Crain's Detroit Business, June 9, 2014 by Crain's Detroit Business

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www.crainsdetroit.com Vol. 30, No. 23

JUNE 9 – 15, 2014

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Page 3 Mt. Pleasant electronics recycler seeks space

Golf grip maker gets ahold of one, as sales take flight Survey finds biz bracing for 7% jump in health care costs CRAIN’S MICHIGAN BUSINESS

Vapor chase: Firms take up the growing e-inhaler habit

Second Stage Salute to Entrepreneurs: The many faces of success, Page 21

This Just In

Three outlet mall plans in battle over anchors

It only takes two signatures to pay out $1 million in state business incentives. Is that ...

Developers take to land, sea, air to woo retailers

Efficient or too little oversight?

Birmingham-based Center Management Services Inc. and CincinCRAIN’S DETROIT BUSINESS nati-based Jeffrey R. Anderson Real There’s not just one new outlet Estate Inc. are developing the Outshopping center planned for metro lets of Southeast Michigan in Detroit — there are three. Chesterfield Township on the east And the race is on to see which side of I-94, north of M-59, on land project will be able to land the retail they purchased four years ago. anchors needed to launch construcAnd Baltimore-based Paragon tion first. COURTESY OF NEW ENGLAND DEVELOPMENT Outlet Partners LLC is under conLast week, Newton, Mass.-based New England Development plans to tract to purchase about 50 acres of New England Development made news build an outlet center near Detroit land in Canton Township at I-275 when it announced plans to con- Metropolitan Airport. and Ford Road for a center totaling struct a 325,000-square-foot outlet 375,000 square feet of retail space. This project is scheduled to open in summer 2016. center in Romulus near Detroit Metropolitan Airport. Although one of the project developers — the airBut outlet center projects are also quietly coming together in two other metro Detroit communities, Canton Township and Chesterfield Township. See Outlets, Page 30

BY SHERRI WELCH

From zero to 20,000 How one man’s vision is bringing thousands to the streets of Detroit. Story on Page 32

Hilfinger leaves MEDC post, returns to Foley & Lardner Michigan Economic Development Corp. COO and Executive Vice President Steve Hilfinger is leaving Friday to return to Foley & Lardner LLP, the law firm he left for an appointment by Gov. Rick Snyder in 2011. Hilfinger, 52, of Beverly Hills, will be in the firm’s Detroit office, where he was managing partHilfinger ner before becoming director of the Department of Licensing and Regulatory Affairs. He moved to the MEDC in December 2012. Hilfinger helped found the Detroit office in 2000, and will be a partner in Foley’s transactional and securities practice. — Chad Halcom

BY CHRIS GAUTZ CAPITOL CORRESPONDENT

ince 2011, more than $65 million in state funds have been awarded to businesses around the state with the signatures of just two individuals — in fact, most business incentives are approved that way. An expedited approval process dubbed “delegated authority” allows Michael Finney, president and CEO of the Michigan Economic Development Corp.; state Treasurer Kevin Clinton or his designee; and Mark Morante, the interim strategic fund manager, to approve incentives Finney of $1 million or less, as long as two of them sign off. A database of Businesses MEDC incentives have been award- approved ed 129 projects since 2011, under delegated crainsdetroit. authority since com/medcdata 2011, compared with 89 projects approved in public meetings by the Michigan Strategic Fund board. “The whole idea is to keep projects moving as efficiently as possible,” Finney said. Delegated authority can shave off a few days to a month of approval time, depending on where it falls between the Strategic Fund board’s monthly meetings. Delegated authority is similar to policies in companies that require fewer signoffs on relatively small-

ON THE WEB

See MEDC Page 31 ANTHONY BARCHOCK

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CRAIN’S DETROIT BUSINESS

MICHIGAN BRIEFS Grand Rapids transit system ponders quicker bus line to GVSU As the Grand Rapids area’s transit system nears completion of the Silver Line (Crain’s, May 12) through the heart of the city, The Rapid is now pursuing a similar bus rapid transit system connecting downtown Grand Rapids and the Grand Valley State University campus in Allendale, the Grand Rapids Business Journal reported. “Once we have the study completed and have that analysis done, then that will determine how things move forward,” Rapid CEO Peter Varga said. The so-called Laker Line is being sold as a better and faster connection between the two areas.

Schuette: Chesapeake Energy lied to landowners on leases Oklahoma City-based Chesapeake Energy Corp., already facing antitrust claims in Michigan over bids on gas exploration rights, was charged with racketeering and fraud for allegedly lying to landowners about leases it took out on their property, Bloomberg News reported. The allegations announced by Michigan Attorney General Bill Schuette follow earlier accusations that the company colluded with a unit of Calgary, Albertabased Encana Corp. to divide the Michigan counties in which they’d

Dow helps remove unwelcome abstract expressionism What would you think if you heard that Dow Chemical Co. was going to help restore a coveted painting? Scrubbing Bubbles? It turns out that research from the Midland-based company had a hand — and a delicate one at that — in the restoration of a Mark Rothko painting, which has been returned to public display at London’s Tate Modern museum. In 2012, Rothko “Black on Maroon” was damaged by graffiti. It took 18 months of conservation work that relied on analytical information from Dow coating material experts to successfully restore it, MLive reported.

Dow experts analyzed ink from the graffiti, then identified possible solvents to clean it. Dow scientists spent two days testing solvents on dried samples of the graffiti ink. “We were able to narrow it down to a small list of solvents and microemulsions for consideration in the Rothko restoration,” Dow scientist Melinda Keefe said in a statement. “We sent this list of solvents to Tate, and their conservation experts added these to the range of options they were testing in order to determine the best possible solution: a blend of benzyl alcohol and ethyl lactate.”

bid for exploration rights in 2010, driving down prices at auction.

ice melted later than usual, delaying work by about two weeks.

Boaters still trying to get their sea legs as winter delays season

MICH-CELLANEOUS

That winter we thought would never end apparently left boaters with a hangover. The Grand Rapids Press reported that orders are stacking up for seasonal dock and lift installations. Some plans to put boats in the water at marinas also have been delayed. Kevin Zoodsma of Action Water Sports in Hudsonville said more people waited longer to prepare for the boating season. Zoodsma said some pushed back plans until after Memorial Day weekend, typically the start of boating season. At River Haven Marina in Grand Haven, owner Dave Lenger said snow and

䡲 DTE Energy Co. is buying one of two Pheasant Run wind parks in Huron County in the Thumb from a subsidiary of NextEra Energy Resources LLC and will rename it Brookfield Wind Park, The Associated Press reported. The park has 44 wind turbines. 䡲 Grand Rapids-based Mercantile Bank Corp. and Alma-based Firstbank Corp. have completed their merger, creating the thirdlargest bank based in Michigan. The merged bank has $2.9 billion in assets and 53 offices in the state. 䡲 Borgess Health President and CEO Paul Spaude plans to retire in September, MiBiz reported.

Spaude, who joined the Kalamazoo-based health system in 2005, said he wants to spend time with his father, who is critically ill. 䡲 Mary Kay VanDriel was named president of the Big Rapids and Reed City hospitals that are part of Grand Rapids-based Spectrum Health System. VanDriel will

䡲 An incorrect date for the Walsh College commencement was given in

the June 2 edition. It is June 21. Also, an incorrect date was given for the retirement of the keynote speaker, Jeffrey Bergeron. He will retire from the Detroit office of Ernst & Young LLP at the end of this month. A past managing partner of the firm, he is currently senior advisory partner. 䡲 A story on Page M28 of the June 2 issue mistakenly reported that Osama Siblani, publisher of The Arab American News, has daughters who were harassed because of political views expressed in that newspaper. Siblani has been harassed for those views, but he does not have daughters.

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replace President Sam Daugherty when he retires June 30. 䡲 Atlanta-based Newell Rubbermaid said it has opened a 40,000square-foot design center in Kalamazoo, which will be staffed by about 100 design professionals when at full capacity, the Grand Rapids Business Journal reported. 䡲 Flint Community Schools plans to lay off 250 employees as part of a $10.4 deficit elimination plan, The Flint Journal reported. No teachers are included in the list. 䡲 Grand Rapids Community College and Grand Valley State University signed an agreement to make it easier for students to transfer between the two institutions, The Associated Press reported.

Muskegon gon n

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Electronics recycler seeks space Plant could create 20-50 local jobs BY KIRK PINHO CRAIN’S DETROIT BUSINESS

An electronics recycling company owned by a former Mt. Pleasant mayor and members of the politically well-known Yob family is trying to open its first recycling plant

in Southeast Michigan. Mt. Pleasant-based 3S International LLC, founded in March 2013, has plans to open a total of six more recycling centers in metropolitan areas in the next 3½ years years after opening a 60,000-square-foot plant in Tinley Park, Ill., about 30 miles southwest of Chicago, according to Gina Yob, vice president of sales and marketing. Yob said 3S — whose name stands for “safe, secure and sustainable” — is considering locations in the tri-county area. It expects to occupy 40,000 to 80,000 square feet and create between 20 and 50 mostly

full-time jobs by the end of the year. She declined to say how large of an investment the local plant would be. The company does not plan new construcYob tion. Finding an existing building for the plant has proven difficult because 3S needs ceilings at least 21 feet high, Yob said. The company has considered for-

mer General Motors Co. buildings now being marketed by the RACER Trust, but their square footages are “way beyond what we need,” she said. In the Michigan plant, there could be two recycling machines, each of which could recycle about 14 million pounds of electronics, which is the current electronics consumption rate of about 6 million people, Yob said. Cellphones, flat-screen TVs, laptop and desktop computers, DVD players, video game consoles and others are among the items 3S can recycle. See Recycler, Page 29

Inside

Atwater wanted to, so now it can — in cans, Page 6 Company index These companies have significant mention in this week’s Crain’s Detroit Business: 3S International . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 ACLU of Michigan . . . . . . . . . . . . . . . . . . . . . . . . . 11

SuperStroke owner Dean Dingman paid $750,000 for the brand in 2009. The business is forecast to post $30 million in revenue this year.

Survey: Biz sees 7% jump in costs for health care

AGS Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . 31 American Iron and Steel Institute . . . . . . . . . . . . . 16 Atlas Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Atwater Brewing . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Avomeen Analytical Services . . . . . . . . . . . . . . . . . 25 Belfor USA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Beyond Gaming of Michigan . . . . . . . . . . . . . . . . . 23 Brewery Vivant . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Cascade Engineering . . . . . . . . . . . . . . . . . . . . . . 17 Center Management Services . . . . . . . . . . . . . . . . . 1 Children’s Hospital of Michigan Foundation . . . . . 10 Chrysler Group . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Detroit Economic Growth . . . . . . . . . . . . . . . . . . . 24 Detroit Lions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

BY JAY GREENE

DiverseNote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

CRAIN’S DETROIT BUSINESS

Domino’s Pizza . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Employers in Southeast Michigan project an acceleration of health care cost increases this year — a 7 percent jump, up from 4 percent in 2013 — as taxes and fees from the Patient Protection and Affordable Care Act add to typical annual inflationary increases in health costs, according to McGraw Wentworth’s Projected increases in 2014 Southeast Michi- employer health care gan Mid-Market costs Group Benefits sur- 2014: 7 percent vey. 2013: 4 percent The cost increases for Southeast Michi- Family gan employers also monthly 11% are higher than na- PPO costs tional projections of 2014: $391 5.2 percent. “We knew that Family changes related to monthly 5% health reform (taxes HMO costs and fees) would add 1 2014: $308 percent to 5 percent” to employer costs this Percentage of premium year, said Becky costs paid by employee McLaughlan, manag- for family PPO coverage ing director at Troy- 2014: 27 percent based McGraw Went2013: 26 percent worth. The Obamacare fees, which began in Percentage of premium small doses last year, costs paid by employee for family HMO coverage were imposed on health insurers and 2014: 25 percent employers to pay for 2013: 27 percent

Dow Chemical . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

subsidies for expanded coverage and create a special fund to protect insurers from losses for covering sicker patients with higher costs in the individual market. Insurance companies passed on these costs to their insured clients and self-insured employers paid the pass-through costs. But McLaughlan said she is surprised that employers, in turn, haven’t passed along the federally mandated fees to employees as much as they

BANKRUPTCIES . . . . . . . . . . . . . . . . . 10

SURVEYING COSTS

JOHN SOBCZAK

Growth takes hold for golf club grip maker SuperStroke sales soar from $700,000 to $15M BY BILL SHEA CRAIN’S DETROIT BUSINESS

olfers, as a breed, are sometimes known to buy the latest gadgets in desperation to shave strokes from their game, while equipment makers come and go. If the weekend duffer sees a PGA Tour pro using something new to win tournaments, odds are that equipment manufacturer will see a payday. That’s held true for Wixom-based SuperStroke, a maker of patented oversized rubber grips for putters. A quarter of PGA players in a given week’s tournament are using SuperStroke grips. Several high-profile PGA Tour victories

and strong finishes by pros using SuperStroke grips have turned owner Dean Dingman’s $750,000 purchase of the brand in 2009 into a business forecast to post revenue of $30 million this year. In 2009, SuperStroke sold 5,000 grips for $700,000. Last year, it sold 1.5 million grips for $15 million. The success has Dingman, the company’s co-owner and president, planning to move into grips for other clubs. SuperStroke isn’t Dingman’s first foray into golf equipment. In the late 1990s, Dingman and his brother, Darin, launched a line of low-priced golf clubs See Grips, Page 33

佢佢

Dragonmead Microbrewery . . . . . . . . . . . . . . . . . . . 6 Driven Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . 33 EOS Worldwide . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Fairpoint Solutions . . . . . . . . . . . . . . . . . . . . . . . . 17 Fresh Corner Café . . . . . . . . . . . . . . . . . . . . . . . . 25 General Motors . . . . . . . . . . . . . . . . . . . . . . . . . . 17 George Matick Chevrolet . . . . . . . . . . . . . . . . . . . 21 GolfWRX.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Hatch Detroit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Impact Management Services . . . . . . . . . . . . . . . . 26 Karp & Associates . . . . . . . . . . . . . . . . . . . . . . . . . 7 LorAnn Oils . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Mackinac Center for Public Policy . . . . . . . . . . . . . 31 Mango Languages . . . . . . . . . . . . . . . . . . . . . . . . 25 Mayser Polymer . . . . . . . . . . . . . . . . . . . . . . . . . . 31 McGraw Wentworth . . . . . . . . . . . . . . . . . . . . . . . . 3 Michigan Economic Development . . . . . . . . . . . . . . 1 Michigan Muslim Community Council . . . . . . . . . . 32 Mister-E-Liquid . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Motus Integrated Technologies . . . . . . . . . . . . . . . 15 Perrigo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Plasan Carbon Composites . . . . . . . . . . . . . . . . . . 17 Prolim Global . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Revolve Detroit . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 RGIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 SuperStroke . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Tomcor North America . . . . . . . . . . . . . . . . . . . . . 17 Victory Electronic Cigarettes . . . . . . . . . . . . . . . . . 11 Wild Bill’s Tobacco . . . . . . . . . . . . . . . . . . . . . . . . 12

Department index BUSINESS DIARY . . . . . . . . . . . . . . . . 28 CALENDAR . . . . . . . . . . . . . . . . . . . . 27 CLASSIFIED ADS . . . . . . . . . . . . . . . . 29 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 8 LETTERS . . . . . . . . . . . . . . . . . . . . . . . 8 MARY KRAMER . . . . . . . . . . . . . . . . . 11 OPINION . . . . . . . . . . . . . . . . . . . . . . . 8 OTHER VOICES . . . . . . . . . . . . . . . . . . 9 PEOPLE . . . . . . . . . . . . . . . . . . . . . . 28

See Survey, Page 30

RUMBLINGS . . . . . . . . . . . . . . . . . . . 34 STAGE TWO STRATEGIES . . . . . . . . . . 26

THIS WEEK @ WWW.CRAINSDETROIT.COM

Just like mother used to make (Yeah, right) Lime poached shrimp on avocado mousse and cilantro, topped with tomato relish is just one of the dishes at four restaurants new to downtown Detroit. View a photo gallery accompanying “Salad, kabobs and small plates” at crainsdetroit.com. ANJANA SCHROEDER/CDB

WEEK ON THE WEB . . . . . . . . . . . . . . 34

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Port Authority eyes Jamian successor by early 2015; jobs will be key priority BY BILL SHEA CRAIN’S DETROIT BUSINESS

The Detroit/Wayne County Port Authority likely won’t have a new executive director in place until Jan. 1, the organization’s board chairman said. Until then, the authority will spend its time concentrating on the summer shipping and tourism season, bringing the five-member board’s two newest members up to speed, and working out what it wants in a new top executive, said Tom Orzechowski, who was elected chairman in May. “We’re kind of a blank slate, and we can craft it,” he said. The authority must replace John Jamian, whose three-year contract ended May 31. Orzechowski said he expected the search to fill the position to begin later this year and wrap up with a hire in place at the start of 2015.

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The port authority’s Public Dock and Passenger Terminal opened in 2011.

by Congress in 1921, has oversight of seaports, airports, bridges, tunnels, trains and bus lines. Orzechowski also said he’d like to start talks with Chevrolet Detroit Belle Isle Grand Prix organizers to re-establish the water taxi service to the island during the race.

Infrastructure New priorities Boosting the authority’s economic development ability so that it creates jobs will be a priority under the next executive director, said Orzechowski, the Algonac-based vice president of the Seafarers International Union’s Lakes and InOrzechowski land Waters District. The union represents U.S. merchant mariners. “We want to develop (the authority) more as an economic engine,” he said. Orzechowski said he wants to see the authority continue its effort to seek legislative permission to finance bond projects away from the riverfront, an issue that has drawn political opposition as a confusing and unnecessary replication of services already available in the city. Such a move would require talks to ensure understanding and cooperation from agencies that have expressed opposition, such as the Detroit Economic Growth Corp., Orzechowski said. The port authority currently is permitted to finance projects related to the port facilities or development along the riverfront. For example, it was the conduit for $43 million in bonds issued in 2004 to aid construction of the Beaubien Place parking garage adjacent to the Renaissance Center. Jamian had said fees generated by bonds would help offset reliance on tax dollars. The nonprofit port lost $643,000 in 2012. Regional transportation cooperation has been an ongoing topic in metro Detroit, and having the authority become part of a transportation hub is something Orzechowski said he wants to explore. “Are we set up for that right now? The answer is probably no, but I think we can get there,” he said. He cited The Port Authority of New York and New Jersey as a successful example of a regional transportation effort. That organization, authorized

Ferry service to Windsor is also

on Orzechowski’s list of topics for the future. So are increasing the number of passenger ships stopping at the authority’s passenger terminal, and attracting more vessels that people come to visit. The authority in recent years completed construction of a $15 million, 21,000-square-foot ship terminal and $7.1 million offshore See Next Page

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June 9, 2014

From Previous Page

Jamian’s departure

wharf to serve cruise ships and other deep-draft vessels in the Detroit River bringing tourists — and their money — to the city. One local logistics insider said a hard, realistic look at authority must be taken by all stakeholders. “There needs to be a major reassessment of the role, if any, that this authority has. What can it do? What should it do? What shouldn’t it do?” said John Taylor, associate professor of supply chain management and chairman of the department of marketing and supply chain management at Wayne State University. “It’s unclear what role it plays in facilitating effective logistics in the region, with the exception of the foreign trade zone activities.” Taylor noted that the actual port facilities are almost all privately owned and operated in Detroit, and that the city isn’t a container port like Los Angeles or New Orleans — meaning it’s going to be limited to largely inland bulk raw materials. New port authority board member Lorron James, vice president of Detroit-based logistics firm James Group International, was appointed by Duggan in April. He said the pending construction of a second Detroit River bridge could be a catalyst for increasing raw material shipping to the city’s ports, and new riverfront development. “With the new bridge, we can finally talk about bringing in more material to our ports,” said James, a 2011 Crain’s 20 in their 20s honoree. “There is a lot of waterfront property that we can revitalize.” Helping to get a long-discussed $400 million modern rail tunnel built between Detroit and Windsor James also should be a future port authority goal, James said. Another ongoing issue for the authority that James said is a concern of his is getting Michigan environmental law governing ballasts for oceangoing cargo ships relaxed to match the rules in Ontario and other Great Lakes states. The rule prompts vessels to unload in Toledo and Windsor rather than Detroit, in an attempt to limit any waterborne invasive species in Michigan waters. Easing the law would mean 40 or 50 additional ships would ply Michigan’s ports, Jamian has long said. Changing the law to match other ports would mean more steel delivered in Detroit, and more farm products exported by ship, James said. “More steel in and more grain out,” he said. The other new board member is Jonathan Kinloch, appointed by Mayor Mike Duggan in April. Kinloch is an at-large Detroit Public Schools Board of Education member and serves on the executive committees for the Detroit branch of the NAACP and the Michigan Democratic Party. The port authority board comprises two members appointed by the mayor of Detroit, two appointed by the Wayne County Commission and one by the governor. The board hires the executive director.

Jamian, a former state legislator and state and federal official, said he’s leaving to work in maritime education. His 2011-14 stint running the authority, which is charged with economic development on the Detroit River waterfront and oversight of the city’s commercial trade port, was his second. Jamian was paid $145,000/year for each year of the contract. “John’s departure is almost mutual in a sense. He was moving on to some other things. We as a board can’t force him to stay. If anything, it was mutual,” Orzechowski said. Deputy Director Kyle Burleson, the acting director in the interim, deferred questions to Orzechowski. The authority bills itself as “the primary public conduit between

private sector businesses in the Port of Detroit and the public sector. In this role, the Port Authority offers assistance in capital finance, development, applications and disbursement of public sector and foundation grant programs.” According to port authority statistics, companies contractually use its privately managed port facilities and terminals to manage 17 million tons of cargo annually. The authority’s fiscal year 2014 budget is about $1 million. Thirty-one companies operate at the 29 terminals overseen by the authority. The authority owns the city’s only general cargo terminal. The port stores about one-sixth of the nation’s aluminum supply in 1,000-pound ingot bars housed in bonded warehouses — taking advantage of the port being the

Page 5

DETROIT/WAYNE COUNTY PORT AUTHORITY BOARD MEMBERS The Detroit/Wayne County Port Authority board is composed of two members appointed by the mayor of Detroit, two appointed by the Wayne County Commission and one by the governor. The members are: 䡲 Tom Orzechowski, the chairman of the authority board and Algonacbased vice president of the Seafarers International Union’s Lakes and Inland Waters District. He was appointed by the county. 䡲 Alisha Bell, a Wayne County commissioner since 2002. Appointed by the county. 䡲 Lorron James, vice president of Detroit-based logistics firm James Group International. Appointed by Mayor Mike Duggan. 䡲 Jonathan Kinloch, an at-large Detroit Public Schools’ Board of Education member. Appointed by Duggan. 䡲 Frederick Hoffman, a former Chrysler executive and state official now of counsel in Clark Hill PLC’s Detroit office. Appointed by Gov. Rick Snyder.

largest U.S. free-trade zone. The port authority was created by the Legislature in 1978 to replace the Detroit Wayne County Port District. The authority’s next meet-

ing is 9 a.m. Monday at its offices at 130 E. Atwater St. Bill Shea: (313) 446-1626, bshea@crain.com. Twitter: @bill_shea19

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A month ago, Atwater began canning its Dirty Blonde, Grand Circus IPA and Atwater Lager at the contract-brewery Brew Detroit LLC in Corktown.

This is the first time since 1985, when Stroh Brewery closed its 135year-old location, that beer is being packaged in cans in Detroit, according to Rieth. “You miss out on 30 percent of the market when you only sell bottle or draft,” he said. While not fully embraced by all, cans have advantages such as better portability and fewer restrictions (such as parks or other venues that do not allow glass.) While consumer demand was a major reason, another motivator is a longer-term goal to bring the culture of Detroit across the country. “For us, from a can standpoint, our ad says: ‘It’s a craft beer you can totally shotgun,’ ” Rieth said. Atwater plans to add three more

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beers to the can family in the first quarter of 2015. Final decisions have not yet been made, but Rieth said there’s a strong chance the Vanilla Java Porter will be released in a 16-ounce four-pack, and the DLight, a beer with qualities both of ale and lager, in 19-ounce cans. But not everyone is convinced. Larry Channell, co-owner of Dragonmead Microbrewery LC in Warren, said although cans are more portable and may protect your beer, they have a stigma in the industry. “When I see a can, my brain tells me, ‘Well, that’s cheap,’ ” Channell said. “It tastes wrong to me.” Brewery Vivant LLC in Grand Rapids would disagree. Ben Darcie, brewery representative and sales manager, said there are two enemies to beer — oxygen and light — and cans eliminate both. Darcie said it’s also one-third cheaper to can products than to bottle them, and Vivant has enough flexibility with canning to release 14 different brands of beer this year. He said he believes canning is the future for Michigan and Detroit beer, now that big players like Founders Brewing Co. and Bell’s Brewery Inc. are releasing their top sellers in cans. “It’s inevitable,” Darcie said. Atwater is being sold in 18 states, with plans for breweries to be built in Texas and North Carolina in the next five years. Rieth said he doesn’t want Atwater to be everywhere, though. “We just want to be everywhere that makes sense for us. Areas that are thriving,” he said. “But Detroit is priority.” International market growth is another focus area: A bar in Munich carries Atwater on tap, and Rieth has been in talks to get Atwater into Canada and Australia. Rieth said he would like sales to be 20-25 percent exports. In about 60 days, Rieth expects to be granted a license to produce spirits in a micro-distillery at Atwater’s 237 Jos. Campau location. First on the still list is Dirty Blonde Vodka. Rieth said he wants to start with clear spirits first and then move on to darker, more aged spirits. By early October, patrons will be able to buy Atwater spirits at the Detroit distillery; Rieth said the company hopes to add store distribution in the future. Atwater is in its 10th consecutive year of record sales, and is on track to gross $10 million this year with 60,000 barrels of beer, Rieth said. The company reported 2013 revenue of $4 million.

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IS YOUR CURRENT F A B R I C AT O R

Financing secured; former United Way building to be offices, lofts by 2015 BY KIRK PINHO CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

The redevelopment of the former United Way building in Capitol Park is expected to be completed by the end of the year now that the developer secured $38.5 million in federal, state and private financing. The 126,000-square-foot building at 1212 Griswold St. will be turned into new office space for 185 Archdiocese of Detroit employees and 56 loft-style apartment units. Financing for the project came from federal New Markets and historic tax credits; state historic and brownfield tax credits; Beechwood, Ohio-based Liberty Bank NA; Chase Bank; J.P. Morgan Chase; the Chicago-based Urban Partnership Bank; the Chicago-based National Community Investment Fund; Invest Detroit; and Lansing-based Develop Michigan Inc., said Richard Karp, principal of Lansing-based Karp and Associates LLC, one of the developers of the project. Karp said units will range from 500 to 1,300 square feet. Rental rates wonâ&#x20AC;&#x2122;t be known until the fall, but he expects them to rent for about $1.95 per square foot. Most of the units will have one bedroom, but there will also be two- and three-bedroom units, he said. The development group for the project, Capitol Park Partnership, includes Karp; Kevin Prater, owner of Lansing-based Prater Development Ltd.; and Richard Hosey III, a former senior vice president for Bank of America who is now the owner of Detroit-based Hosey Development LLC. Lansing-based Buildtech Ltd., owned by Karp, is the general contractor on the project. The Downtown Detroit Partnershipâ&#x20AC;&#x2122;s Live Downtown Program will provide financial incentives to employees of several companies to move into the former United Way building, according to the release. The Downtown Development Authority purchased the former United Way building for $1.75 million and the 72,000-square-foot Capitol Park Building at 1145 Griswold, according to Washington, D.C.-based real estate information service CoStar Group Inc. Capitol Park Partnership owns the former United Way building, Karp said. The DDA still owns the Capitol Park Building, but Capitol Park Partnership has development agreements on that building and the 110,000-square-foot Farwell Building at 1249 Griswold, which was purchased by the Michigan Land Bank in 2009 for $3.3 million. The DDA approved the development agreement for the three buildings in 2012. â&#x20AC;&#x153;This is probably the fastest public/private partnership development in Detroit in the last 40 years,â&#x20AC;? Karp said. Demolition and abatement began this month at the Capitol Park Building to turn it into retail/office space and 63 loft-style apartments. The Farwell Building will be redeveloped to feature first-

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The former United Way building, at 1212 Griswold St. in Capitol Park, will be turned into office space for the Archdiocese of Detroit and 56 loft-style apartments.

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year that it is moving into the former United Way building from the Gabriel Richard Building at 305 Michigan Ave. and the Chancery Building at 1234 Washington Blvd. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB

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CRAIN’S DETROIT BUSINESS

LETTERS

OPINION

Port future needs careful planning T

he Detroit/Wayne County Port Authority is taking a few months before choosing a successor to Executive Director John Jamian, who left when his contract expired last month, and maybe that’s wise. (See story, Page 4.) The port wants to be an economic engine for the region, but it faces obstacles, primarily lack of funding, that require consideration and definition before launching a search for a new executive director. One source of funding the port has sought in the past is legislation that would have given it added bonding authority — along with the ability to collect developer fees on bond issues — in competition with the Detroit Economic Growth Corp. That bonding authority would have included bonds for projects away from the waterfront. The goal was worthy: Jamian was seeking financial selfsufficiency for the nonprofit port, which lost $643,000 in 2012, according to its Form 990 filed with the IRS. But the move came as a surprise to the DEGC and others, and seemed destined to be moving money from one local pocket to another rather than create more economic value. New board Chairman Tom Orzechowski still hopes for such legislation to be passed and says he understands that talks are needed before proceeding. We applaud that thought, but remain unconvinced such legislation is a good idea. Although we’re not in favor of fiefdoms for their own sake, there’s nothing to be gained from duplicative efforts or situations that potentially could have a developer pitting the port against the DEGC. Strong, responsive, coordinated economic development efforts are what we need.

Persistence brings conference It’s easy to think a single person can’t make a difference, but, as Senior Reporter Sherri Welch reports on Page 32, that’s not always true. The Islamic Society of North America’s national convention, which draws around 20,000 people, is coming to Detroit this year because med student Syed Mohiuddin looked out his window and thought the streets were too empty. That led to a four-year personal journey of false starts, volunteering and community building that led to the merger of the two major local Islamic organizations. That merger, along with improving conditions in the city, created the infrastructure to win a bid for the 2014 convention last year. Mohiuddin allows that he had no idea the effort would take this long or that he would become so involved. But he kept pushing, and in so doing, has left his mark.

Top execs’ high pay not deserved Editor: When I saw the May 19 headline “Highest-paid execs earned their keep,” I had to double-check the date of the issue; I thought it might be April 1. What a joke! It would be interesting to see the compensation figures for midlevel executives and nonexecutives employed at these same companies. How much did their compensation increase in the past year — if at all? A generous 3 percent? This article only confirms that senior executives’ compensation has spiraled out of control. The fact that a company’s stock price increased from Dec. 31, 2012, to Dec. 31 2013, is only significant to shareholders who sold their stock that day. Stock prices reflect the market’s perception of value at a particular moment in time — which often is based on the general economy, world events and emotions like the so-called “irrational exuberance.” It bears little correlation to CEO and seniorexecutive performance. What shareholders really value are dividends. However, dividends and lower-level employees are usually the first things cut when a company fails to perform. Meanwhile, the CEO flies away on the platinum parachute given by the board when he or she first took the job. The opinions of so-called executive compensation experts are hardly a proper gauge. Their opinions are bought and paid for by corporate boards made up entirely of C-suite club members who all pledge “I’ll vote for your package if you’ll vote for mine.” These compensation experts are well paid to slice and dice data collected from other companies who overpay their senior executives to conclude that these multimillion-dollar compensation packages are somehow appropriate. If the executive compensation company actually told a CEO the

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 truth, that he or she was grossly overpaid, it would be fired immediately. And, by the way, has anyone noticed that board members’ compensation has risen dramatically as well? This is not a coincidence. If the folks who really mattered — shareholders and customers — decided senior executive compensation, the numbers would look very different. Suggesting that such extravagant compensation is necessary to attract the best and the brightest is ridiculous. Most of these companies already employ the best and the brightest — the midlevel executives and nonexecutive employees who actually run the companies day to day. I’ll bet every one of the listed executives is whining that an increase in the minimum wage will destroy jobs and complaining about the cost of having to provide decent health insurance under the Affordable Care Act. Rather than increasing the minimum hourly wage to $10.10, perhaps the law should be that the lowest-paid worker must make at least 10 percent of what the CEO makes. What disease did any of these execs cure last year? What lifesaving technology did any of them personally invent? What major money-saving or moneymaking idea did they alone come up with and implement at their company? Arianna Huffington said it best

If the folks who “really mattered –

shareholders and customers – decided senior executive compensation, the numbers would look very different.

”

when she wrote Pigs at the Trough. Maureen Thomas White Lake

Don’t overlook Armenians’ role Editor: I read with great delight Bill Shea’s article “Built by immigrants: Foreign-born workers integral part of Detroit’s history, economy” in the June 2 issue. Many ethnicities were mentioned in Bill’s article, but I would like to bring attention to one important ethnic group that made some valuable contributions to Detroit — the Armenians. One of the most well-known and diverse communities in southwestern Detroit from approximately 1900-1960 was Delray. This community was a bit of a melting pot for many ethnic groups; probably most prominent were the Hungarians and Armenians. Before 1900, there were fewer than 60 Armenians living in Detroit, but after the Armenian genocide of 1915, in which more than 1.5 million Armenians were massacred by the Turkish Ottoman Empire government, this number rose to more than 2,000. The number of Armenians living in Detroit grew with each passing year. The Armenians spread into other neighborhoods, such as Highland Park, Dearborn and Pontiac, and, in the process, played an important role in the growth of the Detroit community contributing a great deal to the small-business community. As Mr. Shea’s article mentioned, the $5 work day created by Henry Ford was also a major attraction to the Armenians. They settled on streets such as Solvay Street, where rail cars would stop and the conductor would announce its arrival to “Armenian Boulevard.” Eventually, the Armenian population rose to more than 30,00040,000 dispersed throughout Detroit and the suburbs. Bravo to Crain’s and Bill Shea for recognizing the importance of the many ethnic groups that helped shape the metro Detroit area. Ara Topouzian Farmington Hills

KEITH CRAIN: Let’s keep the momentum going in Detroit Kudos to Roger Penske, Bud Denker and the entire Penske organization for putting on the Chevrolet Belle Isle Grand Prix. It was great if you were there, but more importantly, it looked magnificent to the millions of viewers who saw Detroit on television. Once again, an automotive event generated Super Bowl-like economic development for the city and region. Last week, the Detroit City Council voted unanimously in favor of the Detroit Institute of Arts to agree to create a trust for the jewels of our city, the art of the

DIA. There is a lot going on in our city and our community. There is a lot more optimism going on in our city. Some of it is deserved; some of it is simply hope for the future. The stock market usually performs based on future expectations. All of us who live and work in Southeast Michigan have that same optimism for our city and our region. There are still plenty of prob-

lems. There are still plenty of hurdles, but there is a real feeling that we’re going to get this done. The leaders of our state and community are getting it done and done right. There is, regardless of the political affiliation, lots of cooperation among politicians to do the right thing. In an era of political bickering, that is a very remarkable occurrence. Cooperation. Optimism.

Those are two words that we haven’t heard in a very long time. But it’s real and it is happening. Sure, it is very fragile. But it exists and it’s real. Now it’s up to all of us to make sure it grows. The next time you hear a naysayer, just tell them that they are wrong. There is a silver lining. We are attacking the blight, and we are lighting up the city, one light at a time. We are seeing new businesses, big and small, opening in our city. People, young people mainly, are moving into the center of the city, and you can’t find an

apartment or a loft to rent or buy. It is just a beginning, but it is a beginning. Every journey starts with a step and Detroit is making big steps forward. Building blocks that will turn this city back into the thriving metropolis it once was. We need more jobs. We need more public safety. But we have a beginning. That’s truly quite remarkable. Detroit is on a roll. Let’s all do whatever it takes to keep it on that roll. It is all very exciting.

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OTHER VOICES: Age diversity makes for better workplaces Throughout my caoverlap, and we must encourage Those in today’s reer, it has never ocall ages to cross paths in the workyounger generation bring curred to me to expect place, share skill sets and apprecito the workplace a permy superiors to be older ate what each generation offers, spective that they want than I am, and those that rather than butting heads just bewhat they do every day to I manage to be younger. cause we do things differently. mean something to them. Apparently, I’m unique All the skills and talents and They don’t want to go to in that regard because years of experience we bring to work and punch a clock many people expect the each position can truly be for and stay at a desk for workplace hierarchy to everyone’s benefit — and boost the eight hours and not care reflect years of hard-won bottom line. Let’s capitalize on the what they’re doing all for the wisdom they can get from ceived generational gaps. Tara Miceli seniority, with the eldest day. They want to make colleagues and superiors. They Our workplaces today are a mix strengths of this new working parstaff members in top positions an impact. want knowledge; they want men- of generations, with more retirees adigm, for the sake of corporate and their younger counterparts One of the biggest myths is that tors. Yes, they may bring ad- realizing they might want to start America and so we can build a betfuriously climbing the corpopeople in this generation doesn’t vanced technological skills and a new career or may have to stay ter economic future for all. rate ladder beneath them. Tara Miceli is director of the respect generations that came be- wisdom, but they are eager to in the workplace longer than I’ve been in my current posifore them. Actually, they hunger learn and want to bridge any per- planned. Generations are going to Walsh Institute at Walsh College. tion for nearly three years, working alongside (and managing) employees who are older than I am. We work well together — despite the fact that they are all more than a decade my senior. It just doesn’t occur to me that this is exceptional because I’ve always been in positions where employees are older and it just never seemed to matter. We’re seeing that more and more nowadays, with a workplace that looks a lot different than workplaces of yore. In many companies, you’ll see up to four different generations on the clock at the same time. When I was 21 and managing a loan department and investment programs for a credit union, I had to learn that age shouldn’t matter — and really it doesn’t. When you sit in front of a woman in her 50s and tell her she’s denied a loan, you quickly learn the art of corporate finesse. Business is person to person, not one age over another. Over time, I’ve learned the most important workplace lesson: how to deal with people, understanding their needs in the business world and what they require from their work. I’ve also learned that workplace needs don’t overshadow personal desires, and that the art of managing others comes from seeing the whole person and bringing the appropriate compassion to the task at hand. It’s never about coming in When John talked to FirstMerit Bank’s Treasury Management team, his goal and telling people what to do. I don’t care what age you are, or was to increase his company’s working capital. Together, they came up with a what position, you’ll never be successful if that’s your applan to help John effectively manage receivables, control payments, and improve proach. his company’s overall cash flow. Now John has all the tools he needs to keep his I was never intimidated by the fact that my entire team is business moving in the right direction — forward. older than I am. And I hope the team doesn’t see immaturity in my younger age. How we perform on the job has more to do with who we are as people than what age we project. Throughout many different leadership and management experiences, I’ve learned that the manager’s top job is realizing what somebody’s talents are, what they’re good at, and havTO L E A R N MOR E, C O N T A C T : ing the right people in the right PJ Danhoff, Treasury Management Sales Officer, seats, regardless of age. at 248-228-1706 or pj.danhoff@firstmerit.com. It’s also imperative to learn about what’s important to each Follow the latest market trends firstmerit.com generation. They’re all differ@firstmerit_mkt ent, and so are the mentalities Member FDIC shaped by what people have 2411_FM14 lived through.

Let’s capitalize on the strengths of this “new working paradigm, for the sake of

corporate America and so we can build a better economic future for all.

”

Keep your business heading in the right direction.

Treasury Management from FirstMerit Bank

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June 9, 2014

Children’s Hospital foundation seeks input to broaden impact BY SHERRI WELCH CRAIN’S DETROIT BUSINESS

Children’s Hospital of Michigan Foundation’s roots go back a decade, but in a way, the foundation is still in startup mode. Since beginning fully independent operation in 2011, following the 2010 sale of Detroit Medical Center to what was then Vanguard Health Systems Inc., the foundation has launched a formal biannual grant-making program and a campaign to support new areas of pediatric health care and research, hiring new fundraisers to help re-establish connections with donors after losing many amid the DMC sale. The foundation inherited $90 million in charitable assets raised for DMC Children’s Hospital of Michigan following the sale of DMC and its conversion to a for-profit health system. It made $16.3 million in grants between 2011 and 2013 in three pediatric focus areas stemming from the original donor intent behind those assets: research, community benefit and education on things such as new pediatric procedures. The grants have gone primarily to researchers and physicians associated with Children’s Hospital and Wayne State University. But the foundation is also looking to carve out a new identity in order to have the greatest impact, said Chairman David Page, partner at Honigman Miller Schwartz and Cohn LLP in Detroit. “We felt if we were simply to steward the assets we were given, it would be good,” he said. “But getting contributions from the community for other things benefiting children would be even better.” “We have to figure out where’s the best place to put our next $100 million,” Page said. To that end, the foundation is seeking input from physicians, researchers and administration at DMC Children’s Hospital of Michigan, which remains its home base, and others in the community such as foundations making grants in health care and school-based health centers, said

BANKRUPTCIES The following businesses filed for protection in U.S. Bankruptcy Court in Detroit May 30-June 6. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation. Marty M. Powell DDS PC, 14356 E. Jefferson Ave., Detroit, voluntary Chapter 7. Assets: $271,524; liabilities: $442,724.47. Palushi Inc, 12033 Grand River Ave., Detroit, voluntary Chapter 11. Assets: $12,348.65; liabilities: $151,524.72. Summit Mobility Products Inc, 24711 Sherwood Ave., Center Line, voluntary Chapter 7. Assets: $0; liabilities not available. — Natalie Broda

In my mind, the foundation “ has to be relevant to community needs as well as donors’ wishes.

”

Tony Werner, Children’s Hospital of Michigan Foundation

foundation President and CEO Tony Werner. “In my mind, the foundation has to be relevant to community needs as well as donors’ wishes,” he said. Werner joined the foundation in early 2013 after spending a decade as president of three foundations that benefited Toledo, Ohio, hospitals: Mercy Children’s Hospital Foundation, Mercy St. Vincent Foundation and St. Marguerite d’Youville Foundation II. Much of the $90 million in assets the foundation inherited were restricted or designated for specific programs. Securing new, unrestricted support will give the foundation’s board the flexibility to make grants in new pediatric areas where the needs are greatest, Werner said. To rebuild its fundraising team,

which was largely depleted amid the DMC sale, the foundation has hired four fundraisers, giving it about a dozen, among 19 total employees. As of the end of May, the foundation had $108 million in assets, Werner said. It’s taking grant solicitations only from pediatric physicians and researchers at Children’s Hospital or community organizations that work collaboratively with the hospital. The foundation considered changing its name, but the Children’s Hospital of Michigan Foundation name is so well known that the board decided against it, Page said. Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch

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

CRAIN’S MICHIGAN BUSINESS Mary Kramer

Biz leads way to strike down discrimination

Retail sales of e-cigarettes reached about $3.5 billion worldwide last year — barely a puff of the total $756 billion market still dominated by tobacco.

Companies take in revenue as e-inhalers gain in popularity BY MATTHEW GRYCZAN CRAIN’S MICHIGAN BUSINESS

Daniel Lawitzke, a Grand Rapids entrepreneur who pioneered the retail market in vaping liquids and devices in West Michigan, likens it to the rush to the marketplace by dietary supplements in the 1990s, when “antioxidants” became a household word — followed by the need for the U.S. Food and

Drug Administration to step in with regulations. Instead of smoking “analog” cigarettes that contain hundreds of chemicals resulting from the combustion of tobacco, people are inhaling a vapor of vegetable glycerin and propylene glycol, flavorings and nicotine. To produce the vapor as they inhale, users activate a device that generally has a battery-powered heating element surrounding a wick saturated with the e-liquid. O OT PH

hances are good that by this time next year you will have firsthand contact with someone who vapes — uses an electronic inhaler that simulates the act of smoking. And when you observe the thick cloud of vapor emanating from that person’s mouth instead of smoke, you may be witnessing the biggest single play in consumable products that some industry executives say is a once-in-alifetime opportunity. “In my career, there has not been a

sector that has so much potential and is so untapped in terms of value and global reach,” said Jim McCormick, CFO of Victory Electronic Cigarettes Corp. (OTCQB: ECIG), a West Michigan company that aims to be the nation’s largest independent producer of vaping products.

CK TO IS

When advocates for ending discrimination based on sexual preference plotted strategy, they knew they needed powerful business allies. They found them in politically conservative West Michigan. Office furniture makers Steelcase Inc. of Grand Rapids and Zeeland-based Herman Miller Inc., Battle Creek-based Kellogg Co. and Holland-based Padnos, a scrap metal processing and recycling company, are among those that signed on early to the Michigan Competitive Workforce Coalition. The group, formed by the Michigan chapter of the American Civil Liberties Union, is lobbying the Legislature to amend Michigan’s 1976 Elliott-Larsen Civil Rights Act to include protections for lesbian, gay, bisexual and transgender residents, commonly known as LGBT. The Legislature, prodded by Gov. Rick Snyder, may take up the issue this year. Elliott-Larsen protects residents from discrimination in employment, housing, education or “public accommodations” based on religion, race, color, national origin, age, sex or marital status. The Michigan ACLU opened an office in Grand Rapids nearly five years ago. “We wondered: Would ACLU be welcome? What issues were on people’s minds?” Executive Director Kary Moss recalled last week. To her surprise, in interviews with community and business leaders, three issues arose: LGBT rights, racial profiling and religious freedom. Ironically, some base opposition to LGBT rights on religious freedom. If Elliott-Larsen is amended, it means a restaurateur whose religion doesn’t condone homosexuality can’t refuse to serve gay customers or fire a waitress because he discovers she is a lesbian. Employers see LGBT rights as a talent issue. If they want the best, they need to be open to all. Coalition members include Blue Cross Blue Shield of Michigan, Chrysler Group LLC, Consumers Energy, Dow Chemical Co. and Strategic Staffing Solutions. So is this the first step toward legislative action to legalize gay marriage in Michigan? The two are not connected, Moss said. But it’s hard to see how they aren’t linked. In 2004, Michigan voters approved a constitutional amendment banning same-sex marriage and civil unions. But a federal judge struck that down in March, briefly opening the door to more than 300 gay marriages before an injunction was filed. Opponents of gay marriage say Michigan voters’ preferences should be protected. But public attitudes on gay issues have evolved. National polling shows a 70 percent approval rating of gay marriage among people ages 18-39. It will be interesting to see whether employers support gay marriage as strongly as the LGBT protections.

Rising with the vapors

See Vapor, Page 12

Nunica, Mich.-based Victory Electronic Cigarettes has grown through acquisition and now plans to raise $149.5 million in a public sale of stock. JON BROUWER

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CRAIN’S MICHIGAN BUSINESS

Vapor: Where there’s smoke, there’s fired-up entrepreneurs ■ From Page 11

Lawitzke, who launched MisterE-Liquid LLC in the summer of 2010 after he was able to quit smoking through vaping, now employs 43 full- and part-time people at a 16,000-square-foot laboratory and two retail outlets in Grand Rapids, with plans to open a third store in Lansing this month. Brick-and-mortar outlets such as Lawitzke’s that are springing up throughout Michigan are only a wisp of the industry’s vapor cloud. More than a thousand businesses worldwide hope to strike it rich as

suppliers to people who vape, ranging from gargantuan corporations such as Altria Group Inc. and Lorillard Inc. to tiny operations with whimsical names such as Planet of the Vapes that sell e-liquids online. Some mom-and-pop operations literally whip up their e-liquid formulas in kitchens, garages and basements. Wild Bill’s Tobacco, a Clawsonbased owner of 21 tobacco specialty stores and franchiser or business partner in an additional 29 such stores throughout Michigan,

is shifting gears to capture market share in vaping. The company, founded in 1994 as the Smoker’s Outlet, has launched two stores called Mr. Vapor that cater specifically to the vaping consumer, said Wild Bill’s chief marketing officer, Justin Samona. Over the next year, Wild Bill’s hopes to open 10 additional Mr. Vapor stores, mostly in the Detroit area. In addition, all Wild Bill’s stores now have Mr. Vapor sections, which offer a variety of products and “gourmet juice bars”

that allow store personnel to mix customized e-liquid blends for customers. “Every day, customers are switching over from tobacco cigarettes to electronic cigaSamona rettes because they see it as a healthier alternative — also a cheaper and cleaner alternative,” Samona said. “In-

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stead of having to go outside to smoke a cigarette — especially when it is cold — it is something they can do inside their homes and maybe even their workplaces.” One website lists more than 180 retail outlets in metro Detroit as selling vaping products. Samona said his company is slowing down expansion of the Wild Bill’s concept and focusing more on Mr. Vapor, a move that also serves to protect existing Wild Bill’s locations from losing customers to other vape shops. A Mr. Vapor shop may carry three times the selection of e-cigarettes, disposables, starter kits and e-liquids that a Wild Bill’s carries, he said. The company employs about 120 people throughout its chain of stores and at its 15,000-square-foot distribution center in Clawson. Other companies such as LorAnn Oils Inc. in Lansing are being swept up unintentionally by the vaping revolution. LorAnn, established in 1962, is an old-line manufacturer and distributor of flavorings and essential oils used by home crafters and professionals who make candy, baked goods, frozen desserts and soaps. But several vaping websites recommend LorAnn Oils flavorings for e-liquids, even offering a color-coded list of those best for inhalation. “We are in a bit of a quandary,” said John Grettenberger Jr., grandson of LorAnn Oils founder O.K. Grettenberger. “Our flavoring products are FDA-approved for ingestion, and no one knows the result of them being used for inhalation. We would never suggest that our products be used this way, and we wouldn’t even think about going after this market.”

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Victory Electronic Cigarettes has embarked on a go-big-or-gohome strategy that its president, Brent Willis, likens to a military campaign. The West Point graduate even invokes the name of the legendary war strategist Carl von Clausewitz when he talks about growing share in the vaping market. “In his study of war, Clausewitz talked about the ability of maneuver — for us, that means speed, moving faster than the competition,” Willis said. “You have to do the right thing — and you have to do the right thing at the right time.” Doing the right thing at the right time has placed Victory Electronic on a tear when it comes to acquiring other businesses. It has concluded three acquisitions of companies this year, and Willis said the company has agreed on terms to purchase seven more companies or distribution platforms in 2014 to further consolidate its sales and distribution channels. Last month, Victory Electronic filed its federal S-1 registration for the public sale of stock to raise up to $149.5 million. “So we have gone from zero in mid-2013 to about $75 million in revenues on a pro forma basis, and we See Next Page

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expect to be well over $200 million in revenues by the end of this year,” Willis said in an interview before the company filed its S-1 registration. Pro forma statements filed in the S-1 showed a net loss from operations of about $12.7 million. The company intends to change its name to Electronic Cigarettes International Group Ltd. to match its ticker symbol, but the new moniker also reflects its worldwide sales strategy. Victory Electronic purchased Atlanta-based FIN Electronic Cigarette Corp. Inc. in February, United Kingdom-based Vapestick Holdings Ltd. in January and Must Have Limited in April. Willis intends to put his international experience as a former executive for the Coca Cola Co., Kraft Foods Inc., Cott Corp. and InBev to work opening the international markets for Victory Electronic Cigarettes.

Big plans from a small space To say that Victory Electronic is flying below the radar is an understatement: The company shares space with a woodworking business owned by Willis’ father-inlaw in rural Nunica, about 26 miles east of Grand Rapids. A towering grain elevator and parked semis of a nearby business overshadow the parking lot of Versatile Wood Solutions, a manufacturer of

JON BROUWER

Brent Willis, president of Victory Electronic Cigarettes, has big ambitions — more than $200 million in revenue by year’s end — for a company that currently operates out of space it shares with a woodworking business.

store displays and architectural millwork. No sign marks the fact that Victory Electronic Cigarettes is operating in about 3,000 square feet at the plant.

“Every penny counts,” Willis said with a grin when asked about the humble surroundings that serve as the nerve center for Victory Electronic. The company employs more than 100 people locally

and at offices and distribution centers in Atlanta and the United Kingdom. What is quickly thinning the crowd among vaping competitors is access to distribution through convenience stores and mass merchandisers such as Wal-Mart Stores Inc. and Rite Aid Corp., which serve a majority of the 1.3 billion people who the American Cancer Society estimates smoke worldwide. “Retailers are already making (vaping) space for the big tobacco guys — Lorillard, Reynolds and Altria,” Willis said. “But the big tobacco companies have some real weaknesses that we can exploit.” Brand, price and flavor selection aren’t the biggest factors when it comes to consumers making purchasing decisions at this point, he said. “Right now, 65 percent of all brand choice today is made on what’s there, what’s available, what’s on display,” Willis said. With the recent acquisitions, Victory Electronic sells its products through more than 50,000 retail outlets in the United States and Europe, which together make up an estimated 70 percent of e-cigarette sales worldwide, according to estimates from Euromonitor International, a London-based provider of global business intelligence. Euromonitor estimated that retail sales of e-cigarettes reached about $3.5 billion worldwide last year, less than one-half percent of the total $756 billion retail tobacco

market globally. Sales of e-cigarettes grew more than 180 percent in the United States in 2013 from the prior year, the firm said, and the sector is expected to continue to take more market share from combustible cigarettes. Willis and McCormick hope to capture more shelf space by cutting lucrative deals with distributors and retailers that large tobacco companies will find hard to match. Tobacco companies typically offer distributors a 3 percent markup off of cost, while Victory Electronic Cigarettes can offer up to 25 percent markup off of cost, Willis said. “That changes the economics for distributors in a very significant way,” he said. “We offer 30-day payment terms to distributors, and the tobacco companies offer net minus five — you pay for your product on Monday and you receive it on Friday. “We also offer very favorable profit margins for retailers like Meijer. The tobacco companies are at about 8 percent, while we can offer profit margins up to 50 percent.” In a study of 25 state laws that set minimum prices for cigarette wholesaling and retailing operations, the Centers for Disease Control and Prevention in Atlanta found in 2010 that the median wholesale markup was 4 percent and the median retail markup 8 percent. See Vapor, Page 14

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Vapor: Alternative to tobacco’s taste ■ From Page 13

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With such high stakes, the world’s largest tobacco companies have acquired or launched e-cigarette brands themselves. Since buying Blu Ecigs in 2012, Lorillard has built Blu into a leading e-cigarette brand with heavy promotion that tapped celebrity Jenny McCarthy. Reynolds American Inc. launched its own Vuse brand in July last year, and Altria Group introduced its MarkTen brand in August.

Blueberry? Cotton candy? Aside from elbowing for space on cigarette shelves, companies that make vaping products also are struggling to understand what their customers want. A bewildering array of delivery devices have flooded the market — such as “cig-a-likes” that are the size and shape of ordinary cigarettes with rechargeable batteries, refillable atomizers about the size of a cigar and hundreds of formulas of e-liquids that are flavored to simulate blueberries, chocolate or even

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Clawson-based Wild Bill’s Tobacco has added in all its stores Mr. Vapor sections, which offer products and “gourmet juice bars” that let store personnel mix e-liquid blends for customers.

cotton candy. “We don’t know how the product is going to evolve — e-liquids, vaporizers, disposables, rechargeables,” Willis said. “Anyone who says they know exactly where the market is headed is lying. So do it all. … Take the best ideas and bring them to market very quickly.” For example, Victory Electronic is introducing at Walgreen Co. stores this month a disposable clearomiser system discovered in Europe that lets customers see the level of e-liquids left in the unit. Lawitzke of Mister-E-Liquid has built a business on anticipating the market with a variety of ready-touse, refillable and disposable delivery systems along with separate components such as batteries, coils and tips so customers can assemble their own personal vaping equipment. More than half of Mister-ELiquid’s revenue comes from wholesale and retail sales of more than 100 flavors of custom-mixed e-liquids, which range from GranE’s Apple Pie to Maniac Mint Chocolate. The company sells products in 47 countries and supplies liquids to more than 300 vape shops nationally. Instead of competition, Lawitzke views companies such as Victory Electronic and Blu as portals for smokers-turned-vapers to find his business online. “They think that people want a device that looks like a cigarette, but what we’ve learned is that people who are vaping really don’t want to be associated with smokers,” he said. Soon after they try e-cigarettes, people often search out delivery devices that are higher-powered and refillable, Lawitzke said. “When they get them home and see $20 for a five-pack of cartridges, their first instinct is to say: ‘I’m going to search Google and find them cheaper. And that’s where we come in.’ ” Another misconception is that adults don’t like a variety of flavors. “The majority of our client base started with tobacco-flavored e-liquid, and they wanted it to taste like a cigarette when they first started,” Lawitzke said. “What we found is after a month or

so, our customers don’t want to taste tobacco anymore — it’s gross. “After their taste buds regain their sense of taste, tobacco doesn’t taste as good as strawberries or blueberries. The thing that gets people off analog cigarettes in the long term is the flavoring — the fact that you can taste apple pie if you want to taste apple pie.” Willis and Lawitzke were adamant about enforcing age restrictions on the sale of their products and the need for FDA regulations. In April, the federal agency proposed rules that would require vaping product companies to register, list ingredients in e-liquids and impose minimum age and identification restrictions to prevent sales to those under age 18. At the end of a 75-day public comment period, the agency will enact the rules that it deems necessary. In the manufacture of e-liquids, “people are just picking up what looks good, and they are mixing it in their kitchens or, God forbid, their garages or bathrooms,” Lawitzke said. “That’s part of the problem. There’s no accountability.” Mister-E-Liquid purchases its base materials, flavorings and nicotine from suppliers that document the concentrations and purity of their products and mixes the ingredients in its ISO-certified Class 6 clean room in Grand Rapids. The company, a founding member of the American E-Liquid Manufacturing Standards Association, does regular testing of final product, Lawitzke said. Willis said Victory Electronic Cigarettes imports its products from China, but it has plans to move manufacturing to the United States during the next year. “It’s our intention to be the leading independent electronic cigarette company in the world, fully in control of our own destiny, right here in West Michigan,” he said. “Frankly, the thing that keeps me up at night is the money that big tobacco — and big pharma, for that matter — can throw around because we are eating into the smoking cessation business.” Matthew Gryczan: (616) 916-8158, mgryczan@crain.com. Twitter: @mattgryczan

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Dow’s Liveris answers criticism with numbers BY FRANK ESPOSITO CRAIN NEWS SERVICE

It’s barely June and Dow Chemical Co. CEO Andrew Liveris already has had one heck of a year. Things got rolling for Liveris on Jan. 21 when activist investor Daniel Loeb and his Third Point LLC hedge fund blasted Midland-based Dow in a letter to investors for what was described as “a poor operational track record across Liveris multiple business segments.” Loeb and Third Point also called for Dow — one of the world’s largest plastics and chemicals makers — to be split into two companies, with its petrochemicals business in one. Within days, Liveris — a 38-year Dow veteran who has occupied the corner office since 2004 — had met with American business guru Warren Buffett, whose Berkshire Hathaway firm is a Dow shareholder. Buffett assured Liveris that Dow was heading in the right direction. Liveris, naturally, didn’t keep Buffett’s assurances to himself. He took to the airwaves Jan. 29 on CNBC’s “Squawk Box” program to share that info with viewers. On the show, Liveris said Buffett had told him that “we’re an owner and we like being an owner,” adding that “we think (Liveris) has been running the company for the investors who will stay vs. investors who will leave.” Somewhere in New York, Loeb had to wince at those words. Liveris had to feel like a happy pastor who just had the Pope show up at his church’s bake sale. CNBC’s website wrote about Liveris’ appearance under the headline, “Hey Loeb, Buffett has my back.” On that same date, Dow announced that full-year profit for 2013 grew more than four times to

$4.8 billion. Part of that increase was a $2.5 billion settlement from a Kuwaiti firm over a failed business deal in 2008. In a Q&A session with analysts, Liveris didn’t mention Loeb or Third Point by name, but he did say he “agreed with the investor that there is an upside” to Dow’s strategy. And Liveris pointed out that Dow already had sold off $10 billion of assets in recent years and in late 2013 announced plans to sell off $5 billion more. Dow’s plans to increase its share buyback program and to sell off other small businesses was seen by some as a response to Loeb’s criticism. Company officials said these moves were part of an existing strategy. And like other companies in the region, Dow has announced plans to add polyethylene and ethylene capacity to take advantage of newfound supplies of shale-based natural gas. Liveris was able to deliver more good news for Dow on April 23 when the company announced that firstquarter 2014 profit was up more than 60 percent to just under $1.1 billion, even though sales essentially were flat at almost $14.5 billion. What has Dow’s per-share stock price been doing amid all this hubbub? Well, it was around $43 before being goosed by the Loeb letter in late January. It proceeded to shoot up above $50 in late March before settling down a bit to close near $49.30 on May 19. So do the higher profits and stock price mean that Liveris can relax a little? Maybe not. On April 30, Loeb and Third Point fired another shot across Dow’s bow. According to a letter to investors that was obtained by Reuters, Loeb said that Dow’s integrated strategy is costing shareholders billions and that executives should work harder to boost results and transparency. To date, Dow has declined to comment on Loeb’s recent comments. From Plastics News

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A new tier-one auto supplier has been formed to operate a headliner and sun visor business acquired from Johnson Controls Inc. Motus Integrated Technologies, backed by the private equity firm Atlas Holdings LLC, will have its North American headquarters in Holland. JCI announced the planned sale, which left the auto supplier with a portion of its interiors unit, in February. Terms of the deal were not disclosed. It later announced a deal to spin off the remainder of its interiors group into a joint venture with Yanfeng Automotive Trim Systems Co. Ltd. “Motus is being built from solid automotive manufacturing busi-

nesses with outstanding products that are burdened by circumstances where their true value and potential are constrained,” Motus Chairman Tim Lee said in a statement. “Our focus at Motus is to remove the barriers and provide the capital required to enable our company to flourish.” Besides its Holland location, Motus will continue operations in Ramos Arizpe, Mexico; Uberherrn, Germany; and Creutzwald, France, and will have production capabilities in Cottondale, Ala. Lee is a former longtime General Motors Co. executive who retired in April as chairman of GM China. Shannon White, a former executive with United Plastics Group Inc., is president and CEO. From Plastics News

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Analysts consider impact of CO2 regulations on state The Obama adminisdon’t use electricity to tration’s plan to reduce fuel their operations. carbon dioxide emissions They use … you guessed Gears from existing U.S. coalit … coal. The proposed fired power plants by 30 regulations are limited to percent by 2030 is creatcoal-fired power plants, ing the expected maelnot coal-fired steel plants. strom of backlash. The So the effects could be proposal is being labeled minimal, said John Ana jobs killer and a detriton, Washington, D.C.ment to American manubased director of steel facturing. service for analysis firm The proposal, released IHS Inc. Dustin Walsh last week by the U.S. EnviAnton said the inronmental Protection Agency, is de- creased use of natural gas in the signed to battle global warming, U.S., thanks to the oft-debated but at what cost? What is its effect fracking in parts of the country, is on Michigan industry? Will the pro- actually offsetting much of the proposed cuts save polar bears but kill posed emissions cuts anyway. manufacturing? Analysts are start“The natural gas boom really ing to weigh in. made this easier to take and mitiThe plan, which sets different tar- gates a lot of the pain of this progets in each state, would require posal,” Anton said. Michigan to reduce CO2 output by Anton said increasing natural 31.5 percent from 2012 levels, The gas production will likely offset a Associated Press reported. Nearly large portion of CO2 emissions. half, 49 percent, of electricity in the Michigan gets approximately 20 state is produced from coal, above percent of its electricity from natthe 39 percent national average. ural gas. Michigan is the 11th-highest carbon dioxide producer in the country. President Barack Obama has The automotive industry has so asked the EPA, which has the authority to go around Congress under far remained silent on the EPA prothe Clean Air Act, to finalize the posal. The industry is already facing new rules by June 2015. States have until 2016 to submit their plans — or 2017, if they choose to work in a joint effort with another state. The National Association of Manufacturers has taken a strong stance against the EPA proposal. Jay Timmons, president of the Washington, D.C.-based NAM, said stricter regulations would force manufacturers to move manufacturing to lowercost, less-regulated countries.

Shifting

OEMs yet to weigh in

steep challenges in meeting the federal Corporate Average Fuel Economy (CAFE) standards, which require automaker fleets to reach 54.5 mpg by 2025. For the new EPA standards rollout, the auto industry feels a stateby-state set of deadlines would be challenging, said Julie Fream, president and CEO of Troy-based Original Equipment Suppliers Association. “OESA is concerned what the new emissions proposal will do relative to energy costs for all manufacturers, including our members,” Fream said in an emailed statement. “Additionally, the proposal allows state-by-state implementation of the requirements, increasing the complexity for manufacturers.” New regulations and extreme weather, whether global warmingrelated or not, affects automotive production and will cost Michigan industry. How much? That’s going to be debated in the months and years ahead as much as climate change. This column originally appeared as a blog post on crainsdetroit.com. Dustin Walsh: (313) 446-6042, dwalsh@crain.com. Twitter : @dustinpwalsh

Cold reaction from steel The steel industry, ground zero for automotive production, is often cited as a major producer of pollutants, including carbon dioxide. Experts predict the industry contributes roughly 5 percent of global carbon emissions. Thomas Gibson, president and CEO of the American Iron and Steel Institute, which has an office in Southfield, said the proposal would cripple the steel industry and raise costs for manufacturers and consumers. “Energy, in particular electricity, is one of the most significant cost drivers for the production of steel,” Gibson said in an emailed statement to Crain’s. “This proposal will result in increased electricity costs for industrial consumers, who ultimately have the compliance costs and risks passed on to them. A regulation from EPA that will disproportionately impact coal-generated electricity will have a detrimental effect on steelmaking.” Dearborn-based Severstal North America Inc., which the Michigan Department of Environmental Quality approved for a controversial emissions plan last month, declined to comment directly on this story. However, most steelmakers in Michigan, including Severstal,

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Israel

WHERE MICHIGAN DOES BUSINESS Belfor USA Based: Birmingham Operations: Belfor has a main base in Tel Aviv and a branch in Haifa, part of a network of more than 300 offices in 31 countries. Employees: 50 Products/Services: Commercial and residential services, with special emphasis on local needs for disaster recovery, including water and fire damage, asbestos removal and other services. Top executive: Nimrod Vered, CEO

srael has a growing high-tech sector, including companies focused on aviation, communications, computer-aided design and medical electronics, in addition to traditional manufacturing. Israel’s GDP for 2013 was $272.7 billion, up $29.8 billion since 2011. According to the CIA World Factbook, services comprise 66.4 percent of Israel’s economy, with 80.3 percent of the workforce working in that sector. High-tech equipment, cut diamonds and pharmaceuticals are some of Israel’s leading exports, worth $60.67 billion in 2013. Israel’s most common imports include raw materials, military equipment, fuels and consumer goods. Its largest trading partner is the U.S. Natural gas fields were discovered off Israel’s coast in 2009 and are expected to give the country’s energy sector a boost in the coming years.

Haifa Bnei Brak Herzliya Holon Rishon LeZion Tel Aviv Yad Eliyahu Jerusalem

Cascade employs 25 in a joint venture.

Cascade Engineering Inc. Based: Grand Rapids Operations: Cascade has a 50-50 joint venture with Beersheba-based Dolav Plastic Products called Decade Products, which manufactures plastic products for Israeli markets and for export to Europe, Asia, Africa and the Middle East. Employees: 25 Products: Plastic pallets and large containers Top executive: Ralph Harris, president and CEO, Decade Products

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ISRAEL

COMING UP July: United Kingdom August: Thailand/Malaysia

Israel and the West Bank. This is located at importer UMI’s headquarters in Rishon LeZion. There is also an advanced technology center in Herzliya. Employees: Approximately 50 people work at the GM Advanced Technology Centre. About 400 people work at UMI, though they are not GM employees. Products: A range of Chevrolet and Cadillac vehicles is sold in Israel (via importer UMI). Additionally, Opel vehicles are imported into Israel (direct from Opel in Germany) via another importer. Top executive: Ray Schmit, country manager More information: In 2013, Chevrolet sales in Israel totaled 7,897 units. Chevrolet market share is 3.5 percent. So far in 2014, Chevrolet sales have already reached 5,304 units, with market share growing to 5.6 percent.

Perrigo Corp.

Chrysler Group LLC Based: Auburn Hills Operations: Fiat Chrysler operates in Israel through the importers Mediterranean Car Agency Ltd. and Automotive Equipment & Vehicles Ltd. These entities distribute and sell Fiat Chrysler vehicles. MCA has its headquarters in Tel Aviv. AEV sells Chrysler Jeep Dodge and Ram brands through eight showrooms in Israel. Employees: MCA: 300; AEV: 450 Products: MCA: Romeo, Fiat, Abarth, and Fiat LCV; AEV: Jeep Grand Cherokee, Jeep Wrangler, Jeep Compass and the new Jeep Cherokee, Chrysler Grand Voyager, Chrysler 300, Dodge Journey, Ram 3500 Top executives: Ori Lahav, CEO of MCA; Ittamar Givton, managing director, Automotive Equipment Group; Tzvi Neta, chairman of AEG

Crain’s World Watch Monthly report showcases companies leading the way in international business, as well as those expanding their global operations. If you know of a Michigan company that exports, manufactures abroad or has facilities abroad, email Jennette Smith, managing editor, at jhsmith@crain.com.

Fusepoint Solutions Based: Ann Arbor Operations: Research and development center in Holon Employees: 5 Products: Internet of Things/Connected Vehicles software, which connects the Internet to objects to transfer data wirelessly Top executive: Ehud Naamani, CEO

Based: Allegan Operations: Perrigo Israel has four business units, in Ramat Hovav, Yad Eliyahu, Bnei Brak and Yeruham. Employees: 1,300 Products: Develops and manufactures generic oral prescription drugs, mainly focusing on active pharmaceutical ingredients. Also produces generic and OTC pharmaceuticals, branded OTC, vitamins and mineral supplement products. Perrigo also sells diagnostic and other medical pharmaceutical products in Israel. Top executives: Joseph Papa, chairman, president and CEO; Sharon Kochan, vice president and general manager international

Clients: Israeli, European and U.S. markets

Plasan Carbon Composites Inc. Based: Wixom Operations: A subsidiary of Israeli defense company Plasan Sasa, Plasan Carbon Composities has a headquarters, R&D center, and engineering and production facilities in Kibbutz Sasa, in northern Israel. Employees: 330 Products: Vehicle armor Top executive: Dani Ziv, CEO Clients: Oshkosh, AM General, Lockheed Martin, General Dynamics Land Systems Canada

RGIS LLC Based: Auburn Hills Israel operations: An office in Rishon LeZion services the entire country. Employees: 300 Services: Physical inventory, store mapping, fixed asset inventories, equipment rental, seasonal staffing Top executive: Guy Ratzenberg, country manager Clients: Alon Blue Square Israel Ltd., SuperPharm, Shufersal, Rami Levi Hashikma Marketing, Ace, Osher Ad, Dor Alon, idigital

Tomcar North America makes off-road vehicles.

Tomcar North America Based: Rochester Hills Operations: Development and manufacturing operations located near Tel Aviv Employees: 9 Products: Tomcar, a military grade offroad vehicle Top executive: Yoram Zarchi, managing director Clients: Tomcar NA, Tomcar Australia, South Sudan Ministry of Interior — Compiled by Bridget Vis and Natalie Broda Michigan Israel Business Bridge assisted in the research for this report.

General Motors Co. Based: Detroit Operations: Has a regional marketing office focused on providing sales support for

Domino’s Pizza Inc. Based: Ann Arbor Operations: 49 Domino’s Pizza stores throughout the country; Israel’s operation is based in Jerusalem. Employees: 100 Products: Pizza, beverages, side items Top executive: Yossi Elbaz, CEO of Domino’s Pizza Israel Clients: Retail pizza customers

Domino’s Pizza operates 49 stores in Israel.

Perrigo’s four business units in Israel include this one in Yeruham.

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Choon Ng

WINNER Inventor and entrepreneur Choon Ng created a way to weave rubber bands into brightly colored bracelets, rings, Õgures and other items kids wear and share with their friends. It is the winner of four Toy Industry of America awards, including the coveted Toy of the Year award.

Biggby Coffee L: Michael McFall R: Bob Fish Equal partners Mike McFall and Bob Fish have always had clear roles. Bob is the strategist and the face of Biggby while Mike focuses on sales, Õnances and legal matters. While each hold very different roles in the business, one thing they both agree on is their focus. Their Õve simple cultural values are imbedded in everything they do and every decision made.

founded the EY Entrepreneur Of The Year™ Program to recognize these dynamic leaders and to build an inÖuential community of

Thomas Salisbury Professional dedication and competitiveness are a few of the qualities that helped Thomas Salisbury take a company from startup to multimillion dollars in just Õve years. He’s been able to use multiple e-commerce platforms to provide aftermarket agriculture and construction equipment parts.

Mango Languages

Indratech

BorgWarner Inc.

John Lowery

Kevin Choksi

Jason Teshuba

Surendra Khambete

James Verrier

John Lowery brings a “yes-it-canbe-done” vision to Applied Imaging. He has attracted a strong group of professionals and challenged them to remain ahead of the technology curve. His leadership style allows him to be approachable, present and available, and unify his team behind his vision.

In 1999, Kevin Choksi and his co-founders created WorkForce Software to address an unmet need among large employers. Since then the Õrm is in new global markets, with hundreds of clients in the U.S., Canada, the U.K. and Australia.

L: Michael Kulka R: Pete Bosanic

As a lifelong lover of language and culture, Jason Teshuba has always been frustrated by the poor quality of the options in the languagelearning market. It was this unmet need that led to Mango Languages, a product line now used for 60 languages.

In founding Indratech, Surendra Khambete brought technology together with manufacturing. The end result is a technology-based company offering an effective and sustainable replacement for cushioning products that reduces problems associated with recycling or disposal.

celebrations in 25 U.S. cities to

our community and to toast their vision. Their energy and strategic vision have turned their dreams into reality. We applaud them all for taking the road less traveled to launch new companies, open new

passion, innovation and unwavering commitment

Zoup! Fresh Soup Company

Eric Ersher Zoup has grown from one location in 1998 to its current roster of 62 in 15 states and Ontario. Eric Ersher’s focus has always been on quality and an “everything matters” philosophy that is one of the pillars of the company’s deliberate culture.

The combination of a career as a professional boxer followed by 10 years in the stafÕng industry led Jeffrey Styers to start his own company, Arrow Strategies. It started with one ofÕce and is now providing contract stafÕng services in IT, engineering, health care and professional services across seven ofÕces in the U.S.

Chris McCuiston

Nanua Singh

Chris McCuiston has grown his business from one location and 2,800 students per week to 13 locations and 18,000 students. He developed a proprietary swim curriculum, uses an efÕcient computer based scheduling system, invested in his building infrastructure and established an intense customer focus—which is the families.

As head of an engineering services, workforce management and software development Õrm, Nanua Singh recognized the need to diversify out of doing mostly automotive work in 2006. Now in the aerospace, locomotive and medical equipment industries, the Õrm has been consistently recognized as a fast-growing company.

RETAIL & CONSUMER PRODUCTS

Summit Health Inc.

Richard Penington

WINNER Richard Penington built Summit Health from the ground up. He took strategic risks along the way, such as reinvesting heavily in the IT infrastructure at a time when others weren’t. These risks have pushed the organization toward new goals and innovation, and instilled a culture of creativity.

Flatout Inc.

Bridget Lemberg

Stacey and Mike Marsh

WINNER Stacey and Mike Marsh recognized a void in the marketplace for a Öatbread that could become a premier carrier for many food applications. Flatout is now a full line of artisan Öatbreads sold in retail stores across the United States, Canada, Puerto Rico and Mexico.

Bridget Lorenz Lemberg turned a simple and innovative vision—a quick, precise drug test using saliva —into a growing startup, and one of the few female-led technology companies in the nation. Her recipe for success is her determination to succeed and her commitment to stafÕng FFL with the very best innovative employees.

Shiloh Industries

When Tel Ganesan left Chrysler in 2005, his goal was to chase his entrepreneurial dreams. His risk paid off with the creation of Kyyba, which offers engineering and IT stafÕng services and software development.

Patrick Fehring created Level One Bank in 2007 because, after 26 years in the industry, he thought he could build a better bank. Starting with card tables in a rented ofÕce, the bank has gone from zero assets to $600 million under management.

John Roggow

Ramzi Hermiz

When Marshall Plastic Film went into bankruptcy, John Roggow took the opportunity to buy the company for which he had been working. Together with three investors, they started the company from scratch in 2003, working to bring back former customers and grow the business.

Ramzi Hermiz took over as CEO of Shiloh Industries in 2012 when it was a quiet, steady public company. Within three months of his arrival, Hermiz made his Õrst acquisition, adding two more within a year. He brings not only a vision for transforming a company, but the determination and skills to bring that goal to fruition.

Alliance Franchise Brands LLC

Goodwill Industries of Greater Detroit

In 10 years, Donald Hicks grew LLamasoft from one person (himself) to a 100-person Õrm. He created LLamasoft because the industry needed a solution, and he felt that, “if I didn’t make this happen, maybe no one would.”

Computerized Facility Integration LLC

Robert Verdun

WINNER Surviving the Tech Bubble of 2001 and the Great Recession of 2008 and 2009 has brought lessons and a more solid business model to Robert Verdun. It taught him to keep high standards and diversify his business base.

Todd Sachse has built his company by exceeding in many niches: renovating historical buildings; constructing ofÕce buildings, hotels, schools and shopping centers; and completing build-outs in retail centers, airports, medical ofÕces and general ofÕce buildings.

Grand Rapids Plastics Inc.

Arthur Bott Arthur Bott sold his company in 2001 to retire, but wound up buying the company back in 2006. Since then, he’s been able to reduce costs and grow the company. He’s brought in new clients like Magna International, Johnson Controls Inc. and Chrysler Group LLC and grown from 45 employees to 300.

Lorna Utley

MachineTools.com

In the six years that Lorna Utley has led Goodwill Industries, she not only helped the nonproÕt survive the recession, but also grow. A crucial piece was re-entering the retail market; in the last three years, Goodwill has opened three stores that created 75 new jobs.

CONSUMER SERVICES

Stuart Carlin

MVC Holdings LLC When Linda Torakis and her husband Mike co-founded MVC Holdings LLC in 2008, it was bleeding $1.5 million per month. They were able to turn the company around in less than six months and save over 300 manufacturing jobs. Additionally, they found capital to fund future growth.

FAMILY BUSINESS

Jeffrey Farber Alta Equipment Company

Rich Beckman

Steven Greenawalt

WINNER

Steven Greenawalt articulates a vision to his employees and stresses the importance of creating “customers for life.” Alta has been on a growth path after a bold move in 2009 when the company made four acquisitions in one month that grew both the territory and the product portfolio.

As CEO, Rich Beckman identiÕed acquisitions as the critical growth driver for the company and strengthened the existing infrastructure. Under his leadership, Great Expressions became proÕtable in 2000 and has seen both top- and bottom-line growth every year since.

Detroit Venture Partners

Linda Torakis

Stuart Carlin founded MachineTools.com on a simple idea: Bring buyers and sellers of industrial equipment to one online marketplace. With a user-friendly interface and transparent pricing, the site now has a presence in 200 countries.

DISTRIBUTION & MANUFACTURING

Great Expressions Dental Centers

SPIRIT OF ENTREPRENEURSHIP

Josh Linkner

Auburn Pharmaceutical

WINNER

Õnalists!

MPF Acquisitions Inc. dba Marshall Plastic Film

Michael Marcantonio started as an investor in 2000 and became CEO by 2011. As CEO he has been instrumental in planning the future of the company and positioning it as a driving force in the marketing and visual communications industry.

Todd Sachse

Forensic Fluids Laboratories

Patrick Fehring

Tel Ganesan

Michael Marcantonio

DIVERSIFIED SERVICES

WINNER Shortly after James Verrier was named BorgWarner’s president and CEO, he introduced himself to employees, saying, “I never forget where I came from, how I got here and how that made me who I am.” Humility, respect and trust are core to his value system, and he has implemented those values to the company.

Level One Bank Kyyba Inc.

Donald Hicks

Sachse Construction

Congratulations to all of our

Partner, EY Entrepreneur Of The Year Michigan & Northwest Ohio Program Director

Luther Elliott started Information Systems Resources Inc. out of his Farmington Hills home 16 years ago. The company has grown not by selling computer systems, but by recycling those no longer being used. Each year, the company processes 2 million pounds of electronic hardware.

Starting in 1992 with a single truck and some business cards, Michael Kulka and Pete Bosanic have grown PM Environmental to a company that works with banks, government agencies and numerous other businesses throughout the U.S. as an environmental risk expert.

TECHNOLOGY

to win in the marketplace.

Angie Kelly

Luther Elliott

LLamasoft Inc. Rapid Global Business Solutions Inc.

GoldÕsh Swim School Franchising LLC

markets and fuel job growth. Join us in celebrating their

Jeffrey Styers

BUSINESS SERVICES

Each June, we host

who are regional Õnalists into

AUTOMOTIVE

P.M. Environmental Inc.

Arrow Strategies

Reliable Aftermarket Parts Inc.

innovative entrepreneurs.

welcome the men and women

DISTRIBUTION & MANUFACTURING Continued

WorkForce Software

Information Systems Resources Inc.

passion, vision and persistence

Twenty-eight years ago, EY

CONSUMER SERVICES Continued

Applied Imaging

to their communities. Their

dedication.

DIVERSIFIED SERVICES Continued

LIFETIME ACHIEVEMENT

businesses and giving back

stand as a testament to their

TECHNOLOGY Continued

Kar’s Nuts Inc. When Jeffrey Farber worked for the company his father owned, he learned the values, as well as the missteps, of running a drug distribution company. With those lessons learned, he started his own company when the demographics, government regulation and insurance mandates were driving the consumer to generics.

Nick Nicolay

WINNER When Nick Nicolay took over Kar’s Nuts in 1995, he became the third generation of his family to run the company. But changes had to be made. The company diversiÕed into vending channels, leading to a strategic focus on trail mix. Now the Sweet ‘n Salty Mix is the top selling trail mix in America.

L: Dan Gilbert R: Brian Hermelin Three people with years of entrepreneurial experience wanted to help others looking to start their own enterprises. The work isn’t just capital needs, but also the serious hands-on work it takes to realize something out of thin air. Dan Gilbert, Josh Linkner and Brian Hermelin founded Detroit Venture Partners with the mission to rebuild Detroit through entrepreneurial Õre. Since creating DVP, they have made 23 investments in early and seed stage digital technology companies. In turn, those companies have each grown, hiring hundreds of people, creating technological and entrepreneurial density in the central business district.

2014 JUDGING PANEL Andy Appleby Chairman General Sports and Entertainment 2002 award winner

David Cole Chairman AutoHarvest Chairman Emeritus Center for Automotive Research

Arvind Pradhan Chief Executive OfÕcer Camaco, LLC 2005 award winner

Brian Demkowicz Managing Partner Huron Capital Partners 2008 award winner

Ron Shahani President and Chief Executive OfÕcer Acro Services 2003 award winner

Willie Geiser Chief Executive OfÕcer Allshred Services 2005 award winner

Michelle Sherman Vice President and Chief Financial OfÕcer Barden Companies

Jeff Ishbia Chief Executive OfÕcer United Shore Financial Service 2013 award winner Vince Thomas Chairman and founder Billhighway 2011 award winner