer on behalf of Red Wings owners Mike and Marian Ilitch, will be signed by April 30, said Alex Ivanikiw, senior vice president at Barton Malow and one of the executives overseeing the project. Olympia will manage the DDA-owned arena under a 35-year concession management agreement. Using a joint venture for con-

lease approved in March. Under previous lease, city collected taxes on tickets, concessions and suites sales that generated $2 million and $3 million annually. Maintenance: Red Wings pay Lease: Retroactive to 2010 through 2015, signed in March Rent: Old lease required $25,000 monthly and $252,000 annual use tax. New deal is $1 million annually 2010-15, minus credit for property taxes. Five one-year options.

from the DDA and $188 million from Olympia, the real estate arm of Wings owners Mike and Marian Ilitch’s business holdings 䡲 How it will operate: Revenue: Red Wings keep all Maintenance: Reserve fund funded by the state bonds Lease: 35 years. Twelve five-year options. Rent: $11.5 million concession fee paid to DDA, for bond retirement

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April 14, 2014

Revamped charity poker rules in the cards, Page 6 Company index These companies have significant mention in this week’s Crain’s Detroit Business: Advocate Commercial Real Estate Advisors . . . . . . . 1 Alex & Beck . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Allied Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Altair Engineering . . . . . . . . . . . . . . . . . . . . . . . . . 29 Art Van Furniture . . . . . . . . . . . . . . . . . . . . . . . . . 21 Autoliv . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Barton Malow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Barton Malow-Hunt-White . . . . . . . . . . . . . . . . . . . . 3 Brass Aluminum Forging Enterprises . . . . . . . . . . . 32 Brembo North America . . . . . . . . . . . . . . . . . . . . . 25 Chrysler Group . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Comerica Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Community Choice Credit Union . . . . . . . . . . . . . . . 4 Compuware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Cooper-Standard Automotive . . . . . . . . . . . . . . . . 25 Davenport University . . . . . . . . . . . . . . . . . . . . 14, 15 Denso International America . . . . . . . . . . . . . . . . . . 7 Detroit Red Wings . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Dow Chemical . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Eaton Steel Bar . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Federal-Mogul . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Fifth Third Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Flagstar Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Foley & Lardner . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Friedman Integrated Real Estate Solutions . . . . . . 33 General Motors . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Gregory J. Schwartz . . . . . . . . . . . . . . . . . . . . . . . 11 The Henry Ford . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Huron Valley State Bank . . . . . . . . . . . . . . . . . . . . . 4 Ideal Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 J.W. Westcott . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Kelly Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Kolene . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Lee Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Level One Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Meritor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Michigan Culinary Tourism Alliance . . . . . . . . . . . . 23 Molina Healthcare of Michigan . . . . . . . . . . . . . . . . 1 MSX International . . . . . . . . . . . . . . . . . . . . . . . . 25 Oakland University . . . . . . . . . . . . . . . . . . . . . . . . 15 O’Connor Development . . . . . . . . . . . . . . . . . . . . . 29 Olympia Development of Michigan . . . . . . . . . . . . . 3 Orleans Landing . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Painting with a Twist . . . . . . . . . . . . . . . . . . . . . . . . 1 Plymouth Venture Partners III . . . . . . . . . . . . . . . . 10 Prima Civitas . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Public Lumber . . . . . . . . . . . . . . . . . . . . . . . . 11, 13 The Recovery Project . . . . . . . . . . . . . . . . . . . . . . 16 Renaissance Venture Capital Fund . . . . . . . . . . . . 10 Rust Belt Market . . . . . . . . . . . . . . . . . . . . . . . . . 32 Search Optics . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Simmons & Clark . . . . . . . . . . . . . . . . . . . . . . . . . 12 Southwest Solutions . . . . . . . . . . . . . . . . . . . . 14, 15 Sweet Potato Sensations . . . . . . . . . . . . . . . . . . . 12 Talmer Bank and Trust . . . . . . . . . . . . . . . . . . . . . . 4 TI Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Valentine Distilling . . . . . . . . . . . . . . . . . . . . . . . . 32 Valeo North America . . . . . . . . . . . . . . . . . . . . . . . . 7 Vibe Credit Union . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Wayne State University . . . . . . . . . . . . . . . . . . . . . 30 West Michigan Sports Commission . . . . . . . . . . . . 20 White Construction . . . . . . . . . . . . . . . . . . . . . . . . . 3 Woodward Avenue Brewery . . . . . . . . . . . . . . . . . . 32 Woodward Willis . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Department index BANKRUPTCIES . . . . . . . . . . . . . . . . . . 6 BUSINESS DIARY . . . . . . . . . . . . . . . . 26 CALENDAR . . . . . . . . . . . . . . . . . . . . 27 CLASSIFIED ADS . . . . . . . . . . . . . . . . 29 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 8 JOHN SULLIVAN

Site of new arena for the Detroit Red Wings

LETTERS . . . . . . . . . . . . . . . . . . . . . . . 8 MARY KRAMER . . . . . . . . . . . . . . . . . 19 OPINION . . . . . . . . . . . . . . . . . . . . . . . 8 OTHER VOICES . . . . . . . . . . . . . . . . . . 9

THIS WEEK @ WWW.CRAINSDETROIT.COM

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PEOPLE . . . . . . . . . . . . . . . . . . . . . . 28 RUMBLINGS . . . . . . . . . . . . . . . . . . . 34 STAGE TWO STRATEGIES . . . . . . . . . . 16 WEEK ON THE WEB . . . . . . . . . . . . . . 34

ISTOCK PHOTO

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End of support for Windows XP no security threat, area banks say BY TOM HENDERSON CRAIN’S DETROIT BUSINESS

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Banks, credit unions and industry analysts say customers have little to worry about as a result of Microsoft Corp. ending support last week for its 12-year-old Windows XP operating system, which until recently ran about 95 percent of the 440,000 ATMs in the United States. The ending of support means that as hackers find new ways into XP systems, Microsoft won’t be doing patches or issuing security updates to fix problems. People using XP systems, whether on their home computers or at businesses they deal with, eventually could be at risk. Some banks, like Troy-based Talmer Bank and Trust, have upgraded ATM systems to other newer operating systems. Some, like PNC Bank and J.P. Morgan Chase, have signed contracts with Microsoft to continue supporting XP-based machines. “Banks are on top of this. There’s no risk to the public,” said Dennis Koons, president and CEO of the Lansing-based Michigan Bankers Association. “From the consumers’ point of view, this is a non-event.” The problem of XP-enabled ATMs is not especially urgent, Avivah Litan, an analyst at the research firm of Gartner Inc., told Bloomberg. Banks with ATMs running XP “will need to get off of it eventually, but it’s not an emergency situation,” said Litan, who said banks and cash-machine operators long ago took extra security precautions to seal off ATM software from hackers. However, industry analysts say, consumers might think twice about using independent ATMs not affiliated with banks. “The industry is well aware of the problem. We’ve been gearing up for it,” said David Provost, president and CEO of Talmer Bank. Talmer began upgrading the software at its 77 ATMs just after the first of the year, at a cost of between $5,000 and $7,000 per machine, and is almost done, Provost said. “The vast majority of our ATMs run over an isolated network,” said Kathleen Pitton, vice president of corporate communications at Comerica Bank. “Because it’s on an isolated network, it doesn’t have the potential vulnerability that others are facing. Only two of our ATMs in Michigan require conversion to Windows 7.” Comerica has about 640 ATMs nationwide, about 350 of them in Michigan. “We have been well aware of Microsoft’s plan to discontinue support for Windows XP and have made our plans accordingly,” said Jack Riley, senior vice president and market director for Fifth Third Bank in Michigan. Community bankers say they are on top of the situation, too. Farmington Hills-based Level One Bank has eight ATMs, and all are being upgraded to Windows 7. “In the meantime, the current ATM Windows XP software is secure. … Many of the features enabled for a PC are purposefully dis-

abled on an ATM, making a breach of security impossible,” said Patrick Fehring, the bank’s president and CEO. Flagstar Bank, the Until recently, largest brickWindows XP ran about 95 percent of and-mortar headthe ATMs in the U.S. bank quartered in Michigan, with $9.4 billion in assets — Ally Bank is bigger but has no branches — has 137 ATMs. “We have taken steps to mitigate the sunsetting of XP, and we are confident that there is no material risk,” said Susan Cherry-Bergesen, director of corporate communications. Milford-based Huron Valley State Bank is a tiny bank, with two branches and $90 million in assets. Its president and CEO, Jack Shu-

bitowsky, said the bank will not only pay the $5,000 that Ohio-based Diebold Inc. is charging to upgrade each of his three ATM’s software, but he is paying an additional $1,000 to upgrade to software that will be compatible with chip-embedded credit and debit cards when they are introduced next year. Farmington Hills-based Community Choice Credit Union, which has $531 million in assets, has also decided to do an upgrade at its 11 ATMs that will incorporate the new chip technology, according to chief technology officer Dan Monroe. Paul Mazur, the chief information officer at Novi-based Vibe Credit Union, said Vibe replaced its 14 ATMs last summer, with advanced technology platforms that will make the current upgrade to Windows 7 much cheaper than the standard upgrade price of $5,000. Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

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Developer: Orleans Landing construction may begin in September units, 46 two-bedroom Detroit native Richard units and 34 two-bedroom Baron, chairman and CEO townhouses in the first of St. Louis-based McCorphase, according to EDC mack Baron Salazar Developdocuments. The second ment Inc., expects conphase would consist of 132 struction to begin in one-bedroom units, 48 September on the $55 miltwo-bedroom units and 28 lion first phase of the two-bedroom townhouses. Orleans Landing mixed-use It also would have 12,000 development along the Desquare feet of retail space. troit riverfront. Baron spoke about the Last week, Baron reproject with Crain’s received approval from the porter Kirk Pinho: Detroit Economic DevelopRichard Baron, ment Corp. on three resoluWhat’s next for Orleans tions approving the follow- McCormack Baron Salazar Landing? ing for the proposed Development We have to complete development: our financing. We have to Allow the Detroit office of Saginaw-based AKT Peerless finish processing for our D4 mortEnvironmental & Energy Services LLC gage with the FHA (Federal Housing to perform remediation on the de- Administration), and we have to velopment site, along Atwater and complete our architectural drawFranklin streets between the De- ings. At that point, once we have quindre Cut Greenway and Ri- all of our financing completed, opelle Street. The contract with then we go to construction. AKT is for up to $165,100; an ownWhat’s the timeline for construcer’s contingency of $24,765 was tion and accepting residents? also approved. The construction program will Accept $1 million from the Michigan Department of Environmen- probably be 18 months, and we hope that we’ll be bringing the tal Quality for site remediation. Commit McCormack Baron first tenants in sometime in the and the EDC to basic terms of a de- summer of next year. velopment agreement that allows How about for nailing down retail the EDC to accept grant funding and proceed with remediation tenants? We’ll be doing that (leasing). We work on the site. There would be 210 one-bedroom think that it’s small enough that

Q&A

COURTESY OF MCCORMACK BARON SALAZAR DEVELOPMENT INC.

A rendering of Orleans Landing, a mixed-use development planned on the Detroit River.

we’ll be able to handle it ourselves without the need for a broker. Probably there will be a fitness center of some sort, then our management and leasing office as well, and there may be an opportunity for some sort of coffee shop or some other small kind of restaurant. But we are not sure exactly how that will sort out. We’ll know more about that next year. What will the price ranges on the apartments and townhomes be? Based on our experiences in other markets, the residents will generally be younger. They’ll probably be single (or in) a roommate situation, part of the downtown workforce, although we never know. Sometimes we get others who are just interested in living

downtown who move in from the suburbs, and they want to be in a new community. We think the rents will be very competitive — probably $1.70 per square foot or something like that.

Talk a little bit about your Detroit roots. I was born and raised in the city at Livernois and Seven Mile. I was in college at Oberlin College, and then I went to the University of California-Berkeley for graduate school. Then I came to the University of Michigan for law school in 1968. Then I was in a fellowship program and was assigned to the St. Louis Legal Aid Society as part of that program. I never left until I relocated to New York about seven years ago. I married and my wife and stepson are here, so I came here, but I commute to St. Louis or places like Detroit, where I go pretty frequently these days. We are also involved with the Strathmore (Hotel) in Midtown, working with Sue Mosey on

that project, which we hope will be starting construction in June. Explain the genesis of this project and when we can expect the second phase to begin. My hope is that over a five-year period or so, we can build out more and have close to 500 units in that area. The hope is that it will also be a stimulus for other development to occur. There are a number of vacant parking lots run by General Motors Co. close to the Renaissance Center, and there are some streets — Franklin and others — where we hope there will be additional development to create a 24-hour kind of community with different kinds of services, businesses, more housing, food and restaurants. So it will become a very, very nice new community for the city. Anything else you want to add? I think we are very excited about it. I think that it will be a really fine project for the city, and I’m very excited about really coming back home to help the city in this next phase of its renaissance, so we are glad to be a part of it. Will you rent a unit there? I suspect we probably will, for sure. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB

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Revamped charity poker rules go to state panel, could be law in May BY SHERRI WELCH CRAIN’S DETROIT BUSINESS

New proposed rules for charity poker games could take effect as early as May if the state’s Joint Committee on Administrative Rules doesn’t oppose them. Among other things, the rules would place new limits on the amount of money that permanent poker rooms and licensed suppliers can make from the games — and limit the number of games that can take place concurrently at a single location. The rules would also require charities to show they’ve done other types of

fundraising beyond the poker parties as an indication of their legitimacy. Rick Kalm, executive director of the Michigan Gaming Control Board, resubmitted the rules to Kalm the committee March 25. That was just days after he’d withdrawn an earlier set of proposed rules to address concerns by the committee based on feedback from more than 50 representatives of charities, millionaire party

suppliers and permanent poker rooms who attended a March hearing. The resubmitted rules allow up to two millionaire parties per location per day, rather than one as earlier proposed, and increase the amount charities can pay licensed suppliers for expenses to up to 45 percent of the event gross profits, rather than the earlier 35 percent proposed. The new plan also eliminates a rule that would have only allowed charities to conduct the games at a site in their county or an adjacent county. “This was a compromise as sug-

gested by some members” of the joint committee, Kalm said in an email. “Our intent has been to favor the charities and ensure we have a viable licensed supplier pool.” Other significant changes proposed under the new rules: No more than four millionaire parties per week are allowed at any one location. Three representatives from the benefiting charity must be present at games, rather than the two now required. Charities must have raised $500 outside of the poker games during the preceding year in order

to apply for each millionaire party license. Background checks on all dealers must be performed by state Gaming Control Board staff. The committee has until the end of April to file a notice of objection to the rules if it disagrees with them. It would then be required to introduce a bill to remove the rulemaking authority from the Gaming Control Board, delay the rules from being filed for a year and/or rescind the rules once the Gaming Control Board files them to give the Legislature time to act, committee counsel and clerk Marge Martin said. Kalm said poker rooms will no longer be able to rent equipment, run games or take 50 percent of the proceeds from the games, as they had been allowed to under oversight by the Michigan Lottery Bureau. The rules allow only licensed suppliers to assist with games, he said. Locations will only be allowed to charge the charity a rental fee of up to $250 for the space. The new charity poker rules will go into effect if the committee doesn’t object to them, but that may not be the end to the issue. In March, Sen. Rick Jones, RGrand Ledge, introduced SB 878 to amend the Traxler-McCauleyLaw-Bowman Bingo Act, with 11 senators from both parties as cosponsors. The bill is currently before the Committee on Regulatory Reform. Among other things, the bill would legitimize permanent charity poker rooms in Michigan and allow them to supply gaming equipment for the games. It would also provide a licensing code for dealers and suppliers that assist charities in running the games and establish checks to ensure charities are legitimate, Jones said last month. A separate provision in the bill would treat racetracks differently than other gaming venues, allowing for up to seven charity poker games at a track (compared with up to six games concurrently at other locations). While charities already could host millionaire parties currently at racetracks, the provision in the bill green-lights racinos, which haven’t been approved by state legislators. Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch

BANKRUPTCIES The following businesses filed for protection in U.S. Bankruptcy Court in Detroit April 4-10. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation.

Larson’s Insurance Solutions Agency Inc., 34441 Eight Mile Road, Suite 102, Livonia, voluntary Chapter 11. Assets and liabilities not available. Oxford Big Boy Inc., 955 S. Lapeer Road, Oxford, voluntary Chapter 11. Assets and liabilities not available. Rainbow Enterprises Co. Inc., 29433 Southfield Road, Southfield, voluntary Chapter 11. Assets and liabilities not available. — Bridget Vis

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Belle Isle traffic to go high-tech for transport conference For four days in September, Belle Isle runners, picnickers and anglers will be replaced by talking cars, driverless vehicles and hightech traffic systems. The futuristic Belle Isle demonstrations are part of the Intelligent Transport Systems 21st World Congress, running concurrently at Cobo Center Sept. 7-11. The event occurs every three years, this marking the first time it’s been to Detroit. It’s expected to draw as many as 10,000 business executives, legislators and researchers to showcase the latest innovations in transportation. Belle Isle will host live demonstrations of driverless cars, including passenger vehicles, commercial trucks and military vehicles, and robotics. The island became a state park in February, when Michigan leased the city-owned park for 30 years relieving bankrupt Detroit from managing the area. Scott Belcher, president of Washington, D.C.-based ITS America, said the state’s offer of using the park for the World Congress proved how serious the state takes its stake in automotive. “Michigan is blazing the trail for investment in automotive technology… ,” he said. “Belle Isle is a

Belcher

beautiful location, and it’s ideal for us; it’s risky to demonstrate these technologies on public streets, and now we can do it in a controlled environment with amazing views of the

Detroit skyline.” Prior to the state’s offer, ITS was working with the city of Detroit for permits to test the autonomous technologies on the public roads near Cobo Center, Belcher said. During the event, Belle Isle will be closed for four days to the general public, with the exception of owners of boats docked at the Detroit Yacht Club. Rob Morosi, communications specialist at the Michigan Department of Transportation, said the inconvenience to the public is mitigated due to the time of year. “The event is during the work week, and the kids are back in school,” Morosi said. “With this event, we’re looking at bringing in thousands of people to touch and feel these technologies, and Belle Isle is an ideal location to showcase what the technology can do in a closed environment.” More than 30 demonstrations by automakers, suppliers and tech-

nology companies will take place on Belle Isle. Southfield-based Denso International America Inc. will have two demonstrations. It will showcase its human-machine interface for two connected vehicles, which will communicate with each other and the infrastructure, and its advanced-cruise control technology featuring steering control. “We’ll have these vehicles working together to give the passengers a good feel and taste of our products,” said Terry Helgesen, senior vice president of industry and government affairs at Denso. “The Belle Isle location allows us to Helgesen demonstrate our technologies with fewer limitations and give people a true demonstration of how these machines work.” Troy-based Valeo North America Inc. will demonstrate its autonomous parking technology, which allows drivers to leave their vehicle at a parking lot entrance and send it to a parking space via their smartphones. Local demonstrators will include Troy-based Delphi Automotive plc, Van Buren Township-based

Visteon Corp. and Northville-based IAV Automotive Engineering Inc. Belle Isle will also host a special event for first responders and students. The demonstrations come on the heels of major announcements regarding connected and driverless cars in Michigan and the U.S. In February, the National Highway Traffic Safety Administration announced it would begin working to allow vehicle-to-vehicle communication technology on consumer light vehicles. Late last year, Gov. Rick Snyder signed automated motor vehicle legislation, allowing for manufacturers to test driverless cars on Michigan roads. “We began putting this together four years ago and a lot of things have come together … to make this the best World Congress we’ve ever seen,” Belcher said. The U.S. Department of Transportation is expected to make an announcement Sept. 7 in support of expanding the connected car pilot program in Ann Arbor. The University of Michigan’s Transportation Research Institute launched a study in 2012 of 3,000 vehicles equipped with vehicle-tovehicle and vehicle-to-infrastructure technology. The group is expanding that pilot to 9,000 vehicles over the next two years. The USDOT wants to bring the total to 20,000 vehicles in South-

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east Michigan over the next five years, Belcher said. A Detroit-themed festival will also be held on the island for the event, featuring Michigan-based food, beer and music, he said. The conference and exhibit event at Cobo aim to build the business case for these technologies as well as educate about their functions. MDOT is planning to operate a traffic management center in Cobo for the event, allowing attendees to see how the state manages traffic lights, traffic flow and freeways. The World Congress is hosting several sessions specialized for global government officials, chief technology officers, executives and engineers. As many as 30 heads of state DOTs will be on hand for the conference as well as 15 foreign transportation ministers, Belcher said. The event will also include an investor component for startups and entrepreneurs, including a matchmaking event. The speaker series includes Bill Ford Jr., Ford Motor Co. executive chairman; Lowell McAdam, Verizon Communications Inc. chairman and CEO; Kirk Steudle, MDOT director, and Robert Slimp, CEO of HNTB Infrastructure. More details at itsworldcongress.org. Dustin Walsh: (313) 446-6042, dwalsh@crain.com. Twitter: @dustinpwalsh

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OPINION

LETTERS

Medicare doc data offers opportunity

Road opinion lacked on taxes

he release last week of records of $77 billion in Medicare payments to doctors, drug-testing companies and others is a rich source of data, but as with most data, will take time — and, in this case, specialized computer software — to be fully understood. The big headline, of course, was the eye-popping numbers. Getting top billing was a Florida ophthalmologist who was paid nearly $21 million in 2012 and has been found to have overbilled Medicare in the past. Closer to home is Dr. Farid Fata, the Rochester Hills oncologist who received more than $10 million in 2012 Medicare payments and is awaiting trial for purposely misdiagnosing patients and then administering unnecessary chemotherapy and other treatments. On average, according to The Washington Post, the biggest chunk of Medicare spending goes to doctor overhead, at 43 percent, with doctors taking 41 percent in compensation. Drugs and other costs are 13 percent and malpractice premiums 3 percent. For Fata, those percentages are nearly reversed: $8.2 million of his compensation was for drug payments, while he received about $704,000 in fees and $1.1 million to cover overhead. Fata and the Florida doctor represent the two largest areas of spending — oncology and ophthalmology — but they’re outliers that lead to the conclusion that the numbers are indicative of possible overbilling or fraud rather than an aging population and other causes. Fraud exists, but at a relatively small level, if the 3 percent of billings estimate for Medicare fraud is accurate. The big question, though, is whether costs can be reduced in other ways without compromising the health of those Medicare is intended to protect. Medicare cuts are a significant part of the funding mechanism for Obamacare. Making that work is probably less about how much is paid to individual doctors and more about how analyzing what makes effective care.

Swaps deal reasonable for city Detroit got one step closer Friday to an expeditious exit from bankruptcy when U.S. Bankruptcy Judge Steven Rhodes approved a settlement of interest-rate swaps debt tied to casino revenue. The approved deal allows the city to settle the debt for $85 million — far less than earlier proposals of $200 million and $165 million Rhodes rejected. There is some question about whether the swaps would survive a court battle if the city chose to sue, but Rhodes on Friday agreed that $85 million was a reasonable amount to pay to avoid protracted litigation. We agree.

Editor: This is in response to the March 31 Other Voices column from George Hubbell, “Road funding plan needs fixing,” Page 8. Regarding the numbers the writer used to say Michigan’s gas tax was the lowest in the Great Lakes region: The state excise tax on gasoline is 19 cents per gallon. But when other fees and taxes, such as the sales tax, are factored in, the total tax burden more than doubles for gasoline — a total of 39.10 cents per gallon, making Michigan’s rates some of the highest in the Midwest. When comparing Michigan to other states in the Great Lakes region, you have to include all taxes and fees beyond the excise tax, as each state taxes differently. Second, Mr. Hubbell wrote that “most of the taxes we pay at the pump are dedicated to schools and local government — only slightly

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 less than half go toward transportation.” This makes the reader think that more than half of the 19 cents goes toward schools and government, because of the failure to point out the additional 20.10 cents tax per gallon. Changing the fact that Michigan does not dedicate all taxes on gasoline toward road construction and repair could be the first step to better roads. The “common-sense invest-

ments” Mr. Hubbell says Michigan needs, in straight talk translates to tax increases. I am not supporting or opposing tax increases to improve our roads, but I wonder why the first answer for every problem is always more money. Additionally, the federal government has been asking for an increase in the federal gas tax since it has been spending more than it takes in. Mayor Mike Duggan, keynoter at a recent function, pointed out that if the only suggestion people have for Detroit’s problems is more money and more people, then that is no solution at all because there is no more money or more people. Duggan reiterated that he is looking for solutions for Detroit’s problems with the money and people the city has now. A refreshing approach. One can only hope that state and federal governments will follow his lead. Sue Peters St. Clair Shores

TALK ON THE WEB From www.crainsdetroit.com Re: Detroit Blight Authority steps aside in demolition efforts Why the city leaders would think that they can do the job better than anyone else is mind-boggling and arrogant. The city should be saying to anyone who can contribute to bring a plan and resources it will coordinate its efforts with. Instead, the city says, take your plan and get north of Eight Mile. Steve F So now what? Is there an alternative plan for demolishing blighted properties, or was that just a nice thought to entertain for a few months? I want to know why this project got the ax. kb212513

Re: $45 parking tickets coming How about eliminate all parking meters and let people spend their money buying stuff from local businesses? Or offer $1 parking at

Reader responses to stories and blogs that appeared on Crain’s website. Comments may be edited for length and clarity. city lots for the first three hours and earn honest money for the city and help local businesses at the same time. Maurice Always punitive versus proactive. Will they ever learn? How much is on the books for unpaid parking tickets? Why not offer the option of obtaining parking permits assigned to individual cars? On a monthly, quarterly, annual basis? Regular cash flow. Two hour max per occasion of parking. Yvette Jenkins

Re: Three construction companies to build new Red Wings arena What happens to the construction jobs after the arena is built? Other than the high-paying Red

Wings jobs moving over from the Joe, this venue will be providing primarily minimum-wage jobs. A family cannot be supported on that type of job. Carolyn Mazurkiewicz It’s nice that two of the three companies building the new arena are Michigan companies. 257669

Re: Oakland, Macomb counties: Detroit water plan lacks details The outer counties are doing what they should have done years ago. The city’s water department has been mismanaged for decades. So the outer counties have paid for that and now are being asked to pay again to bring the whole thing up to code. Nope. Most taxpayers have complete confidence that the well-run counties will propose a new, solid and financially attractive system. William J

KEITH CRAIN: The mayor is making all the right moves I will be the first to tell you that I am a great fan of our new mayor. I worked with Mike Duggan at the Detroit Medical Center and watched him do a great job turning around the hospitals. It didn’t always make people happy, but he always got the job done. The thing I liked the best was Duggan’s ability to bite off small pieces to accomplish the hospital’s goals. I see the same thing happening at the city, and I can only applaud his efforts.

First the lighting, and now blight. There is nothing worse than blight to ruin the image of a city. The mayor is tackling the problem the same way he did when he was the prosecutor. One small bite at a time, and before you know it, you have a meal. So if a property owner doesn’t fix what’s wrong, the city will condemn the property and sell

it to someone else who will do something about it. I guess I would only additionally encourage him to give vacant land to neighbors next door for a hundred bucks. Then they can get rid of the blight as well as fix up the landscape. It seems like a fairly simple philosophy that the mayor is using. Small pieces, slowly attacking the problem so it

can be digested and solved. I have a feeling that we will see a whole lot of this tactic over the next few years as we start to impact the neighborhoods all over the city. All too often, we try to create grandiose schemes that somehow never seem to pan out to anyone’s satisfaction. Lots of fanfare, but little results. The mayor is going to stay busy taking on one task after another and getting them all done. Lots of small steps that will turn into a

marathon. I admire the approach and think it will have great results in Detroit. Too often we have heard about grand plans that never get done. Our mayor will announce projects that will usually be greeted by universal comments of “why didn’t we do that before?” There is a heck of a lot of work that has to be done. I have great optimism that we will see progress slowly but surely. That’s a very good thing.

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OTHER VOICES: Be sure water department’s on right route Most of us in Southeast Michigan rely on a bus called the Detroit Water and Sewerage Department for something: clean tap water, purified wastewater before it goes to the Detroit River and stormwater conveyance. This is an old bus, increasingly needing maintenance and increasingly breaking down. Parts of this bus are more than 90 years old. There aren’t any new buses to be purchased — not for most of Southeast Michigan anyway, not for anything less than a fortune — so keeping this bus on the road is essential. The newest DWSD proposal from Emergency Manager Kevyn Orr is to privatize the system, meaning private contractors would submit bids to manage and operate the system. Good for everyone, right? Detroit gets a big infusion of dollars, the three counties are off the hook and don’t need to worry about buying into a shaky system, and the public gets competitive bids for this big infrastructure system. Here’s the rub. Competitive bidding — a good thing in itself — fosters a “do only what is specified” approach, all too often meaning that things are fixed when they

break. For a newer system, this isn’t too bad. But for old infrastructure, like much of DWSD, it means the bus gets older and older, and repairs get costlier and Thomas Doran costlier. Thus, the product — in this case, pure drinking water and purified wastewater — deteriorates. For an example, look at the severe disruption caused by old water mains rupturing in Detroit this winter, re-

quiring the repair of huge sinkholes and associated service interruptions. Or look at the wastewater treatment plant incinerating sewage sludge in 50-year-old furnaces rather than working toward a 21st century solution. Still another example is the ongoing effort to separate stormwater from sewage so that large storms don’t swamp the wastewater plant and produce permit violations. For too many years, resources have been allocated to merely operating a deteriorating system and to reacting to system failures. If DWSD is privatized, bidders

should be required to look forward rather than maintaining the status quo — that is, merely providing routine maintenance and reacting to system failures. Practically speaking, this means dollars and effort will need to be allocated to planning and budgeting for the future, especially in relation to the hidden (buried) and antiquated components of the system. This future planning and system rehabilitation can be competitively evaluated, but on the basis of the ideas and approaches that contractors identify, on cost economies associated with measures that address the future

needs of the system and not merely on the basis of the lowest price, which often means shortsighted solutions. Will this cost more? Certainly. But this old bus won’t last forever, and neither will clean drinking water, purified wastewater and well-managed stormwater that Southeast Michigan take for granted. Thomas Doran is an adjunct professor at Lawrence Technological University and a member of the College of Fellows of The Engineering Society of Detroit. He has worked on water-related projects for more than 35 years.

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The Renaissance Venture Capital Fund, the Ann Arbor-based fund created by Business Leaders for Michigan, is expected to announce Monday that it has invested $4 million in Plymouth Venture Partners III. PVP III is the latest and largest fund of Ann Arbor-based Plymouth Management Co., the venture capital firm founded by the dean of Michiganâ&#x20AC;&#x2122;s VCs, Ian Bund, who was honored last year with the lifetime achievement award at the annual Crainâ&#x20AC;&#x2122;s M&A Awards. PVP III has a target of $60 million. That investment follows a recent commitment in PVP III of $15 million from the stateâ&#x20AC;&#x2122;s $120 million Venture Michigan Fund II, managed by Southfield-based Grosvenor Capital Management LP. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m really pleased by how fast fundraising has gone,â&#x20AC;? said Mark Horne, Plymouth Managementâ&#x20AC;&#x2122;s CEO and managing partner. â&#x20AC;&#x153;We kicked off fundraising in November, we had a first close of $31 million in January, and our second Horne close in March got us to $50 million. So Iâ&#x20AC;&#x2122;m expecting to wrap things up this spring.â&#x20AC;? PVP I was $23 million and PVP II $41 million. â&#x20AC;&#x153;Liquidity has improved, but people really understand now what weâ&#x20AC;&#x2122;re doing with our growthstage investing,â&#x20AC;? Horne said. The new fund will continue to target what has been an underserved market, said Chris Rizik, president and fund manager at Renaissance Venture Capital, which raised its second fund of $65 million in 2012. This is the 16th investment for Rizikâ&#x20AC;&#x2122;s fund, which is a fund of funds that invests in other VC firms doing business in Michigan. â&#x20AC;&#x153;Plymouth has a really interesting focus,â&#x20AC;? he said. â&#x20AC;&#x153;They donâ&#x20AC;&#x2122;t invest in typical startups. They invest in companies with $2 million to $5 million in revenue that used to be serviced by the banks or other lenders but who canâ&#x20AC;&#x2122;t get a loan anymore because the banks are backing away from smaller companies. â&#x20AC;&#x153;So they fill a nice post-2008crash niche, one that wonâ&#x20AC;&#x2122;t end soon. So theyâ&#x20AC;&#x2122;re unlike any other venture fund in town because they are growth-stage-oriented. For us, it is a nice contrast to the other investments weâ&#x20AC;&#x2122;re making.â&#x20AC;? Rizik also has joined Plymouthâ&#x20AC;&#x2122;s advisory board. â&#x20AC;&#x153;Renaissance has developed a great model here in Michigan,â&#x20AC;? Horne said. â&#x20AC;&#x153;Theyâ&#x20AC;&#x2122;re a premier fund of funds, and Chris adds a great depth of experience.â&#x20AC;? Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

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INTERN MANAGEMENT 101 How a company can avoid learning the hard way, Page 14

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

Amy Haimerl

Family biz: We all can relate I’ve always been an excavator’s daughter. As a kid, my dad rescued a fleet of old, yellow Tonka tractors from the dump behind my grandparents’ place. We had no idea they were a sign of our future. It was the middle of the 1980s, and the oil shale bust on the Western Slope of Colorado was in full force. My dad, like most of the dads in the area, hadn’t seen work in far too long. “I got tired of it,” my dad told me recently. “So I swore that I’d never let another man take my job.” So he did the craziest thing anyone in my risk-adverse family could imagine: He scraped together enough money to buy two D4 Caterpillars and started Bear Excavating and Construction. Those two tractors look so tiny now compared to the heavy iron that eventually would sit in our construction yard. But I remember the feeling of pride the day it all started. Dad had no mentors, no guides, just determination. How do you hire? How do you fire? How do you survive when margins are thin and the insurance man is always at your door? How do you build something strong enough to pass on to your kids? The company did grow, though, and started to thrive. My brother went to work for Bear and, my dad thought, his dream was coming true. He was bidding million-dollar projects, keeping debt low and cash on hand high. But then the Great Recession hit and the construction industry tanked. Thanks to my mother’s hard-earned frugality, the company survived year one, year two, year three with almost no work. Those hard times took a toll on my parents’ marriage, and when it failed, the business went with it. In 2012, my brother and I sold off Bear at the equipment auction. I watched every piece of my family’s legacy roll across the auction floor. Every piece of yellow iron looking, from the nosebleed seats, like those tiny tractors my dad once rescued from the dump. I’m still the daughter of an excavator. I couldn’t be more proud of my father, mother and brother and their legacy. Being their daughter and sister shaped who I am and how I interact with the world. It’s a unique and prestigious club that all of us family-business kids belong to, despite our knowing jokes about long hours and no vacations. I salute family businesses. Whether you’re struggling in the first generation or planning for the fifth, you are shaping our community and helping our economy to thrive.

DETROIT’S FAMILY FIRMS share their advice for staying in business, staying together and building a brand in Southeast Michigan LESSONS LEARNED Sweet Potato Sensations: The next generation wants to change the recipe for success, Page 12 Public Lumber Co.: The Sarafa family (pictured at right) picked a niche and hasn’t tried to turn the 87-year-old company into Home Depot, Page 13

LARRY PEPLIN

To all the familiar qualities that go into any successful business, Christa Sarafa (left) adds this: “Unconditional love. If that’s not in place, you’ll never succeed,” said the second-generation owner of Public Lumber Co., with mother Fadiya Sarafa and brother Craig.

BY AMY HAIMERL CRAIN’S DETROIT BUSINESS

t’s all in the family here in Detroit. From Henry Ford to Mike Ilitch, the metro area is brimming with iconic family brands that have survived through the third, fourth, even fifth generations. Hamilton Carhartt started his workwear business in 1889; 125 years later, Carhartt Inc. is still family owned. Kirlin Lighting Co. operates on East Jefferson Avenue in Detroit with its fourth-generation leader at the helm. The John E. Green Co., a Highland Park mechanical contractor, started in 1909 and is now one of the region’s largest family-owned businesses. An Eastern Market staple, Roma Café, opened in 1890 and now has the third generation calling the shots at the Italian restaurant. But for all the successes, there are challenges. Long hours. Challenging communication. Difficult transitions. Trust. Flagging interest. As a result, it’s become an old adage that just 30 percent of family-owned businesses survive through the second

Kin do generation. That number comes from a 1987 study that is certainly getting long in the tooth, but that experts say is still accurate. The feeling of an uphill battle to stay relevant and thrive is a daily challenge for CEOs hoping to pass on their legacies. And with 40 percent of family-business owners expecting to retire by 2017, according to a Mass Mutual survey, there’s a lot of planning happening. Crain’s talked with seven family businesses to find out their secrets to longevity.

Learn to communicate

Family communication can be trying under the best of circumstances. Add in payroll, ringing phones, new products, demanding clients and it can be downright overwhelming. Figure it out. If you don’t, you’ll fail. “I don’t know how other families do it, but in this family there is an element of unconditional love that is in place,” said Christa Sarafa, 41, a second-generation owner of Public Lumber Co., a lumber and millwork company that started on Detroit’s east side in 1927. “If that’s not in place, you’ll never succeed. You have to have that, so whether you fight over something big or small, you can put it aside instantly when you have to.” To help structure communication, Bloomfield Hills-based wealth management firm Gregory J. Schwartz & Co. Inc. instituted informal weekly meetings on Wednesday mornings. At those gatherings, all five brothers — and dad — can air the daily-grind issues that build up, leaving the quarterly board meetings for more serious and productive discussions. See Family, Page 12

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Second Stage

Lesson from Sweet Potato Sensations: Sensations Let the biz change F

or 26 years, the Thomas family has been serving up Sweet Potato Sensations: sweet potato cookies, sweet potato pie, sweet potato cake, sweet potato everything. All of it made fresh and from scratch, each potato washed by hand. “It all starts from my love for sweet potatoes and my wife’s love for me,” said Jeffery Thomas, 61. But now they are looking at the business with fresh eyes as their daughters, Espy and Jennifer, take on more responsibility. The next generation wants to evolve the business from just a baker and into more of a café. “I have to think about it as a new business,” said Thomas. “We’re going from a 26-year-old business to thinking about it as a 4- to 5-year-old business.” But he is also thrilled by the change and the energy his daughters are bringing. They introduced

I have to think “ about it as a new business. We’re going from a 26year-old business to thinking about it as a 4- to 5-year-old business.

”

Jeffery Thomas

LARRY PEPLIN

Daughters Espy (left) and Jennifer Thomas (right) are taking more responsibility in Sweet Potato Sensations from parents Jeffery and Cassandra Thomas. Espy and Jennifer Thomas want the bakery to mix it up a bit as a café.

sweet potato pancakes and waffles on Saturdays, which have been sell-

ing out. They are also talking about adding grits and salmon croquettes.

“When you are a second-generation business, you have to figure out where you fit,” said Espy, 33. “My challenge is trying to figure out how to marry what I love to do with what my parents have created. It was a sacrifice, and I don’t

want to see that go away. So how do I stray true to my authentic self and put my spin on the business so I can have the same love and same dedication that they have displayed over 26 years?” For Cassandra, her faith is helping her with the transition, as it has always helped her guide the business. “My strong faith in God has also been an integral part of keeping the business afloat at times when things were not good,” she said. “There were many opportunities that we could have stopped. That’s part of the reason we’re still here today.” For Espy, that translates as love and passion. “If you put love into it, you get love back,” she said. “We sell tradition and memories. So when people come in, they are our supporters. Our customers feel like they are part of our business.” — Amy Haimerl

Family: Companies on how they stay in biz ... and stay together ■ From Page 11

“With something as sensitive as family relationships, candor is not always there,” said Edward Schwartz, 45, president. “We’ve benefited as a family business because candor has always been there. Both my father and my mother were able to express their candid thoughts on the leadership while also soliciting input.” For Jim Hogan, the key is keeping family life and business life separate. “Easier said than done,” he shared with a knowing laugh. But that’s what has kept his marriage intact and him at the head of the J.W. Westcott Co., which his great-grandfather started in 1874 and is best known for its mail and sundry delivery service to the passing freighters on the Detroit River. “Family businesses can make and break family ties,” said Hogan, 57. “Keep them as separate as possible. You keep the everyday family matters in one location and keep your business matters in your business location so that they don’t drive a wedge.”

Stay in your lane

“That’s your daddy’s lane. Call him.” That was just the reminder Espy Thomas needed from her mother. The salesman was calling, wanting to know if they needed more syrup, while customers were at the counter and questions were flying at her. A million things buzzing at her, and her first instinct was to drop everything and track down the syrup order. But no, that part of Sweet Potato Sensations is her father’s responsibility. She just needed a reminder. “We step on each other’s toes, and that can be tough,” said Thomas, 33. “We have to have our roles.” Identifying and sticking to defined duties has been critical to the success of the bakery, which is located in Detroit’s Brightmoor

neighborhood. Thomas’ mother, Cassandra, started the bakery in the family basement in 1987, specializing just in sweet potato cookies at the time. But now her daughters, Espy and Jennifer, are getting more involved and wanting to evolve the business from a bakery to a café. That makes for a lot of cooks in the kitchen at times, so having clear roles helps prevent animosity or anxiety from brewing. Having specific duties is also helping Kolene Corp. navigate the transition from the third to fourth generations. The 75-year-old chemical company started in a garage on Detroit’s west side and now boasts Alcoa, Boeing and Cummins Diesel among its customers. “My grandfather was a workaholic,” said Roger Shoemaker, the third-generation chairman, CEO and president. “He lived and breathed Kolene seven days a week. He was always working. That trait is what allowed Kolene to be successful.” Now, with more than 30 employees, everyone works very hard, but in their defined roles. Family members — including two greatgrandsons — can fill almost any role in the business because they each started in the chemical plant and worked their ways up. In fact, neither Shoemaker nor his brother or two sons have held positions outside the company. “My grandfather and my father worked very closely together,” said Shoemaker, 66. “I worked closely with my dad. My sons work very closely with me. But we also have very different roles in the organization. That helps.” Linzie and Jesse Venegas can certainly relate. They’ve been involved in their dad’s business, Ideal Group Inc., since they were kids. “We both had to start out at the bottom,” said Linzie, 34. “I stuffed envelopes; Jesse was pushing a broom.”

Now, however, they both run a business unit of Ideal Group, which encompasses 11 different operating units and six different companies, including Ideal Construction LLC and Ideal Shield LLC. “I give people authority and let people run their companies,” said Frank Venegas Jr. That has been a transition for Venegas, 62, who began passing stock and ownership to his children this year. He started the company in 1979 after winning a Cadillac in a Home Builders Association raffle. He sold it for $12,000 and used the proceeds to bankroll his first company, Ideal Steel. He now employs 300 people in southwest Detroit, and company revenues exceed $200 million. “I still come to work every day, but I can see where my role has got to change,” he said.

Take risks, but be conservative

Building a business that can stand the test of generations requires taking some risks. You have to be willing to expand and grow, to let sons and daughters try new things. But be conservative in those risks. Michael Simmons opened an outpost of his family’s jewelry business, Simmons & Clark Inc., in Northland Mall in 1985. That was a big leap for his father and grandfather, who had been operating out of their Broadway location in downtown Detroit since 1925. But they wanted Simmons to grow and develop a business he could take pride in, too. “I always wanted to open my own store, but my grandfather didn’t really want to be a part of it,” said Simmons, 51. “But he gave me authority to do it. After my first year, I gave him my profit-and-loss

statement and my grandfather said, ‘You’re all right, kid.’ I’d proven myself.” But the company also remained conservative in its finances even as Simmons expanded into three other malls. So when the economy started turning, they were prepared and could let the high-price leases go and retrench in the Detroit store. “We saw what was going on in the economy and knew we could still do very nicely in Detroit,” he said. “We have always been very conservative in our finances, and that’s been great for us.” Kolene, too, has kept a tight grip on its finances. The company has grown and expanded from its early days of selling tricolethylene (the dry cleaning chemical) to designing and building the equipment that companies like Caterpillar Inc. use in conjunction with Kolene’s chemicals. “It has sort of evolved,” said Shoemaker, who started with the family business in 1968. “We would see a cleaning requirement in a Cat or Cummins tractor, and we would actually develop a product and process to clean that particular component. Then we’d sell them both.” But while the company grew, Shoemaker was also very careful not to taken on too much debt and keep cash on hand. He’s been through four major recessions during his tenure, so he is always preparing for a rainy day. He also didn’t follow his competitors’ path to the Detroit suburbs even when everyone thought Kolene was crazy. “Everything was paid for. They’re all paid for, all three plants,” he said. “To move a company from one location to another is horrifically expensive, and we are debt adverse. In hindsight, I’m glad we didn’t. Had we moved the business to, say, Novi and taken on $56 million in debt, when the 2008

recession, well … . A lot of companies struggled while we survived.”

your 4 Cherish customers “Treat your customers like they are gold,” said Shoemaker. “In the end, that’s how your business survives.” Four recessions have taught him that lesson. Boom times are easy to build strong customer relations, but when the bear starts roaring, that’s when you really prove yourself. “In tough times, customers may not be buying as much as they did in the past, but if you maintain that relationship, when things get better they’ll come back on board,” Shoemaker said. “The key that has allowed us to survive is very little debt, cash on hand and maintaining close relationships with our customers.” Customer relationships are the backbone of Ideal Group’s longevity, too. Venegas’ first piece of advice to new business is: “Do what the customer likes.” Like Kolene, Ideal built its business around identifying ways to solve new problems plaguing exiting clients. “We just got really good at what we did, and when the customer said, ‘Can you do this?’ we raised our hands and said, ‘Yes,’ ” Venegas said. Customers are what keep Simmons coming into work every morning. He joined the jewelry business full time in 1984, the day after he graduated from the University of Michigan, but he’d been working in the store since he was 6. “I started, unfortunately, by throwing away the garbage,” he said, laughing. “The worst part is, I’m still throwing away the garbage.” See Next Page

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But he knows it’s all worth it when he helps third- and fourth-generation customers, people who remember when his grandfather gave away cigars. The shop has sales in excess of a million dollars, but repeat customers are the success metric that Simmons measures. “I just fell in love with the business, the idea that you’re taking part in somebody else’s life,” he said. “We have a great tradition and following.”

Cultivate non-family leadership

Jim Hogan never intended to be a part of the J.W. Westcott Co., which was a family business on his mother’s side. After graduation, he was playing hockey and studying to teach high school. He didn’t see himself down on the docks, working like a devil during shipping season, with 50-60 deliveries a day, 24 hours a day. “Shortly after high school, dad had problems with one of the employees, and I was ripe for the pickings,” said Hogan. “I couldn’t say yes; I couldn’t say no. I just had to pack my lunch and go. … The next thing you know, you’ve already been there 40 years.” Right there next to him has been his right-hand man, Paul Jagenow, who is starting his 41st season. The captain of the J.W. Westcott II, Sam Buchanan, is entering his 30th – and he’s only 45. Neither is family by blood, but both are family by business. “It’s not a 9-to-5 job for them,” Hogan said. “That’s a reason our success can be continued. The legacy. It’s the people you are surrounded by, the ones who are carrying the ball.” And it doesn’t have to be family. In fact, Hogan doesn’t see either of his children taking up a spot behind their great-great grandfather’s desk. One son is playing hockey in Europe, and while the other is employed by the company, he hasn’t shown interest in ownership. “I don’t think this is going to be in their future, so I have a lot of decisions to make,” Hogan said. Ed Schwartz credits non-family leaders with making Gregory J. Schwartz & Co. a stronger firm. “It has gone a long way toward improving the way our company is managed,” he said. “It’s also helped strengthen the relationship between myself and my brothers.” But the company goes a step further in bringing outside experience and perspective inside its walls: Family members are required to graduate from college and then spend at least two years working elsewhere before they can join the family business. “It establishes professional maturity and establishes a professional culture,” Schwartz said. “We want anyone, whether their last name was Schwartz or not, to have real work experience.” There are currently two college graduates in the third generation, but he’s not certain they want to be involved. So having trusted leaders already in place gives Schwartz confidence in the company’s future.

Lesson from Public Lumber Lumber: Find, keep your niche Christa Sarafa sends her customers to Home Depot on occasion, even though her family owns one of the few remaining lumberyards in the city of Detroit. That’s because she knows Public Lumber Co.’s niche. The 87-year-old company doesn’t focus on the constructiongrade material that you can get cheap at any big-box store. It doesn’t sell screws. There are no hammers. Instead, Public Lumber specializes in millwork and highend lumber, especially the white oak and mahogany used in boat building. It wasn’t always that way.

Trust your children and let go

This was the big year for Frank Venegas. He turned 62 and could start transferring stock and ownership to his children without facing hefty tax penalties. He’s been beaming about that milestone, telling everyone around town of the achievement. But it also means he has to start the process of letting go. That he is less excited about. “When I was growing up, always

When Sarafa’s father and uncle bought the store in 1976, it was a traditional hardware store. You could buy hammers, screws, twoby-fours and more. Sarafa would come in on Saturdays, when her father would bring doughnuts for the staff, and sit at an old adding machine and add up the books. As the neighborhood around Seven Mile Road and Chrysler Freeway became more blighted, however, the Sarafas knew the business needed to evolve. “We knew we had to make a change when four guys carried in an assembled king-sized bed to match a screw to it,” said Sarafa,

41. “When you run a hardware store in a blighted area, it’s very easy to steal things.” They also realized that they would have to specialize to compete with the big-box stores. They added in millwork and started phasing out the constructiongrade lumber in favor of the higher-grade materials. Sarafa, meanwhile, had pursued her own career away from the family business, including earning a law degree. But when her dad became very ill, she came home. He passed away, but she stayed with the family. “I had all of this experience un-

the people in the neighborhood thought you’re going to retire when you’re 65, but if you save your money and do real good, you can retire at 62,” he said. “I did all that, but now that I’m 62, I’m thinking I don’t know about all that.” It’s a process, and he’s taking each step slowly. He still goes into work each day, but he’s rethinking his responsibilities. It helps that his brother, Loren is the president, so there is still first generation in the lead. “I cannot come in and tell every-

one to do things different than what their boss told them,” he said. “But that’s part of maturing.” After all, he adds, “you know how your kids are. If your kids are good kids, you should trust them to operate the business. … We sell to 55 companies now, and I wouldn’t have done that if it weren’t for the kids. “I am tired, and they are filled with piss and vinegar and want to do something else.” At Sweet Potato Sensations, Espy Thomas understands that conundrum from the other side of

der my belt that made me the perfect person to step in and reorganize,” she said. “There are days when I’m sweeping the showroom. All this education, and I’m sweeping sawdust,” she said with a laugh. Now she, her mother and brother are leading the company into the second generation of leadership. Sarafa is leading the final evolution from neighborhood hardware store to lumberyard and millwork facility. “I am so happy we don’t sell nails anymore,” she said. “Where’s the money in that?” — Amy Haimerl

the generation gap. She and her sister are facing the same struggle with her parents. They want to pass on the business, but the letting-go is hard, especially when there is a long transition period. “Parents are always your parents,” Thomas said, smiling and shaking her head. “You know who you raised. Let me do it. If the business is changing, I can fill that role. Trust me.” Amy Haimerl: (313) 446-0416, ahaimerl@crain.com. Twitter: @haimerlad

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Internship shouldn’t be a learning experience for company BY GARY ANGLEBRANDT SPECIAL TO CRAIN’S DETROIT BUSINESS

Big companies tend to have summer interns lined up early in the year, but as some small and medium-sized employers seek talent to help with an uptick in business or with administrative or marketing tasks, a common error is a poorly planned intern program. That was the lesson learned when Eaton Steel Bar Co. Inc. in Oak Park took on its first intern in 2007. Having put little thought into what the intern would be doing upon arrival, the company didn’t get as much benefit from the intern as it might have, and the intern also was underwhelmed with the work. “It failed because we didn’t really know what to do with him,” said Steve Cramer, a purchasing agent at Eaton who helped set up the intern program. “We left him there and let him get bored.” A switch to a new Oracle sales system prompted Eaton to try an intern. The company figured a student might be more up to speed on the latest systems and could help the transition through a paid internship. And he did, but he was eager to do more than administrative tasks. He wanted to learn deeper parts of the business to get the bigger picture of what it does. Eaton learned this during the exit inter-

TIPS FOR INTERN PROGRAMS 䡲 Pay the interns. The stickier intern compensation regulations come into

play for unpaid internships, especially at for-profit organizations, so paying interns is a smart way to go. Students have to pay for gas and meals the same as other workers. “I’m not shy about telling employers that,” said Shelley Lowe, executive director of career services at Davenport University. She tells employers to plan to spend at least $1,200, which “over 15 weeks is not outrageous.”

䡲 In lieu of pay, an employer might consider working with the school to make the internship count as credit. Credit can act as a stand-in for pay, Lowe said, and has the added benefit of involving an instructor who pressures students to make the most of their internships. But employers should consult a lawyer or human resources because regulations are getting stricter. 䡲 Prepare specific projects. Have managers look at what they’re doing or items on their “wish list” and consider whether an intern could do any of those, said Cindy Brown, executive director of Hello West Michigan. An HR manager falling short of time to develop a personnel handbook? An intern could research templates and what information to put in them. 䡲 Adjust expectations. An intern is not a temp, said Mike Crudele, senior accountant at the nonprofit Southwest Solutions. Temps are expected to have experience; interns aren’t and probably don’t. Start with the job description, matching the work with the interns’ level of experience. “Don’t ask a beginning or second-year accounting student to come in and do audits,” Crudele said. But it’s also good to hint that bigger projects could be in the cards if things progress rapidly. 䡲 Don’t forget older interns. Interns don’t have to be 22. They don’t even have to be enrolled, said Amanda Dumond, director of talent initiatives at Prima Civitas. “When we say the word ‘intern,’ it doesn’t necessarily mean ‘enrolled in an academic institution,’ ” she said. “It can be someone open to learning in a new environment.” — Gary Anglebrandt view, when it was too late to do anything about it. “We learned the lesson that we need to find out what the interns coming in want to do and see if we

have a need in that realm so it’s beneficial for the intern and also for the company,” Cramer said. This is the time of year when college students are preparing for

finals and employers are preparing to take on students as summer interns right after the tests are over. But employers that haven’t hired interns before should slow down, said Amanda Dumond, director of talent initiatives at Prima Civitas in East Lansing. Dumond manages the nonprofit’s Michigan Internship Initiative, which helps small businesses and nonprofits create effective internship programs. Setting up a formal structure, identifying which managers will be involved, getting input from those managers and planning specific projects will save a lot of headaches. The purpose of the program should be clearly established, Dumond said. Is it to fill a soft spot in day-to-day work? To fill the talent pipeline? “Everybody at some point has had a bad experience with an internship program. You start to ask them questions and drill down, and you realize they didn’t have that structure in place,” Dumond said. The Michigan Internship Initiative launched in 2010, expanding from an existing initiative begun by Cindy Brown, executive director at Hello West Michigan, a talent attraction organization for the state’s west side. Prima Civitas carried the effort to the rest of the state. About 2,200 employers have re-

Everybody at some point has had a bad experience with an internship program. You start to ask them questions ... and you realize they didn’t have (a formal intership plan) in place. Amanda Dumond, Prima Civitas

ceived help through the initiative, usually through training sessions held at colleges, high schools and workforce development agencies. Brown said the launch of an internship program starts with a clear job description and work plan. “Set up expectations at the beginning,” Brown said. The Michigan Internship Initiative’s main resource is its tool kit, which includes things like confidentiality agreements and steps for forming a program. It also connects experienced employers with ones just beginning their intern programs. Employers can call the initiative’s two point people, Dumond and Brown, with questions. The services are free, thanks to funding from Charles Stewart Mott Foundation, Michigan State University and the Michigan Economic Development Corp., except when an employer asks for a program to be built from scratch. Then a fee is arranged. “It could be as simple as they can’t get the IT department on board because (IT managers) don’t want to give the intern access to the shared drive,” Dumond said of the types of questions employers have. “We let the department know that interns can sign confidentiality agreements just like employees. A lot of times they call because a little thing like that is preventing them from having a program.” It’s the rare case when the intern simply isn’t up to the task. In those cases, employers might try moving the students to another project or department, Brown recommended. “Most of the time, it’s just poor planning,” Brown said of internships she’s seen go sour.

Mutual benefit Ahead of its next go at hiring interns in 2010, Eaton got help from the initiative and Central Michigan University, a school Eaton targeted for its supply chain management program, and planned its internship program step by step. The company brings in four or five interns a year, usually for 16See Next Page

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Second Stage From Previous Page

week stints. About 10 of them have turned that into permanent fulltime jobs at the company, alleviating some of the worry about replacing members of its aging workforce. Because of his limited scope of activity, the first intern at Eaton had struggled to understand the company’s niche. That was changed for later interns. “That’s the very first thing they learn when they come in — what we do and why we do it and where we exist in the marketplace, our niche,” Cramer said. Eaton gives interns long-term projects alongside day-to-day tasks and are assigned a manager. They’re also put in rotational internships, where they get experience on the commercial and production sides of the business to see what they like. Interns want large projects to sink their teeth into. “Some are much better at it than some guys who’ve been in the business 25 years,” Cramer said. The problem with Eaton’s first attempt at hiring interns wasn’t that it dragged staff resources, but that Eaton missed an opportunity to benefit more, he said. Subsequent interns have done things like manage accounts, place a $250,000 order for steel and conduct marketing studies. Many are quick studies and can begin to relieve the staff workload within a few weeks. One student was asked to find

RESOURCES FOR EMPLOYER INTERNSHIP PROGRAMS 䡲 Michigan Internship Initiative. To download a tool kit, go to

primacivitas.org/our-work/talent and follow the links. 䡲 Pure Michigan Talent Connect (postings and searches) can be found at mitalent.org. 䡲 The Michigan Economic Development Corp.’s Shifting Gears program for workers changing careers: mitalent.org/misg-stakeholders 䡲 The Michigan Career Educator & Employer Alliance annual conference, June 18-20 in Ann Arbor. Employers can call Brian Partie, current alliance president, at his Oakland University office, (248) 370-3250, or go to mceea.org. 䡲 The U.S. Department of Labor’s Fact Sheet No. 71 lays out the criteria for unpaid internships and is found at dol.gov. new ways to make money from a line of steel-cutting saws the company had purchased to satisfy a key customer. The student, armed with the latest knowledge on how to go about such a study, came through. “We’ll benefit for many years on that project,” Cramer said. Interns are paid $13-$15 an hour, depending on their commuting distance.

Preparation, teamwork The best-run internship programs designate a supervisor for the intern and treat students like employees, including formalities such as orientation procedures, said Shelley Lowe, executive director of career services at Davenport University. Lack of preparation leads to floundering, she said. A symptom of this is when staff members are reluctant to give up tasks they hold dear. Workers, never consult-

ed in the early stages, end up resenting the interns. “We usually catch it within two weeks. We’ll work it out or pull the student from the site,” Lowe said. Lowe Another employer-side reason for pulling an intern is if the employer indiscriminately dumps work on the student. Students aren’t exempt from getting themselves yanked, either, be it for general lack of ability or for specific “soft skills” problems, like making statements to customers that aren’t within company policy. “No employer should feel like they’re stuck with somebody,” Lowe said. But pulling interns for any reason is very rare, she said. An unorganized intern program

can cause harm beyond wasting time. Students who have a bad experience will share notes back on campus. “They’re taking that word back to their college,” said Brian Partie, associate director of career services at Oakland University and president of the Michigan Career Educator and Employer Alliance, which has 500 members — half employers and half career services people from colleges and universities. A 2013 National Association of Colleges and Employers survey showed conversion rates of 48 percent for interns becoming full-time employees. That’s significant when considering the cost of recruiting and rolling the dice with new employees, Dumond said, especially since interns who become employees tend to stick around. “Interns are already exposed to the culture and company, they already know what they’re coming into,” Dumond said. But, a lack of soft skills can cause unpredictable problems to arise, making the need for regular communication — with the student and the school — all the more important. At Southwest Solutions, a Detroit nonprofit, a Davenport accounting intern was ready to pack it in last year because he kept hearing his supervisor sighing and assumed the supervisor was unhappy with his work. The student contacted his Davenport intern manager who told the student to talk to the supervi-

sor directly about it. Upon doing so, the student learned it was just the supervisor’s habit and had nothing to do with him. Businesses also get hung up by not knowing where to look for interns. Employee referral programs can be effective, as long as the intern program structure is well organized beforehand, Dumond said. But approaching universities, some of which have dozens of career services staff members who have “intern” in their title, can be daunting. Eaton got around this by coldcalling the head of CMU’s supply chain management program. It also now works with Eastern Michigan University and Oakland University. Going through career services usually yields a bigger pool of candidates and helps with equal opportunity requirements, said Lowe at Davenport. But in any event, employers shouldn’t assume their call is unwelcome. “There’s not a faculty person on this earth that wouldn’t appreciate it,” Lowe said. Another conundrum that comes up is that, while a business could really use the help, it would take time from already thinly stretched staff to create and manage the intern program. The answer lies in the question: Hire a business administration student, perhaps one with an interest in human resources, to manage the project. “The first intern role can be to help develop the intern program,” Dumond said. “And then get ready to scale that intern program.”

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CRAIN’S DETROIT BUSINESS

Second Stage

For therapy biz, the first step in expansion: Research Polly Swingle helped Charles Parkhill come back from a spinal cord injury. Today, they’re in business together as The Recovery Project and facing the challenge of how to expand into new markets.

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The Recovery Project LLC was born out of adversity. Its founders met when one of them, Charles Parkhill, injured his spinal cord when a wave hit him just the wrong way off a beach in Mexico in 1998, leaving him unable to move from the neck down. He made progress working with a Detroit Medical Center physical therapist, Polly Swingle, and in 2003 the two formed the business to help others with traumatic brain and spinal cord injuries. In 2005, Parkhill took his first unassisted steps since the accident — he now uses a wheelchair and can walk short distances. By 2012, the company had reached $2.3 million in revenue. Problem: After some years in business, The Recovery Project faced more adversity, albeit of a more routine variety and one that all second-stage businesses face: the need to enter new markets to keep the enterprise growing. Parkhill and Swingle saw their business missing out on a big market in the elderly population. “One obvious thing we recognized is the elderly population in the nation is growing,” Swingle said. “What programs can we offer? What kind of revenue can we get from this?” But their business, targeted at neurological problems as it was, couldn’t just waltz into a new demographic and begin treatment on a new set of ailments. It lacked the connections or resources. The biggest hurdles would be developing and then marketing a new program. Solution: Parkhill and Swingle did market research and identified treatment areas of need among the elderly — such as Parkinson’s disease and fall prevention — and began building physical therapy programs around them. For marketing, they targeted the areas surrounding the company’s two locations — Livonia and Macomb Township — because their research suggested that elderly patients don’t or can’t drive far for physical therapy. The Recovery Project reached out to providers of elderly care, and Swingle began speaking at senior centers and events having to do with elderly care. The business structured its program to meet Medicare reimbursement requirements and to fall within the allowed number of annual patient visits — 14. It also had to get staff up to speed. The treatment regimens for neurological patients involved equipment and routines for retraining the brain to perform certain functions again. Treatment of problems that come with age revolve around strength, flexibility, balance and cardiovascular functioning. The Recovery Project hired two therapists and two support staff workers for the new undertaking, and 14 of the company’s licensed therapists were trained on the guidelines of elderly treatment. Two therapists — Swingle one of them — attended a three-weekend training program in Chicago to gain special certifications in treat-

THE RECOVERY PROJECT LLC Location: Livonia Description: Physical and occupational therapy and training provider for people with traumatic brain and spinal cord injuries and other neurological disorders Founders and co-CEOs: Charles Parkhill and Polly Swingle Employees: 36 Revenue: $2.6 million in 2013; $3.5 million estimated in 2014 ing the elderly. The program, launched in June 2013, fueled a 5 percent boost in revenue for the remainder of the year. Parkhill projects revenue this year of $3.5 million as the program fully gets rolling. Risks and considerations: In their research, the owners didn’t see many other clinics like theirs offering elderly physical therapy services, Parkhill said. “Other people who fit our A look at mold weren’t problem-solving doing it,” he by growing said. That companies made it risky to devote staff time and materials to the program, which so far has cost the business about $140,000 to build. Licensed physical therapists — the kind Medicare demands — have seven-year degrees and corresponding salary expectations, Swingle said. And Medicare reimbursements in general lie in shifting terrain, adding to the risk of an elderly care program. On the other hand, doing nothing is rarely an attractive strategy for a growing business, either. “The risk is if we didn’t do something besides the aggressive neurological rehabilitation that we’d been doing,” Parkhill said. “We need to do something else, or we’re not going to grow.” Expert opinion: When entering a new market segment, businesses shouldn’t underestimate the need for research to make sure that a need or desire for the product or service exists, said Mark Lee, president of Lee Group MI LLC, a marLee keting consultancy in Plymouth. Otherwise, he said, money will be wasted. “It’s typically more expensive to get new customers than to retain existing ones,” Lee said. To mitigate the risk, he said, businesses need to make sure that they do the research and that the research plan is well thought out. In one case, Lee saw a soft drink company’s newest product pulled off shelves after six months. The problem wasn’t that the company forgot to do market research. It just did it on the wrong people. “It researched the existing audience and did not get opinions from the target audience it wanted to attract,” Lee said. — Gary Anglebrandt

STAGE 2 STRATEGIES

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

CRAIN'S LIST: LARGEST FAMILY-OWNED BUSINESSES Ranked by 2013 revenue Company Address Phone; website

Year founded First-generation owner

Revenue 2013/2012

Percent change

Kelly Services Inc.

$5,413.1 $5,450.5

-0.7%

1946 William Russell Kelly

Ilitch companies

3,100.0 2,600.0

19.2

Plastipak Holdings Inc.

2,295.3 2,371.7

The Suburban Collection

Rank

Family members in management with relation to the first-generation owner

Percent of business family-owned

Type of business

Terence Adderley, chairman, son

93%

Outsourcing and consulting services as well as world-class staffing on a temporary, temporary-to-hire, and direct-hire basis

1959 Michael and Marian Ilitch

Christopher Ilitch, president and CEO, Ilitch Holdings Inc., son

100

Food, sports and entertainment industries. Companies include Little Caesars Pizza, Olympia Entertainment, Detroit Red Wings, Blue Line Foodservice Distribution, Champion Foods, Olympia Development, Uptown Entertainment, and Little Caesar Pizza Kit Fundraising Program. Michael Ilitch owns the Detroit Tigers. Marian Ilitch owns MotorCity Casino-Hotel.

-3.2

1967 William P. and Mary Young

William C. Young, president and CEO, son

Manufacturer of rigid plastic packaging containers and preforms for consumer products companies

1,599.3 1,370.8

16.7

1948 Richard Fischer

David Fischer, president and CEO, son; David Fischer Jr., vice president, grandson; Zachary Fischer, director, grandson

100

Automobile sales and service

Sherwood Food Distributors LLC

1,539.9 1,523.4

1.1

1969 Earl Ishbia and Alex Karp

Howard Ishbia, executive vice president of sales and marketing, son; Jason Ishbia, executive vice president of finance and CFO, son; Joel Ishbia, executive vice president of inventory management, son; Gary Karp, executive vice president of corporate affairs, son; David Ishbia, sales, son; Scott Ishbia, IT, son

100

Wholesale food distributor

H.W. Kaufman Financial Group Inc./Burns & Wilcox Ltd.

1,425.0 1,225.0

16.3

1969 Herbert W. Kaufman

Alan Jay Kaufman, chairman, president and CEO, son

100

Insurance distribution, underwriting, brokerage, financing, claims administration, inspections, loss control, audits and real estate

Walbridge Aldinger Co.

1,307.0 1,291.1

1.2

1916 John Rakolta

John Rakolta Jr., chairman and CEO, son

Construction company offering services in North America, South America and the Middle East.

Meridian Health Plan Inc.

1,164.7 977.1

19.2

1997 David Cotton

Jon Cotton, president, Meridian Health Plan of Michigan, son; Sean Cotton, general counsel and director of human resources, son; Michael Cotton, president, Meridian Health Plan of Illinois, son

100

Government programs health insurance

Barton Malow Co.

1,145.5 1,005.9

13.9

1924 Ben Maibach Jr.

Ben Maibach III, chairman and CEO, son; Doug Maibach, vice chairman, son; Ryan Maibach, president, grandson

General contracting, construction management, design/build, engineer-procure-construct, integrated project delivery, selfperform services: civil, concrete, rigging and interiors

10.

Wolverine Packing Co.

1,060.0 1,156.0

-8.3

1937 Alfred Bonahoom

Jim Bonahoom, president, son; Roger Bonahoom, vice president, son; Jay Bonahoom, vice president

100

Wholesale meat packer and processor; wholesale meat, poultry and seafood distributor

11.

Kenwal Steel Corp.

904.3 904.3

0.0

1947 Sol Eisenberg

Kenneth Eisenberg, chairman and CEO, son; Stephen Eisenberg, president, Burns Harbor, grandson

100

Steel service center

12.

Barrick Enterprises Inc.

798.9 809.9

-1.4

1977 Robert Barrick

Trish Barrick, retail supervisor, daughter; Greg Barrick, general manager, nephew

100

Petroleum retailer and wholesaler

13.

The Diez Group

733.0 612.0

19.8

1973 Gerald Diez

April Diez, vice chair, daughter; Gerald Diez Jr., president, son; Sherry Diez, vice president, daughter; Mark Diez, vice president, son

100

Steel and aluminum sales, scallops/wave blanking, blanking (exposed/unexposed), slitting, laser welding

Orleans International Inc.

631.0 637.0

-0.9

1937 Max Tushman

Earl Tushman, president, grandson; Larry Tushman, vice president and secretary, grandson; Reed Tushman, director of operations, great grandson; Marc Tushman, director of logistics and operations, great grandson

100

Meat trader

15.

RKA Petroleum Cos. Inc.

608.6 719.0

-15.4

1954 Hilmer Westphal Leemon

Kay Albertie, managing shareholder and daughter; Kari Elliott, CEO and granddaughter; Kyle Albertie, president and grandson

100

Petroleum wholesaler, biodiesel, ethanol, E-85, jet A and jet A1 products, compressed natural gas and liquefied natural gas as well as a hauler of crude oil

16.

Art Van Furniture Inc.

575.0 515.0

11.7

1959 Archie Van Elslander

Gary Van Elslander, president, son; David Van Elslander, senior director of merchandising, son

100

Retail home furnishings

PVS Chemicals Inc.

549.3 566.0

-3.0

1945 Floyd Nicholson

James B. Nicholson, president and CEO, son; James M. Nicholson, vice president, grandson; David Nicholson, vice president, grandson; John Nicholson, vice president, grandson; Timothy Nicholson, vice president, grandson

100

Manufacturer, marketer and distributor of industrial chemicals

18.

Lipari Foods LLC

540.0 502.0

7.6

1963 Vincent Lipari

Thom Lipari, president and CEO, son; Lori Lipari Adams, executive vice president, daughter

100

Wholesale deli, bakery, dairy, seafood, confections and nuts, specialty foods and packaging distribution

19.

ABC Appliance Inc.

395.0 395.0

0.0

1963 Martin Hartunian, president and CEO, son; John Gordon Hartunian Hartunian, vice president of information systems, son

100

Appliance, electronic, and bedding and furniture retailer

20.

Letica Corp.

380.0 B 380.0 B

0.0

1968 Ilija Letica

Anton Letica, president, son

Plastic packaging and paper cup manufacturer

21.

General RV Center Inc.

355.0 303.0

17.2

1964 Abe Baidas

Robert Baidas, CEO and chairman, son; Loren Baidas, president and chairman, grandson; Wade Stuff, vice president of operations, grandson-in-law

100

Recreational vehicle dealership

350.0 C 340.0

2.9

1922 Don Barnes Sr.

Don Barnes Jr., chairman, son; Bob Barnes, owner, son; Don Barnes III, vice president of store operations, grandson; Kelly Wilson, training manager, granddaughter; Mike Barnes, manager in training

100

Tire retailer, windshield replacement and repair, automotive service and repair

Phillip Elder, president, son; Robert Elder, secretary and treasurer, son

100

Automobile dealerships

Brian Simon, president and CEO, son

100

Manufacturer of variable wall axle housings, hollow axle shafts, transmission shafts and driveline components for the transportation industry

100

Building general contractor and process equipment installation, facilities management, including Design Build and construction management services.

1. 2.

5. 6. 7. 8.

14.

17.

999 W. Big Beaver Road, Troy 48084 (248) 362-4444; www.kellyservices.com 2211 Woodward Ave., Detroit 48201 (313) 471-6600; www.ilitchcompanies.com

41605 Ann Arbor Road, Plymouth 48170 (734) 455-3600; www.plastipak.com 1795 Maplelawn Drive, Troy 48084 (877) 471-7100; www.suburbancollection.com 12499 Evergreen Road, Detroit 48228 (313) 659-7300; www.sherwoodfoods.com

30833 Northwestern Highway, Farmington Hills 48334 (248) 932-9000; www.kaufmanfinancialgroup.com 777 Woodward Ave., Suite 300, Detroit 48226 (313) 963-8000; www.walbridge.com 777 Woodward Ave., Suite 600, Detroit 48226 (313) 324-3700; www.mhplan.com

26500 American Drive, Southfield 48034 (248) 436-5512; www.bartonmalow.com 2535 Rivard, Detroit 48207 (313) 259-7500; www.wolverinepacking.com 8223 W. Warren Ave., Dearborn 48126 (313) 739-1000; www.kenwal.com 4307 Delemere Court, Royal Oak 48073 (248) 549-3737; www.barrickent.com 8111 Tireman Ave., Dearborn 48126 (313) 491-1200; www.thediezgroup.com 30600 Northwestern Highway, Suite 300, Farmington Hills 48334 (248) 855-5556; www.orleansintl.com

28340 Wick Road, Romulus 48174 (734) 946-2199; www.rkapetroleum.com 6500 14 Mile Road, Warren 48092 (586) 939-0800; www.artvan.com 10900 Harper Ave., Detroit 48213 (313) 921-1200; www.pvschemicals.com

26661 Bunert Road, Warren 48089 (586) 447-3500; www.liparifoods.com 1 W. Silverdome Industrial Park, Pontiac 48343 (248) 335-4222; www.abcwarehouse.com 52585 Dequindre Road, Rochester 48307-2321 (248) 652-0557; www.letica.com 48500 12 Mile Road, Wixom 48393 (248) 349-0900; www.generalrv.com

Belle Tire Distributors Inc.

22.

1000 Enterprise Drive, Allen Park 48101 (313) 271-9400; www.belletire.com

23.

Elder Automotive Group

343.6 365.6

-6.0

1967 Irma Elder

24.

U.S. Manufacturing Corp.

334.0 287.0

16.4

1964 Joseph Simon Sr.

25.

Commercial Contracting Group Inc.

285.0 304.0

-6.3

1946 William Pettibone, son William Pettibone Sr.

777 John R Road, Troy 48083 (248) 585-4000; www.elderautogroup.com 28201 Van Dyke Ave., Warren 48093 (586) 467-1600; www.usmfg.com 4260 N. Atlantic Blvd., Auburn Hills 48326 (248) 209-0500; www.cccnetwork.com

This list of family-owned businesses is an approximate compilation of the largest such businesses headquartered in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. It is not a complete listing but the most comprehensive available. Crain's estimates are based on industry analyses and benchmarks, news reports and a wide range of other sources. Unless otherwise noted, information was provided by the companies. For some companies, the founders were later bought out by another family. Actual revenue figures may vary. NA = not available. B Plastics News estimate, North America injection molding. C Company estimate. LIST RESEARCHED BY BRIANNA REILLY

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C RAIN’ S DETROIT BUSINESS

CRAIN'S LIST: LARGEST MICHIGAN WOMAN-OWNED BUSINESSES Ranked by 2013 revenue Rank

Company Address Phone; website

Majority owner(s)

Revenue ($000,000) 2013

Revenue ($000,000) 2012

Percent change

Michigan employees Jan. 2014

Michigan employees Jan. 2013

Percent womanowned Type of business

Dakkota Integrated Systems LLC

Andra Rush (Rush Group LLC) president and CEO

$726.0

$632.0

14.9%

906

753

55%

Complete assemblies for original-equipment manufacturers

RKA Petroleum Cos. Inc.

Kay Albertie primary shareholder

608.6

719.0

-15.4

100

Petroleum wholesaler, biodiesel, ethanol, E-85, jet A and jet A1 products, compressed natural gas and liquefied natural gas as well as a hauler of crude oil

Detroit Manufacturing Systems LLC B

Andra Rush (Rush Group LLC) president and CEO

593.5

28.6

1,975.2

710

218

Provides full module assemblies; mechanical and robotic subassemblies; welding; plastic injection molding; and sequencing services to the automotive industry. Other services include program management;supply chain management; other

MotorCity Casino Hotel

Marian Ilitch owner

454.3

459.8

-1.2

1,948

1,973

100

Casino, hotel, dining, spa and theater

Elder Automotive Group

Irma Elder CEO

343.6

365.6

-6.0

248

268

100

Automobile dealerships

Two Men and a Truck International Inc.

Mary Ellen Sheets founder

310.4

261.2

18.9

365

Franchised moving company; home moving and corporate relocation services, packing and unpacking services

Strategic Staffing Solutions Inc.

Cynthia Pasky president and CEO

238.0

208.7

14.0

941

559

Provides consulting and staff augmentation services, vendor management programs, executive search services, call center technology and a Detroit-based IT development center

Buff Whelan Chevrolet

Kerry Whelan-Thieleke president

162.8

136.7

19.1

120

117

100

Automobile dealership

Brazeway Inc.

Hickman family/ Stephanie Boyse president and CEO

157.1

146.1

7.6

Producer of aluminum frost-free evaporators for household refrigerators and a leading supplier of HVAC and automotiveextruded aluminum tubing and tubular components

Vesco Oil Corp.

Marjory Epstein, Lillian Epstein Stotland, Lena Epstein chairman, gm, gm

144.8

144.0

0.6

173

174

Distributor of automotive and industrial lubricants, petroleum and aftermarket products and chemicals

11.

Technical Training Inc. (TTi Global)

Lori Blaker owner, president and CEO

118.5

104.0

13.9

100

Staffing, outsourcing and training

12.

Iconma LLC

Claudine George managing member

118.3

109.7

7.8

100

Providing professional staffing services and project-based solutions to a broad range of Fortune 1,000 organizations

10.

1875 Holloway Drive, Holt 48842 (517) 694-6500; www.dakkotasystems.com 28340 Wick Road, Romulus 48174 (734) 946-2199; www.rkapetroleum.com 12701 Southfield Road, Building A, Detroit 48223 (313) 243-0700; http://dms-na.com

2901 Grand River Ave., Detroit 48201 (866) 752-9622; www.motorcitycasino.com 777 John R Road, Troy 48083 (248) 585-4000; www.elderautogroup.com 3400 Belle Chase Way, Lansing 48911 (800) 345-1070; www.twomenandatruck.com 645 Griswold St., Suite 2900, Detroit 48226 (313) 596-6900; www.strategicstaff.com 40445 Van Dyke Ave., Sterling Heights 48313 (586) 939-7300; www.buffwhelan.com 2711 E. Maumee St., Adrian 49221-0749 (517) 265-2121; www.brazeway.com 16055 W. 12 Mile Road, Southfield 48076 (248) 557-1600; www.vesco-oil.com

3903 W. Hamlin Road, Rochester Hills 48309 (248) 853-5550; www.tti-global.com

850 Stephenson Highway, Suite 612, Troy 48083 (888) 451-2519; www.iconma.com

This list of woman-owned businesses is an approximate compilation of the largest such businesses headquartered in Michigan. Percentage of the company that is woman owned may not be solely held by the leading shareholder. It is not a complete listing but the most comprehensive available. Crain's estimates are based on industry analyses and benchmarks, news reports and a wide range of other sources. Unless otherwise noted, information was provided by the companies. Actual revenue figures may vary. NA = not available. B Joint Venture between Faurecia North America and Rush Group, formed June 2012. ■ An expanded version of this list may be purchased at crainsdetroit.com/lists. LIST RESEARCHED BY BRIANNA REILLY

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

CRAIN’S MICHIGAN BUSINESS Mary Kramer

Compensation creep worth keeping eye on It’s annual meeting season. Which means, in my case, that I am sending proxy forms back with rejections of new director slates and my handwritten note: “WHERE are the WOMEN?” It’s also a time when we begin seeing the lists of top-paid CEOs — the Crain’s Detroit Business list will run May 19. Compensation in Michigan — even at the big auto companies — generally seems tame compared with the eye-popping numbers you see for Wall Street types. But even after the economic meltdown, caused in part by many of those same Wall Street types, compensation is back up. Which could be one reason we’re seeing a steady drumbeat of populist themes, from raising the minimum wage to tax-therich campaigns. In too many companies, there’s a big disconnect between life at the top and what’s happening on the ground. In the 1970s, management guru Peter Drucker recommended that a CEO top out at about 20 times the compensation of the typical worker. In reality today, that factor is probably more than 300 times. Max De Pree, CEO of Herman Miller Inc. for much of the 1980s, was listening. The company, founded in 1923 by De Pree’s father, had employee incentive and profit-sharing plans from the beginning. When Max became CEO, he heeded Drucker’s advice and capped his own pay at 20 times the average worker’s wages. The Zeeland-based office furniture company is known for elegantly simple design (think Eames and Aeron chairs) as well as a sense of social responsibility. The pay caps seemed elegantly simple, too. “When the difference between top and average pay is huge, you have an imbalance,” a Herman Miller executive told a business reporter in 1990. “This company is a living organism; it has got to be in balance.” Of course, capping pay could mean serious problems in recruiting top executive talent. Look at the haircuts General Motors Co. and Chrysler Group executives took compared to peers while U.S. taxpayers held the stock. De Pree wrote several books about leadership, including Leadership is an Art and Leadership Jazz. He took the “servant leadership” theme — that leaders also serve those they lead. How many CEOs do you know who feel that connection? The Dodd-Frank Wall Street Reform and Consumer Protection Act has a provision that will require companies to report the ratio between top pay for executives and the median salary of company workers. The U.S. Securities and Exchange Commission is supposedly putting rules together on that. Maybe next year, that will be another data point on Crain’s list of top-compensated CEOs.

Fields from fields

In sports tourism, diamonds – and soccer fields – seen as a town’s best friend

LARRY PEPLIN

“Washington Township sees sports tourism as a vital part of growing our community,” township Clerk Kathy Bosheers says. The township plans to turn 200 acres of rural field into soccer fields, volleyball courts, two pools and a community center.

BY MATTHEW GRYCZAN CRAIN’S MICHIGAN BUSINESS

tarting this month, battalions of kids age 8 and under normally begin to swarm over baseball diamonds throughout Michigan for tournaments named Bunnyball and the WaCo Wolves Great Lakes Shoot-Out — as much a rite of spring for these peewee ballplayers as opening day is for Justin Verlander and the Detroit Tigers. This year’s long winter has postponed some events, but it hasn’t dampened the drive of parents to travel distances, buy meals and visit other attractions when they attend one of the more than 80 baseball tournaments in Michigan this year, organized by the

United States Specialty Sports Association for kids 18 and younger. It’s that devotion to travel sports for OME HUNGRY youngsters that has Food tourism: One way to a traveler’s Washington Townwallet is through ship near Romeo, the stomach, Grand Rapids and othPage 23 er communities looking for ways to capture tournament play and visitors’ dollars with improved, larger sports complexes. Even in the depths of the Great Recession, these parents found the cash to participate in travel teams — sports tourism flatlined

American Hockey League; Arend “Don” Lubbers, the retired president of

Grand Valley State University; and Rich DeVos, who was honorary co-chair of the sports complex committee. Washington Township is developing a 200-acre parcel at 30 Mile Road JON BROUWER In the Grand Rapids area, the West Michigan Sports Commission is building a east of M-53 that it hopes will satisfy complex of 12 baseball fields that would be one of the state’s largest. the needs of its residuring these years but didn’t sink like dents, the village of Romeo, Bruce Towngeneral vacation or corporate travel. ship, Romeo Community Schools and a priUp-and-coming sports such as vate enterprise called Total Soccer. lacrosse and girls volleyball are only fuWith an initial price tag of at least eling an industry that has long catered to $20 million, the project will feature 20 baseball, softball, soccer and basketball. outdoor soccer fields, a 270,000-squareIn metro Grand Rapids, the push foot building to enclose two full-size footfrom community-minded individuals ball/soccer fields, eight volleyball courts, got the proverbial ball rolling to build a two pools and a community center. ballpark with 12 fields that, when com“Washington Township sees sports pleted, will rank as one of state’s largest tourism as a vital part of growing our baseball complexes. community,” said township Clerk Kathy Philanthropist and former U.S. AmBosheers, who also serves on the parks bassador to Italy Peter Secchia is creditand recreation commission that serves ed with spearheading the effort to build Romeo and Bruce and Washington the complex, joined by others so familtownships. iar to West Michigan: Dan DeVos, owner of the Grand Rapids Griffins of the See Sports, Page 20

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CRAIN’S DETROIT BUSINESS

CRAIN’S MICHIGAN BUSINESS

Sports: Dreams of fields ■ From Page 19

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BY CHAD HALCOM | CRAIN’S DETRO

IT BUSINESS he 12th president of Wayne State University, named soon, faces expected to be a challenge versing several performance over a decade in the making — redeclines, including ment and a six-year falling enrollgraduation rate that recently tumbled low 30 percent. be-

Fall enrollment numbers also have declined 2009, the Michigan each year since Legislature is growing mance, and an often weary of underperforadversarial internal culture persists.

Current President Allan Gilmour, who retires June 30, said he wishes CHALLENGES he had done more with some of More transfer in tech those issues, but State pushes Wayne transfer: office to pull more of its R&D has accomplished weight, a lot in his three Page M16 years at the post. That includes setA chemical reaction at lab: ting the groundResearcher Greg work for imAuner (right) proved goes from top graduation rates, Gilmour dog to the improved student doghouse; retention and rounding university says more than $212 million up it’s about in funding commitments toward money, Page M17. versity capital campaign. a uniDiane Dunaskiss, cation with the board a Republican member of the on the issue. WSU board “We had a sense of governors who that the admiswas on the sion process and programs that search committee, said continserve students were uing improvement not tomer-focused, people very cusin and graduation rates retention helped or approached weren’t being has been a top priority in about what selecting the they needed from the new president. succeed, and as Allan university to “That’s been the came in he validated that we key were not incorrect tion for every candidatequesabout that,” she we’ve said. interviewed, and anyone “There’s still room involved in the search who’s to improve. It’s not where it commitneeds to be, but tee process knows that retenthere is progress. And, hopefully, tion is something we think this we can grow our student base with group has the skills students who are and the inacademically pretent to address,” she said. “Or pared or attracting we wouldn’t be interviewing more people to some of our graduate them.” and professional schools.” Debbie

R&D

WAYNE STATE STUDENT RETENTION

Student retention and graduation rates for Wayne State University *Based on tracking since the 2000-01 an academic year. who began as freshmenincoming class from six years earlier. For example, the in fall 1996 who had students who return 2001-02 graduation graduated on or before the next academic rate is the percentage Aug. 31, 2002. Retention year. rates are the year-over-yearof those students comparison of

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Dingell, the Democratic chairman of the board at Wayne State, also said retention and graduation rates were persistent is- Dingell

sues, but Gilmour made some progress with them, via admissions standards new that take effect this fall for first-time freshmen, and more communi-

The seeds of the slump The performance issues at WSU have many roots, including that admitted underpreparedpolicies students, a culture not focused enough on students, a declining number of college-age students in the state and funding issues. Gilmour also noted that six-year graduation rates don’t story for universities tell the whole have a large number like WSU that of part-time students. See Wayne, Page

M14

“We are a gateway community from the more heavily populated area to the south to a heavily rural area,” Bosheers said. “We don’t have a large industrial district, but we have people daycationing here. “If we can get people to come here for a visit, we can get them to live here also.” Ice dancing arguably is the poster child in Michigan now for the power of participation sports to attract dollars from outside a community, spurred on when Meryl Davis and Charlie White became the first U.S. ice dancers to win a gold medal in the recent Winter Olympics in Sochi, Russia. More than half of all the ice dancing teams that participated in the Winter Olympics trained in the Detroit area. The Davis-White team trained with two other Olympic ice dancing teams at the Arctic Edge Ice Arena in Canton Township, while nine other such teams trained at the Novi Ice Arena and three trained at the Detroit Skating Club in Bloomfield Hills.

“Since that time at the national level, we’ve seen a lot more communication between sports commissions, convention and visitors bureaus, and park and rec departments on ways to schedule outside events that will benefit the community — often enough to make a difference, but not so often that residents will become upset,” he said. During the past decade, Schumacher said, sports tourism stayed steady or grew, with an estimated $8.3 billion in direct visitor spending in the United States in 2012, up more than 9 percent over the prior year. What Michigan needs to do to attract more sports tourism is up for debate, but it seems clear there are economic benefits to boosting the “heads and beds” statistics for hotels, restaurants and other attractions in a community. That’s certainly what metro Grand Rapids and Washington Township hope to achieve.

Play ball!

This summer, Mike Guswiler hopes to do little more than watch the grass grow at the Art Van Sports Complex, about 10 miles north of Grand Rapids. That, and maybe take in a few of the baseball games scheduled to play after the August launch of the 80-acre site, which eventually will become one of the top five such Michigan complexes in terms of number of fields for events hosted by the USSSA. “We’ve been bringing potential customers or tournament directors up to the complex to tour it while it has been under construction over the past year,” said Guswiler, president of the West Michigan Sports Commission. The 501(c)3 organization owns the complex, paid for through private donations. “For our 2015 schedule — our first full operational year — we already have 21 of maybe 27 playable weekends filled,” said Guswiler, who figures the season ranges roughly from mid-April to mid-October.

Michigan isn’t on a level playing field with warm-weather states when it comes to attracting “sports group consumers” year-round for outdoor events like youth baseball, but the state can attract teams from throughout the Midwest and host national championships in summer. Tournament organizers such as the USSSA and Game Day Baseball look for larger complexes that can handle three days of competition on one site and offer attractions other than just the sport. The prediction 20 years ago that “park and recreation departments could continue to be line items in city and county budgets on the expense side that are liable to cuts, or they could be part of the economic development engines in their communities” has come to pass, said Don Schumacher, executive director of the Cincinnati-based National Association of Sports Commissions, a trade organization.

A $7.8 million gamble

See Next Page

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Guswiler makes no bones about the fact that a major emphasis of his organization is to improve occupancy at the roughly 7,000 rooms within driving distance of the sports complex. That improvement, in effect, would raise receipts collected through the 15 percent lodging excise tax that will help fund the complex’s operation and maintenance. Of the 15 percent, 6 percentage points go to the state and 5 percentage points to Kent County. The remainder is a marketing assessment that Guswiler goes to Experience Grand Rapids, a nonprofit that markets the metro area as a destination and partly funds the sports commission. The Art Van Sports Complex, along U.S 131 in Plainfield Township, fills a gap in the West Michigan lineup of sports parks. It also helps balance the concentration of complexes in other metropolitan areas that attract groups of sports consumers. A survey of the locations for USSSA events in Michigan found the largest to be the VerSluis/Dickinson Softball Complex in Kalamazoo, with 14 fields, followed by Homer Howard Park in Southgate and Victory Park in Canton Township, each with 12 fields, and the Redcoat Sports Complex in Midland, with 10 fields. Other large complexes with eight fields each include Mt. Clemens Memorial Park in Mt. Clemens, Rotunda Fields in Dearborn and South Westnedge Park in Portage. Guswiler said supporters of the Grand Rapids area sports complex initially hoped a local government would fund the project and place it in its parks-and-rec inventory. But “unfortunately, the timing and the economic conditions just didn’t allow for that,” he said. “So we kicked off the ‘Everyone Wins’ campaign in 2010 and raised $6.8 million for the construction costs.” Warren-based Art Van Furniture Inc., the state’s largest furniture retailer, pushed the project over the top by locking in 10-year naming rights with a $1.8 million commitment to the campaign. One unique feature to the complex is the Nate Hurwitz Miracle Field, which uses rubberized turf for wheelchairs and walkers so that children with physical and mental disabilities could play baseball. The field is named after Hurwitz, a junior at Forest Hills Eastern High School who succumbed to Duchenne muscular dystrophy in 2012. Kent County sold the complex site, valued at more than $1.5 million, to the West Michigan Sports Commission for $400,000. The county also made a $1.2 million commitment several years ago to establish the sports commission as an entity. Otherwise, the county has been somewhat hands-off on the Art Van Sports Complex because its primary emphasis is the regional parks and trails system, said Roger Sabine, Kent County parks director. “In terms of travel baseball and softball, we anticipate drawing from Michigan, Illinois, Indiana, Ohio and maybe teams as far away

as Kentucky,” Guswiler said. “And we were specifically looking at participatory sports that kids would get involved in.” In those sports, families with players ages 14 and under look at the quality of the tournament and caliber of competition, but they also consider the event as a minivacation where “you’re not always playing baseball or softball, so what else is there to do?” Guswiler said. Direct spending for the trip can

B UILT

vary widely depending on the metropolitan area, but the West Michigan Sports Commission uses an average of $463 per family as the rule of thumb. Early on, visiting tournament directors asked whether a satisfactory range of accommodations would be available near the Art Van Sports Complex — there aren’t any hotels in nearby Rockford. Guswiler and others were relieved to discover See Sports, Page 22

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Sports: A new game plan for tourism â&#x2013; From Page 21

that visiting families will travel up to 40 minutes from the venue, according to sports tourism studies. Within a 20-minute range of the complex, visitors can reach the bulk of the approximately 7,000 rooms in Kent County. â&#x20AC;&#x153;Will developers see an opportunity here and develop something closer?â&#x20AC;? Guswiler said. â&#x20AC;&#x153;I think itâ&#x20AC;&#x2122;s very feasible, and the city of Rockford is interested in having some lodging available.â&#x20AC;?

DETROIT JU UNE 09-12, 2014

Build with hopes they will come Itâ&#x20AC;&#x2122;s not baseball that Washington Township hopes will be the big draw to its community but soccer, football, lacrosse and volleyball played on a 200-acre site it bought in December. â&#x20AC;&#x153;What happens in this small corner of Macomb County is that people come out here in the fall, and weekends are packed with people visiting several of the largest orchards on the east side of the state,â&#x20AC;? Bosheers said. â&#x20AC;&#x153;People may not realize that we are a destination area, but we have some of the most beautiful golf courses on the east side of the state here.â&#x20AC;? Bosheers and others want to capitalize on those leisure-time activities and attract sports groups with a complex that carries a firstphase price tag of $12 million. Total Soccer, a brand launched by professional soccer player, coach and manager Brian Tinnion in 1984, may begin work in the next couple of weeks on an additional $8 million to $10 million pro-

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ject that would start with 20 outdoor soccer fields if it receives the necessary variances from Washington Township, said Chris McInally, part owner in the Total Soccer project in Washington Township and manager of the Total Soccer operation in Royal Oak. Total Soccer also has complexes in Wixom, Fraser and Novi. Work this year would include leveling the land and seeding the site so that fields would be ready to go for outdoor games in the spring next year. Construction on a 270,000-square-foot building for the indoor fields would commence in spring 2015 for an October opening. Bosheers said Washington Township is in discussions with Romeo Community Schools, the city of Romeo, Bruce Township and corporations about what amenities the final complex may offer and how to use 80 acres that would remain vacant under the existing plan. â&#x20AC;&#x153;With our fingers crossed, we are hoping that our community center will be open in 2016,â&#x20AC;? she said. â&#x20AC;&#x153;We are hoping to construct a competitive pool as well as a family pool, meeting rooms and gyms with fitness equipment. With Total Soccer

having an indoor facility and us having a community center, we could have year-round activities instead of activities just in the fall. â&#x20AC;&#x153;We also would have more things to do than just be a spectator at a tournament. Parents that come to watch their older kids in a tournament may want to take their younger ones somewhere to swim, and we could offer day passes to our community pool.â&#x20AC;? Sports tourism for the facility may be fueled further by the fields for lacrosse and volleyball â&#x20AC;&#x201D; two sports rapidly gaining in popularity. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m 41 now, and as a kid playing soccer, we had unpaid coaches and dads of players on the team who would coach,â&#x20AC;? said McInally, who played college soccer for Clemson University and professionally with the Detroit Neon indoor soccer team, which played at The Palace of Auburn Hills. â&#x20AC;&#x153;Soccer now has really evolved into a sport with full-time paid positions for coaching. Lacrosse is the next sport that is ready to do the same thing.â&#x20AC;? Matthew Gryczan: (616) 916-8158, mgryczan@crain.com. Twitter: @mattgryczan

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State group sets the table to attract culinary tourists BY AMY LANE CRAIN’S DETROIT BUSINESS

For a growing number of people, traveling isn’t just about reaching a destination — it’s about food and drink. Culinary tourists, as they’re known, seek local tastes and experiences and are willing to travel long distances and spend more than other leisure travelers, according to the World Food Travel Association. And they’re a segment that Michigan wants to attract. “We know we’re getting a lot of new people that have never been to Michigan before. We have the chance, when those people come to this state, to impress them with what’s different,” said Linda Jones Jones, leader of the Michigan Culinary Tourism Alliance. “Our culinary culture is one of those things that can be part of their tourism experience; that can be a lasting, positive part of their trip here.” The alliance — an evolving volunteer organization started in 2009 by the Michigan Grape and Wine Industry Council, of which Jones is executive director —works to connect people and pieces of the state’s food tourism landscape, from culinary schools to farmers markets, growers to restaurants and accommodations to attractions. The alliance has two main goals: Promote Michigan as a culinary tourism destination and encourage restaurants to serve more locally made and grown food and beverages. The grass-roots organization received seed money from a U.S. Department of Agriculture grant to help pay for staff time and some activities such as the creation of 14 local and regional “foodie tours,” posted on the website of Travel Michigan, which is collaborating with the alliance. The Tourism Alliance relies largely on networking and collaboration and the members of two of Michigan’s largest industries: agriculture and tourism. In Southeast Michigan, one energizing force is Jesse Eisenhuth, The Henry Ford’s director of food service and catering. As a regional point person for the alliance, Eisenhuth pulls together “anybody that has an interest in culiEisenhuth nary tourism” in Wayne, Oakland and Macomb counties — be it orchards, restaurants, venues, farms or others. “I want anybody that … wants to help promote the region and the great culinary things we have going on here to be involved,” said Eisenhuth, who hosted his second regional meeting April 7 at The Henry Ford. His immediate goal is to expand the region’s online foodie tour

from the 10 restaurants, markets, orchards and attractions currently listed on Travel Michigan’s website to possibly as many as 200 destinations within a couple of years, publicizing the variety of what visitors might do in the area. “We need to promote each other better,” Eisenhuth said. “If culi-

nary tourism in general gets better in this area, we all will do well.” Food is a major part of the story of The Henry Ford, from working farms to events to restaurants such as the Eagle Tavern, which offers 1850s-era food served by staff in period clothing. There’s much that historic sites

such as The Henry Ford can gain from culinary tourists, Eisenhuth said. “There’s a stigma that’s still out there from long ago that museums, historical attractions don’t have very good food,” he said. “Nobody ever thinks, I’m going to go to that museum because their food is

good. We’re trying to change that.” In addition, about half a dozen years ago, The Henry Ford started a program to source food locally from vendors and family farms. The effort has become a priority and promotion throughout the institution’s See Food, Page 22

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Food: One way to a tourist’s wallet is through the stomach ■ From Page 21

food service and catering. More than 60 percent of purchases last year were through farmers, food producers or suppliers within a 200mile radius of The Henry Ford or in the state, Eisenhuth said. Local sourcing is one of the top 2014 menu trends cited by the National Restaurant Association, and

travelers increasingly seek an authentic and local experience overall, said Dan McCole, a researcher and an assistant professor in the department of community sustainability at Michigan State University. Interest in elements such as farmers markets, local food, breweries and wineries all plays into

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and communications at the Michigan Restaurant Association, which has been working with the Michigan alliance from its inception. “There’s a lot of people that are coming, and they need to eat,” she said. And they spend. According to research cited by the Ontario Culinary Tourism Alliance, the average culi-

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nary tourist spends double that of a generic tourist on a trip overall and triple on fine dining. They also spend more than other leisure travelers. A study for the Portland, Ore.-based World Food Travel Association found the average culinary traveler spending nearly $1,500 on trips, including transportation, lodging, entertainment, food and dining. That compares with about $1,200 spent by leisure travelers. In Michigan, Jones said, top assets include wineries, the burgeoning craft beer and spirits industries, highly regarded chefs and dining venues, and offerings ranging from fresh fish — promoted in a statewide “Catch & Cook” program that joins charter boat operators, restaurants and others — to wild game and an assortment of fruits and vegetables that help make Michigan the second-most agriculturally diverse state for commodities after California. The potential is good to build culinary tourism, Jones said. “I think we’ve just barely scratched the surface of this.” The Michigan alliance plans to work with elected officials and state agencies to find financial resources “to aid in the development of a more formal strategy for culinary tourism in Michigan,” Jones said. A benefit of the alliance, she said, is that it’s a conduit for sharing information so that “people doing interesting things with food in Detroit,” for example, can learn about what’s going on in regions such as Traverse City or Grand Rapids and vice versa. A goal this year is to continue to foster the formation of regional groups, Jones said. Such groups can identify assets and people interested in promoting culinary tourism and provide a network to feed information toward statewide efforts such as this year’s second annual, end-of-summer public relations campaign by the Michigan Department of Agriculture and Rural Development highlighting “the flavors of Pure Michigan.” Jones is encouraging regional groups to update the list of foodie tours visited by about 1,000 people a month on the state website. At the local level, foodie tours are being developed by convention and visitors bureaus, such as Traverse City Tourism’s Tasty Traverse tour. The self-guided tour, available as a print brochure and on the organization’s website, includes area food artisans and wine, spirits and cider producers, with each listing telling a small story about the location. Traverse City Tourism sought product diversity and ease of visitor access, among considerations for the brochure. And, said media relations manager Mike Norton, “we wanted to make it places where people were actually making something.” The brochures are among those most requested at the visitor center, and staff members also take them to travel and industry shows. It’s something other communities could do easily, Norton said. “And it’s just a matter of recognizing, often, what’s right under your nose.”

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Monthly

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Italy

WHERE MICHIGAN DOES BUSINESS Autoliv Inc. Based: Auburn Hills Operations: Office in Orbassano Employees: 19 Top executive: Fulvio Podio, managing director Clients: Fiat SpA, Lancia Automobiles SpA, Alfa Romeo, Ferrari SpA, Maserati, Tofas

Brembo North America Inc. Based: Plymouth Operations: Parent company Brembo SpA has its headquarters, research and development center and two plants in Stezzano, and other plants in MapelCOURTESY OF BREMBO N.A. lo, Curno, Turin and Brembo employs about 3,000 Brescia. throughout Italy. Employees: Around 3,000 Products: Car brakes, pistons, Marchesini wheels, Sabelt safety seats and harnesses Top executives: Alberto Bombassei, chairman of Brembo SpA; Matteo Tiraboschi, executive deputy chairman of Brembo SpA; Daniel Sandberg, president and CEO of Brembo North America Inc. Clients: BMW AG, Fiat-Chrysler, Daimler AG, Ford Motor Co., General Motors Co., Honda Motor Co., Harley-Davidson Motor Co., Mitsubishi Motors Corp., Tesla Motors, Volkswagen Group .

Chrysler Group LLC Based: Auburn Hills Operations: Fiat SpA has its headquarters in Turin, and 45 plants and 35 research and development centers throughout Italy. Employees: 62,500 Products: Designs, engineers, manufactures, distributes and sells vehicles for mass market under the Fiat, Alfa Romeo, Lancia, Abarth and Fiat Professional brands and distributes Chrysler brands such as Jeep and Mopar. Comau, Teksid, Magneti Marelli are part of Fiat, and Fiat owns Ferrari and Maserati. Top executives: John Elkann, chairman, Fiat SpA; Sergio Marchionne, CEO, Fiat SpA More information: Chrysler Group LLC is 100 percent controlled by Fiat SpA following the acquisition of a minority interest in Chrysler previously held by the VEBA trust. The companies announced in January that the parent organization, Fiat Chrysler Automobiles NV, would be incorporated in the Netherlands.

Compuware Corp. Based: Detroit Operations: Main office in Milan, and other office in Rome Employees: 25 Products: IT software and services for application performance management and mainframe development and maintenance Top executive: Emanuele Cagnola, sales director Clients: UBI Banca, Sec Servizi

taly has the third-largest economy in the eurozone, despite suffering from high public debt and structural impediments to economic growth. In 2013, its public debt passed 133 percent of its GDP, which declined 1.8 percent to $2.068 trillion, while its level of unemployment rose to 12.4 percent. Nearly 75 percent of the Italian economy is from the services sector, with tourism being one of its largest industries. Engineering products, textiles and clothing, production machinery and motor vehicles are its largest exports. Major trading partners include Germany, France, China and the United States.

Employees: 730 Products: Sealing and trim systems Top executive: Fernando de Miguel, president of Cooper Standard Europe Clients: Astra Veicoli Industriali SpA, CNH Industrial; Deere & Co., Fiat SpA, Guardian Automotive- Europe SA; Industrial Vehicles Corp.; JC Bamford Excavators Ltd.; Magirus International Gmbh; Maserati; Paccar Inc.; Pininfarina SpA; PSA Peugeot Citroën; Scania Group; Volkswagen Group; Volvo Car Corp.

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

COMING UP May: Spain/Portugal June: Israel

Milan, Stezzano, Cameri

Federal-Mogul Corp. Based: Southfield Operations: Manufacturing locations in Carpi, Chivasso, Cuorgne, Druento and Mondovi, and distribution center in Verona Employees: Approximately 1,000 Products: Ignition products, sealing products, engine bearings, wipers and friction products Top executive: Gian Maria Olivetti, vice president and chief technology officer, Federal-Mogul Powertrain, and president, FederalMogul Italy

General Motors Co. Based: Detroit Operations: Opel National Sales Co. is located in Rome, and General Motors PowertrainEurope has an engineering and development center in Turin. Employees: 158 at Opel; around 560 plus

Meritor Inc. Based: Troy Operations: Manufacturing and technical center in Cameri, near Milan, which is its head of European axle development Employees: More than 500 Products: Axles and gear sets Top executive: Joe Plomin, president, International, Europe and Asia Pacific Clients: Industrial Vehicles Corp., Renault SA, Daf Trucks NV, Ford Otosan and Volvo Car Corp.

MSX International Inc. Bologna

Busalla

Turin, Cirie, Florence Orbassano, Livorno Druento

ITALY

Dow Chemical Co. Based: Midland Operations: Head office in Milan, sales office for Dow AgroSciences in Bologna and other facilities in Correggio, Fombio, Mozzanica, Mozzate, Parona and Pisticci Employees: 720 Products: Polyurethane systems, ion exchange resins for water treatment, agriculture products, resin adhesives used in food packaging, and epoxy resins, among others Top executive: Giuliano Tomassi Marinangeli, president and managing director, Dow Italy More information: In 1960, Dow opened its first sales office in Milan.

employees for 2013 Products: Temporary staffing, search and selection, and outsourcing and consulting Top executives: Natalia Shuman, senior vice president and general manager (EMEA and APAC regions) and COO (North Asia); Stefano Giorgetti, country general manager

Rome, Pomezia

Naples

Melfi

Capri Battipaglia Brindisi

Based: Detroit Operations: Headquarters in Pomezia near Rome, office in Turin, and office and training center in Milan Employees: Approximately 300 Products: Automotive industry products including providing parts and accessories sales programs, dealer standards and process improvements, training, technical support services, warranty products. Top executives: Emiliano Nebbioso, managing director, MSX International Italy Clients: Ford Motor Co., Jaguar Land Rover Ltd., General Motors Co., Renault-Nissan Alliance, BMW AG, Mercedes Benz AG, PSA Peugeot Citroen and Volkswagen Group, among others

RGIS LLC contractors at GM Powertrain Products: Opel vehicle models; diesel engines and control systems that equip trucks for GM brands globally Top executives: Roberto Matteucci, managing director of Opel Italy; Pierpaolo Antonioli, managing director and global diesel sector executive director at GM Powertrain Clients: 122 Opel dealers; GM brands More information: General Motors operates through the Opel brand and General Motors Powertrain in Italy. Chevrolet announced last year that it would cease selling new cars in Europe by 2015, and much of Chevrolet Italia operations are expected to stop sales by the end of June.

Kelly Services Inc. Based: Troy Operations: Italian headquarters in Milan; branches in Bassano del Grappa, Bologna, Cittadella, Ferrara, Florence, Genoa, Mirandola, Modena, Montebelluna, Parma, Piacenza, Rome, Thiene, Turin, Treviso, Varese and Vicenza Employees: 128 full-time, 1,600 temporary

Meritor has a manufacturing and technical center near Milan.

Cooper-Standard Automotive Inc. Based: Novi Operations: Locations in Battipaglia and Cirie COURTESY MERITOR INC.

Based: Auburn Hills Operations: Offices in Milan, Rome and Bologna, and remote teams in Turin, Padua, Florence, Sardinia, Sicily, Naples and Bari Employees: 20 full-time, 1,000 part-time Products: Physical inventory, fixed asset inventories, Electronic Shelf COURTESY OF RGIS LLC Label installation RGIS employs 20 fullfor retailers timers and 1,000 partTop executive: Gio- timers in Italy. vanni Grimaldi, country manager Clients: Carrefour SA, Ipercoop, Conad, Finiper SpA, Leroy Merlin, Inditex SA (Zara), Burberry, Arnoldo Mondadori Editore SpA, Sephora

TI Automotive Inc. Based: Auburn Hills Operations: Fluid carrying systems plants in Brindisi, Busalla and Melfi, and HVAC plant in Cisliano Employees: 460 Products: Brake pipes, HP diesel pipes, zinc-coated tubes, brake lines, clutch lines, power steering lines, and receiver driers and accumulators for air conditioning Top executives: Salvatore Aloisi, plant manager; Enrico Traversa, general manager; Maurizio Paesante, plant manager Clients: Fiat SpA, General Motors Co., Ford Motor Co., Nissan Motor Co., Lamborghini SpA and BMW AG, among others. — Bridget Vis

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BUSINESS DIARY ACQUISITIONS & MERGERS XanEdu Publishing Inc., Ann Arbor, a publisher of customized course materials for higher education, and SharedBook Inc., New York City, announced a merger that includes SharedBook’s AcademicPub and noneducational operations, such as Blog2Print. The combined entity plans to operate under the XanEdu brand. Websites: xanedu.com, sharedbook.com. Agree Realty Corp., Farmington Hills, closed on the acquisition of a parcel of

land in East Palatka, Fla., for the development of a McDonald’s restaurant. The project is pre-leased under a longterm ground lease and is expected to be completed during the third quarter of 2014. Agree also closed on acquisitions with an aggregate purchase price of approximately $9.5 million that include an O’Reilly Auto Parts store and Family Dollar store, Lincoln Park; a Buffalo Wild Wings restaurant, Indianapolis; a Dollar General store, Irvington, N.J.; and a Goodyear Tire & Rubber Co. outlet, Forest, Va. Website: agreerealty.com.

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CONTRACTS Plex Systems Inc., Troy, a software supplier, added customers using the Plex Manufacturing Cloud, including Green Flash Brewing Co., San Diego; Old Mill Kettle Corn, Chickamauga, Ga.; and Morley Candy Makers Inc., Clinton Township. Website: plex.com. Burroughs Inc., Plymouth, a provider of technology services, and Tidel Engineering LP, Carrollton, Texas, a subsidiary of Sentinel Technologies Inc. and provider of cash management solutions and robbery deterrent products, reached an agreement by which Burroughs will provide technical phone support, installation and onsite maintenance to Tidel customers covered by warranty contracts. Websites: burroughs.com, www.tidel.com.

Tanner Friedman Strategic Communications LLC, Farmington Hills, and the Michigan Business Network, an online business news outlet, are producing and broadcasting the radio show “Communicating Business,” hosted by Matt Friedman, co-founder of Tanner Friedman. Websites: michiganbusinessnetwork.com, tannerfriedman.com. Beaver Aerospace & Defense Inc., Livonia, a subsidiary of Phillips Service Industries and a manufacturer and designer of custom ball screws and broad-range actuation products for the aerospace and defense industries, was selected to provide high-performance inertial separator actuators for the new Daher-Socata TBM 900 Aircraft. Website: beaver-online.com.

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Global

Telecom

Solutions, a telecommunications consulting firm, moved its headquarters from 22221 Greater Mack Ave., Suite A, St. Clair Shores, to 1501 Sixth St., Detroit. Telephone: (313) 371-9440. Website: www.gtsdirect.com.

NEW PRODUCTS Altair Engineering Inc., Troy, released

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the HyperWorks 12.0 Student Edition, free software geared toward aspiring structural and mechanical engineers. Website: altair.com. BrassCraft Manufacturing Co., Novi, a Masco Corp. company and manufacturer of plumbing products, introduced its Zip-It tool to plumbing contractors for common clogged drain problems. Website: brasscraft.com.

Johnson Controls Automotive Experience, Plymouth, the electronics, interiors and seating unit of Johnson Controls Inc., Milwaukee, announced it has developed FreshPer4mance coating, which repels dirt, liquid and static. Website: johnsoncontrols.com.

NEW SERVICES RouteOne LLC, Farmington Hills, a Web-based credit application management system for dealers and finance sources, announced that Friendly Finance Corp., Baltimore, a subprime lender, is available as a lender on the RouteOne credit application platform. Dealers who have a relationship with Friendly Finance now can process credit applications electronically to Friendly Finance through RouteOne. Websites: routeone.com, friendly financecorp.com. Virtual Interactive Agency, Farmington Hills, a marketing agency, launched a new website, viathink.net.

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DIARY GUIDELINES Email news releases for Business Diary to cdbdepartments@ crain.com or mail to Departments, Crain’s Detroit Business, 1155 Gratiot Ave., Detroit, MI 482072997. Use any Business Diary item as a model for your release, and look for the appropriate category. Without complete information, your item will not run. Photos are welcome, but we cannot guarantee they will be used.

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

provides a forum through which they can share practical know-how and inspire leadership. With Valerie Brader, deputy legal counsel, executive office of the governor, state of Michigan; Paula Sorrell, vice president of entrepreneurship, innovation and venture capital, Michigan Economic Development Corp.; and Teresa Szymanski, COO, Lansing School District. Lansing Country Club, Lansing Charter Township. $35 Inforum members, $55 nonmembers. Contact: (877) 633-3500; website: inforummichigan.org.

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 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.

2014 Detroit Tigers Outlook. 11:30 a.m.1:35 p.m. May 7. Detroit Economic Club. With David Dombrowski, president, CEO and general manager, Detroit Tigers; and Brad Ausmus, Tigers manag-

er. Other players and coaches are scheduled to attend. Presiding officer: Christopher Ilitch, president and CEO, Ilitch Holdings Inc. MotorCity Casino Hotel, 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.

Doyle, consultant, Anne Doyle Strategies for Leaders, and author of Power-

Matrix Awards Celebration. 5:30-9 p.m. May 15. The Association for Women in

Reinventing Michigan: Getting It Right. Getting It Done. 11 a.m.-1:30 p.m. May 16. Sterling Heights Regional Chamber

Communications Detroit Chapter. Platinum-level sponsor: Crain’s Detroit Business. AWC Detroit will honor three women or organizations that make significant differences in people’s lives through acommunications medium. With keynote speaker Anne

ing Up: How America’s Women Achievers Become Leaders. She completed work for the U.S. State Department in Spain regarding women’s leadership. The Dearborn Inn, Dearborn. $50 members, $60 nonmembers, $35 full-time students. Contact: (866) 385-1784; email: info@womcomdetroit.org; website: womcomdetroit.org.

of Commerce & Industry. With keynote speaker Gov. Rick Snyder. MacRay Banquet Center, Harrison Township. $35 chamber members, $50 nonmembers. Contact: Lori Cline, (586) 731-5400, ext. 11; email: events@shrcci.com; website: suscc.com.

THURSDAY APRIL 17 Government Contracting 101. 9 a.m.noon. Schoolcraft College Business Development Center. Learn what it takes to sell goods and services to the federal government and the state. Schoolcraft College VisTaTech Center, Livonia. $45. Contact: Carrie Vroman, (734) 4624438; email: cvroman@schoolcraft.edu; website: schoolcraft.edu.

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UPCOMING EVENTS Doing Business in Latin America. 811:30 a.m. April 22. Michigan Hispanic Chamber of Commerce, Cadena Group. With Jeff Jorge, executive partner, Global Development Partners Inc.; Kyle Anne Sasena, vice president and international product specialist, Level One Bank; and Noel Nevshehir, director, international business services, Automation Alley. Level One Bank headquarters, Farmington Hills. $25 MHCC members, $35 nonmembers. Contact: Nilda Thomas, (248) 792-2763, ext. 103; email: nthomas@mhcc.org; website: mhcc.org.

Inner Circle Capital Region 2014. 11:30 a.m.-1:30 p.m. April 24. Inforum. Event celebrates women in the inner circle of the business community and

Nannette Benman, HealthPlus Director of Sales and Account Management

EIGHT MILE BLVD. ASSOCIATION HOSTS LEADERSHIP LUNCHEON Join the Eight Mile Boulevard Association 11 a.m.-2 p.m. April 25 at Cobo Center, Detroit, for a panel discussion with Detroit Mayor Mike Duggan and county executives Robert Ficano (Wayne), Mark Hackel (Macomb) and L. Brooks Patterson (Oakland). Charlie Langton, legal analyst, WWJ 950, will moderate, and Lt. Gov. Brian Calley will deliver closing remarks. Topics to include Eight Mile Road revitalization, Michigan State Fairgrounds redevelopment and the proposed Regional Great Lakes Water Authority. This year’s event will recognize the “Faces of Eight Mile,” paying homage to business owners, public officials and community leaders who embody the diversity and strength of the Eight Mile corridor community. Crain’s Detroit Business is among the event’s promotion partners. Event co-chairmen are Ferndale Mayor David Coulter, Farmington Mayor William Galvin and Hazel Park Mayor Jack Lloyd. Tickets are $60 in advance or $70 at the door; tables of 10 are available for $500. Young professionals are eligible for a discounted rate of $35 per ticket. Register at eightmile.org/ leadership_luncheon. Online registration closes April 21. For more information, call Executive Director Jordan Twardy at (248) 3983388, or email jordan@eightmile.org.

We are here to provide the right advice, the right options and the right service. At HealthPlus, we know that the Affordable Care Act is changing the landscape of healthcare, and our expert staff is available to help you ﬁnd a plan that meets your needs. Nannette Benman, Director of Sales and Account Management: “We have several high-deductible plans and Health Savings Account options available that meet the needs of your employees and organization. And, if you want to make a bigger, more positive impact on both employee health and healthcare costs, ask us about our Worksite U Wellness Program.”

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PEOPLE CONSULTING

manager, Metro Consulting Associates LLC, Plymouth. Robert McLeod to senior director, Alderney Advisors LLC, Southfield, from senior manager, transaction advisory services, Ernst & Young LLP, Detroit.

FINANCE Ryan

Richmond

Thies to COO, Stout Risius Ross Inc., Southfield, from director of operations.

Nepper

Seth

David Richmond to project manager, engineering department, Spalding DeDecker Associates Inc., Rochester Hills, from senior project manager, McGill Associates PA, Asheville, N.C. Also, David Nepper to project manager, survey department, from project

Thies

Anderson

to assurance senior manager, Rehmann, Troy, from manager. Also, Mark De Mara to ac-

counting, consulting and taxation senior manager, from manager; and Tim Rossow to tax senior manager, Farmington Hills branch, from manager. Nicole Haviaras to senior manager, UHY LLP, Sterling Heights, from manager. Also to senior manager from manager: Chris Lamb, Jenna Lamb, Amy Perzanowski; Brandon Ernat and Bob Kendall to manager, from senior accountant. In the UHY LLP Farmington Hills office, the following moved to senior manager from manager: Carolyn Johnson, Chad Kime and Loni Winkler. The following to manager from senior accountant: Kevin Burns, Greg McEvoy, Kim Pomaville and Tara Treat. Douglas Shinkle to senior associate, Resource Capital Advisors LLC, Northville, from senior analyst, Ducker Worldwide LLC, Troy.

LAW

IN THE SPOTLIGHT

Thomas

Petterle

Chris Thomas to partner, Fontinalis Partners LLC, Detroit, from founder/managing director, and Laura Petterle to partner from managing director, remaining CFO.

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Roush

Cassia

The Engineering Society of Detroit, Southfield, has named Matt Roush its director of communications and public relations. He succeeds Della Cassia, who has been named to the newly created position of manager of communications at Detroit Public Television, Wixom. Roush, 57, had been technology editor for WWJ 950, where he wrote a daily enewsletter covering high tech from a Michigan perspective and contributed to on-air reports. Before that, he spent more than 10 years at Crain’s Detroit Business, covering banking, finance, retailing and high tech. Roush has participated in ESD activities for several years as a volunteer, host, moderator and master of ceremonies at events. In 2013, the ESD awarded him a Distinguished Service Award for his work advancing public understanding of the engineering profession. Roush earned a bachelor’s degree in speech, communication and theater at Albion College. At the ESD, Cassia, 42, was director of marketing and public relations and managing editor of Technology Century magazine. She also chaired ESD’s Public Relations Committee and Social Media Task Force. She has a bachelor’s degree in journalism and political science from Oakland University and an English teaching certificate from the University of Michigan.

MANUFACTURING

Ziparo

Kay

Peter Ziparo to vice president and general counsel, Visteon Corp., Van Buren Township, from assistant general counsel. Kelly Kay to business development relationship manager, United CNC Machining, Auburn Hills, from business development officer, PNC Bank, Troy.

MARKETING Julie

Edgar to manager of public relations, Your People LLC, Southfield, from freelance journalist, Oak Park. Scott Rourke to sales manager, Dietz Trott Sports & Entertainment Management,

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Farmington Hills, from account executive, Detroit Tigers, Detroit. Mary Pat Geiger to director of sales, Specific Media LLC, Royal Oak, from sales director, Genesis Media LLC, Birmingham.

Edgar

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Home again, mayor’s chief talent officer for city talks tactics Bryan Barnhill started ing employment would his political career as a elude them. “paper passer outer” for “It was a difficult time,” former Detroit City Council he said. “I spent all of my President Charles Pugh. life doing the right thing Now he’s the man to imso that I could avoid the press in Mayor Mike Dugposition where I’m an gan’s administration. adult without a job living The 27-year-old is Dugat my parents’ house. gan’s chief talent officer, “It was hard to stay motasked with finding the tivated, so I learned to right people to hire for discipline myself to see staff positions and apthe positive in every situpoint to boards and comation. That’s a discipline Bryan Barnhill, missions. that I maintain every day City of Detroit That’s no small task in a and that I am thankful for town where everyone, having.” from small businesses to millionThe tide turned, however, when dollar corporations, says they are Rochelle Riley wrote a piece in the struggling to find quality employ- Detroit Free Press about the state’s ees. brain drain and Barnhill’s strugThe Detroit native — Barnhill gle. After the story dropped, Barngrew up on the city’s east side, hill’s phone wouldn’t stop ringing. near the City Airport — brings a That one experience changed unique perspective to the search, everything. It brought Barnhill though. Despite a degree from Har- into contact with Pugh, and evenvard University and experience at a tually to the attention of Duggan, New York City real estate firm, he who tapped him to run his maystruggled to find work after he re- oral campaign. turned home to Detroit. Now it is Barnhill’s job to be the He and several friends from person who can change the tide of high school had scattered to the others’ lives. winds, but they had decided they But he’s not just looking for exwanted to come home and put in perienced people with perfect réthe hard work of investing in their sumés. Barnhill is also committed city. They just never thought find- to finding and nurturing young

Q&A

people who are invested in their communities, people like himself as a kid. “I want to expose young talent to careers in city government so they can see it as a viable option,” he said. “We’re developing an internship program.” Crain’s Entrepreneurship Editor Amy Haimerl talked to Barnhill about his role as the chief talent officer and how he finds candidates. You were the mayor’s campaign manager. Now you are the chief talent officer. What does the role encompass? Generally speaking, I’m responsible for putting the right people in the right places to achieve our objectives. I focus on recruiting very talented people to occupy high-level roles in the administration. That’s a challenge for businesses throughout the region. How did you start? I talked to the mayor about the values of his organization and what traits matter to him. Then I started to develop questions that would help extract those character traits. That’s the tactical aspect of it. I got some great advice from some great people. Deloitte was very helpful in creating a process

for interview and onboarding. Do you have any go-to questions that you ask each candidate? I do. They are really designed to elicit responses that help me get to know who a person is and how they think and what they value. I ask people from time to time, “Tell me about a time when you’ve had to make an ethical decision on the job.” It’s just about the conversation and the follow-up probing. You really get to know people. What type of candidates are you seeking? I’m looking for people who have had experience restructuring organizations or creating processes and systems or transforming organizations. I’m looking for people how have had experience incorporating ethical values in their decision-making. Do you have any tactics? Part of what I do is just meet people and have conversations. It’s such a powerful thing to do. A lot of people just really haven’t realized how significant it is to have the right type of conversation and the right type of interaction. It might be through a casual conversation that you have a major

BY DUSTIN WALSH Three mixed-use projects in Detroit will result in about $9.1 million in capital investment, including state incentives totaling $1.123 million, the Michigan Economic Development Corp. announced Wednesday. The projects, receiving performance-based grants from the Michigan Strategic Fund, are expected to create 157 jobs. Alex & Beck LLC will receive a $178,000 grant for its $839,000 redevelopment of a building at 3980 Second Ave. in Midtown. The

group plans to turn the dilapidated Thomas Beck house into three residential units with more than 1,000 square feet of commercial retail space on the first floor. The project is expected to create seven jobs and is supported by a seven-year property tax abatement from the city of Detroit and $55,000 in grants from Midtown Detroit Inc. O’Connor Development, under Diamonds & Rifles LLC and Gold Cash Gold LLC, plans to renovate the three-story vacant building at 2100 Michigan Ave. The $1.9 million project in Detroit’s Corktown area will result in a first-floor restaurant called Gold Cash Gold with

six apartment units above. The project is expected to create 50 jobs and is supported by $200,000 in state grants. The Detroit Development Fund and Detroit Investment Fund will finance approximately 66 percent of the project. Woodward Willis LLC received a $745,000 grant toward its construction of a new $6.4 million three-story mixed-use space at Woodward and Willis in Midtown. The commercial and retail space project is expected to create 100 jobs and is supported by a 10-year property tax abatement by the city of Detroit, estimated at $2.3 million.

BY CHAD HALCOM Troy-based Altair Engineering Inc. is on the hook for all but a sliver of a $26.5 million judgment in a lawsuit alleging misappropriation of trade secrets and breach of confidentiality agreements, involving simulation software. Jurors took about two days in deliberation this week after a sixweek trial before U.S. District Judge Avern Cohn in Detroit to award damages to California-based MSC Software Corp. in a 2007 lawsuit. Jurors awarded about $26.3 million of that against Altair; about $170,000 more was awarded against three former MSC employees who left the company in 2005 and 2006. MSC has alleged previously at least eight employees had left MSC

between 2005 and 2007 and took jobs at Altair. Five of those employee claims were dismissed prior to trial. At issue were 3-D model prototyping software products using computer-aided design and simulating real-world conditions, at both companies. Jurors found that Altair had misappropriated some source code as well as concepts or processes that get used to write code from MSC, and that the employees had also breached one or more of various non-solicitation, confidentiality or severance agreements with MSC. After the Altair hires began, according to the MSC lawsuit, Altair began putting resources into a software product called MotionSolve that competed directly with an MSC product called

Adams/Solver. MSC also had made allegations involving improvements Altair made to another software product, MotionView, that competed with its own Adams/Car software, but those claims were resolved prior to the trial. “At about the same time, Altair undertook an aggressive program to induce Adams/Car customers to abandon Adams/Car and adopt Altair MotionView,” the lawsuit states. Detroit-based Dykema Gossett PLLC represented MSC in the lawsuit, with Anthony Rusciano of Bloomfield Hills-based Plunket & Cooney PC as co-counsel. Troybased IP law firm Young Basile Hanlon & MacFarlane PC represented Altair, and Lipson, Neilson, Cole, Seltzer & Garin PC defended the individual employees.

Was he from Detroit? He lives in Boston Edison. Has anything surprised you? The most surprising thing was realizing that I didn’t have to focus on selling people, that a lot of people are attracted to the mission of improving Detroit. It’s remarkable to see the amount of talent that wants to be here. Amy Haimerl: (313) 446-0416, ahaimerl@crain.com. Twitter: @haimerld

POSITIONS AVAILABLE

THE SOUTHEASTERN MICHIGAN CHAPTER OF THE NATIONAL ELECTRICAL CONTRACTORS ASSOCIATION (SMCNECA) is preparing for a transition in management and leadership over the next five years. Toward that end, SMCNECA is seeking a candidate to work with the current Executive Vice President and eventually assume the role of Chapter leadership and administration. The ideal candidate will have a demonstrated ability to acquire the skills, knowledge, and tools required to successfully manage an electrical construction association in our market. These include, but are certainly not limited to: @ Labor relations skills for the construction industry @ Membership service and development of a volunteer membership organization @ Taft Hartley trust fund administration @ Business development, and general administrative skills This position is also SMCNECA’S liaison to our national organization and other regional and local organizations. Candidates interested in applying or further exploring this unique career opportunity should send a resume to:

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Passed-over med school grad learns life lesson, gets 2nd chance BY JAY GREENE CRAIN’S DETROIT BUSINESS

Nick Frame waited a whole year for March 21, also known in the medical field as “Match Day.” At Detroit’s MGM Grand Hotel & Casino, with about 269 other graduates of Wayne State School of Medicine, Frame found out he had matched with Mercy Health St. Mary’s Hospital in Grand Rapids as a first-year medical resident in family medicine. He starts work July 1. “I was excited, ecstatic, really happy,” said Frame, 26, who decided his senior year at Eisenhower High School in Shelby Township that he wanted to become a doctor. “I did want emergency medicine, but I think family medicine is a better fit for my personality as a whole,” he said. “After residency, I can still go out and do emergency medicine.” As happy as Frame is now, it was a different emotion he experienced a year ago on Match Day. On March 17, 2013, Frame’s name wasn’t called for a residency slot. He joined more than 1,500 other newly graduated medical students nationwide — and one other Wayne State student — with college debt of more than $200,000 who weren’t selected by a teaching hospital. “I was stunned, absolutely,” he said. “I can’t even remember the specifics of that. I had no idea what to do.” Frame said over the next several weeks he went through the motions

to apply for the thousand or so unfilled residency slots nationally during the so-called “Scramble.” “There was one open ER spot. I applied to that. Some surgery, preliminary and family medicine slots,” he said. But Frame said he didn’t put a lot of effort into it and didn’t match in the Scramble either. He was disappointed he didn’t find a position along with 98.5 percent of his classmates at Wayne State who did match with a residency program. Frame said given all the talk the past few years about the need for more physicians to care for an additional 30 million insured patients under the Patient Protection and Affordable Care Act, it didn’t make sense to prevent more than 1,000 well-educated U.S. trained doctors each year from practicing medicine in hospital residency programs. “I tried not to think about what else I would do for a career,” he said. With $250,000 in medical school debt, Frame planned on paying down his debt with his post-residency salary and by practicing in an underserved medical area with various loan forgiveness programs from hospitals or government programs.

Physician supply priorities Despite studies that show the U.S. will face a shortage of about 130,000 doctors by 2025, the U.S. has an artificial cap on the number of doctors accepted into hospital residency training programs.

On March 17, 2013, Nick Frame’s name wasn’t called for a residency slot. He joined more than 1,500 other newly graduated medical students nationwide — and one other Wayne State student — with college debt of more than $200,000 who weren’t selected by a teaching hospital. While medical students are awarded medical degrees or osteopathic degrees, the M.D. or D.O. monikers, when they graduate, they can only be licensed by state medical boards as professional physicians after completing a residency program. To become a practicing physician, more than 40,000 medical school graduates each year compete for nearly 30,000 first and second-year residency slots. This year, 29,671 graduates matched into one of 9,600 accredited residency programs, including 16,400 graduates of U.S. schools and 9,287 graduates of international schools, according to the National Residency Matching Program. Over the past 18 years, graduate medical education funding, which is primarily paid for by Medicare, has been frozen. However, teaching hospitals have increased the number of funded residency slots by about 12 percent since 1996 to about 110,000 residents from 98,000 by using their own funding sources. In recent years, talk has surfaced about legislation to increase residency slots by as many as 15,000. But how to pay for additional doctors without raising the deficit or cutting other programs has stymied such efforts.

Dr. Frame makes a new plan After the initial shock of not matching, Frame’s dream of being a doctor slowly returned after some soul-searching and discussing his

situation with his father, Phil Frame, and a number of physician mentors. During the past year, with the help of James Meza, M.D., Margit Chadwell, M.D., Frame kept his hand on medicine by volunteering at the Robert R. Frank Student Run Free Clinic in Detroit. “The advice I received was stay clinically active this year and apply next year. Another goal I decided to accomplish was to get back to what drew me to medicine in the first place, namely the free clinic,” Frame said. At the clinic, Frame said he met Chadwell, one of the physicians in charge. She created the position of post-graduate clinical director for Frame. While a volunteer, Frame said he worked 25 to 30 hours per week. “I worked closely with Dr. Chadwell, the executive board and a group of students,” he said. “I did a little of everything. I saw patients, filled in the gaps where needed. I ran chart reviews with students where we looked at patient needs one week before their visit so we could come up with a game plan when they came in.” Frame said the past year he has learned more about delivering patient care, and the intricacies about administering a clinic. He also met Meza, whom Frame described as a person who not only gave him invaluable medical career advice but also with general life issues. “We kind of bonded immediate-

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ly. We traded stories, and I told him I hadn’t matched. He wanted to be involved,” he said. “He helped me with my application and my whole life.” Frame said Meza helped him understand how to learn from his mistakes. “He said the setback I had (losing a residency slot) doesn’t really define who I am or my goals as a person or physician,” Frame said. “You have to roll with it and keep moving forward. His kind words helped me get my confidence back.” But one of the biggest pieces of advice Meza gave Frame was to consider a career in family medicine. “I never had considered it before. I first wanted to become a surgeon and later an emergency medicine physician,” he said. By talking often with Meza, Frame said he learned family medicine has a wide scope of practice. “I can take care of children, adults and the elderly as well. That appealed to me because I have always enjoyed working at the free clinic,” Frame said.

Good news Frame’s efforts the past year paid off last month with his selection as a family medicine resident by St. Mary’s, a 344-bed Catholic hospital owned by Livonia-based Trinity Health. “I applied to 80 to 90 emergency medicine programs and about 40 family medicine programs in the Midwest, mostly in Michigan, Ohio and Illinois,” said Frame, noting that he only applied to 30 hospitals his first go-round. Frame said he feels very lucky to be selected by St. Mary’s, a hospital he described as “excellent” and “offering me lots of opportunities.” Over the next two months before he reports in middle June for orientation, Frame said he will start looking for housing. “Of all the places I visited, Grand Rapids was the best place,” the Detroit-born Frame said. “The downtown is fantastic, and they have put tons on money into the health care infrastructure of the city.” Phil Frame said being in Grand Rapids also will help the family finances as daughter Chelsea, who is a senior at Grand Valley State University in nearby Allendale Township, will live with Nick until she graduates in December. Nick also graduated from Grand Valley. “It saves us from having to sign a one-year lease on an apartment for her,” Phil Frame said. “She gets a roomie she likes and has a lot of experience living with, and Nick gets a roommate who actually likes cooking, doesn’t mind doing laundry and is fastidious about cleaning.” Frame said he is very much looking forward to his three years at St. Mary’s. “I know it will be harder than I expected, and I expect to be busy. Right now I am focusing on my job, my program and my education. This is the foundation that will carry me through for the rest of my life. I am just trying to make the most of it.” Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

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Arena: Construction joint venture helps share expertise, risk ■ From Page 3

struction is commonplace for such massive projects, said Ivanikiw. “This is not something that’s unusual,” he said. “No single organization is going to have enough of the right kind of talented people to do a project of this size.” The joint venture will act as a stand-alone company to organize construction of the arena, he said. Staffers from each company will work on different aspects of the effort rather than each company handling specific portions. While Barton Malow’s résumé includes many sports venues, it decided it needed help. “We needed more sports experience, so we reached out to Hunt,” Ivanikiw said. “We suggested to them we form a team.” White was added in late 2013 because of the firm’s familiarity with working in Detroit, he said. It’s vital to have a firm such as White to help navigate local politics and understand the local practices and rate of availability of employees, said Irwin Raij, a partner and vice chairman of the sports industry team in the Miami office of the Foley & Lardner LLP law firm. “That local tie really helps bring it all together. You’ve really got to know your market. This is local, sensible and consistent with industry practices,” he said. Joint ventures or partnerships spread the risk allocation, Raij said. “These are large projects, and

there’s risk involved. They burden the bonding capacity of each firm,” he said.

The process The selection process for the arena began in October 2013, Ivanikiw said, and the field of bidders was reduced to two. The names of the other firms were not disclosed. More meetings followed before Olympia chose Barton MalowHunt-White last week. “Hunt is one of the premier firms, as is Barton Malow, in handling projects like this,” Raij said. The next step is to finalize the contract with Olympia by April 30, then quickly move into planning, procurement and construction. The construction group also will begin an effort to train and hire Detroit residents to build the arena.

The companies All three firms have a rich history of sports venue work. Barton Malow had $1.1 billion in 2013 revenue, and most recently was in the news as being named the managing partner of a joint venture overseeing a four-year, $150 million renovation of the famed 91-year-old Rose Bowl stadium in Pasadena, Calif. Its other high-profile sports work includes designing, building and financing the $55.7 million

Pontiac Silverdome in the mid-1970s, and, more recently, the $24.5 million expansion of Spartan Stadium and the $226 million Michigan Stadium expansion and upgrade. It was hired last year to be construction manager for the $300 million redevelopment of Daytona International Speedway’s milelong grandstand. Barton Malow has 1,500 employees and 13 offices. It also builds offices, schools, hospitals and factories. White Construction, which had $31.3 million in 2012 revenue, was part of the construction management team with Hunt and Detroitbased Turner Construction Co. that built Comerica Park. White also was part of a joint venture with St. Clair Shoresbased JM Olson Corp. to handle turning the old seven-story, 750,000-square-foot J.L. Hudson Co. warehouse into commercial office space attached to Ford Field. The company last year was hired as a subcontractor for the $137 million private-public M-1 Rail streetcar project along Woodward Avenue, which will include a stop near the arena. Bernard White, the company’s founder, president and CEO, declined to comment. Hunt Construction Group is one of the largest sports stadium and arena builders in the world. The firm has averaged $1.9 billion in

revenue over the past five years. Hunt, which launched in 1944, began building sports facilities in the early 1960s, and has done more than 100 venues since then, the firm said. Aside from Ford Field, its project list includes the Barclays Center, Marlins Park, Citi Field, Lucas Oil Stadium, University of Phoenix Stadium, Miller Park, Heinz Field and Amway Center. It has 700 employees in nine offices nationwide. Hunt also builds airports, casinos, offices, performing arts venues, hospitals, convention centers and hotels.

The financing Property taxes collected by the DDA in a downtown district will pay for $261.5 million, or 58 percent of the arena’s construction cost, while team owners are to provide the remaining $188.4 million. Olympia, which will operate the arena under a 35-year concession agreement with the DDA, is the property development arm of the Ilitches’ $2 billion business empire, which includes the Red Wings, Detroit Tigers and Little Caesars. Under the deal, Olympia keeps all revenue generated by the arena, including concessions and parking, and all money from any naming rights deal. There will be 12 five-year renewal options for its 35-year management deal.

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Olympia has disclosed very little about what the arena will look like, or even its specific placement within the site footprint. In May 2012, the Red Wings’ ownership selected Dallas-based HKS Inc. as the arena architect, according to Sports Business Journal. The team and firm declined to confirm or deny the report. HKS will design the venue with the Cambridge, Mass.-based architectural firm NBBJ, the sports industry trade magazine said. It is known that the long side of the arena will be parallel to Woodward, and its footprint is estimated to be about 2.5 blocks. A single 500-space garage is part of the project, but no surface lots. The plan says the new arena will have 1,200 premium seats and 10,000 square feet of retail including a Red Wings merchandise store, restaurants and other retail. Olympia has committed to building or attracting another $200 million for development around the arena, such as retail, commercial office space and housing. Joe Louis will be razed and the site redeveloped after the new venue opens. The state is paying up to $6 million for the demolition once the Wings leave JLA. Bill Shea: (313) 446-1626, bshea@crain.com. Twitter: @bill_shea19

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Ferndale: Biz-friendly moves attract companies, spur expansions ■ From Page 1

and the city had to take a long hard look inward to make some changes. “One of the challenges any community like Ferndale faces is evolving from a mentality that you are a writer and enforcer of rules to treating businesses as customers in your community,” he said. “Municipalities have been behind the curve in terms of looking at economic development that way, but we’ve embraced the notion that when businesses locate and grow in Ferndale, it strengthens our city overall.”

Magnet for the nontraditional Lewis, who owns the Painting with a Twist franchises in Ferndale and Farmington, had originally considered locating her Ferndale location in Royal Oak before it opened in September 2010. “I was just spinning my wheels” in Royal Oak trying to get city approvals, she said. “I was ready to rock and roll with this. Ferndale wasn’t as popping, but it just seemed to be the new spot where folks started going. So I turned to Ferndale, and it just seemed to be the perfect place.” In her more than three years downtown, Lewis has noticed a range of businesses expanding and more unique businesses entering the market. “We have stores or boutiques that you can’t find everywhere, not just the ‘Joe Blow’ store on the corner or the average liquor store or anything like that,” she said. “It kind of rounds out the whole atmosphere of the Ferndale flavor, which is more of a different flavor than you might find in average cities.” There is also new downtown office development planned that will upgrade local offerings, said Derek Delacourt, director of the Community & Economic Development Department. Jake Sigal, the founder and former CEO of Ferndale-based Livio Radio, which was acquired by Ford Motor Co. last year, plans to turn two city-owned surface parking lots behind the former Old Navy store at Nine Mile Road and Woodward Avenue into a mixed-use development with at least 100 residential units, office space for second-stage tech companies, and a parking structure, Delacourt said. “We are pursuing those secondstage tech and automotive-related companies,” Delacourt said. “Those would fit fantastically in Ferndale.” Sigal said the additional office space would increase foot traffic during the day downtown and the parking structure would improve the parking situation during nights and weekends. Sigal is negotiating to buy the lots but has not submitted site plans for the project. Construction would begin in the summer of 2015 at the soonest, Delacourt said.

Product manufacturing Industrial and manufacturing businesses are also showing a renewed interest in Ferndale. Last month, the Michigan Strategic Fund Advisory Committee approved $718,000 in city tax-increment financing incentives for an $8.6 million industrial renovation

EXPANDING FERNDALE Retail and small-business expansions in Ferndale during the last 24 months: Black Owl LLC, restaurant: Opening in September in 8,000 square feet at 345 E. Nine Mile Road. Owners: Thom Bloom, Reagan Bloom and Scott Myrick. Employees: 45. Blue Nile Ethiopian Restaurants Inc.: 1,100 more square feet at 545 W. Nine Mile Road. Owner: Seifu Lessanework. Employees: 10. Boston Tea Room Psychic Readings and Intuitive Counseling: 1,700 more square feet at 224 W. Nine Mile Road. Owner: Heatherleigh Navarre. Employees: 5. C! Tech Solutions Inc.: 800 more square feet at 23257 Woodward Ave. Owner: Ryan Meray. Employees: 2. Ferndale Collision & Auto Repair Inc.: 2,500 more square feet at 180 Vester St. Owner: Dennis Zoma. Employees: 7. Go Comedy! Improv Theater LLC: 2,800 more square feet at 261 E. Nine Mile Road. Owners: PJ Jacokes, Gerald Knight, Tommy LeRoy and Chris DiAngelo. Employees: 14. Greenleaf Bodywork LLC, massage therapy: 800 more square feet at 251 E. Nine Mile Road. Owner: Kelly Battaglia. Employees: 16. M-Brew, brewery and coffeehouse: Opening June 1 in 6,500 square feet at 177 Vester. Owner: Dean Bach. Employees: 15. Modern Natural Baby LLC: 2,700 more square feet at 200 W. Nine Mile Road. Owners: Emily Murray, John Murray and Debbie Clear. Employees: 7. Painting with a Twist: 2,500 more square feet at 200 W. Nine Mile Road. Owner: Michelle Lewis. Employees: 22. Public House, restaurant: 2,400 square feet at 241 W. Nine Mile Road. Owner: Jeff King. Employees: 30. Rouge Makeup and Nail Studio LLC: 1,000 more square feet at 23341 Woodward Ave. Owners: Cheryl Salinas-Tucker and Jeny Bulatovic. Employees: 7. The Fly Trap, restaurant: 800 more square feet at 22950 Woodward Ave. Owner: Kara McMillian. Employees: 12. Treat Dreams, ice cream store: 2,000 more square feet of space at 22965 Woodward Ave. Owner: Scott Moloney. Employees: 14. Source: Ferndale Downtown Development Authority

and expansion project for Brass Aluminum Forging Enterprises LLC on Wanda Street. Brass Aluminum, Valentine Distilling Co. and Allied Printing Co. are expected to occupy a 220,000-square-foot building that will be renovated. A 100,000-square-foot building will also be constructed in the project, which the Michigan Economic Development Corp. said will create about 50 full-time Brass Aluminum jobs and another 50 by other building tenants. Valentine Distilling makes vodkas, gins and whiskey, and Allied Printing provides printing and information management services. Allied Printing plans $10 million in investment over the next five years. That investment is for new equipment, an additional 61,000 square feet at the 220,000-square-

Looking down Nine Mile Road in downtown Ferndale, where the core vacancy rate is just 2 percent. WIKIPEDIA

foot Brass Aluminum building and additional employees, said Margaret Fitzgerald, CFO of Allied Printing. It has 94 employees and four locations in Ferndale on Woodward, Hilton Street, Wanda and Rosewood Street. On Burdette Street, Search Optics Inc. has about 85 employees and expects to grow to 150 by the summer, said Christian Fuller, chief relationship officer for the company, which moved to Ferndale from San Diego three years ago. It is on track to reach its five-year goal of 300 employees, Fuller said. Search Optics is a marketing firm specializing in search engine optimization and Web development for the automotive industry. “It’s wonderful to get a new retail business that hires a couple folks, but when you can attract a company that hires hundreds of people and pays millions of dollars in taxes, it has the potential to help firm up the financial foundation of your community and attract jobs,” Coulter said Companies like Autolights LLC, Roe Photo LLC and Dearborn Axle Inc. have also added a total of 20 new jobs in Ferndale for a total investment of $1.4 million, according to Irene Spanos, economic development and community affairs director for Oakland County. Still other kinds of businesses have diversified their business model — such as the Rust Belt Market on the northwest corner of Nine Mile and Woodward. The 15,000-square-foot artist and designer market, which used to be open only during weekends, is now hosting events throughout the week, Delacourt said. Chris Best, who owns and operates the market with his wife, Tiffany, said about 4,000 square feet of the Rust Belt Market center has been gated off for events like weddings and bar mitzvahs. Film production companies from California have also inquired about reserving the space for wrap parties, he said. The market, which occupies the former Old Navy store, has served as incubator space for Rock City Eatery and HenriettaHaus Coffee Roasters LLC, both of which now have locations in Hamtramck, Delacourt said. Further south and east, the Woodward Avenue Brewery also purchased an 11,000-square-foot building on Saratoga Street, said Matt Osiecki, vice president of industrial brokerage in the Southfield office of CBRE Inc. WAB will only move its brewing operations there,

and no beer will be served onsite. The building sold for $160,000, according to Washington, D.C.based real estate information service CoStar Group Inc.

Efficiencies at City Hall Delacourt said licensing and permitting have been streamlined between 2011 and last year at the request of the Mayor’s Business Council. He said that since then, the city has refined its approval processes and the technology used by city inspectors. For example, temporary certificates of occupancy are now allowed, free occupancy certificate walk-throughs to identify issues ahead of time are available, and building inspectors use tablets for faster inspections and more time efficiency. “We implemented all of that stuff almost immediately,” Delacourt said. “To get companies to agree to expand and invest in their space, they need to know that the community is behind them.” Coulter said he formed the council in the model of Oakland County Executive L. Brooks Patterson’s Oakland County Business Roundtable. “I don’t mind stealing good ideas,” he said.

Railroad real estate Ferndale’s role as a logistics hub may be expanding, although the city is wary of too much growth in this segment. The Canadian National Railway Co., formerly Grand Trunk Western Railroad, has purchased a pair of properties on Fair Street in the last six months, and is planning to expand its intermodal transportation facility on 29 acres on Fern Street. The railroad has a meeting with the city later this month. CNR purchased properties at 350-360 Fair St. and 380 Fair St., Delacourt said. Those 60,000square-foot ($975,000) and 29,000square-foot ($775,000) buildings were purchased in December, according to CoStar. The sellers were listed as Dragutin Pernik and Hand of Grace Charitable Organization. Coulter said he would oppose an expansion if it “would take those industrial buildings off the (city) tax rolls and create a lot of industrial rail traffic in a place very close to a neighborhood.” Currently, the buildings are assessed by Ferndale and the city collects the taxes on them. If the properties become part of a rail-

way system, they are assessed by the state and the state collects the taxes under Michigan’s Public Act 282 of 1905. Delacourt and Coulter said specific expansion plans have not yet been submitted to the city. Patrick Waldron, a CNR spokesman, said there are plans to expand the facility for additional container storage. How large the expansion would be has not been determined. “We are working on a plan for an expansion that is being developed and we plan on meeting with the city of Ferndale in the coming weeks to review and discuss those expansion plans,” Waldron said.

Geographic advantage Beyond the railways, Ferndale’s proximity to freeways like I-696 and I-75 and major roads like Woodward Avenue and Eight Mile and Nine Mile roads make it a prime location for expansion and investment, Osiecki said, especially for distribution or service-related companies. Credit Union ONE has added another 18 employees at its Ferndale headquarters on West Nine Mile, and 57 total, Delacourt said. Osiecki said the streamlined government improvements have been additional selling points. “The local government, inspectors and economic development team have been very helpful in getting uses that may not be allowed in other communities, Osiecki such as a brewery or a distillery,” he said. What challenges remain for Ferndale? Osiecki said much of the existing industrial inventory is outdated and requires substantial modernization. Plus, there isn’t a wealth of office space, he said. That’s where the Sigal project is key, Coulter said. Going forward, the city is looking outside the downtown boundaries for continued expansion and redevelopment in the city, he said. “We saw the opportunity for growth in the larger industrial and commercial sectors that had been neglected in our community to some extent,” he said. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB

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Pension: Market rise could lift depth of city cuts ■ From Page 1

now — the general system was just under 60 percent funded, while the police and fire fund was about 78 percent funded on a market-value basis, at the end of fiscal 2012, according to the systems’ own valuation reports. But the adjustment plan could infuse the plans with a combined $1.9 billion of new capital in about nine years, and recent rates of return are far exceeding the city’s projections and could close the funding gap faster. “We’re generally, I think, remaining in a bull market for at least another two years,” said David Tawil, co-founder and portfolio manager of New York City-based Maglan Capital, a hedge fund that invests in distressed assets, including some risky government bonds. “So let’s assume the city gets what it wants in a confirmation hearing. We could see a good continuous run for another year after that, and maybe with extra capital that funding does go to a much better place for the pensioners,” he said. “That could happen. And if that’s the case, the question will then be, what was the point of the bankruptcy?” Assuming Detroit gets all it wants under the proposal — far from a certainty as 170,000 creditor ballots still have to go out for votes

next month, and U.S. Bankruptcy Court Judge Steven Rhodes expects to review it at a confirmation hearing in July — the pension plans will receive a combined $816 million in funding from various sources. Those include the state ($350 million, which has yet to be approved by the Legislature); private foundations ($366 million); and a private nonprofit corporation to acquire the Detroit Institute of Arts and its assets ($100 million). Also going to the general system, under Detroit’s current plan, is a proposed $675 million in contributions from the Detroit Water and Sewerage Department by 2023, and recouping funds the general retirement system previously contributed into annuity savings for participating city employees. City officials propose to recompute those annuity contributions for 2003 through 2013 to correct for “imprudent and excessive” contributions, and return the difference to the plan. Officials close to the bankruptcy have estimated that proposal alone in the adjustment could recoup $300 million to $400 million. Another $13 million or more could go to the pensions from a proposed settlement the city reached this past week with three insurers of unlimited tax general

obligation bonds. All told, those contributions put a large dent in the unfunded liability of $2.03 billion in the general system and $1.43 billion in the police-fire system, as previously estimated by actuary Milliman Inc. Anthony Randazzo, director of economic research for the Los Angeles-based Reason Foundation, said it’s reasonable the police-fire system could get on track to exceed 80 percent funding, and possible for the general pension to be adequately funded as well, if all those requests are met. But there are many contingencies in that forecast, he said, not all of which are under Detroit’s control. “The performance of the investments for Detroit over the next five years will depend on outside factors, like what happens in the future with the quantitative easing policy by the Federal Reserve,” which is the practice of regulating interest and money supply through government purchases of securities, he said. “Former chairman (Ben) Bernanke has said explicitly that (quantitative easing) has helped a great deal to support the performance of investment products that institutional investors (like pensions/trusts) often invest in.”

If the two pension funds, postbankruptcy, expect at any time to exceed 80 percent funding by 2023 under actuarial projections, the trustees are authorized to increase pension benefits through restorations or cost-of-living adjustments, so long as the increases don’t put the plan back under an 80 percent target. Once given, officials have said, those future increases also cannot be rescinded even if funding levels or market conditions change. The two current pension plans also would be frozen effective June 30 under the city’s proposal, in favor of new defined-benefit plans with different features for active employees. Experts told Crain’s that a freeze could also reduce those plans’ unfunded liabilities since thousands of current employees won’t be accrue any additional benefits under them in the future. The plan of adjustment calls for the general and police-fire pension funds to presume investment rates of 6.25 percent and 6.5 percent, respectively, in computing future liability. In fiscal 2013, the plans reported actual investment returns of 12.23 percent and 18.5 percent. Chad Halcom: (313) 446-6796, chalcom@crain.com. Twitter: @chadhalcom

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

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

Legislation would Molina:HMO plans move to larger HQ extend National Heritage Area designation ■ From Page 1

Legislation has been introduced to extend the MotorCities National Heritage Area designation for the state, which promotes auto tourism and the preservation of historic automotive sites. The original federal legislation that created the heritage area designation in 1998 is set to expire Sept. 30, so the Detroit-based MotorCities National Heritage Area Partnership is working on awareness building. Over the past 15 years, the designation has brought more than $6 million in matching federal dollars through the National Park Service to help fund education, preservation and promotion efforts tied to Southeastern and central Michigan’s automotive and labor history. Without renewal of the designation, ongoing projects like the renovation of the Model T Automotive Heritage Complex and Packard Automotive Plant, both tourist draws, could be at risk, Shawn Pomaville, managing director of the partnership, said Friday. Last week, U.S. Rep. John Dingell and U.S. Sen. Carl Levin introduced companion bills to extend the heritage designation until Sept. 30, 2030. Pomaville sent an email to supporters, asking them to contact their legislative leaders and push for the federal extension. — Sherri Welch

Yu said Molina will have a newhire estimate in about a month. “With new projects coming down the pipeline, like Healthy Michigan Plan and the dual (Medicare and Medicaid) demonstration, we will most likely add more staff in the near future,” Yu said. Healthy Michigan is the state’s new Medicaid program for people at or below 133 percent of the federal poverty level. Eligibility covers a single adult with annual income of $15,000 or less and families of four with annual income below $34,000. Under health care reform, an estimated 320,000 uninsured people will be enrolled in Medicaid this year. By 2021, 470,000 will be covered, said the state Department of Community Health. Stephen Harris, Molina’s Michigan president, said the company projects to add between 25,000 and 30,000 Medicaid members this year. “If we get beyond that, we are prepared,” said Harris. “We are already increasing staffing in health care service areas.” New hires this year will include nurses, social workers and call center employees to answer members’ questions, he said. “Healthy Michigan requires us to schedule new members for a primary care physician visit within a few months of joining the plan. We need to build telephonic models to take care of this,” Harris said. Allan Baumgarten, a Minneapolis-based health researcher who publishes the Michigan Health Market Review, said Molina’s expected hiring makes sense.

“The prospects for growth are very good because Michigan is expanding Medicaid eligibility and the early sign-ups are coming in very quickly,” he said. In terms of enrollment, Detroitbased Meridian Health Plan, United Healthcare Community Plan and Molina are the three largest Medicaid HMOs in the state, Baumgarten said. They are all expected to hire additional employees, he said. Molina could take on tens of thousands of new Medicaid enrollees, Baumgarten said. In 2009, Molina was the state’s largest Medicaid HMO, with about 200,000 members. Meridian, which operated at the time under Health Plan of Michigan, was a close second at 197,000. Since then, however, Meridian has gained about 90,000 members to 290,434, while Molina gained about 12,000 for a total of 212,914 in 2014, said the Michigan Department of Financial and Insurance Services. United is second-largest with 242,185 members. Total enrollment for the 24 Medicaid HMOs in Michigan stands at 1.28 million, said DFIS. Molina’s real estate planning has an eye toward future needs. The late February sale of the building at 880 W. Long Lake was for “north of $10 million,” according to Washington, D.C.-real estate information service CoStar Group Inc. Molina currently occupies 60,000 square feet in the Liberty Center office complex at Big Beaver and Livernois roads in Troy. Farmington Hills-based Friedman Integrated Real Estate Solutions

LLC managed the building on behalf of the previous owner, Miami Beach, Fla.-based special servicer LNR Partners Inc., Lasky said. Glenn DesRosiers, vice president for Friedman, said Molina was originally going to lease four floors at 880 W. Long Lake totaling 120,000 square feet but ended up buying the building instead. Yu said Molina does not plan to lease the unoccupied space to other tenants. Berkemeier said Molina’s new building has been vacant since BBDO North America closed its office there in 2010 and eliminated 450 local jobs when it lost the Chrysler LLC marketing account that year. Molina will be moving to the Troy Corporate Center from 100 W. Big Beaver, a multi-tenant building. Crain’s reported in December that Molina was considering moving to downtown Detroit. Harris said at the time that the company had not yet decided where to move. Opening space downtown, which was discussed among real estate sources late last year, is still on the table, Yu said. “We are considering the option of opening a satellite office in downtown Detroit,” she said. San Diego-based McKinney Advisory Group hired Bloomfield Hillsbased Forum Group LLC to represent Molina locally. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

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 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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CRAIN’S DETROIT BUSINESS

RUMBLINGS Orr: Parking fines hike right thing to do s surely as parking enforcement cars seem to roll up at the exact moment a meter expires in Detroit, the price of parking in the city appears to be on the way up. Last week, we learned Emergency Manager Kevyn Orr officially proposes raising the city’s standard parking fine to $45. For those of you who Orr haven’t been caught at an expired meter lately, the current tab is $20 — $10 if you pay it within 10 days. The $45 fee would also apply to parking in noparking zones, blocking an alley or driveway and other scenarios. The cost of illegally parking in a handicap spot would jump to $150 from $100. And the changes could bring double penalties; if you park at a two-hour meter but stay four hours, you could be ticketed twice. While the proposal awaits a public hearing process, insiders believe the parking fine hikes are pretty much a done deal. Orr could refine his plan based on feedback, but he has the legal authority to make the heftier fines so. Consultants recommended that Orr increase the fines because a $30 parking ticket actually costs the city $32 to issue and process. Orr’s plan of adjustment also points out the city’s current fine schedule is underpriced compared with other large cities. Small business owners say the new fines could hurt business, but are mainly concerned about customers feeling fairly treated. “I say $45 is fine if they also address some of the other issues of fairness,” said Rachel Lutz, owner of the Peacock Room and Emerald boutiques in Midtown. “The meters aren’t well-lit enough or well-maintained enough for people to read them. The city will write tickets at meters that don’t function. They are inconsistent. Some accept coins; some accept cards. The dis-

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play panels vary. I’m youngish with fairly good eyesight, and I have trouble reading some of them.” In Orr’s original plan of adjustment, the EM said that the city projects writing 323,000 parking tickets, booting 2,760 vehicles and raising $11.4 million for the 2013 fiscal year, which ends in June.

WEEK ON THE WEB FROM WWW.CRAINSDETROIT.COM, WEEK OF APRIL 5-11

All this correspondence has led to real estate speculation about whether Compuware will eventually sell, and who some of the interested buyers could be for the modern Campus Martius building. Would Dan Gilbert, whose Quicken Loans Inc. already occupies a big chunk of space in the building, be interested in buying the 15story building to add to his downtown portfolio? Whether it makes sense for Gilbert is something for him and his Bedrock Real Estate Services to figure out. The building, which opened in 2003, was built for $350 million. The new headquarters was seen as an act of good corporate citizenship by company co-founder Peter Karmanos Jr., who retired last year. Bedrock and Compuware declined to comment last week about a possible real estate sale.

State women’s golf group hosts benefit scramble

Compuware building: Scuttlebutt, but no sale.

New chatter over possible Compuware building sale Ever since the takeover battle that was launched in December 2012 between Compuware Corp. and New Yorkbased Elliott Management Corp., there’s been chatter about Compuware’s headquarters building in Detroit. At the time Elliott launched the later-called-off $2.3 billion bid for Compuware, it and other institutional investors, including Sandell Asset Management Corp. of New York, said the company had too much money locked up in headquarters expenses. In November, another investor, Starboard Value LP of New York, wrote to CEO Bob Paul and asked him to sell the building and lease it back as a way to unleash shareholder value.

The Michigan Women’s Golf Association will host its inaugural Legacy Celebration May 19 at the Travis Pointe Country Club in Ann Arbor to honor the game’s leading women. The event will include an 18-hole scramble, lunch, dinner, auction, raffle and awards program. MWGA will honor Shirley Spork, founding member of the Ladies Professional Golf Association; Betty Richart, U.S. Golf Association committee member and Golf Association of Michigan honorary governor; and Mary Fossum, Michigan State University women’s golf team coach. Proceeds of the event benefit the MWGA Girls Golf Program and the collegiate golf teams of MSU, Eastern Michigan University and the University of Michigan. Tickets for the event, which include all the day’s activities, are $150 and can be purchases at mwgolf.org.

Midtown ribbons for Foster Care Awareness Month The Children’s Center and hundreds of volunteers plan to deck Detroit’s Midtown neighborhood in blue ribbons April 29 to recognize Foster Care Awareness Month in May. Ribbons will adorn lampposts, storefronts and trees up and down Woodward Avenue, from Ferry Street through Grand Circus Park. In Michigan, more than 14,000 children are placed in foster care annually, according to The Children’s Center, a nonprofit, which provides foster care services for about 200 children each day.

Judge OKs city’s $85M swaps deal

etroit won permission to pay UBS AG and Bank of America Corp. about $85 million to cancel interest-rate swaps, in a deal that may help the city speed the end of bankruptcy. The settlement, approved by U.S. Bankruptcy Judge Steven Rhodes, yields a payout of $42.5 million apiece Rhodes to UBS and Bank of America’s Merrill Lynch unit to terminate the swaps; Detroit would pay an additional $4.2 million a month until late 2015 to satisfy the balance. In other bankruptcy news: City creditors, led by Financial Guaranty Insurance Co., lined up four tentative bids of as high as $2 billion to purchase all or parts of the Detroit Institute of Arts collection. The creditors asked U.S. Bankruptcy Court to order the city to cooperate with the interested parties. Wayne County wants U.S. Bankruptcy Judge Steven Rhodes to appoint a mediator to return Oakland and Macomb counties to the negotiating table on forming a regional water authority to manage the Detroit Water and Sewerage Department.

ON THE MOVE Toyota Motor Corp. veteran Yoshiaki Kato, 59, was named president of Plymouth-based Aisin Technical Center of America, replacing Takashi Aoyama, who remains senior technical adviser. Jennifer Rass, 42, resigned as senior communications manager of Detroitbased Quicken Loans Inc. Separately, Jennifer Kulczyck, 40, was named vice president of communications for Gilbert’s Rock Ventures LLC and Bedrock Real Estate Services LLC. Jeffrey Brown was terminated as executive director of the Oakland County Community Mental Health Authority. The Detroit Artists Market named Matt Fry, 45, former director of marketing for the Detroit Institute of Arts, as its director. He succeeds Nancy Sizer, who left in March. Fry led marketing at the Walters Art Museum in Baltimore for the past three years.

COMPANY NEWS General Motors Co. plans to invest $449 million at its Detroit-Hamtramck Assembly Plant and Brownstown Battery Assembly to build the nextgeneration Chevrolet Volt and two future vehicles, Automotive News reported. Sterling Heights-based General Dynamics Land Systems is reviewing options after the U.S. Army Materiel Command denied its protest over a bidding process that the company claims favors rival BAE Systems Inc. Farmington Hillsbased Aco Hardware, which in January announced it would transition its stores to Ace Hardware stores, said it would close stores in Dearborn, Saline and Tecumseh rather than convert them. Visteon Corp. announced $800 million in new financing, including a $600 million seven-year loan and $200 million revolving line of credit to pay for bond redemption and other things. Idaho-based US Ecology Inc. announced an agreement to acquire Waynebased EQ — The Environmental Quality Co. for $465 million from New York City-based Kinderhook Industries LLC. Troy-based Talmer Bancorp Inc. announced the sale of its 11 branches in Wisconsin to Town Bank, a subsidiary of Rosemont, Ill.-based Wintrust Financial Corp. Separately, Talmer agreed to sell its branch in Albuquerque, N.M., to New Mexico-based Grants State Bank. Sale prices wern’t disclosed. Ally Financial Inc. raised $2.38 billion in its initial public offering, Bloomberg reported. The stock started trading on the New York Stock Exchange under ALLY. An attorney for Novibased Lotus Bancorp Inc. and Lotus Bank argued in Oakland County Circuit Court that top bank executives, who are being sued for alleged discrimination, had a First Amendment right to send derogatory emails about Asian Indians. Clinton Townshipbased automotive publisher Tweddle Group Inc. announced an equity investment from Los Angeles-based firm The Gores Group LLC, led by Alec Gores, brother of investor and Detroit Pistons owner Tom Gores. Details were not disclosed. Cleveland private equity firm The Riverside Co. bought Southfield-based Diversified Property Solutions. Terms were not disclosed. Novi-based Eberspaecher North America Inc. is in-

vesting $122 million in a five-year expansion plan expected to create 545 jobs. Sterling Heights-based auto supplier Key Safety Systems is close to being bought by Chinese private equity firm FountainVest Partners for $700 million to $800 million, Bloomberg reported. Sweet Lorraine’s Fabulous Mac n’ Cheez will open its fourth location, at Cass and Warren avenues, this summer. The Specialty Medicine Compounding Pharmacy in South Lyon and its owner were fined $100,000 and the pharmacy’s license revoked by the state for distributing tainted dextrose injections. First-quarter revenue for Detroit’s three casinos was down 5.9 percent from a year earlier, but up 13 percent from February 2014, said the Michigan Gaming Control Board.

OTHER NEWS The Michigan Strategic Fund board OK’d $6.8 million from the Michigan Economic Development Corp. for the Michigan Pre-Seed Fund 2.0, supporting high-tech early-stage companies. The fund will be managed by InvestMichigan, a new Detroitbased nonprofit. The Troy City Council authorized an offer of $1.05 million to Grand/Sakwa Properties LLC to reacquire the 2.7-acre Troy Transit Center property after the courts found it had reverted to Grand/Sakwa ownership. The Detroit Blight Authority will no longer focus on structural blight removal, at the request of city officials. Founder and Chairman Bill Pulte said the nonprofit will focus on nonstructural blight removal. Jim Wigginton, managing partner of True North Equity LLC, Birmingham, donated $5 million to the University of Michigan Comprehensive Cancer Center to establish two endowed fellowships supporting thyroid cancer research. The Midtown Viaducts Public Art and Light Project will fund up to $75,000 per project for artists/designers to decorate two Midtown railroad viaducts. Application deadline for the Midtown Detroit Inc.-organized project is April 30. Federal prosecutors said Michael Grundy spent $10,000 on hair plugs, a portion of the $700,000 in kickbacks he accepted when he was assistant Wayne County executive and head of Wayne County HealthChoice, AP reported.

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