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www.crainsdetroit.com Vol. 30, No. 33
AUGUST 18 – 24, 2014
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A FLOOD OF QUESTIONS FROM A REGION SUBMERGED
IN DEEP
Macomb County’s first exhibition center?
F
ive inches of rapid-fire rain over a few hours — it resulted in the unprecedented flooding of metro Detroit businesses, homes, cars, streets and even freeways. New vehicles parked on some dealer lots were submerged in muddy water, trucking deliveries were delayed or damaged, and commuters faced treks hours longer than usual until the floodwater drained. A week later, the region is still waterlogged in parts, and rattled, with the storm raising questions about infrastructure planning, insurance rules, and even regional cooperation.
Display Group finds new home at Packard site Automation Alley re-ups with U.S. Army fix-it pact
Health Care
The potential healing power of electronic data, Page 9
INSIDE
This Just In
Troy Transit Center could open in fall
NEWSPAPER
The city of Troy again has the title to 2.7 acres on which the Troy Transit Center sits and will pay Grand/Sakwa Properties LLC $1.05 million for it following an order issued Friday by Oakland County Circuit Court Judge Leo Bowman. The center, which was completed last fall off Maple Road west of Coolidge Highway, now is expected to open this fall. In April, the City Council authorized the offer to Farmington Hills-based Grand/ Sakwa, which can still request a jury determination on the price and ask for more money, City Attorney Lori Grigg Bluhm said. Grigg Bluhm said city officials will meet with Grand/Sakwa in the next 30 days “in an effort to try to resolve any remaining issues” over the longtime legal dispute. Kirk Pinho
COURTESY OF UNITED PHOTO WORKS
Pat Presutti, new car sales manager at Jim Riehl’s Friendly Chrysler Jeep in Warren, surveys the water damage to vehicles parked in an out lot; more than 80 are expected to be deemed a total loss.
■ Auto dealers grapple with flooddamaged cars, Page 21 ■ Insurers could pay more than $200 million in claims, Page 20 ■ Trucking and logistics firms reroute, Page 22 ■ Storms bring regional infrastructure woes to surface, Page 22
PHOTOS BY LARRY PEPLIN
Investor pool plans $40M Pontiac redevelopment BY KIRK PINHO CRAIN’S DETROIT BUSINESS
Sometimes it actually does take a village to raise a child. In this case, the child is downtown Pontiac, and the village is a group of more than 50 private investors, entrepreneurs and Pontiac supporters who are forming an investment pool to spend between $40 million and $50 million on a series of redevelopment projects for the historic but underused area being rebranded as Indian Hill. The redevelopment — expected to take about three years and involve more than a dozen historic buildings owned or controlled by
the investors — would be the latest in a spate of new projects for a city that just a year ago emerged from under four years of emergency manager control after swimming in tens of millions in debt. But it would be among the first large investments downtown, which is only about one square mile in size. “This is a grass-roots plan the likes we have never seen,” said project investor Matt Farrell, executive principal of Birminghambased Core Partners Associates LLC. “With millennials’ desire to live, work and play in downtown setSee Pontiac, Page 18
KENNY CORBIN
Developer Bob Waun inside his 1. N. Saginaw Building in downtown Pontiac, where wall covering has been removed, exposing the worn brick underneath.
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CRAIN’S DETROIT BUSINESS
MICHIGAN BRIEFS Some thought for food: Kellogg wants suppliers to go green Battle Creek-based Kellogg Co. wants its suppliers to cool it with the planet-warming emissions. The food manufacturing giant wants the farms and mills that feed it to measure and publicly disclose greenhouse gas outputs and targets for reducing them, The Associated Press reported. Kellogg said it also will strengthen cutback requirements for its plants, building on a 2008 pledge to reduce emissions 15 percent to 20 percent, said Diane Holdorf, the company’s chief sustainability officer. The cereal and snacks maker also announced green performance goals by 2020 that include a 50 percent increase in the use of low-carbon energy and establishing water-reuse projects in 25 percent of its plants. Kellogg will boost to 30 percent the number of plants sending no waste to landfills and use more efficient packaging, with all timber-based packaging materials being recycled or coming from sources certified as sustainable, Holdorf said.
Study: Lifting gay marriage ban would add $53.2M to economy A study conducted by the Williams Institute at the University of
Traverse City train: A locomotive for development? The nonprofit Michigan Land Use Institute thinks that an 11-mile rail line connecting Traverse City and the nearby community of Williamsburg could help revive train travel in the northwest Lower Peninsula and increase tourism and development in the area, The Associated Press reported. “It’s a low-cost way to add capacity to our existing transportation network while supporting development along the track at the same time,” said James Bruckbauer, a transportation policy specialist with the institute and author of a report laying out the idea. The passenger rail line could help connect Traverse City to the rest of the state by rail, Bruckbauer said. It would cost much less to upgrade the track than reconstruct a 1.5-mile section of U.S. 31, the highway California, Los Angeles School of Law contends that legalizing gay marriage in Michigan would add $53.2 million to the state economy over three years. Using census data and the experiences in other states, researchers estimated that about 7,300 same-sex couples would get married in the first three years after the ban was lifted. Researchers said that spending could support 152-457 full- and part-time jobs and generate an estimated $3.2 million in sales tax revenue for state and local governments. The study did not consider the immediate state budget impact of same-sex couples filing joint tax returns.
linking Traverse City and Williamsburg, according to the report, which the National Association of Realtors helped fund. “While year-round daily commuter trains might be too expensive for now, a seasonal tourist shuttle could be a low-cost, achievable first step,” the institute said in a statement. “We’ve got plenty of evidence that rail projects can have a very positive impact on neighborhood development,” Kim Pontius, executive director of the Traverse Area Association of Realtors, said in a statement. “We need to think of transportation solutions other than the automobile. This project, if realized, may prove to be a great way to test the thesis.”
Michigan is one of 21 states that would see income tax revenue decline if same-sex marriage were legalized, costing about $482,000 a year, according to a study in the Journal of Policy Analysis and Management.
Crowdfunding campaign raises $10,000 to raze house in Flint What happens when you apply the modern fundraising technique known as crowdfunding to one of the most nettlesome challenges of urban America — blight? In Flint, you get $10,000 to tear down a house, MLive.com reported.
The campaign was launched by Gordon Young, author of Teardown: Memoir of a Vanishing City. He chose the house, on the north side of his hometown, because it was on an otherwise well-kept street. In the campaign, 149 donors gave amounts ranging from $5 to $1,000.
MICH-CELLANEOUS 䡲 Gov. Rick Snyder agreed with a financial review team’s conclusion that a financial emergency exists in the Benton Harbor Area Schools, The Associated Press reported. The appointment of an emergency manager is one of several options if the state confirms a financial emer-
gency. The city of Benton Harbor had an emergency manager for four years until last spring. 䡲 Midland-based Dow Chemical Co. ranks No. 49 on CNBC’s list of the top 50 innovation companies. San Francisco health care services company McKesson Corp. was No. 1. 䡲 The Michigan Court of Appeals upheld a 2007 decision by the Michigan Department of Environmental Quality to allow Kennecott Eagle Minerals Co. to operate a nickel and copper mine in Marquette County, The Associated Press reported. 䡲 The Grand Rapids area is ranked the fifth-best market in the U.S. for homebuyers ages 25-34 — also known as millennials — according to a study released last month by the National Association of Realtors. The association analyzed job creation, population and housing conditions in 100 metro areas. Austin, Texas, topped the list. 䡲 The Thomas M. Cooley Law School — with locations in Auburn Hills, Ann Arbor, Grand Rapids and Lansing — is now officially the Western Michigan University Cooley Law School. Which would make it WMUCLS, for those of you planning to buy a T-shirt. Any objections? Find business news from around the state at crainsdetroit .com/crainsmichiganbusiness. Sign up for the Crain’s Michigan Morning e-newsletter at crainsdetroit.com/emailsignup.
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Display Group expands into large space at Packard Plant
Inside
Q&A: Aisin exec on supplier’s plans for North America, Page 4
BY KIRK PINHO CRAIN’S DETROIT BUSINESS
What was once part of the shuttered 3.5 million-square-foot Packard Plant on Detroit’s east side has a new owner: The Display Group Ltd., which is currently in 200,000 square feet of space at 1700 W. Fort St. As President Rick Portwood’s business expanded in the last 18 months, he began looking for more space in the city. He found it in the 255,000-squarefoot former Packard Building No. 22 — which is separate from the Portwood part of the plant purchased by Peruvian developer Fernando Palazuelo last year — that was built in 1941. “We have been looking at some different areas of expansion, and this will allows us to go pretty crazy,” Portwood said, adding that the building is “in better condition than any other building I walked through.” The company, which makes event props, rental office furniture and other products, expects to keep its showroom in the Fort Street building while moving company inventory, offices and manufacturing to the Packard building starting by the beginning of October. Display Group had about $4 million in revenue last year and expects a 10 percent to 15 percent increase this year, along with additional hiring. Portwood, who founded Display Group in 1991 and has 25 full-time and 12-15 part-time employees, would not disclose how much his company paid to buy the space from the Detroit-based Kirlin Co. See Packard, Page 19
Company index COURTESY OF ROSSETTI ASSOCIATES INC.
A new exhibition center planned for Chesterfield Township would draw Canadian traffic from southern Ontario and state associations and visitors from mid-Michigan and the Thumb, developers say.
These companies have significant mention in this week’s Crain’s Detroit Business: AAA Michigan . . . . . . . . . . . . . . . . . . . . . . . . . 20, 21 Aisin World Corp. of America . . . . . . . . . . . . . . . . . . 4
Macomb’s first exhibition center may be in works
Ashley Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Automation Alley . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Center Management . . . . . . . . . . . . . . . . . . . . . . . . 3 Con-way Freight . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Core Partners Associates . . . . . . . . . . . . . . . . . . . . 1 Detroit Metro Convention & Visitors Bureau . . . . . . 22 Display Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Elite Motor Sales & Service . . . . . . . . . . . . . . . . . . 21 Galeana’s Van Dyke Dodge . . . . . . . . . . . . . . . . . . 21 Go Comedy! Improv Theater . . . . . . . . . . . . . . . . . 20 Grand Traverse Behavioral Medicine . . . . . . . . . . . 11 Great Lakes Health Connect . . . . . . . . . . . . . . . . . . 9 Insurance Institute of Michigan . . . . . . . . . . . . . . 20
Developers also plan hotel on outlet site
Jim Riehl’s Friendly Chrysler Jeep . . . . . . . . . . . . . 21 Just Baked . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Liddle & Dubin . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
BY SHERRI WELCH CRAIN’S DETROIT BUSINESS
The developers vying to bring an outlet center to Chesterfield Township plan to build a conference center and hotel on the same site. The 120,000-square-foot center, planned near M-59 and I-94, would be Macomb County’s first exhibition center. The idea is that it would attract people to the outlet center, and the outlet center, in turn, would help bring people to the new exhibition center, said Thomas Guastello, owner and president of Center Management, a local developer that co-owns the Chesterfield Township site with Cincinnati-based Jeffrey R. Anderson Real Estate Inc. Retailers considering a presence in the outlet center like the idea of having an exhibition center nearby, Guastello said. But the plan for the new conference center isn’t contingent on securing the outlet center. “We would like to think we’ll do both, but the exhibition center can stand alone. ... We have a positive study that’s been done on it by the convention
bureau,” Guastello said. The developers are also planning restaurants for the site and in the future plan to sell parcels of land to other developers for additional hotels, he said. “We think … that site with the outlet center and exhibition hall would conservatively (support) five to six hotels.” The Comfort Inn-Utica on M-59 at Guastello M-53 (Van Dyke Freeway), which Guastello owns, is recording good numbers, as are the other hotels in the area, he said, “because there’s a lot of things for guests to do there and a lot of things that generate guests.” Guastello has had preliminary conversations with Blair Bowman, owner of the Suburban Collection Showplace, Diamond Center and Hyatt Place Detroit, about including him in the conference center. It’s too early to say exactly what shape Bowman’s par-
Lou LaRiche Chevrolet . . . . . . . . . . . . . . . . . . . . . 21 Michigan Health and Hospital Association . . . . . . 11 Michigan Health Information Network . . . . . . . . . . 11 Mich. Health Information Network Shared Services . 9 Michigan Municipal League . . . . . . . . . . . . . . . . . 22 Original Equipment Suppliers Association . . . . . . . . 5 Plante Moran . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Plunkett Cooney . . . . . . . . . . . . . . . . . . . . . . . . . . 20 R&E Development . . . . . . . . . . . . . . . . . . . . . . . . . 17 RE Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 RPM Freight Systems . . . . . . . . . . . . . . . . . . . . . . 20 Rush Trucking . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Ryan Family Practice . . . . . . . . . . . . . . . . . . . . . . 11 St. Johns Internal Medicine . . . . . . . . . . . . . . . . . 11 Southeast Michigan Council of Governments . . . . . 22 Sterling Insurance Group . . . . . . . . . . . . . . . . . . . 20 United Road Services . . . . . . . . . . . . . . . . . . . . . . 20 University of Michigan Health System . . . . . . . . . . 10 Waltonen Engineering . . . . . . . . . . . . . . . . . . . . . . 17 Wayne State University . . . . . . . . . . . . . . . . . . . . . 20 West Construction Services . . . . . . . . . . . . . . . . . . 18
See Macomb, Page 22
Department index
Automation Alley renews Army pact to revive old equipment BY CHAD HALCOM CRAIN’S DETROIT BUSINESS
A new era of tighter federal budgets for defense actually could mean a business boost for local design and prototyping companies, under a new U.S. Army contract with Troy-based Automation Alley to sustain aging equipment. The Army last week signed a three-year contract renewal of up to $10 million for the Alley to study military equipment for which com-
ponents or materials are limited or unavailable, as well as to reverseengineer and create technical specifications for manufacturers to build replacements. The Army Tank-Automotive Research, Development and Engineering Center in Warren, which helped the Alley secure the new contract, also will coordinate with the local technology business association on some task orders. The Army awarded a three-year contract to
THIS WEEK @ WWW.CRAINSDETROIT.COM
Automation Alley in 2009 but later extended it through March of this year and spent nearly $5.5 million on various projects. Dan Raubinger, director Raubinger of defense and manufacturing for Automation Alley in Sterling Heights, said the
spending is likely to exceed that amount under the renewed contract because the Army has scaled back on new production contracts and new equipment orders. That will mean greater repair and maintenance costs to keep current, aging equipment in working order. “We think there’s an enormous market for what we’re doing in the next few years, especially since so See Alley, Page 17
Social spot packs ’em in at Comerica Park Visit this season’s addition to the ballpark’s lineup: the New Amsterdam 416 Bar, which is – yes – 416 feet from home plate, crainsdetroit.com/video.
BUSINESS DIARY . . . . . . . . . . . . . . . . 16 CALENDAR . . . . . . . . . . . . . . . . . . . . 13 CLASSIFIED ADS . . . . . . . . . . . . . . . . 17 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 6 MARY KRAMER . . . . . . . . . . . . . . . . . . 7 OPINION . . . . . . . . . . . . . . . . . . . . . . . 7 PEOPLE . . . . . . . . . . . . . . . . . . . . . . 16 RUMBLINGS . . . . . . . . . . . . . . . . . . . 23 WEEK ON THE WEB . . . . . . . . . . . . . . 23
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Aisin World opens new N.A. HQ in Northville, aims to expand Aisin World Corp. of Ameriwell as proximity to maca opened a new North jor universities. American headquarters in Northville Township in What automotive technolJuly as part of the foreign ogy is most exciting to you subsidiary’s growth stateand Aisin? side. Through Aisin’s sysAisin bought and renotems solutions, we’re able vated the 200,000-squareto help our customers satfoot building at 15300 Cenisfy many of their objectennial Drive, a $13 million tives, including (vehicle) development to house its weight reduction, fuel efU.S. headquarters and ficiency, safety, and comAisin Technical Center of fort and convenience. John Koenig, America after outgrowing its offices in Plymouth Aisin World Corp. How has the influx of reTownship. calls changed or affected The subsidiary of Japanese con- business at Aisin? glomerate Aisin Seiki Co. Ltd. has inThe attention that recent revested a total of $3 billion in North calls has brought to the industry America and more than $250 million reminds us of the importance of in Michigan since 1984 as it contin- examining and re-examining ues to win new contracts with do- everything we do. Our company is mestic and foreign automakers. based on the fundamental princiAisin employs more than 700 at ples of “quality first,� which its five sites in Northville Town- means we consider safety as a priship, Ann Arbor, Plymouth Township and Fowlerville. Crain’s manufacturing reporter Dustin Walsh spoke with Aisin World Corp.’s top local executive, John Koenig, president of sales and marketing, about foreign investment and the transmission and engine parts supplier’s growth in the region.
Q&A
KING AIR B200
Carl J. Grassi, President
August 18, 2014
Why invest in a new technical center and headquarters? The expanded Aisin Technical Center of America enables us to add equipment, i.e., the first inhouse engine dynamometer for Aisin in the U.S. — and engineering resources. This will help us grow our regional capabilities, lead local product development, bring new technology to the industry and handle a larger share of design duties for the North American market, all under one roof. We plan to continue to grow by adding new facilities and investing in current plants in order to provide ongoing support to our customers. What customers do you support from those offices? Chrysler, General Motors, Honda, Nissan, Subaru, Toyota and others. Do you see potential for M&A activity? In order to stay competitive in a market that is constantly evolving, we explore all opportunities for growth of our business capabilities. Why has the region seen so much foreign investment? Michigan is home to 63 of the top 100 suppliers in North America, and ranks first in the country in concentration of engineers, designers, R&D professionals and skill-trade workers. We’re here because our customers are here — hence the location of our sales and marketing headquarters, our technical center and our proving ground in Fowlerville. Being near our customers enables us to take advantage of the great automotive human resources in the area, as
Aisin World’s North American headquarters, in a renovated building in Northville Township, opened in July.
mary aspect of quality. Is government regulation playing to Aisin’s benefit? We have ongoing development in (intelligent transportation systems), such as distracted driving technology, sensors, navigation systems, camera systems, as well as technologies for fuel efficiency, light weightSee Next Page
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ing efforts and improved transmission capabilities. We believe we have a huge advantage in the fuel efficiency arena because of our engine components, heat management systems, body components designs, etc. This product leadership will continue to help our customers reach their objectives. Are the domestic automakers improving relationships with suppliers? Yes, we see that trend via (automakers), whether it’s town hall meetings or simply improved communications. Aisin is confident that the trend will continue because the more we know about each other’s needs and requirements, the better opportunity we’ll all have to make good decisions. Has pricing pressure changed in recent years? Cost competition pressure is always increasing, and even though pricing pressure has taken different forms over the years, it hasn’t really changed. There’s always pressure. What keeps you up at night? Retaining and developing our most important assets. Human resources and rising health care costs.
Survey: Confident parts makers plan to expand, hire CRAIN NEWS SERVICE
Flush with cash and fat order books, North American suppliers are increasing capital expenditures, hiring workers and raising funds for possible acquisitions. According to a survey last month by the Troy-based Original Equipment Suppliers Association, 47 percent of suppliers are more optimistic about their prospects for the next year, and 6 percent are more pessimistic. “The optimism is driven by greater confidence in North American production forecasts, particularly with the rebound in vehicle sales after the first quarter,” the report noted. Suppliers expect bigger budgets for the next fiscal year: 䡲 Seventy-four percent of suppliers will increase capital investments; 8 percent will reduce them. 䡲 Sixty-seven percent will spend more on product innovation; 1 percent will spend less. 䡲 Eighty percent will hire more hourly workers; 7 percent will reduce their payroll. The association drew its results from a July survey of 93 suppliers. Suppliers are optimistic because automakers are telling them to gear up for more production. In May, IHS Automotive predicted that North American light-vehicle production would exceed 16.8 million units this year, rising to a record 17.5 million vehicles in 2016. With prospects for record production looming, fewer suppliers are trying to hedge their bets. Survey respondents listed plant expansions as their fourth-highest priority, edging out the hiring of temporary employees. From Automotive News
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OPINION
Storm could be catalyst for fixes I
n Michigan, we generally count ourselves lucky because the Great Lakes don’t have hurricanes. But who knew how much damage a few hours of rain could do? Tens of millions of gallons of water and raw sewage later, it’s a hard lesson learned. Damage is still being assessed, but as Crain’s reports on Pages 20-22, very few in the affected areas were spared. And in many, many cases, the losses aren’t covered in full or are sometimes not covered at all. That’s why Gov. Rick Snyder’s declaration of emergency on Wednesday was important. It opens up the possibility, although no guarantee, of federal aid. (Snyder was criticized for being slow to issue the declaration. His office said Friday it was waiting for Macomb and Oakland counties to submit their list of requests to add to the list already submitted by Wayne County.) But here’s a larger question: What needs to be done to prepare an already aging infrastructure for future major storms and how will that be paid for? We don’t have a definitive answer for that, but one thing that can support that is redevelopment around existing infrastructure rather than continuing to add infrastructure beyond our population’s needs. Michigan’s spider web of autonomous local government units doesn’t lend itself to coordinated planning, but incentives that help support redevelopment can help. Maybe this can be a catalyst for reinvestment in other ways. Bonding to separate storm and sewer systems and correct problems that create sewer backups could also cover public investment in the affected roads beyond quick fixes.
Leaner Pontiac reaps benefits Getting your financial house in order can pay dividends. That’s a verity being demonstrated in the city of Pontiac, where emergency managers, notably Louis Schimmel, reduced the overall size of government while improving essential services, such as police and fire. That has made the city attractive to investors, who, as Kirk Pinho reports on Page 1, are putting together an investment pool of $40 million to $50 million to rehabilitate historic buildings downtown. The plans have the support of the city’s mayor, Deirdre Waterman. Pontiac struggles with high unemployment and poverty, which has made private investment sometimes hard to come by, despite its long ties to GM. But the city also has assets, one of which is a true downtown and historic buildings that can’t be replicated in newer communities. It’s now in a better position to maximize those.
TALK ON THE WEB From www.crainsdetroit.com Re: State officials: Removing water doesn’t remove trouble Poor planning and engineering just came back and bit Michigan. What wise guy thought that building “below grade” highways was a good idea? Look at other states with highways at grade and you’ll see no flooding. So we blame Mother Nature. Guess again. Historian I have never seen Third World countries with flooded highways or even highways, for that matter. If anything, the images we are seeing are the result of 70 years of poor urban planning. Between the covering of natural drainage ditches and paving acres of roads, highways and parking lots, the water runoff is excessive and has nowhere to go. This event and the resulting conditions should be a warning to us about how delicate our urban lifestyle really is. BloggerDave
Reader responses to stories and blogs that appeared on Crain’s website. Comments may be edited for length and clarity.
How (are we) supposed to plan for unusual, unexpected flooding if we have no history of it? It would be like telling us we should have built earthquake-resistant buildings like California, even though we aren’t prone to them. Stephanie Morales Do you want to pay significantly higher taxes to support infrastructure for this type of rain, which (has) occurred twice in the last 89 years? GFD
Re: Tuition up, support down: Has college finally broken the bank? Maybe it’s time for more students to pursue a vocational or
trade school instead of a four-year degree that nets them a job at Starbucks instead of one of those highpaying jobs that are being promised if you go to school. What about working while you are going to school so you don’t end up in such a big hole at the end of four years? Too much play time while in school and not enough thought going into the end result after you graduate. I know, kids don’t want to be bricklayers, plumbers or electricians. That’s just not a cool job. G. Briggs This article deals with just one half of the equation — income to the schools. Maybe the real story is on the other side of the ledger. What are the dollars funding, how much time are the tenured professors spending in the classrooms compared to the business world, how do salaries, benefits, etc., line See Talk, Page 7
KEITH CRAIN: Woodward Dream Cruise: It is what we are Last Saturday ended what has become a weeklong celebration of the Motor City. Long before the official Saturday Dream Cruise, which likely saw a million spectators line Woodward Avenue for the 16-mile loop, people were camping out with their lawn chairs to enjoy and participate in the world’s largest automotive celebration. It seems fitting that this celebration is in the Motor City on famed Woodward Avenue. With thousands of cars cruising back and forth at lightning speeds of 5 mph, everyone knows that this
is the national event for people who love cars. Many would like to include the city of Detroit in the loop, but that would make more sense if the purpose were to create a new event rather than recreate a historic event. Back in the ’50s and ’60s, cruising Woodward meant traveling up to Square Lake Road and down to Eight Mile — that was the track for the muscle cars of those
decades. Many people have tried to include the state fairgrounds for many years, but without a lot of success. For the time being, the Dream Cruise remains the original route. Even the Great Flood of 2014 hasn’t dampened people’s enthusiasm. Cruising Woodward was a timehonored event back in those early years, with hot-rodders right next to
automotive engineers from the Big Three. With drivers strutting their stuff, it was a time with lots of drag racing with Detroit’s latest and greatest muscle cars of the era. Engineers were out testing their latest creations, usually flaunting their lawlessness right in front of police. That doesn’t happen anymore. If anyone in the world wants to challenge this as the largest motoring event, they will have a very long way to go to try to snatch away that title. People come from around the world to watch and enjoy this
event. Car enthusiasts bring their cars from every state in the continental U.S. It is certainly a big part of Detroit’s history. Even if it doesn’t take place within the boundaries of Detroit, the city can lay claim to this event with justifiable pride. Detroit is a lot more than just a city with boundaries. During the Dream Cruise, it is simply a celebration of what the community was all about. And for many what it still is all about. The Woodward Dream Cruise is what we are.
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MARY KRAMER: Biz volunteer cleanup helps remodel lives Last week, more than 10,000 volunteers descended on 65 blocks on Detroit’s west side that straddle the Southfield Freeway between Joy and Plymouth roads. The full tally — number of homes demolished, boarded up or remodeled and tonnage of urban forests of junk trees and other trash removed from lots and public sidewalks — was to be released Sunday afternoon. But the before/after is remarkable. And the best stuff is at the schools — a medical simulation lab and other labs at Cody High School and a new football field for a school that hasn’t played a home game in years. Kudos to the volunteers and the companies that supplied them —
LETTERS CONTINUED
like General Motors, with more than 3,000. Also to companies that supplied labor, expertise and materials, such as Barton Malow, Cunningham-Limp, ABB, Michigan CAT and many more. The nonprofit Life Remodeled began in 2010 by building homes in suburban communities for people who had never been homeowners. The shift to Detroit and schoolbased neighborhoods came when founder Chris Lambert said he re-
alized that one new house didn’t excite a neighborhood. “Why would people get excited to see one home that someone else gets for free?” he said. Lambert credited Detroit Public Schools Emergency Manager Jack Martin for embracing the concept. “Within two weeks of our first call, we were in his office, planning,” Lambert said. The project then engaged students and neighborhood residents in the planning — and the post-
makeover activities. I was part of a team from the Skillman Foundation and First Merit Bank that created one safe pathway for students walking to Henderson Elementary School on West Chicago Street. It was remarkable to see what a lot of weed wackers, lawn mowers, pruning shears and other tools — with a small army — could do in five hours. (Pass the Epsom salts, please.) Lambert started down a path to law school before a religious experience led him with his business degree from Indiana University to Fuller Theological Seminary in
California, ministry in Africa and pastoral roles in metro Detroit. Life Remodeled is a sectarian nonprofit, but Lambert is affiliated with Oak Pointe Church in Novi — popularly known as the place that former TV weather forecaster Chuck Gaidica joined as a minister. That was another “life remodeled.” Mary Kramer is publisher of Crain's Detroit Business. Catch her take on business news at 6:10 a.m. Mondays on the Paul W. Smith show on WJR AM 760 and in her blog at www.crainsdetroit.com/kramer. E-mail her at mkramer@crain.com.
TOP FIVE SIGNS YOUR EMPLOYEES MIGHT HAVE INFERIOR DENTAL COVERAGE:
■ From Page 6
up? Is there an income problem or a spending problem? ScottLyon
Re: IRS put lien on ex-state housing chief’s house Just politics as usual. This is just another reason why citizens should be seeking to reduce the ever-expanding size of government and their regulations. The people running them are either unethical or at best incompetent. Either way, time to reduce the controls these bureaucrats are placing on our freedom. No Spin; Facts Please
THEY ONLY GET ONE CLEANING PER DECADE, PER HOUSEHOLD.
THE DENTAL PLAN’S CUSTOMER SERVICE IS A 900 NUMBER.
THEIR DENTIST THINKS ROOT CANAL IS LOCATED IN VENICE.
Re: Slap in face of Chrysler suppliers? Marchionne gripe could chill relations Mr. Marchionne has had his path smoothed for him every step of the way until now. He may learn that extracting concessions isn’t as easy when it isn’t his good, good friends in the U.S. or Italian government on the other side of the bargaining table. BrendaKilgour
MOLARS ARE CLASSIFIED AS “OPTIONAL.”
Re: OU plan: Help autistic find work This is great news, and as a parent of a child with autism, I applaud any efforts to help build employment opportunities for adults with autism. However, it would be great to see more emphasis being put on higher education and development of more employable skills, such as in trades or technical applications, for our sons and daughters to overcome the problem of underemployment. 272069
Re: How Jason Hall pedaled across the iPad Detroit is full of energy and creativity. Our wealth of talent has been ego-bruised over the decades, but it’s fighting back and making things happen. When we get fully engaged and the rest of our doubters start espousing the greatness of this city, we will start to see even more positive expansion of our city. Tarrbot
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United Physicians congratulates 134 BCBSM** Patient-Centered Medical Home Designated Practices! Congratulations on earning this designation and your outstanding performance! Abdel-Wahab Meri MD PC *Alternacare PC *Andrew J Madak DO PC Angela D Hamlin DO PC *Arcturus Healthcare PLC - Associates of Family Medicine PC *Arcturus Healthcare PLC - Lifetime Medical Associates PC *Arcturus Healthcare PLC - Macomb Oakland Adult Medicine PC *Arcturus Healthcare PLC-Troy Internal Medicine PC *Beaumont Associated Family Care Physicians *Beaumont Associates of Internal Medicine Beaumont Beverly Hills Internal Medicine Beaumont Clearwater Family Practice *Beaumont Eastpointe Physicians *Beaumont Family Medicine Center - Sterling Heights *Beaumont Grosse Pointe Farms Family Physicians Beaumont Grosse Pointe Park Internal Medicine Center Beaumont Internal Medicine of Grosse Pointe Farms Beaumont Internal Medicine Pediatrics of RO Beaumont Lakeside Family Medicine Beaumont Metro Family Medicine Beaumont Neighborhood Family Medicine Beaumont Parkside Medical Associates Beaumont Physicians of Internal Medicine *Beaumont Shorepointe Family Physicians *Beaumont Shores Family Physicians *Beaumont St Clair Shores Family Medicine Center *Beaumont St Clair Shores Internists *Beverly Hills Pediatrics PC *Bradford Merrelli MD PC *Center For Pediatric & Adolescent Medicine PLC *Charles E Heth DO PC Charles G Godoshian MD PC *Child Health Associates PC *Christopher Wilhelm MD *Clarkston Lakes Family Medicine PLC *Clawson Internists PC *Colleen Kennedy DO PC *Commerce Internal Medicine, PC Curtis L Hunt MD PLC *David W Calton MD PC *Doctors for Kids PLC *Doctors of Internal Medicine *Eastman & Vempati MD PC *Eastman & Wozniak MD PC *Envision Medical Group PLLC Fonseka Internal Medicine - Beaumont Forum Medical Clinic PC Franklin Medical Consultants PC *Gary Hollander DO PLC Ghazala Zafar MD PC *Haller & Hug PC Internists 2000 PC *James Bauer MD PC
According to David W. Calton, MD, PC, in Washington, MI, it takes a team to earn this designation. To become a PCMH designated practice, primary care physicians lead a professional healthcare team that utilizes health information technology and administrative processes to deliver more coordinated, HIÂżFLHQW DQG HIIHFWLYH PHGLFLQH WR WKHLU SDWLHQW SRSXODWLRQ *Jay H Sandberg DO PC *John R Medical Clinic PC *Karle Medical Group PC *Keith C McKenzie MD PLLC *Kenneth J Kulik, MD *Kidz 1st PLLC Kristin A Keskey MD PC *Lisa Beth Speck MD PC *M-15 Family Medical Center PC *Macomb County Pediatrics PC *Mali & Mali Pediatrics PC Mansour Mercy Medical Center *Margaret Eckel DO *Merrillwood Pediatrics PC *MHP - Gary Langnas DO and Evan Stashefsky MD *MHP - Auburn Hills Medical Clinic *MHP - James M Kohlenberg MD *MHP - Ryan Medical Associates PC *Michigan Adult & Child Medicine PC Michigan Physicians Group PC Molly O Shea MD PLLC *My Second Home Pediatrics PLLC *Nada D Bachuri MD PC Nader S Meri MD PC *Nahed A Zakaria MD PC Nancy F Mansour-Habib, MD PC Neil D Jaddou MD PC Norman J Kakos MD PC *North Woodward Internal Medicine Associates PC *Northeast Pediatric Associates PC Northwood Physicians PC *Norton, Klein, Hug & Sabin MD PC *Orchard Pediatrics PC *Orion Family Physicians PC *Paint Creek Pediatric and Adolescent Care PC Pediatric & Adolescent Care Associates PC *Pediatric Consultants of Troy PC *Pediatric Healthcare PLLC 3HGLDWULF 6SHFLDOLVWV RI %ORRPÂżHOG +LOOV 3& Physicians Home Health PC *Preferred Family Medicine PC
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Thank you for your commitment to improving health care delivery and patient care quality! United Physicians, Inc. (UP) is one of Michigan’s largest independent physician organizations, representing 2,200 physicians with medical staff privileges at hospitals throughout Southeast Michigan. UP’s mission is to deliver a healthcare system of excellence to its community through a coordinated, efficient and integrated network of physicians. Visit www.updoctors.com. *Honor Roll= Honor Roll practices are practices that have been designated for the past two years. ** Blue Cross Ž Blue Shield Ž of Michigan is a nonprofit corporation and an independent licensee of the Blue Cross and Blue Shield Association.
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People 䡲 Tom Lauzon, executive vice president and CIO of Meridian Health Plan of Michigan, has joined Michigan Health Information Network Shared Services as a member of the board of directors. Lauzon 䡲 Beaumont Health System has announced: Perry Altman, M.D., orthopedic physician, received the 2014 Young Investigator Grant from the American Orthopaedic Society for Sports Medicine for a study on new treatment options for knee injuries and conditions. Beaumont surgical residents received four awards for presentations at the American College of Surgeons Resident Research Competition, Michigan Chapter: Andrew Bayci, M.D., education; Mohsen Bannazadeh, M.D., Szilagyi Vascular Award; Christina Jenkins, M.D., Alexander Walt Second Place Overall Award; and Ankur Aggarwal, M.D., the Frederick A. Coller Best Paper Award. David Haines, M.D., director of the heart rhythm center, Beaumont Royal Oak, was appointed to the American Board of Internal Medicine’s Haines Cardiology Board Clinical Cardiac Electrophysiology Exam Committee. Subra Sripada, executive vice president and chief administrative and information officer, was elected a board member of the Michigan Health and Sripada Hospital Association. Marie Doherty, R.N., director of care management, Beaumont Royal Oak, was appointed to a two-year term as secretary of the American Case Management Association, Great Lakes Chapter. Alicia Voorhees, R.N., Doherty received the National Annual Patricia Hansen Memorial Award from the American Society of PeriAnesthesia Nurses. 䡲 Nancy Schlichting, CEO of Henry Ford Health System, received the American College of Healthcare Executives SeniorLevel Healthcare Executive Regent’s Award for significant contributions to the Schlichting advancement of health care management excellence. 䡲 John Thorhauer, president and CEO of United Methodist Retirement Communities Inc., has been appointed chairman of the LeadingAge Michigan board of directors.
CARTER SHERLINE
Andrew Rosenberg, M.D., chief medical information officer at the University of Michigan Health System, says some hospitals participating in health information exchanges don’t send all potential medical data because of security concerns or worries that rivals will use the information against them.
The exchange factor Electronic data system points to a future of managing health, reducing costs, improving quality BY JAY GREENE CRAIN’S DETROIT BUSINESS
T
he health care and business communities in Michigan may be on the cusp of realizing the ultimate benefit of the free flow of online medical electronic data: Managing the health of patients as they move through the health care delivery system across the state and multiple care providers. As Michigan’s six health information exchanges continue to tailor their individual business plans for customers — typically, hospitals, physicians and health insurers — HIEs are moving closer to using clinical patient data to analyze population health, improve care coordination and more effectively identify patient risks for readmissions. Meeting these goals is important to
providers because they ultimately can help reduce inWhat do doctors desire from information dividual premiums exchanges, electronic and cut employer records? Page 11 health benefit costs, said Tim Pletcher, executive director of Lansingbased Michigan Health Information Net-
SECOND OPINIONS
work Shared Services. “Before, people didn’t have incentives to share information. As they have gone from fee-for-service, paid for volume, to be paid financial incentives for quality and outcomes, there is a desire to look across their borders” and work toPletcher gether to exchange clinical and cost data, Pletcher said. “Historically, doctors have only known 27 percent of the time when their patients have been in the hospital,” Pletcher said. “How do you do care coordination when you don’t know your patient has been sent home?” Pletcher said the use of electronic health records and health information exchanges by hospitals and doctors is radi-
cally changing how medicine is delivered. At the Connecting Michigan for Health 2014 conference in Lansing in June, more than 40 electronic data exchange experts from Texas, Rhode Island, Maine, Indiana, Illinois and Michigan described the evolutionary ups and downs in creating a national electronic health data highway. Doug Dietzman, executive director of the newly merged Great Lakes Health Connect, said HIEs will reach their full potential when providers, including hospitals and physicians, start accepting financial risk for taking care of patients. Great Lakes was formed through the Dietzman merger of Grand Rapids-based Michigan Health Connect, the state’s largest HIE, and Great Lakes HIE, or GLHIE, based in East Lansing. It is one of the largest in the nation, accounting for 80 percent of the state’s total licensed beds with 120 member hospitals, 20,000 physicians, 3,000 clinics and offices and consolidated revenue of $8 million, Dietzman said. See Exchanges, Page 10
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Health Care
Exchanges: More info, better quality? ■ From Page 9
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“This is an opportunity for me to offer you services to help you meet that need,” Dietzman said to representatives of hospitals, physicians and other providers at the recent HIE conference. “(HIEs) exchanging data will help you reduce risks, manage capitation risks and conduct population health management for out-of-network” patients. But Andrew Rosenberg, M.D., chief medical information officer at the University of Michigan Health System in Ann Arbor, said technical barriers and incentives to participating in health information exchanges first need to be overcome. “The technical barriers are reducing rapidly, not only for the big health systems but also for the smaller provider organizations and individual provider offices that are on certified electronic medical records,” Rosenberg said. “Once we do this (and hospitals, doctors and other providers share patient data), the clinical and cost containment benefits of managing population health can be achieved.” Rosenberg said some hospitals participating in HIEs are not sending all potential medical data because of data security concerns or worries that competitors will use the information against them. “We send huge amounts of data to Great Lakes Health Connect,” Rosenberg said. “Some providers don’t have sufficient incentives” to fully participate. Over time, however, as financial incentives align between providers to jointly improve quality and manage costs under shared managed care contracts, Rosenberg said, the ability for physicians and hospitals to monitor population health will improve. Pletcher said hospitals are realizing now that they have incentives to share data because of hospital readmission penalties if patients are readmitted anywhere within 30 days. “HIEs will help stop that patient from being readmitted, and that helps” hospitals financially, Pletcher said. “This is one of the early benefits of data exchange. The longerterm effort will be on population health.”
What is population health management?
Anthony Frabotta, BA ’73 Chairman and CEO, UHY Advisors MI, Inc. Co-CEO, UHY Advisors, Inc.
School of Business Administration business.wayne.edu
AIM HIGHER
Many definitions exist, but population health management has two key components: First is the ability to coordinate and track patient care to improve clinical quality and health outcomes. Second is managing that care to lower costs by reducing duplication of services and diagnostic testing and avoiding medical errors. But population health, by description, also means managing large groups of patients — 10,000, 20,000, 50,000 or more — through some risk-based contracting mechanism. “One-third of our patients (at the University of Michigan Health System) are taken care of by providers outside of our health system,” Rosenberg said. “If we are to manage their health in risk contracts, we need to have exquisite informa-
HEALTH INFORMATION EXCHANGES IN MICHIGAN A health information exchange is a nonprofit organization intended to help hospitals and physicians exchange patient information in a secure electronic format. Data include electronic messages, laboratory, pharmacy and imaging data along with documentation of care and admission discharge and transfer information, or ADT. Michigan’s foray into health information exchanges began in 2006 under Gov. Jennifer Granholm and with several million dollars of federal funding. Initially, nine health information exchanges were created in Michigan to allow competing medical providers to share patient information instantly in a secure format and to encourage the exchanges to experiment and grow within their regions. Over time, some exchanges closed and others have merged, leaving six operational HIEs in Michigan. Last month, two of the state’s largest HIEs merged. Michigan Health Connect and the Great Lakes Health Information Exchange formed Great Lakes Health Connect, one of the largest HIEs in the nation, with 120 hospitals, 20,000 physicians, 3,000 clinics and 80 percent of the state’s licensed beds. During the next two to three years, the goal is for the HIEs to be interconnected with each other and health insurance companies through the Michigan Health Information Network, formed in 2007 through the Michigan Department of Community Health with the help of $15 million in federal funds. Nationally, there are more than 250 health information exchanges, including 160 private exchanges. Eventually, all state exchanges are expected to interconnect to form a national health information exchange.
Michigan’s health information exchanges
䡲 Great Lakes Health Connect, Grand Rapids and East Lansing. Members
include Beaumont Health System, Ascension Health Michigan, St. John Providence Health System, Henry Ford Health System, Oakwood Healthcare Inc., University of Michigan Health System, Sparrow Health System, Michigan State University, McLaren Health Care, CHE Trinity Health and Botsford Hospital. Data exchanged include radiology and lab results, admission, discharge and transfer data in real-time. 䡲 Ingenium, Bingham Farms, a physician-led HIE founded by United Physicians that encompasses 1,327 participating physicians and 1.4 million patients in Southeast Michigan. About 180,000 admission discharge and transfer messages are exchanged every month and 3.5 million laboratory results each year to assist with care coordination. 䡲 Southeast Michigan Health Information Exchange, Detroit. SEMHIE is a consortium that since 2010 has focused on a contract with the Social Security Administration to develop an electronic disability claims system. Members include Oakwood, St. John Providence, Henry Ford, Beaumont, CHE Trinity Health, Detroit Medical Center and several health insurers, provider groups and employers. 䡲 Jackson Community Medical Records, a joint venture between Allegiance Health and the Jackson Physicians Alliance that also connects more than 1,000 users, or half the providers in the region, including a federally qualified health center and the Jackson County Health Department. It operates an integrated patient chart that includes medication lists, lab results, radiology, disease registry and physician notes. 䡲 Upper Peninsula Health Care Network includes the Dickinson County Healthcare System. The HIE is piloting various projects, including sharing information with participating providers on Medicaid and Medicare patients, working with Blue Cross Blue Shield of Michigan on claims data and working on a community electronic health record project. 䡲 Southeast Michigan Beacon Community is one of 17 similar organizations funded by the federal government to experiment with EHRs to improve the health of various populations. SEMBC focuses on improving care of patients with diabetes by increasing the number of patients who receive the recommended standards of care, reducing costs of care and decreasing nonurgent use of hospital emergency departments. — Jay Greene
MORE INFO Visit mihin.org/exchanges tion on them outside of our health system.” For example, what if a Detroit Tigers fan from Petoskey gets injured in a car accident after a game and is rushed to the emergency department at Detroit Medical Center? Data exchange on that patient through an HIE could enable the DMC to have immediate access to the patient’s health care history. This information could reduce costs and avoid potential medical errors, Pletcher said. Then, two days later, that fan is discharged from the hospital and goes home. But what happens to his or her medical record at the
DMC? If the DMC is able to send that patient’s ATD (admission, transfer and discharge) document to an HIE, then it would be possible for that information to be shared with providers in Petoskey for follow-up care, Rosenberg said. Sharing patient data like this will help hospitals and physicians lower costs, coordinate care, improve quality and reduce service duplication, Pletcher said. “They are trying to make a decision (about care), and the safest route is to admit the patient to make sure nothing is wrong,” Pletcher said. “If I have access to what is going on with patient, I can do something to stabilize patient and then tomorrow have patient go to cardiologist. I don’t have to admit.” A recent University of Michigan See Next Page
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NEW YORK YANKEES
Info exchanges, electronic records: What do docs desire? BY JAY GREENE CRAIN’S DETROIT BUSINESS
Some physicians want to converse directly with their electronic health records, and others just want to be sure patients’ privacy is protected when electronic data is exchanged between providers through health information exchanges. A recent panel discussion by five practicing physicians in June at the Michigan Health Information Network’s annual meeting in Lansing illustrated a range of feelings — from praise to frustration — about health information exchanges and electronic health records. Christopher Beal, D.O., an internist and chief medical informatics officer with St. Johns Internal Medicine PC and chief of staff at Sparrow Clinton Hospital in St. Johns, said he wants to talk with his EHR just as the two astronauts did with HAL in the Stanley Kubrick movie “2001: A Space Odyssey.” Like the Kubrick movie, Beal said, he wants to have a conversation first thing in the morning while he is in the shower with his
From Previous Page
study found that patients who visited the emergency departments of two hospitals participating in HIEs within 30-day periods reduced repeat imaging for computed tomography (8.7 percent), ultrasound (9.1 percent) and chest X-rays (13 percent). About 20,000 patient visits at 37 hospital emergency departments were studied in the report, “Does Health Information Exchange Reduce Redundant Imaging?” in the March issue of the journal Medical Care.
own “HAL” computer to discuss patients he will see later in the day. Beal also said administrators and vendors need to listen to doctors about design. “We want technology that helps us make improvements in our practices,” he said. “Go low-tech first.” On the other hand, James Ryan, D.O., a family physician and solo practitioner at Ryan Family Practice in Ludington, said most EHRs on the market do not make physicians’ lives easier. “It is depressing when you have to log in to” an inferior system, Ryan said. “Most systems are garbage. There are too many systems that are throwaways, and everyone knows they are. E-prescribing and scheduling are logical. You want to be able to chart.” Gregg Stefanek, a family practice doctor in Gratiot County, said physicians wish they could have single log-ins for all the various systems they have: electronic health records, disease registries and electronic prescribing. Scott Monteith, M.D., a psychiatrist at Grand Traverse Behavioral Medicine PC in Traverse City, said doctors want HIEs and EHRs to
help them support the Triple Aim — improving patient care experience, improving population health and reducing costs. “They want to leverage health information technology toward that end,” said Monteith, who described himself as a big supporter of EHRs. But Monteith said health care will be unable to achieve that goal until EHRs and HIEs are working together seamlessly. “We have way too many forms. We need insurers to standardize consent forms,” he said. Monteith also said doctors and hospital administrators also want better support from EHR vendors. “One health system CEO told me he was 30 percent less efficient some 4½ years after implementation,” he said. “I would have thought maybe six months.” Finally, doctors also want more assurances that privacy will be protected within HIEs and EHRs. “One patient told me she wouldn’t answer my questions if they went into a computer,” Monteith said. Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene
“You need access to (clinical and claims data),” said Tony Colarossi, a partner at Southfield-based Plante Moran PLLC, who leads the firm’s acute health care conColarossi sulting services practice. “The information itself is not population health. It is how you use the data.” Shaun Alfreds, COO of HealthInfoNet, Maine’s HIE, said 34 of the
state’s 37 hospitals, 34 federally qualified health centers and 400 other outpatient clinics contribute data to the state’s all-claims payer database. “Hospitals want to look at population health. We are crunching the data now to get the information into care management workflow. The goal is to know the risk of readmission before a patient is discharged,” said Alfreds, adding that early studies show the readmission predictions have been fairly accurate. Like a growing number of HIEs, HealthInfoNet’s data include patients’ encounter history, laboratory and microbiology results, radiology reports, adverse reactions and allergies, prescription medication history, diagnosis, conditions and problems, immunizations, vital signs, dictated/transcribed documents and continuity-of-care documents. Jim Lee, vice president for data policy at the Michigan Health and Hospital Association, said the ultimate use of patient care data is to coordinate care and manage patients wherever they go. Maine’s allpayer claims database is imLee portant to help hospitals analyze risk, Lee said. “We (hospitals) don’t have that data. The insurers have it,” he said. “Sometimes the past is a predictor of the future to know what your potential needs are.” Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene
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Health Care CON Report The following are selected filings for a certificate of need submitted to the state June 9-Aug. 14:
er connected to main hospital; $145 million.
Letters of intent 䡲 Children’s Hospital of Michigan, Detroit: Replace 48 existing hospital beds, 45 NICU beds and four operating rooms and move them into a newly constructed six-floor tow-
䡲 Providence Hospital and Medical
Applications received Center, Southfield: Expand cardiac catheterization services by adding one lab in space that would be renovated on the first floor of the hospital; $5.8 million.
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䡲 Surgical Center of Southfield LLC: Begin operating a freestanding surgical outpatient facility with two operating rooms; $2.6 million. Decisions Fountainbleu LLC, Sterling Heights: Begin operating a nursing home with 100 beds in a newly constructed leased building in Macomb Township; $7.5 million. Disapproved. 䡲 Romeo Nursing Center: Acquisition and replacement of the existing 35-bed nursing home with newly constructed leased space within the replacement zone by Trilogy Health Services LLC, Romeo; $2.9 million. Approved. 䡲 University of Michigan Health System, Ann Arbor: Renovate existing clinical space at the university hospital emergency department, university hospital operating room suite and the fifth floor of the building formerly named Mott Hospital; $36.4 million. Approved. 䡲 St. Francis Nursing Center, Detroit: Acquisition of the 81-bed nursing home by Mission Point of Detroit LLC; $2.8 million. Approved. 䡲 Havenwyck Hospital, Auburn Hills: Add 44 adult psychiatric beds under the high-occupancy provision; $2.5 million. Approved. 䡲 Henry Ford Medical Center, Dearborn: Replace two operating rooms within the licensed site and renovate one operating room; $1.5 million. Approved. — Natalie Broda
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This year’s Crain’s Best-Managed Nonprofit Contest is focused on good management practices of nonprofits. Applicants are asked to give examples of how they deploy their mission and resources, among other information. Applications are due Aug. 25. Finalists will be interviewed by judges the morning of Nov. 11. Applicants for the award must be a 501(c)(3) with headquarters in Wayne, Washtenaw, Oakland, Macomb or Livingston counties. Applications must include an entry form, a copy of the organization’s code of ethics, a copy of the most recent audited financial statement and a copy of the most recent IRS 990 form. Previous first-place winners are not eligible; neither are hospitals, HMOs, medical clinics, business and professional organizations, schools, churches or foundations. The winners will be profiled in the Dec. 1 issue, receive a “bestmanaged” logo from Crain’s for use in promotional material and will be recognized at Crain’s Newsmaker of the Year lunch early next year. For an application form, please email YahNica Crawford at ycrawford@crain.com or visit www.crainsdetroit.com/nonprofit contest. For information about the contest itself, email Executive Editor Cindy Goodaker at cgoodaker@crain.com or call (313) 446-0460.
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CALENDAR TUESDAY AUG. 19 Government Marketing Strategies. 9 a.m.-noon. Procurement Technical Assistance Center of Schoolcraft College. Course targeting business owners interested in learning how best to market to the government customer. Attendees should have a basic understanding of government contracting with federal, state or local government agencies. Schoolcraft CollegeVisTaTech Center, Livonia. $45. Contact: Carrie Vroman, (734) 462-4438; email: cvroman@schoolcraft.edu; website: schoolcraft.edu.
THURSDAY AUG. 21 Open Office Hours — Tech-Based. 9 a.m.1 p.m. TechTown Detroit. For entrepreneurs working on technology-based or enabled businesses, including advanced automotive, advanced computing, biotech, clean energy, engineering and medical devices. Seek an expert’s opinion on an idea or seek direction on how to secure funding, line up resources or make connections. TechTown Detroit, Detroit. Free. Contact: Diane Love-Suvada, (313) 879-5250; email: diane@techtowndetroit.org; website: techtowndetroit.org.
UPCOMING EVENTS Leadership Oakland Breakfast — The Road to Reinvention. 7:30-9 a.m. Aug. 26. With Josh Linkner, CEO, Detroit Venture Partners, on his latest book, The Road to Reinvention, MSU Management Education Center, Troy. $36. Contact: Susan Williams, (248) 9526880, ext. 3; email: swilliams@leader shipoakland.com; website: leader shipoakland.com.
Toast + Tech Talk Session 2: Surefire Ways to Attract, Retain and Motivate Talent. 7:30-10 a.m. Aug. 26. Plante Moran LLC, Automation Alley. Second in a four-part series on topics related to the technology industry, focused on helping growing companies develop the framework and tools to continue to compete. Free. Detroit Athletic Club, Detroit. Contact: Dan Artman, (248) 2233469; email: dan.artman@plantemoran.com; website: plantemoran.com.
Networking Reception with Mayor Mike Duggan. 5:30-p.m. Aug. 26. Detroit Regional Chamber. After Detroit Mayor Mike Duggan issues brief remarks, network with him and key staff members. Max M. Fisher Music Center, Detroit. $10 chamber members, $590 nonmembers (the cost of a membership). Contact: Marianne Alabastro, (313) 596-0479; email: malabast@detroitchamber.com; website: detroitregionalchamber.com.
Detroit Economic Club 18th Annual Detroit Lions Kickoff Luncheon. 11:30 a.m.-1:30 p.m. Aug. 27. Detroit Economic Club. Join the DEC as it welcomes new Detroit Lions head coach Jim Caldwell. Ford Field, Detroit. $45 DEC members, $55 guests of DEC
CALENDAR GUIDELINES If you want to ensure listing online and be considered for print publication in Crain’s Detroit Business, please use the online calendar listings section of www.crainsdetroit.com. Here’s how to submit your events: From the Crain’s home page, click “Detroit Events� in the red bar near the top of the page. Then, click “Submit Your Entries� from the dropdown menu that will appear and you’ll be taken to our online submission form. Fill out the form as instructed, and then click the “Submit event� button at the bottom of the page. That’s all there is to it. More Calendar items can be found on the Web at www.crainsdetroit.com.
Chrysler Day. 11:30 a.m.-1:30 p.m. Sept. 9.
JOIN LEADERS TO DISCUSS WESTERN WAYNE COUNTY Join chief elected officials and business leaders from 18 western Wayne County communities for an evening of networking and insights into the region in the second annual Western Wayne Business Leadership Banquet, 5-8 p.m. Sept. 25 at the Ford Motor Co. Conference & Event Center, Dearborn. Sponsors include Bank of America Merrill Lynch, Comcast Corp. and Fausone Bohn LLP. Crain’s Detroit Business Publisher Mary Kramer is the emcee, and the keynote speaker is David Sowerby, portfolio manager for Loomis, Sayles & Co. LP, Bloomfield Hills. Sowerby will address economic and business trends for western Wayne County and metro Detroit. Tickets are $100 individual, $1,500 corporate sponsorship for a table of eight. For ticket information, call Dan West, president, Livonia Chamber of Commerce, (734) 427-2122, or email him at dwest@livonia.org. members, $75 others. Contact: (313) 963-8547; email: info@econclub.org; website: econclub.org.
Detroit Economic Club Presents: Lowell McAdam. 11:30 a.m.-1:30 p.m. Sept. 8. Detroit Economic Club. Lowell McAdam, chairman and CEO, Verizon Communications Inc., will address the lunch meeting. MotorCity Casino Hotel, Detroit. $45 DEC members, $55 guests of members, $75 others. Contact: (313) 9638547; email: info@econclub.org; website: econclub.org.
Adcraft Club of Detroit. Luncheon presentation with Ralph Gilles, senior vice president, product design, and CEO, motorsports, Chrysler Group LLC. San Marino Club, Troy. $25 junior and student members, $35 members, $45 nonmembers. Contact: Melanie Davis, (313) 872-7850; email: mdavis@adcraft.org; website: adcraft.org.
Cracking the Gender Code at Work. 11:30 a.m.-1:30 p.m. Sept. 9. Inforum. With Connie Glaser, corporate consultant and author of GenderTalk Works, More Power to You! and Swim With the Dolphins. Townsend Hotel, Birmingham. $25 students, $40 Inforum members, $55 nonmembers, $700 preferred seating for 10, with recognition in event presentation and signs, access to VIP reception. Contact: Deb Roy, (313) 2258244; email: droy@bcbsm.com; or Melissa Countryman, (313) 225-7223; email: mcountryman@bcbsm.com; website: inforummichigan.org. 5th Summit on the Future of the Connected Vehicle. 7:30 a.m.-6 p.m. Sept. 11. Connected Vehicle Trade Association, Michigan Department of Transportation. Participants will include automakers; suppliers; hardware, software, services and communications companies; insurers; and state and federal government officials. Cobo Center, Detroit. $300 government representatives, $400 speakers and CVTA members, $500 nonmembers; all prices increase $100 after Aug. 28; $100 extra to attend Intelligent Transport System World Congress Expo and Demos, Sept. 10. Contact: Scott McCormick, (734) 730-8665; email: sjm@connectedvehicle.org; website: connectedvehicle.org.
How the Destruction of the Dollar Threatens the Global Economy and What We Can Do About It. 11:30 a.m.-
Sept. 15. Detroit Economic Club. With Steve Forbes, chairman and editor-in-chief, Forbes Media, presenting a controversial argument about why a return to a sound dollar and a new gold standard are vital to the future of the global economy. Forbes and Elizabeth Ames are the co-authors of How the Destruction of the Dollar Threatens the Global Economy and What We Can Do About It. Westin Book Cadillac, Detroit. $45 DEC members, $55 guests of members, $75 others. Contact: (313) 963-8547; email: info@econclub.org; website: econclub.org.
Estate Women Detroit. Recognizing three commercial real estate developments that significantly affect surrounding communities, focusing on renovation or adaptive reuse, new construction and special impact. Westin Book Cadillac, Detroit. $65 CREW members, $90 nonmembers, $130 members and a guest, $800 table for 10. Registration deadline: Sept. 8; table reservation deadline: Sept. 1. Contact: Nicole Franzen, (248) 2330107; email: nrfranzen@hedev.com; website: crewdetroit.org.
Let the Giant Buy Your
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1:30 p.m. (plus 1:35 p.m. book signing)
Take care of your career. If you currently work in health care, or aspire to, Western Michigan University oers multiple health care degree options at our Metro Detroit location. We are preparing today’s professionals to transform health care and human services tomorrow. Contact WMU-MetroDetroit at (248) 485-4500 for more information about the following programs: t "MDPIPM BOE %SVH "CVTF Graduate CertiďŹ cate (online) t *OUFSEJTDJQMJOBSZ )FBMUI 4FSWJDFT # 4 POMJOF
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CREW Detroit Impact Awards. 11 a.m.1:30 p.m. Sept. 17. Commercial Real
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CRAIN’S DETROIT BUSINESS
CRAIN'S LIST: LARGEST AUTO DEALERS Ranked by 2013 revenue Company Address Rank Phone; website
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.
Top executive(s)
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CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS
THE MILLER LAW FIRM
PEOPLE
Changing the Odds in our Clientsâ&#x20AC;&#x2122; Favor
ARCHITECTURE Dennis McGowan to associate vice president, Hobbs + Black Associates Inc., Ann Arbor, from senior associate. Also, Tom Dillenbeck to associate vice president, from senior associate.
CONSULTING Brittany Guerriero to executive vice president, Right Management Inc., Southfield, from director of corporate relations, United Way for Southeastern Michigan, Detroit.
The Miller Law Firm is Recognized as a Leader in Complex Business Litigation Q
Automotive supplier counseling
Q
Commercial and business lawsuits
Q
Employment litigation
Q
Shareholder and partnership disputes
EDUCATION Polly Fisher to director of early childhood program, The Academy of the Sacred Heart, Bloomfield Hills, from director, Our Shepherd Lutheran Child Care, Our Shepherd Lutheran School, Birmingham.
Referral fees honored on contingency fee cases
950 West University Drive, Suite 300 Rochester, Michigan 48307
248-841-2200
FINANCE
millerlawpc.com
IN THE SPOTLIGHT Gongos Inc., Auburn Hills, has appointed Katherine Ephlin COO. She will be responsible for overseeing day-to-day operations for the parent company and its business units, Gongos Research and O2 Integrated. Ephlin replaces Ephlin Camille Nicita, who became CEO in 2012 upon the death of John Gongos, the companyâ&#x20AC;&#x2122;s founder and CEO.
Ephlin, 45, had been Gongosâ&#x20AC;&#x2122; vice president of operations after serving as director of the financial and diversified team at Gongos Research. Before joining the company, she was an independent consultant and marketing manager at General Motors Co. Ephlin earned a bachelorâ&#x20AC;&#x2122;s degree in psychology from the University of Vermont, Burlington, Vt., and an MBA in marketing management from Michigan State University. Gongos provides primary research and market intelligence services to the consumer product, retail, financial service, transportation and technology industries.
Team USA, Dominoâ&#x20AC;&#x2122;s Pizza Inc., Ann Arbor, from vice president, Americas region.
cations LLC, Farmington Hills, from
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Tablet Users: Have you seen whatâ&#x20AC;&#x2122;s NEW at crainsdetroit.com?
Czarnota
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dale, from director of philanthropyOakland County, Evangelical Homes of Michigan, Farmington Hills.
LAW
SERVICES
Fenton
Steven Bender to partner, The Health Law Partners PC, Southfield, from
R. Michael Czarnota to senior
managing counsel, Health, Livonia.
CHE
HOSPITALITY Stan Gage to executive vice president,
Holly Nieuwendijk to project manager and performance consultant, Innovative
Trinity
MARKETING
Learning Group Inc., Royal Oak,
Nieuwendijk
Guaranteed Rate Inc., Birmingham.
She will take on the new role in addition to her previous title of vice president of mortgage lending, Troy. Larry Stawiarski to vice president and senior counsel, Pinnacle Wealth Management, Brighton, from senior manager, Insulgard Security Products, Brighton.
Marina Glagolev to executive director, Ferndale Area Chamber/Oak Park Alliance Chamber of Commerce, Fern-
Betsy Reich to director, premier insurance solutions, Colburn Group, Troy, from assistant vice president, premier personal lines, Huntington Insurance Inc., Birmingham.
vice president and chief tax officer, Flagstar Bank, Troy, from director, PricewaterhouseCoopers LLP, Detroit. Bonnie Fenton to branch manager,
School of Business
account coordinator.
from independent consultant, Illumination Communications LLC, Bloomfield Hills.
PEOPLE GUIDELINES Scarlet
Sisco
Susan Scarlet to vice president, strategic branding, Gongos Inc. , Auburn Hills, from senior director, strategic branding.
Maggie Sisco to account manager, Tanner Friedman Strategic Communi-
Announcements are limited to management positions. Email them to cdbdepartments@crain.com or mail notices to Departments, Crainâ&#x20AC;&#x2122;s Detroit Business, 1155 Gratiot Ave., Detroit, MI 482072997. Photos are welcome, but we cannot guarantee they will be used.
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BUSINESS DIARY CALL FOR NOMINATIONS The Association of Fundraising Professionals Greater Detroit Chapter is calling on local nonprofits to submit their organizationsâ&#x20AC;&#x2122; volunteers to be recognized at the National Philanthropy Day Dinner, Nov. 12 at Cobo Center, Detroit. The event is presented by Crainâ&#x20AC;&#x2122;s Detroit Business. Deadline for recognition forms is Sept. 8 at afpdet.org. For more information, call Rachel Schultz, (248) 579-5004, or email her at rachel.schultz@afpdet.org.
try, Mooresville, N.C.; and Ritron Inc., Carmel, Ind. Also, during the first half of 2014, 25 customers went live on the Plex Manufacturing Cloud. Website: plex.com.
EXPANSIONS Rate Inc., Chicago, opened a mortgage lending location at 33477 Woodward Ave., Suite 1000, Birmingham. Telephone: (248) 8354440. Website: guaranteedrate.com.
ing for new business ventures, globalization through mergers and acquisitions, and international tax consulting to U.S. and Canadian companies and organizations looking to invest and expand in cross-border initiatives. Websites: bakertilly.com; collinsbarrow.com.
Guaranteed
STARTUPS Onyx Modern Steakhouse & Whiskey Bar opened at 208 W. Fifth St., Royal Oak. Telephone: (248) 543-6911. Website: onyxroyaloak.com.
CONTRACTS
NEW PRODUCTS
Shelving Inc., Auburn Hills, complet-
Burroughs Inc., Plymouth, a provider
ed a multilevel shelving and pushback racking warehouse project at the new branch in Toledo, Ohio, for Zatkoff Seals & Packings, Farmington Hills. Websites: shelving.com, zatkoff.com. MiPro Consulting LLC, Milford, was retained by the Susan G. Komen Breast Care Foundation, Dallas, to upgrade its PeopleSoft Financial application to PeopleSoft 9.2. Website: miproconsult ing.com. Plex Systems Inc., Troy, a software supplier, added new Plex Manufacturing Cloud customers including Irwin Seating Co., Walker; Queen City Pas-
of technology services, launched the Quantum DS next-generation desktop sorter for processing payments. Website: burroughs.com.
NEW SERVICES Baker Tilly Virchow Krause LLP, Southfield, and Collins Barrow Windsor LLP, Windsor, accounting firms and independent members of Baker Tilly International, created service desks at both locations to provide expertise in areas including assurance and related compliance services, cross-border financ-
DIARY GUIDELINES Email news releases for Business Diary to cdbdepartments@ crain.com or mail to Departments, Crainâ&#x20AC;&#x2122;s Detroit Business, 1155 Gratiot Ave., Detroit, MI 482072997. Use any Business Diary item as a model for your release, and look for the appropriate category. Without complete information, your item will not run. Photos are welcome, but we cannot guarantee they will be used.
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Cupcake retailer Just Baked whips up new niche with kiosks BY COURTNEY BALESTIER SPECIAL TO CRAIN’S DETROIT BUSINESS
Sometimes it’s all about sticking with the original recipe. When cupcake retailer Just Baked attempted to transition from consumer retail sales to a wholesale distribution network that included grocery stores, the company discovered selling gourmet cupcakes wholesale was a big-effort, low-profit proposition. So into the batter last year came a new group of investors and a more targeted plan to sell cupcakes through mall kiosks. At $3 a pop for specialty treats, the company says it is on track for $3.2 million in revenue through 19 locations this year.
Bakers and backers Just Baked started with a bang in 2009. One day, after baking too many treats, owner and founder Pam Turkin opened her bakery doors to sell an overflow of 120 treats. It worked: That month, Just Baked did $1,700 worth of business. The next month, it did $17,000. “It’s just had a life of its own,” Turkin said from the Livonia headquarters of Just Baked, which now includes 19 locations in Turkin Michigan and Ohio. Food trends have natural arcs, though; as the cupcake trend moves through its arc, Just Baked adjusted its business plan with a new lower-cost retail strategy: mall kiosks. Initially, Just Baked was focused on
COURTESY OF JGA
Just Baked, which operates in mall kiosks like the one in this rendering, sells intricately decorated cupcakes offered in flavors ranging from funfetti to tiramisu.
opening standalone stores and taking on franchises (the first now has three stores with the company). “We were totally self-funded, so we grew it as organically as we could,” Turkin said. Then, in 2011 — in need of capital and a newer, bigger space — Just Baked drew the interest of executives from Garden Fresh Gourmet, the Ferndale-based salsa company. Garden Fresh provided capital and expertise through equity ownership to help Just Baked grow a program in grocery stores. But the Garden Fresh partners sold their stake to a new investor group, Ryan and Eric Goodman, of Royal Oak-based R&E Development, last year. “(Garden Fresh’s) focus was really on wholesale, grocery stores, and it took us six or seven months to realize that probably wasn’t our spot in the world,” Turkin said.
Thinking big by thinking small The Goodman brothers, who met Turkin through a mutual friend,
were attracted to Just Baked’s established branding. “I was already trying to invest in other franchisee concepts,” Ryan Goodman said, “and trying to bring something that’s not already here, it’s pretty difficult.” Since joining Just Baked, he’s focused on real estate negotiations, while Eric Goodman has jumped into daily operations, even baking and working in stores. It’s been a natural collaboration. “We definitely have the same vision of where we want to go,” Ryan Goodman said. “We’re on the same letter on the same word on the same page.” That vision involves the nimble little spaces and flexibility that mall kiosks have to offer. Each Just Baked location offers 30-45 different flavors a day — from best-sellers like Grumpy Cake and seasonal favorites like key lime — but they’re all baked in Livonia (also home to Just Baked’s customcake arm, which reports revenue of
Alley: Army renews equipment pact ■ From Page 3
many (defense) programs are transferring from production to sustainment,” Raubinger said. “Most of the vehicle industry in particular will be in sustainment mode. “There are officials on some of these vehicle and other programs who haven’t yet managed a program in sustainment mode, and we can actually help them do that.” The first directive under the new contract will be to complete a sustainment engineering risk assessment for the Army’s fleet of Bradley Fighting Vehicles, an assessment that Raubinger estimates will cost about $300,000. The assessments tell the Army which components or materials were built by companies that are out of business or were made with materials that no longer are available on the market or for which no current design specifications or blueprints can be found. Automation Alley also can, with help from various companies, reverse-engineer and re-create those technical specifications using material analysis, 3D image scanning and computer-aided design modules. The organization then submits a complete data technical package,
and sometimes a replacement prototype for those components or systems, that the U.S. Department of Defense can use to seek replacement-part production bids from manufacturers. “In this region (of Michigan), you can get virtually anything made, if you can just tell people here what specifically you want,” Raubinger said. “It’s just amazing the manufacturing capacity you have right here.” Among the local companies that take part is Warren-based Waltonen Engineering Inc., which provides 3D scanning and CAD engineering services to the Alley for military equipment. Tom Laboda, director of business development for Waltonen, said the Army design work was a steady piece of Waltonen’s business under the previous Alley contract, and the company has the capacity to do more if demand grows. “It’s definitely a very strong part of our business,” Laboda said. “I wouldn’t say that it’s accelerating for us just yet, but we do know the military is going into a reset and recap mode, and a lot of replacement parts have to be made.”
Other local companies that assist the Alley with technical specifications and pre-production development for the Army include Lanzen Fabricating Inc. and RCO Engineering Inc., both of Roseville; Top Craft Tool Inc. of Clinton Township; Elmhirst Industries Inc. of Sterling Heights; Detroit Flexible Metal Products Co. of Troy; and Detroit Radiator Corp. of Romulus. Under the contract, Automation Alley also expects to recommend alternative sources or parts for the Army using its VisCom database tool, which lists tens of thousands of manufacturers and suppliers and their capabilities nationwide. The organization also will design and engineer specific hardware and software as needed and sometimes complete limited production runs for crucial parts on an emergencyresponse basis. Army production awards generally will go out for bids through FedBizOpps.com and other channels under the government’s Diminishing Manufacturing Sources and Material Shortages acquisition procedures. Chad Halcom: (313) 446-6796, chalcom@crain.com. Twitter: @chadhalcom
about $1 million a year). With no need for a commissary area for baking, a mall kiosk is the perfect footprint. Just Baked’s first mall site was at Fairlane Town Center. It now has kiosks at Twelve Oaks, and Great Lakes Crossing Outlets, and has just opened its first location outside the state, in Toledo’s Franklin Park Mall. It is currently scoping locations in Cleveland. “We’re in 200 square feet in Franklin, and it’s doing double what any of our stores were doing,” Turkin said. That location also has a Just Baked first: full-service coffee, a partnership with Chicago’s Intelligentsia Coffee that Turkin hopes to include into future expansions. Darren Tristano, executive vice president of food-market research firm Technomic, says cupcake business growth will be in lower-cost, scaled-down spaces, not the large cupcake destinations of the craze’s early days. “We’ve seen the peak and flattening of the cupcake trend,” he said. For Just Baked, thinking smaller
with real estate seems to be working: This is the first year of steady improvement, after a couple years of growing pains, Turkin said. Now, Turkin and the Goodmans are focusing on what works — like kiosks — and pruning what doesn’t. For instance, while current franchisees will retain their stores, the company is backing off new franchise agreements. The team is assembling an executive team and mulling more kiosk site expansions. The company also has just introduced a new flavor, Brownie Brittle, as well as muffins, and a new chocolate line is in the works. The custom-cake business is expanding, too. Growth will also bring new discussions about operations, like whether to open commissary locations to serve fartherflung locations. “We know now the economics of our footprints work,” Turkin said. “So the real question, at the point we’re at, is ‘How do you get from 19 to 100 or 19 to 500?’ ”
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CRAIN’S DETROIT BUSINESS
WBEC-Great Lakes 14th Annual Women’s Business Conference Join the Center for Empowerment and Economic Development (CEED) at the largest women’s business conference in Michigan! Achieve six months of sales prospecting at Meet the Buyers and Women’s Business Showcase and Reception, where special contract opportunities and supplier matchmakers are available for WBENC certified women business enterprises. Over 60 corporate procurement and supplier diversity professionals and government representatives are confirmed to attend. September 29-30 Suburban Collection Showplace, 46100 Grand River Ave., Novi Registration: miceed.org
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10th Annual Taste of SouthÀeld The Annual Taste of Southfield celebrates what’s right about business and commerce in Southfield. The event includes a reception with a strolling buffet and live entertainment. Join us to promote our area businesses and restaurants while building a strong business/community relationship. October 7 • 5-8 p.m. Southfield Town Center Atrium, 2000 Town Center, Southfield Registration: southfieldchamber.com
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1. 1 N. Saginaw 2. 28 N. Saginaw 3. 31-33 N. Saginaw 4. 87 N. Saginaw 5. 10-12 W Pike 6. 40 Pike 7. 31-35 Huron 8. 50 Wayne Mill
Mardi Gras Sales for Salespeople and Entrepreneurs Taking the originality of Mardi Gras and applying it to sales, Michelle Bracali will share how to better stand out in a crowded marketplace, differentiate from the competition and build a stronger personal brand. September 25 • 5:30-7:30 p.m. Chamber Office, 24300 Southfield Rd., Suite 101, Southfield Members: Free • Non-Members: $10 Registration: southfieldchamber.com
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In The Public Eye From Feared to Welcomed: How Public Relations Can Help Expand Your Business Topics will include the power of branding, telling your story through the media, social media as a PR tool and a media panel comprised of industry leaders from Crain’s Detroit Business, WWJ News Radio 950, WJBK Fox 2 and MLive. Sponsored by Delphi Foundation and Oakland University October 23 • 8 a.m.-Noon Altair, 1820 East Big Beaver Rd., Troy Members: $45; Non-Members: $75 Registration: (248) 641-8151, theteam@troychamber.com or troychamber.com/events
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tings, many people are expressing support in the rebirth of Pontiac to be the bookend on the other side of the Woodward corridor. “Detroit and Midtown have done an amazing job of repositioning themselves, and coupled with the continued success of Royal Oak and Birmingham, it seems only logical that Pontiac is poised for a new start.”
e Wayn
PARTNER EVENTS
■ From Page 1
aw Sagin
UPCOMING
Pontiac: Three-year project launches Pine
2014
August 18, 2014
Looking north on Saginaw Street 6 1 last week, fellow project investor 5 Bob Waun, vice president of busiPike ness development for Core Partners, counts off about a half-dozen buildner with exist- foot Strand Theatre, at 12 N. Saginaw. ings and three parking lots that he ing property Kyle Westberg, president and CEO owns. owners and keep of Pontiac-based West ConstrucThose buildings and a handful them in the rede- tion, said Strand investors still seek more are expected to be the inabout $4 million in financing for the COSTAR GROUP INC. velopment plan vestors’ playgrounds, becoming the sites of a combination of multi- 1 N. Saginaw St. if they want to project. He expects the Strand project, be there and be family residential, office and retail which will also part of the improvements.” space — and possibly even a hotel. include new All told, the investment group All told, investors envision 175restaurant 225 residential units, between 50,000 owns or has under contract about space, to be comand 75,000 square feet of loft and tra- 450,000 square feet of space and pleted by the ditional office space, boutique and more than 400 parking spaces downend of next year. destination retail, and restaurants town. Although The redevelopment follows the and entertainment space. those were imThe largest of the projects would work of a lot of good foot soldiers portant to downbe a $15.6 million renovation of the in the city, Waun and Farrell said. town, the area “We aren’t the knights coming 135,000-square-foot Oakland Towne outside of it has Center at 28 N. Saginaw St., a 15-sto- in to save Pontiac,” Waun said. Westberg been much more “There has already been ry building that would be so much good work by so active. converted into nearly 100 Last year, General Motors Co. anmany good people that, beloft apartments and 40,000 cause of their good work, nounced a $200 million investment square feet of Class A office we see a real opportunity to shift about 400 jobs from Warren, space, plus retail and here to build upon the Wixom, Indiana and California to restaurant space. great foundation that’s al- Pontiac through a 138,000-squareThe investors are under ready been laid by so foot expansion of its powertrain encontract to buy that buildgineering headquarters at 777 many people before us.” ing, which was long However, too often the Joslyn Ave. north of Montcalm, known as the Pontiac State efforts to improve down- bringing it to 588,000 square feet. Bank Building. There is also the M1 Concourse town have been too limitThe 61,000-square-foot LLC project, a $40 million-plus effort ed in scope, Farrell said. Riker Building, at 31-35 COSTAR GROUP INC. “Many great people have to redevelop a former GM plant at Huron St., would be turned 28 N. Saginaw tried to enhance and give Woodward Avenue and South into a boutique hotel or St.: Also known downtown Pontiac an op- Boulevard into a 1.5-mile recremixed-use development as the Pontiac portunity to turn around ational test track, automotive event with a $2.5 million to $4.8 State Bank in the past,” he said. “Un- complex and more than 250 car conmillion price tag. The in- Building fortunately, most of the dos for owners of classic and highvestors are under contract previous efforts have been end cars to store vehicles in a clito buy that, too. The vacant ‘silo’ projects and did not mate-controlled environment. 31,000-square-foot building M1 Concourse closed on the purprovide balance and susat 50 Wayne St., owned by chase of the 87-acre RACER Trust tainability to the area.” Waun’s RE Fund LLC, would Farrell said downtown site this month. The first phase of be turned from office space Pontiac needs more day- condos will go up for sale next into 16 apartments, plus time foot traffic, a strong month; the first phase is expected 6,000 square feet of retail housing market and night- to open next summer. and office space, for $3.7 Then there is the $129 million palife. million. At Waun’s build“This is huge,” Mayor tient tower at St. Joseph Mercy Oaking at 40 Pike St., the forDeirdre Waterman said of land, a 301,000-square-foot, eightmer 22,500-square-foot story building featuring 136 private COSTAR GROUP INC. the plans. “These are the failed Sevin Nightclub buildthings we are trying to rooms and 72 additional patient ing would be turned into of- 31-35 Huron St.: fice or creative flex space The Riker Building make the ground fertile beds at 44405 Woodward. That was completed this year. for.” with a $1.25 million renovaThere is the $1.5 million Wessen tion, investors said. SmallLawn Tennis Club Inc. project, a develer renovations to add loft opment with 24 grass and two hard office space, loft apartThe investors’ plan courts that opened this summer and ments and creative workwould be another large in- also will feature an Olympic-size space are planned for other vestment in the city, but swimming pool at 235 Wessen St. buildings, including the 12,000-square-foot building one of just a handful downAnd then there was the $16.7 COSTAR GROUP INC. at 1 N. Saginaw, where the 50 Wayne St. town in recent years. million Ultimate Soccer Arena proformer JD’s Key Club and The largest was the $20 ject in 2010. Coyote Club were located, million redevelopment of Recent development plans outand the 3,800-square-foot the 80,000-square-foot for- side downtown are “kind of a surbuilding at 9-11 W. Pike St. mer Sears, Roebuck & Co. round sound and will help create Waun owns those, too. department store by West that connection to the downtown Waun said the investConstruction Services into area, which is so viable,” said Brad ment group wants to work Oleshansky, co-owner and CEO of COSTAR GROUP INC. Lafayette Place — featurwith current property 40 Pike St. ing 46 high-end loft apart- M1 Concourse. owners for the betterment ments, the Lafayette MarWaun said those projects will be of downtown Pontiac. ket and Anytime Fitness at 154 N. a boon to the downtown redevelop“We are not taking over and run- Saginaw. It opened in 2012. ment plan. ning people out,” he said. “This is There is also the planned $20 milnot gentrification. We want to part- lion renovation of the 38,000-squareSee Next Page
Not just downtown
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August 18, 2014 From Previous Page
“Wessen, M1 Concourse, Ultimate Soccer, the new (municipal) golf course owner (The Links at Crystal Lake) all create rich amenities for loft apartment residents and maybe even an opportunity for a boutique hotel,” he said. With all that development, Pontiac could become a new hip spot in the region, along the lines of Royal Oak, Ferndale and Birmingham. Downtown Pontiac is “the biggest untapped opportunity in southeastern Michigan,” Oleshansky said.
‘A collaborative effort’ While many among the investment group’s roster have significant real estate backgrounds, others are relative newcomers to the field. “This is a collaborative effort of a lot of good people coming together to help the downtown be all it can be,” Waun said. For example, Lauren Rakolta — the daughter of John Rakolta Jr., CEO of the Detroit-based construction company Walbridge Aldinger Co. — is an investor. She is finance consultant for David Trott’s congressional campaign and Gov. Rick Snyder’s re-election bid and the Michigan finance consultant for the Republican National Committee. And then there’s Anthony Garth, a director for Royal Oak-based Avalon Films. There’s professional Royal Oak photographer Alan Davidson and John Hamaty, president of Vibra-Tite Adhesives, a division of Clawson-based ND Industries Inc. Hamaty — who invested with Waun in residential real estate renovation projects in Ferndale, Hazel Park and Pontiac following the market crash — sees this new investment as sound. “The upside potential for a fairly modest investment, to me, is fairly significant,” said Hamaty, who is also a board member at the Bank of Birmingham. “It’s in the center of Oakland County, one of the wealthiest counties in the U.S. It’s fairly attractive when you can buy real estate at subpar, Detroit-type pricing but in the middle of Oakland.”
Factoring in A combination of factors in Pontiac attracted the investors, who expect to finance their project in part with historic and brownfield tax credits. First, former Emergency Manager Louis Schimmel and other EMs dramatically reduced the size of government, eliminated nearly $90 million in debt and streamlined city processes.
CRAIN’S DETROIT BUSINESS
A PARTIAL LIST OF INVESTORS: 䡲 Matt Farrell, executive principal,
partner, board member, Core Partners Associates LLC, Birmingham 䡲 Larry Goss, executive vice president, Core Partners and Burton-Katzman LLC 䡲 Bob Waun, vice president of business development, Core Partners 䡲 Adam Duke, associate partner, Core Partners 䡲 Loren Guzik, senior director of brokerage, Cushman & Wakefield, Chicago 䡲 Rick Herbert, managing partner, Herbert & Associates PC, Pontiac 䡲 John Hamaty, president, VibraTite Adhesives, Clawson 䡲 Gary Speet, retired manufacturing executive 䡲 Alan Davidson, photographer and real estate redeveloper 䡲 Andrew Basile Jr., shareholder, Young Basile, Troy 䡲 Don Kegley, president, Cunningham-Limp Co., Farmington Hills 䡲 Lauren Rakolta, finance consultant, Bloomfield Hills 䡲 Anthony Garth, director, Avalon Films, Royal Oak Additionally, the city contracted with the Oakland County Sheriff’s Department for police patrols and the Waterford Township Fire Department for fire services, greatly improving public safety in the community of about 60,000, said investor Don Kegley, president of Farmington Hills-based Cunningham-Limp Co., a design and construction firm. “I’m not going to take my wife there or let my kids go there if it’s not safe,” Kegley said. “Without that safety and what the Oakland County Sheriff’s Department has done, we wouldn’t be here.” Finally, Schimmel disbanded a slew of business organizations with a potpourri of visions to put the city’s eggs in one basket: the Pontiac Downtown Business Association, headed by Glen Konopaskie. Another sign the region is ready for the project: Markets like Auburn Hills and Troy along the I-75 corridor are filling up, leaving fewer parcels of appropriately zoned land, Kegley said.
Fixing the Loop Crucial to the project’s success is the reconfiguration of the Woodward Loop, the investors said. Long considered a detriment to foot traffic because its configuration around downtown discourages people from visiting, city and county officials have been considering a plan to turn the roadway from one-way to two-way, add bike lanes and change
traffic signals. “It’s such a critical element to give the downtown a pulse and a heartbeat. The opportunity is there to turn Pontiac back on,” Farrell said. The project would be relatively inexpensive — about $6 million — because the concrete infrastructure is in place and little right-ofway acquisition is needed. This year, the Pontiac City Council voted to include the Downtown Pontiac Traffic Assessment, which includes the Woodward Loop reconfiguration, in its draft master plan, a document pending council approval and now in the public comment period, said Charlotte Burckhardt, principal planner for the Oakland County Economic Development and Community Affairs Department. Burckhardt said that in the next month, city and council officials will meet with the Michigan Department of Transportation, which maintains the road and would be largely responsible for funding the improvements.
Planning stage Farrell said preliminary project plans have been presented to city officials such as Waterman and City Administrator Joe Sobota as well as Oakland County Executive L. Brooks Patterson and Deputy County Executive Matthew Gibb. Core Partners is expected be responsible for leasing the renovated downtown spaces to tenants; Cunningham-Limp is expected to do the construction and design work. By the end of the month, the group plans to form Indian Hill Co. LLC as the umbrella entity of the buildings in the project area. Waun said it’s too early in the process to start pulling construction permits or submitting formal site plans to the city. Yet work is expected to start soon, with “some real progress” on the project expected by the holiday season this year and renovated office space opening this winter. When the bureaucratic process starts, Waterman foresees a relatively smooth ride. “I’m not anticipating hurdles, but with a project this size, they could be there,” she said. Even without the official organization formed, work went on at Waun’s 1 N. Saginaw building, the former JD’s Key Club and Coyote Club on Friday, the day before the start of the Woodward Dream Cruise. Wall covering had been removed, exposing some of the worn brick underneath the walls. “This,” Waterman said of the downtown redevelopment, “is exactly what Pontiac needs.”
Packard: Display Group’s new home ■ From Page 3
He expects the first phase of renovations to cost about $500,000. The purchase of the building, at 6235-6299 Concord St., closed on July 24, according to Washington, D.C.-based real estate information service CoStar Group Inc. Finding the right space was difficult for Portwood in a tight industrial market. After a bid on a building in Corktown fell through, he contacted his broker and reviewed a list of available properties.
“It was slim pickings,” he said. “I looked at a few and didn’t see anything that really excited me.” Kevin Hegg, vice president of the Canton Township office of Ashley Capital LLC, said finding quality space the size that Display Group was looking for is tough. “There have been some recent (industrial) requirements of 200,000 to 500,000 square feet wanting to be in the city, but they were having difficulty finding it,” he said.
Palazuelo, who closed on his Packard Plant deal in December, purchased the property in a Wayne County tax foreclosure auction for $405,000. He plans a mixeduse development for the site. Troy-based L. Mason Capitani represented the Display Group. Southfield-based Signature Associates represented Kirlin. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB
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CRAIN’S DETROIT BUSINESS
IN DEEP: THE BUSINESS OF CLEANING UP
Insurers expect claims deluge, may ask cities to pay BY CHAD HALCOM CRAIN’S DETROIT BUSINESS
Insurers for businesses and homeowners in Southeast Michigan who suffered flooding and sewer backup damage could pay more than $200 million in combined claims — a sum those carriers could in turn seek to recoup from insurers for local governments. AAA Michigan reports that as of Friday, its insurance services division had received more than 4,000 homeowner claims and expects more than 5,000 soon, a result of the storm that dropped about 6 inches of rain on Southeast Michigan in a matter of hours late Monday. The insurer expects to pay on its water and sewer backup claims even if property owners also have a claim against a local government agency for the same damage. Sewage-backup insurance for homes and businesses is fairly common and can run from about $50 a year for a $25,000 policy to $150 or more for greater coverage, insurance agents told Crain’s. “We will cover the claims for those insureds who purchased the coverage,” Susan Hiltz, public affairs director for Dearborn-based AAA Michigan, wrote in an email. And “if there are subrogation opportunities, we will pursue those.” Subrogation is a substitution of legal rights to claims against a third party — i.e., if an insurer pays a claim on damage to a business that is the fault of a city government or another property owner, it could sue in the insured owner’s place. That could be an uphill battle. Insurance experts said affected cities and townships may not accept responsibility at first. But business owners with damage may need to
determine first whether they suffered actual flooding versus water damage from a drain or sewer system backup.
Flooding or backup? Tommy LeRoy, co-owner of Ferndale-based Go Comedy! Improv Theater LLC, said he thinks the flood damage to a training center building the company operates on Nine Mile Road came from sidewalks and flower beds outside the building. The theater itself was unaffected, he said. But its training center, which hosts introductory and advanced improvisational classes and workshops, had to close for repairs. LeRoy had hoped to have it reopened by Monday. “We actually had a class going on while the flooding began that night and had to get people out of there to go find higher ground,” he said. “Everyone keeps talking about the difference between flooding versus sewer backup as opposed to a drain backup, but we are still in the process of figuring that out.” But don’t assume that because water came onto the property through doors or windows instead of the toilets or floor drains that it isn’t covered under a policy that includes sewer backups, said Joe Haney, owner of Sterling Insurance Group in Sterling Heights. “If your commercial building has water flowing through the front door into the building because the street’s flooded outside, that seems like flooding. But that could be a case where it’s flooded because a pump malfunctioned or a pipe broke or a drain in the street needed to be unplugged,” he said. “And that could be a water-sewer backup.” Flood insurance generally only
covers water that seeps onto property from the top floors or ground water saturating into a property, said Lori Conarton, director of communications for the Insurance Institute of Michigan. Flood insurance can be purchased from private insurance companies, but most policies are bought from the federally funded National Flood Insurance Program. Haney said his company has administered hundreds of claims for carriers from Monday’s floods, but most are water and sewer backup claims rather than flood insurance claims. While flood insurance is mandatory for mortgages inside a flood plain, few carry it outside those areas because of cost, he said. NFIP coverage also can cover sewer backups, but only if the backup is a direct result of the flooding, according to an NFIP website. Standard business property insurance policies also include a “pollution exclusion,” which can carve out sewer backups unless the business owner purchased the additional coverage, said Charles Browning, co-chair of the Insurance Coverage Practice Group at Plunkett Cooney PC in Bloomfield Hills.
Act of God? Some companies also include business interruption coverage in their insurance, which can reimburse lost profits for the time a business is closed or inoperative. But Browning and Haney both said interruption coverage generally mirrors the rest of a company’s coverage — if it doesn’t have flood or sewer backup insurance, it wouldn’t have business interruption insurance for floods or backups, either. And most business interruption insurance has a deductible that
equates to a 48- or 24-hour period of operation, which probably wasn’t triggered by the floods last week, Haney said. “We’re probably talking around 12 hours in most places,” he said. “And most of the flooding was starting in the late afternoon but really accelerated in the evening when a lot of offices were already closed.” That may mean turning to Public Act 222, the state law that allows for economic and some noneconomic damages if a local government allows a structural or operational “defect” to create sewer backflows onto businesses and homes. The act generally allows a property owner to seek economic damages 45 days after suffering flood damage if he or she has contacted the “appropriate” local government within 45 days of the event first. The local government agency has a right to visit and inspect the damage on the property before litigation. PA 222 could cover sewer damage that isn’t insured or exceeds the property owner’s coverage limits, Haney said. But the business owner or insurer probably will have to prove the sanitary sewers had a defect that the local government knew about and could have corrected. Detroit Mayor Mike Duggan, who officially assumed oversight of the Detroit Water and Sewerage Department from Emergency Manager Kevyn Orr late last month, said in a statement Tuesday that the DWSD “suffered no failures, and by design excess water was discharged into the Detroit River as rapidly as possible.” Without proof of a system defect, city and suburban governments could claim the system suffered an “act of God” — a once-in-a-lifetime level of rainfall its designers could not have foreseen, attorneys said.
Damage claims Litigation from sewer backflows in severe weather generally brings in damages of between $10,000 and $15,000 per homeowner in communities with finished basements, said Steven Liddle, managing partner of Detroit-based Liddle & Dubin PC, which specializes in class action lawsuits for property owners damaged by environmental contamination and sewer backflows. The law firm just settled a case this month against the city of Warren before Judge Jennifer Faunce of Macomb County Circuit Court for $1.75 million, covering 100-200 homeowners affected by two storms in 2011. That’s a fairly typical result, Liddle said, and more widespread flood claims could lead to damages several times that amount. That could mean that if last week’s rainfall triggers 5,000 to 10,000 claims among all insurance carriers in the region, the damage could well exceed $100 million. Oakland County on Friday submitted a preliminary damage estimate to the state of $337 million in total property damage from the flooding, based on reports it received for both public and private property in Royal Oak, Ferndale, Madison Heights, Oak Park, Hazel Park, Berkley, Huntington Woods, Troy, Pleasant Ridge and Southfield. Warren, in neighboring Macomb County, estimates more than 18,000 homes were damaged after the storms. Chad Halcom: (313) 446-6796, chalcom@crain.com. Twitter: @chadhalcom Staff writer Sherri Welch and intern Natalie Broda contributed to this report.
Technology comes through in the clutch for trucking firms BY BILL SHEA CRAIN’S DETROIT BUSINESS
Last week’s flash flooding across metro Detroit snarled traffic and made life difficult for logistics companies that rely on the region’s highway system to move goods. Haulers say technology aided their effects to avoid trouble spots, which minimized the financial impact of the weather. Ann Arbor-based Con-way Freight Inc., the large regional and national less-than-truckload subsidiary of $5.5 billion logistics giant Con-way Inc., relied on its computer routing technology to avoid flooding. “The only service center that was significantly impacted was Pontiac. The flooding and closures, particularly I-696, created some operational issues and delays,” said Gary Frantz, Con-way’s director of communications. The freight unit also has local service centers in Ann Arbor, Romulus, and Warren.
Some trucks returning from Canada were rerouted, Frantz said. “Between the technology we have in the trucks (on-board computers and GPS) and the local knowledge and experience of our drivers, we were able to navigate around the problem areas to ensure pickups and deliveries were made, with a few having minor delays due to traffic congestion,” he said. Con-way drivers witnessed how the flooding affected traffic, but didn’t get snarled or stuck themselves. “Some of our drivers witnessed vehicles floating away as they tried to go through flooded roads,” Frantz said. “We didn’t lose any vehicles; drivers are making it back safe to their service centers. All in all our teams are handling the situation pretty well.” Kathleen McCann, president and CEO of Romulus-based newand used-vehicle transporter United Road Services Inc., said her firm was minimally affected. “Our Warren terminal shut
down as the employees couldn’t get there, but they were able to do their work virtually,” she said. “Our drivers were diverted and were lucky enough to have not been caught in traffic as the water swelled in. We took a big hit with Hurricane Sandy flooding in the Northeast in 2012, so I feel for those who felt it this time.” United Road, whose client list of more than 10,000 is led by General Motors Co., will move more than 3 million vehicles in the U.S. and Canada this year, so flooding in Detroit is less impactful on the company’s overall operations. The company’s corporate and independent-driver fleet has more than 1,500 tractors operating out of 75 locations. Royal Oak-based RPM Freight Systems LLC, a third-party logistics brokerage firm, hasn’t been directly hit in the pocketbook, but its clients may be, said CEO and founder Barry Spilman. The company arranges trucking for companies that have supply
chain needs. “Fortunately, we have not seen any financial impact as the impact has been merely delayed pickups, transits and deliveries, but not canceled loads so,” he said. “However, there might be a financial backlash to our clients due to delay costs on their operations.” Spilman said the flooding resulted in “short-term supply chain disruptions” in both the full- and lessthan-truckload logistics segments, with some fleets and terminals shut down or their operations were curtailed. “Many major highways and city roads were impassable,” he said. Scott Reed, CEO of Wayne-based Rush Trucking, said dealing with the recent winter’s series of snowstorms provided valuable experience for his firm and its clients in dealing with road issues. That, and real-time communications and mapping technology unavailable in the past, cushioned the business impact of the flooding, he said.
“It would have been a crazy day 15 years ago,” he said. Rush had a few missed deliveries and a few drivers on overtime, but the financial impact was negligible for the $104 million carrier. “It really turned out to not be that big of a deal,” Reed said. One logistics industry observer said the flooding, while fairly minor for shipping companies, highlighted the region’s infrastructure weaknesses. “The condition and readiness of underpass pumps is not high,” said John Taylor, chairman of the department of marketing and supply chain management at Wayne State University’s business school. Worse, the local highway system’s chromic bottlenecks, bad rush-hour situation, and lack of transportation investment “cause planners to have to assume longer cycle times and deploy more trucks,” he said. Bill Shea: (313) 446-1626, bshea@crain.com. Twitter: @bill_shea19
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www.crainsdetroit.com EDITOR-IN-CHIEF Keith E. Crain GROUP PUBLISHER Mary Kramer, (313) 446-0399 or mkramer@crain.com ASSOCIATE PUBLISHER Marla Wise, (313) 4466032 or mwise@crain.com EXECUTIVE EDITOR Cindy Goodaker, (313) 4460460 or cgoodaker@crain.com MANAGING EDITOR Jennette Smith, (313) 4461622 or jhsmith@crain.com DIRECTOR, DIGITAL STRATEGY Nancy Hanus, (313) 446-1621 or nhanus@crain.com MANAGING EDITOR/CUSTOM AND SPECIAL PROJECTS Daniel Duggan, (313) 446-0414 or dduggan@crain.com SENIOR EDITOR/DESIGN Bob Allen, (313) 4460344 or ballen@crain.com SENIOR EDITOR Gary Piatek, (313) 446-0357 or gpiatek@crain.com WEB EDITOR Kristin Bull, (313) 446-1608 or kbull@crain.com RESEARCH AND DATA EDITOR Sonya Hill, (313) 446-0402 or shill@crain.com WEB PRODUCER Norman Witte III, (313) 4466059, nwitte@crain.com EDITORIAL SUPPORT (313) 446-0419; YahNica Crawford, (313) 446-0329 NEWSROOM (313) 446-0329, FAX (313) 4461687 TIP LINE (313) 446-6766
REPORTERS
LARRY PEPLIN
No, the doors and liftgates of these cars on the lot of Jim Riehl’s Friendly Chrysler Jeep aren’t being aired out. Once the water from Monday’s flood reached the vehicles’ electronic control modules, trunks began to open, windows began to go up and down, and airbags deployed on their own.
Car lots soak in damage Flood-submerged autos, trapped customers kept metro Detroit dealers busy BY SHERRI WELCH CRAIN’S DETROIT BUSINESS
As the rain fell the afternoon of Aug. 11, Pat Presutti, new-car sales manager at Jim Riehl’s Friendly Chrysler Jeep in Warren, sent a porter out to check the water level in the back lot where nearly 100 cars were parked. It was only about a half inch deep. But after “all hell broke loose,” during the early evening commute, it only took 15 minutes for the pooling rainwater to reach the rocker panel below the vehicle doors. “Once it gets over that, your carpet is soaked and it goes into the bottom of the motor,” Presutti said. By 8 p.m., dumpsters were floating around in the car lot. And as the water reached the carpet below the vehicle seats where electronic control modules are housed, trunks began to open, windows began to go up and down and airbags deployed, as if a mean spirit were playing pranks. But it was no prank. Nothing could be done to save the new vehicles. “By the time you pull 80 keys and try to move 80 cars, you’re not going to make it,” Presutti said. On Tuesday morning, mud lines on windshields told the story of the flood’s rise and fall, as did vehicle interiors with mud-encrusted steering wheels and dashboards. “I’ve never been in a flood situation,” Presutti said. “We’ve had theft and damage, but never a flood situation.” As a general policy, dealerships carry insurance on their inventory, and so does Jim Riehl’s Friendly Chrysler Jeep, he said. Of 85 new vehicles submerged in the dealership’s parking lot, Presutti expects 83 will be a total loss
resulting in an insurance claim of about $2.5 million. But the dealership will only break even with the claim, he said. When the flood waters receded, they took with them any chance of making a profit on the vehicles and dampened sales for the near term. “What you’re going to sell the most of for August and September is 2014 (models); customers want the deal,” he said. The majority of the new vehicles lost on the lot were 2014 models.
Seeking higher ground A couple of miles south, Galeana’s Van Dyke Dodge also watched as the water rose to about 3 feet on the heavily traveled Van Dyke Avenue, bringing it about halfway up the dealership lot. Fortunately, Galeana’s is on higher ground, and employees were able to move cars from the front end of the dealership farther back so they were not affected, sales manager John Caldwell said. But he cringed, he said, every time a truck pushed through the flood waters on VanDyke, creating a tidal wave that pushed farther into the lot. The dealership stayed open until 1 a.m. when the last trapped customer left. And Caldwell said he let many of the salespeople who’d stayed drive a new truck home so they could navigate their way with higher clearance from the ground. As of late last week, 35 vehicles had been towed or brought in to be assessed for water damage. Caldwell believes that number will at least double, given that local impound yards are still crowded with cars salvaged as the water receded. “Once the water hits the computers, electrical systems and interior, I don’t think the insurance compa-
ny is looking at them,” he said. “I believe that most of these cars are going to end up being totaled.” A repair estimated to cost $2,000 can morph into a $10,000 or $15,000 repair very quickly once the car has been taken apart, Caldwell said. Rather than run the risk of losing the majority of a vehicle’s value, insurance companies can sell a $20,000 car, for example, for half that amount at an auction as a salvage vehicle “and they know exactly what they’re dealing with in terms of a loss,” he said. Dearborn-based AAA Michigan has received “over 1,000 vehicle claims,” said Public Affairs Director Susan Hiltz. “We expect to total 60-70 percent of them, and repair the rest, she said. Some people believe dealers will sell a lot of cars because of the number being declared a total loss, Caldwell said. “And from the ones that are totaled out, we will have instant sales.” But the forced new-car sales likely will be a wash on the bottom line, since people whose homes were flooded are likely to defer their planned purchases of new vehicles, he said. Caldwell said he doesn’t plan to order additional inventory in anticipation of a flood-induced sales surge because he think sales will just remain steady. “I don’t think this will hurt us, but I don’t think there’s going to be a huge lift,” he said. When a dealership’s inventory is depleted by acts of nature, you have vehicles you can’t move until insurance companies come in and repair or total the vehicles, said Scott LaRiche, co-owner of Lou LaRiche Chevrolet in Plymouth Township. Though the Plymouth Township dealership was unaffected by flood water, its Findlay, Ohio, dealer-
ship suffered significant losses in the past from hail damage. “You’re scrambling trying to do dealer trades and buy products from other dealers,” he said. “Most dealers are extremely generous with other dealers who get hit. We do compete, but what goes around comes around. ... We know some day it may happen to us.”
A pizza surprise Another east side dealer, Elite Motor Sales & Service on Frazho Road near Groesbeck Highway in Warren, also watched as the water surged halfway up its parking lot. Fortunately, none of its 60 used vehicles — mostly trucks and SUVs — were affected, said manager Mark Maniaci. He was able to put one of the trucks on the lot to good use, helping to rescue a pregnant woman and her two young children, all of whom climbed from their submerged vehicle on Groesbeck and through the truck’s windows. Stranded customers and others who sought refuge on the dealership’s higher ground made the best of it, including a pizza delivery guy who shared with everyone the pizza that never made it to its scheduled destination. Maniaci expects Elite’s repair business for vehicles affected by the flood to surge for the next week of so, then taper off. He’s projecting it may rise as much as 10-15 percent for the month or 2-4 percent year over year for the dealership which does $2 million to $2.5 million in annual sales. “I’m fortunate to have a place here that didn’t get affected, and generated business because of it,” Maniaci said. Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch
Jay Greene, senior reporter: Covers health care, insurance, energy utilities and the environment. (313) 446-0325 or jgreene@crain.com Amy Haimerl, entrepreneurship editor: Covers entrepreneurship and city of Detroit. (313) 4460416 or ahaimerl@crain.com Chad Halcom: Covers litigation and the defense industry. (313) 446-6796 or chalcom@crain.com Tom Henderson: Covers banking, finance, technology and biotechnology. (313) 446-0337 or thenderson@crain.com Kirk Pinho: Covers real estate, higher education, Oakland and Macomb counties. (313) 446-0412 or kpinho@crain.com Bill Shea, enterprise editor: Covers media, advertising and marketing, the business of sports, and transportation. (313) 446-1626 or bshea@crain.com Dustin Walsh: Covers the business of law, auto suppliers, manufacturing and steel. (313) 4466042 or dwalsh@crain.com Sherri Welch, senior reporter: Covers nonprofits, services, retail and hospitality. (313) 446-1694 or swelch@crain.com LANSING BUREAU Chris Gautz: Covers business issues at the Capitol and utilities. (517) 403-4403 or cgautz@crain.com
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CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS
Macomb: Expo center?
IN DEEP: THE BUSINESS OF CLEANING UP
â&#x2013; From Page 3
ticipation would take, Guastello said. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re defining the concept now. ... Weâ&#x20AC;&#x2122;ll probably do what Blair did: Put one hotel connected to the exhibition center that we own, and then weâ&#x20AC;&#x2122;ll sell property for other hotels to other brands or developers.â&#x20AC;? Guastello said that he expects to start building the exhibition center in 2015 and that it should go up quickly because such centers â&#x20AC;&#x153;are pretty simple buildings to put upâ&#x20AC;? and the current zoning for planned unit development would support the project. â&#x20AC;&#x153;Tom has some very creative and interesting plans for the whole project site,â&#x20AC;? Bowman said. â&#x20AC;&#x153;If thereâ&#x20AC;&#x2122;s a mutually beneficial way to get involved and we can play a role and bring some value to the table, then Iâ&#x20AC;&#x2122;m certainly interested in exploring that. Thatâ&#x20AC;&#x2122;s the early stage weâ&#x20AC;&#x2122;re at.â&#x20AC;? A feasibility study commissioned by the Detroit Metro Convention & Visitors Bureau in 2011 â&#x20AC;&#x201D; when Guastello, a longtime member of the bureauâ&#x20AC;&#x2122;s board, and Anderson first came up with the exhibition center concept â&#x20AC;&#x201D; showed demand would be strong for an expo center on the Chesterfield Township site, said the bureauâ&#x20AC;&#x2122;s executive vice president and COO, Michael Oâ&#x20AC;&#x2122;Callaghan. The study is one of several that
have been completed for various sites around the region, he said. According to the study, completed by Plano, Texas-based Conventions, Sports & Leisure International, a Chesterfield Township exhibition center would draw Canadian traffic from southern Ontario and state association business and visitors from midMichigan and the Thumb who traditionally arenâ&#x20AC;&#x2122;t interested in going into a large central business district like Detroit or traveling as far as Novi, Oâ&#x20AC;&#x2122;Callaghan said. â&#x20AC;&#x153;And if the (center) is sized properly, they would also be able to attract meetings from associations that meet within a five- or six-state region,â&#x20AC;? he said. An exhibition center in Macomb County probably would be competition for the Suburban Collection Showplace and for the Lansing and Grand Rapids markets, Oâ&#x20AC;&#x2122;Callaghan said. But the market for conferences and events in Southeast Michigan is growing. â&#x20AC;&#x153;The perception of metro Detroit is getting better,â&#x20AC;? Oâ&#x20AC;&#x2122;Callaghan said. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s more potential to attract more association business, ... which will benefit both the Suburban Collection Showplace along and the facility theyâ&#x20AC;&#x2122;re talking about building on the east side.â&#x20AC;? Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch
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Officials study ways to lessen burden on storm systems BY CHRIS GAUTZ CAPITOL CORRESPONDENT
Last weekâ&#x20AC;&#x2122;s historic and severe rainstorm that caused massive flooding in metro Detroit is causing local officials to think more about how they can prepare for future bouts with Mother Nature. One problem is that the storm water systems in place are up to state standards, but just arenâ&#x20AC;&#x2122;t designed to handle the amount of water that fell â&#x20AC;&#x201D; as much as 6 inches in three hours in some parts of metro Detroit. â&#x20AC;&#x153;The investment required and infrastructure required to withstand what happened on Monday would have been cost prohibitive to build,â&#x20AC;? said Craig Covey, the community liaison for Oakland County Water Resources Commissioner Jim Nash. So what can be done? Finding ways to lessen the burden on those systems, which in many cases rely on aging infrastructure, is something more communities are looking at, said Karen Kabbes, president of the environmental and water resources institute at the Washington, D.C.-based American Society of Civil Engineers. â&#x20AC;&#x153;When you have an extreme rainfall event, new pipes may not be the answer,â&#x20AC;? she said. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s stepping back and looking at the whole system.â&#x20AC;? One of the easiest and cost effective ways to do that, Kabbes said, is using green infrastructure. Some of the more common examples include rain gardens, green roofs and installing pervious concrete in parking lots that allow water runoff to be absorbed into the ground rather than flow into storm drains. That water can then be recycled by property owners for sprinkler systems or other uses. Madison Heights City Manager Ben Myers and Ferndale City Manager April Lynch said their communities require new construction projects to retain their own stormwater, rather than send it into the city system. The current system is a legacy of a time when less ground was covered by parking lots and other development. â&#x20AC;&#x153;All the rainwater that hits them needs to go somewhere, and it can end up peopleâ&#x20AC;&#x2122;s basements,â&#x20AC;? Covey said. He said a combination of increased investment and encouraging policies that result in less stormwater flowing into sewer systems will help because the likelihood is that we will see more, not fewer of these kind of storms. â&#x20AC;&#x153;These unusual rain events are not unusual anymore. This is our little piece of the climate change,â&#x20AC;? he said. Luke Forrest, program manager at the Michigan Municipal League, said the use of green systems varies, but is most common in
Grand Rapids and Ann Arbor right now. â&#x20AC;&#x153;This type of runoff highlights the standards arenâ&#x20AC;&#x2122;t widespread enough,â&#x20AC;? he said. â&#x20AC;&#x153;For the most part, the green approach is still seen as experimental in a lot of places.â&#x20AC;? Forrest said these changes can help lighten the load on the local water and sewer infrastructure, but does not lessen the need for replacing aging pipes and drains. â&#x20AC;&#x153;We have a lot of ancient infrastructure doing the job,â&#x20AC;? Forrest said. A 2001 report from the Southeast Michigan Council of Governments found that between $14 billion and $26 billion was needed by 2030 to maintain and improve Southeast Michiganâ&#x20AC;&#x2122;s sewer infrastructure. Much of that cost comes from maintaining and fixing the existing system as well as overflow and capacity issues. At the time of the report, it found that about 60 percent to 70 percent of the regionâ&#x20AC;&#x2122;s sewerage system was more than 30 years old. Now, most of that infrastructure is more than 40 years old because not much has been fixed, said Amy Mangus, leader of plan implementation at SEMCOG. County and local officials agreed that while work is done each year to replace or fix older pipes, there is still plenty that they can just not afford to do. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve been keeping up,â&#x20AC;? Lynch said of Ferndaleâ&#x20AC;&#x2122;s storm water system. â&#x20AC;&#x153;But the cities are old so all of us along the corridor have an older system.â&#x20AC;? The concern many local officials have is that the next time such a large storm hits, the flooding and damage done to homes and businesses could be much worse if pipes crack or the systems in place break down because of their age. The stormwater systems in place in the region are typically meant to handle a 10-year storm event, meaning they can handle a storm that has a 10 percent chance of occurring each year. Last weekâ&#x20AC;&#x2122;s storm was considered a 300-year storm event, meaning it has a 0.333 percent chance of occurring annually. â&#x20AC;&#x153;You donâ&#x20AC;&#x2122;t design sewer systems for 6 inches of rainâ&#x20AC;? in such a short amount of time, Mangus said.
How the system works In a typical rainstorm, water travels into storm drains in the streets, through a pipe and toward a water treatment plant where it is treated. In the case of larger storms, there are 22 retention treatment basins in the region that are used to house excess stormwater and sewage that the treatment plant cannot process because it is at capacity. With typical large storms, the retention basins hold water until the treatment plant has capacity again. But with the kind of severe storms the region saw last week, the basins treat the water on-site
and then release it into nearby rivers and streams. The largest retention basin in metro Detroit is the George W. Kuhn basin near I-75 and 12 Mile Road in Madison Heights. Completed in 2006, it was designed to state standards for a 10-year storm event and can hold 124 million gallons. â&#x20AC;&#x153;It performed as it was designed, but it was overwhelmed,â&#x20AC;? Covey said. â&#x20AC;&#x153;There is no man-made structure than can hold up to whatever Mother Nature decides to throw at you.â&#x20AC;? At the height of Mondayâ&#x20AC;&#x2122;s rain event, the basin facility was treating 6,700 cubic feet of stormwater per second with a chemical called sodium hypochlorite, similar to what is used in swimming pools. In a typical large storm, all of the water is treated before it is released into the Red Run Drain, an open stream that eventually flows into the Clinton River. But there was so much water Monday that not all of it was completely treated, though all of it was at least partially treated, Covey said. Warren Mayor Jim Fouts said the Red Run crested so much it was coming up to peopleâ&#x20AC;&#x2122;s front porches. â&#x20AC;&#x153;This was unlike any weather disaster Iâ&#x20AC;&#x2122;ve experienced,â&#x20AC;? Fouts said. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;ve never had a storm where our main streets are like rivers.â&#x20AC;? He said the system in place was not to blame. â&#x20AC;&#x153;We just had a monumental, catastrophic, Biblical-type of storm.â&#x20AC;? But he does blame politics in part. For several years, there has been haggling between Warren and Macomb and Oakland counties about the cost of connecting the city to the Oakland-Macomb interceptor drainage district. That turned into a lawsuit in June 2013 that has not been resolved. Fouts and Macomb Public Works Commissioner Anthony Marrocco said they believe if Warren were connected to the system, residents would not have had so many flooded basements. Covey declined to comment on the case because of the litigation, but noted many homes across the region had flooded basements. Once storm recovery efforts have settled down, Fouts said he plans to talk with his staff about what can be done to prepare for future storms. Meyers said Madison Heights has a neighborhood road millage and whenever it uses those funds to replace or fix local streets, it also fixes the sewer and stormwater systems in those areas while it has the roadway open. Last week, there was not a defect in the system, he said. â&#x20AC;&#x153;(The stormwater) just completely exceeded the design capacity of the system,â&#x20AC;? Myers said. Chris Gautz: (517) 403-4403, cgautz@crain.com. Twitter: @chrisgautz
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CRAIN’S DETROIT BUSINESS
August 18, 2014
RUMBLINGS M-1 Rail ready to lay down rails he rail for M-1 Rail is here. The $140 million public-private streetcar project under construction on Woodward Avenue in downtown Detroit took delivery of the first mile of steel rail last week from Pittsburghbased rail products manufacturer L.B. Foster Co. It is being manufactured at an L.B. Foster plant in Columbia City, Ind., and sent to Detroit on flatbed trucks. More rail is scheduled to arrive this week. Each piece of rail is 80 feet long and weighs more than 3,000 pounds, project officials said. Detroit-based construction firm Farrow Group Inc., a contractor on the streetcar pro-
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ject hired by Alameda, Calif.based project construction manager Stacy and Witbeck Inc., is handling the rail. During the first phase of M-1 construction, Woodward Avenue from Adams Street south to Campus Martius has been closed since July 28 for about 120 days of streetcar work that will include installation of the tracks. The 12-stop loop is scheduled to be operational by late 2016, and will stretch 3.3 miles between Larned Street and West Grand Boulevard. M-1 said it has discovered track under Woodward from the old streetcar systems, which ended service in 1956.
WEEK ON THE WEB FROM WWW.CRAINSDETROIT.COM, WEEK OF AUG. 9-15
Flood was first local crisis in AAA’s post-Cain era For the first time in many years, metro Detroiters didn’t hear the voice of AAA Michigan’s longtime public relations director, Nancy Cain, on local news broadcasts following last week’s historic flooding. Cain retired in March after more than 30 years. She was succeeded by Susan Hiltz, a 30-year public affairs veteran who most recently was regional managing director of the Ad Council, working in Michigan and seven other states on traffic safety advocacy and other public service campaigns.
Bureau surprises with Super Bowl ad choir performance As the 2014 American Society of Association Executives convention wrapped up in Nashville, Tenn., on Aug. 12, the Detroit Metro Convention & Visitors Bureau teed up for attendees a promo video highlighting “America’s comeback city.” Detroit is the site of the 2015 conference. The video featured lively scenes of metro Detroit set to a pulsing cover version of rapper Eminem’s “Lose Yourself” sung by Larry Callahan & Selected of God choir — the choir made famous when it was featured in a Chrysler commercial during the 2011 Super Bowl. As the video ended, the lights came up to reveal the choir singing the same song live on stage. A video of the choir performance is expected to be available on the DMCVB’s website, visitdetroit.com, this week.
NATALIE BRODA/CRAIN’S DETROIT BUSINESS
Don Kegley, a principal at Cunningham-Limp of Farmington Hills, paints the outside of Cody HIgh School during the Life Remodeled volunteer cleanup effort. He said his entire office was on site Friday.
Cleanup effort: 10,000 volunteers; changed lives What do you get when you mix 10,000 volunteers, more than 200 corporate sponsors and three Detroit schools? Renovations, smiles and changed lives for students. Last week, Life Remodeled, a Detroit-based nonprofit focused on rehabilitating Detroit schools and neighborhoods, took on Cody High School and its surrounding neighborhoods, including two elementary schools.The $5.5 million project involved thousands of volunteers, including 3,000 from General Motors Co. and 1,700 from Quicken Loans Inc. During the weeklong project, Cody received more than just new paint and revamped landscaping. ABB Robotics Inc. in Auburn Hills donated an assembly line robot, along with software for robotics and programming classes at the school. Farmington Hills-based Cunningham-Limp funded a medical simulation classroom, which will include dental chairs and operating tables. Life Remodeled founder Chris Lambert said that although the volunteer effort at Cody has ended, the nonprofit will stay involved in the school, working to develop relationships with local companies who could eventually employ Cody graduates. (Read more in Mary Kramer’s column, Page 7.)
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Bloomfield Hills toxicologist to give TedMed talk Steve Goldner, chairman and CEO of Bloomfield Hills-based CureLauncher Inc., will be a speaker at the TedMed conference in Washington, D.C., next month. He said his address will be about his company, CureLauncher, which pairs people with clinical trials in the U.S. and has matched more than 1,000 since its founding last year. Goldner, 66, is a forensic toxicologist and attorney who worked for pharmaceutical and medical device companies getting U.S. Food and Drug Administration approvals. The conference runs Sept. 10-12 in San Francisco as well as Washington, D.C.; Goldner will speak Sept. 11. TedMed is a licensed offspring of the popular TED: Ideas Worth Spreading program.
Restaurants, bakery, music shop among Hatch finalists estaurants Cockadoodle and Gabriel Hall, bakery Sister Pie, and music shop Third Wave Music were named finalists in the Hatch Detroit business competition. The winning business pitch will receive a $50,000 grant from Comerica Bank and legal, marketing, accounting and IT support from Hatch Detroit. Round two of public voting has begun at hatchdetroit.com. Voting ends at noon Wednesday; the winner will be announced Wednesday night.
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ON THE MOVE 䡲 The Bingham Farms-
based Michigan Humane Society named Matthew Pepper president and CEO, effective Sept. 8. Pepper, a Michigan native, has been director of Bernalillo Pepper County Animal Care Services in Albuquerque, N.M., since 2011. He succeeds Cal Morgan, who left in January to lead the Atlanta Humane Society and Georgia Society for the Prevention of Cruelty to Animals. 䡲 The Engineering Society of Detroit named Robert Magee interim executive vice president, replacing Darlene Trudell, who left the Southfield-based organization after 12 years to pursue other opportunities, ESD said. Magee joins ESD from AT&T Advertising Solutions, where he served in various roles.
COMPANY NEWS 䡲 Detroit Red Wings Executive Vice President and General Manager Ken Holland signed a four-year contract that will keep him with the National Hockey League team through the 2017-18 season. Financial terms were not disclosed. 䡲 Brooklyn-based Fellow Barber plans to set up shop in Detroit’s Midtown neighborhood this fall. The highend barber shop will locate at 441 W. Canfield St. to join five locations in New York City and San Francisco. 䡲 Thomas M. Cooley Law School is cutting faculty and staff positions at its Michigan campuses, The Associ-
ated Press reported. A school official said Cooley is making the cuts to “rightsize the organization” to match enrollment but didn’t say how many positions were affected. Earlier, Cooley announced it is formally adding to its name an affiliation with Western Michigan University. Campuses in Lansing, Ann Arbor, Auburn Hills and Grand Rapids are being branded with the WMU name. 䡲 Ford Motor Co. and DTE Energy Co. plan to build a large solar array at the automaker’s world headquarters in Dearborn, The Associated Press reported. The project, funded by Detroitbased DTE, will provide Ford employees with 360 covered parking spaces and 30 charging stations for plug-in electric vehicles. Construction is to begin in September, with completion in early 2015. 䡲 General Motors Co. is investing $174 million in a new stamping line at its Grand River assembly plant in Lansing, Automotive News reported. The operation, to open in 2016, will produce Cadillac components and employ about 145 full-time workers, the Detroit automaker said. 䡲 General Motors Co.’s Chevrolet brand signed another three-year contract as presenting sponsor for the 20th annual Woodward Dream Cruise. The value was not disclosed, but a Woodward Dream Cruise Inc. official said the continued sponsorship will help the nonprofit to offset cleanup and security costs. 䡲 Farmington Hills marketing agency Duffey Petrosky plans to add 120 jobs after being awarded a $1 million performance-based grant by the Michigan Strategic Fund. The company, which employs 114, will renovate its existing operation to handle expected growth in advertising and marketing. 䡲 The U.S. Department of Treasury said it will cut its stake in Detroit auto lender Ally Financial Inc. by selling stock on the open market in its first divestiture since an initial public offering in April, Bloomberg News reported. The U.S. holds 75.1 million shares, a stake of about 16 percent, in Ally. 䡲 Southfield-based Sun Communities Inc. is acquiring a 59-property manufactured housing portfolio with properties in 11 states for $1.32 billion. Included are three Michigan properties: Egelcraft, in Muskegon, and Frenchtown Villa and Elizabeth Woods, both in Newport. The deal is expected to close by early 2015. 䡲 ZF Friedrichshafen AG’s ambitions to become the world’s No. 2 automotive
supplier are being held up by negotiations to exit a joint venture with Robert Bosch GmbH, the biggest carparts maker, Bloomberg reported. Germany-based ZF is trying to reach an agreement with Bosch on the sale of its stake in their 50-50 steering-systems joint venture before it can complete a deal to acquire Livoniabased TRW Automotive Holdings Corp., sources said. 䡲 Warren-based MSX International Inc. acquired the managed service provider division of Denver-based IQNavigator for an undisclosed amount and created a wholly owned subsidiary, Geometric Results Inc. 䡲 Ann Arbor-based NSF International acquired the laboratory operations of Aurora, Ontario-based Jana Laboratories Inc. for an undisclosed amount.
OTHER NEWS 䡲 U.S. Bankruptcy Court Judge Steven Rhodes postponed the start of the trial on Detroit’s bankruptcy plan by eight days to Aug. 29. Creditors asked for more time to gauge the impact of the city’s debt exchange offer to water and sewer bondholders and for city officials to submit a revised debt restructuring plan. 䡲 State Superintendent Mike Flanagan placed 11 charter school authorizers on notice for possible suspension. Five are in Southeast Michigan: Detroit City Public Schools, the Educational Achievement Authority, Eastern Michigan University, Highland Park Public Schools and the Macomb Intermediate School District. They have until Oct. 22 to fix deficiencies or risk suspension, which would keep them from opening new schools. 䡲 Operators of Las Vegas-style charitable gambling events claimed victory after a Michigan Court of Claims judge barred the state from enforcing rules significantly restricting the activities, The Associated Press reported. The Michigan Charitable Gaming Association and several charities had sued to keep a state board from enforcing the rules, which they say would cost millions in revenue. 䡲 Michigan’s seasonally adjusted unemployment rate rose 0.2 percentage points to 7.7 percent in July from the previous month, said the state Department of Technology, Management & Budget. The July 2013 jobless rate was 9 percent. 䡲 The Detroit Lions’ 13-12 victory over the Cleveland Browns at Ford Field Aug. 9 averaged a 14.6 household rating, WXYZ-Channel 7’s best preseason football numbers in a decade.
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