Crain's Detroit Business, Sept. 1, 2014 by Crain's Detroit Business

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www.crainsdetroit.com Vol. 30, No. 35

SEPTEMBER 1 – 7, 2014

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Flood leaves heap of curbside chaos for communities Supplier event to display the future of smart cars Inside

Come one, come all, Detroit is hopping in Sept., Page 6

The official agreement to launch Beaumont Health is imminent, but difficult decisions remain, including the selection of a new CEO

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BY BILL SHEA CRAIN’S DETROIT BUSINESS

According to sources, the system also will begin a search for a CEO to succeed Gene Michalski, current CEO of Beaumont Health System, who will serve as the combined system’s first CEO. Officials with the three combining systems — Royal Oak-based Beaumont Health System, Dearborn-based Oakwood Healthcare Inc. and Botsford Hospital in Farmington Hills — have declined further comment before the official announcement. “Right now, there’s nothing to announce. Leadership remains optimistic that Beaumont Health will be launched soon. Once there is

New regional transit czar Michael Ford will have two years to persuade metro Detroit voters to pay for a fourth bus system — a trainlike network of high-speed commuter buses with limited stops — that will operate sepaFord rately but in cooperation with the current traditional bus systems. That could be a tall order for a squabbling region that took 40 years to get a regional transit authority created. And Ford isn’t even on the job yet. He’s an optimist — a prerequisite for anyone trying to achieve consensus across this region. So he will make the case that a rapid bus system is needed, and coordinate the planning with the three other local systems. “There are solutions out there. It’s about not getting bogged down. You can get sidetracked very easi-

See Merger, Page 22

See RTA, Page 21

Taking the pulse of hospital merger

Wealth Management Wealth of interest: Banks build revenue with financial advisory services, Page 11

This Just In Minority supplier council head resigns, will aid transition

NEWSPAPER

Louis Green, president and CEO of the Michigan Minority Supplier Development Council, is resigning as head of the Detroitbased nonprofit but plans to help the council transition into new leadership. Green The organization is on the fast track to hire a replacement for Green in October. Green, who has led the MMSDC since 2005, will not extend his contract that expires at the end of the year. Green said he has accepted another position, but would not go into specific details. The National Minority Supplier Development Council hired Chicago-based Hollins Group Inc. to perform a national search for Green’s replacement. — Dustin Walsh

Transit chief plans route: New tax, PR, teamwork

BY JAY GREENE CRAIN’S DETROIT BUSINESS

A final agreement to create the new Beaumont Health — an eight-hospital system with 30 percent market share that could become the largest in Southeast Michigan — is imminent and could occur as soon as Sept. 2, sources tell Crain’s. That’s sooner than expected, but some of the thornier issues are being deferred until after the deal’s closing, expected this year. Those include final decisions on which executives will be kept, compensation for those who depart, and overall staffing levels and budget cuts.

OU starts year with new president, campus construction Among the more than $200 million in construction projects at Oakland University: the 151foot Elliott Tower.

COURTESY OF OAKLAND UNIVERSITY

BY KIRK PINHO CRAIN’S DETROIT BUSINESS

At the start of the new academic year, Oakland University has a fresh face in at least two different ways. First, George Hynd has taken the helm as OU’s new president. In addition, the university has wrapped up more than $200 million in construction projects in the last two Hynd years, with the most expensive — a new $74.5 million building for the School of Engineering and Computer Science — opening its doors to students when classes begin Wednesday. All that work done prior to Hynd officially starting his job late last month helps with OU’s

Show your support for the city.

broader mission of the growing university, which has seen enrollment increases in each of the past 15 years and now tops 20,100. Hynd, a 66-year-old former administrator for the College of Charleston in South Carolina who succeeded Betty Youngblood, the former interim president, has been hired in part to fulfill a broader goal of adding more oncampus students. Right now, only about 14 percent live on campus. Construction of OU’s sixth residence hall, which has 500 beds and cost $30 million, fits into a broader strategy of increasing student See OU, Page 19

DETROIT

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ISSUE DATE: OCT. 20 CLOSE DATE : SEPT. 25 To advertise: Marla Wise at mwise@crain.com or (313) 446-6032.

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CRAIN’S DETROIT BUSINESS

MICHIGAN BRIEFS Pure Michigan tourism tattoos: So marketing can flex its muscles To the extent that the Pure Michigan tourism campaign is about getting the state more exposure, well, mission accomplished. Michigan Economic Development Corp. spokeswoman Michelle Grinnell told MLive.com that a colleague spotted a nearly exact rendering of the Pure Michigan logo as a tattoo, featuring the brand’s blue “M.” Which in the case of this tattoo, does not stand for “Mother.” “I think it is kind of a signal of how passionate our fans are and how passionate people are about the state of Michigan,” Grinnell said. Technically, if you want to use the logo, you have to go through a process that includes submitting an example of how the logo would be used. But Grinnell said the state doesn’t plan to crack down on people who ink up. Which probably is a good thing for a variety of reasons that won’t be spelled out here.

Fruit forecast: Apple crop will be a bumper, peaches a bummer The state’s apple growers will harvest an estimated 28.74 million bushels, according to the official crop estimate announced last month at the USApple Outlook meeting in Chicago. The estimate is close to the record crop of 30 million bushels, set just last year. The predicted crop would be one

What ACTs say about freshmen: This could get testy Now that college football season is here, what better time to stir up rivalries? This time, not on the playing fields but in the admissions offices. In a story last month on the website of Bridge Magazine (bridge.com), Mike Wilkinson reported that since 2001, the University of Michigan, as well as Big Ten colleagues Ohio State University, University of Minnesota, Indiana University and Purdue University, “have seen substantial gains in ACT test scores for incoming freshmen.” One school missing: Michigan State University, which Wilkinson reports “has basically treaded water.” MSU ranks second from the bottom among the 12 Big Ten universities that report ACT scores, ahead of only the University of Nebraska. Further, the Bridge analysis found that nearly all in-state schools “stayed relatively stagnant” since of the largest Michigan has seen, Diane Smith, executive director of the Michigan Apple Committee, said in a release. Michigan is the nation’s second-largest apple producer after Washington state. Last year’s large harvest pushed the state past New York state as an apple producer. In other fruit news, the U.S. Department of Agriculture forecasts that Michigan’s peach crop will be down about 50 percent from last year, the Detroit Free Press reported. The state harvested 41 million pounds last year.

MICH-CELLANEOUS 䡲 In a suit filed in U.S. District Court in Grand Rapids, more than

2001 as measured by the ACT. MSU ranks No. 3 in the state in academic strength of incoming students, behind UM and Michigan Technological University. Jim Cotter, MSU’s director of admissions, told Bridge the college experience is not just about test scores. “It’s a balancing act at a place like Michigan State, which has long been about the principles of opportunity. Admissions is not about a test score, it’s about a whole person.” To move into a more selective admissions posture “would limit access,” Cotter told Bridge. In closing, as you feel your blue or green blood boiling, consider that you’re getting worked up about academics. Which is the way it should be every fall. — Bob Allen

30 migrant workers accuse Iowabased DuPont Pioneer and two recruiters of violating federal wage and migrant labor laws. The workers, who claim they were underpaid while removing tassels from corn in southwestern Michigan fields, also allege poor housing, unsafe transportation to the fields and inadequate water. 䡲 A health insurance policy will cost a family in West Michigan 5.2 percent more this year than last on average, according to a survey of 90 employers conducted by The Employers’ Association and the Alliance for Health in Grand Rapids. According to MiBiz, the survey also found that employees on average pay 25 percent of the

cost for both a family and two-person health plan and 20 percent for a one-person policy. 䡲 Japan-based Marley Precision Inc. plans to spend $3 million to build a second plant in Battle Creek, MiBiz reported. Marley, which makes direct fuel injection components for the auto industry, also expects to add machinery at its original plant. 䡲 Grand Rapids-based Meritage Hospitality Group has acquired 20 Wendy’s restaurants in the Atlanta area, bringing its holdings to 141 restaurants in six states, the Grand Rapids Business Journal reported. 䡲 The Washington Monthly magazine ranked Western Michigan

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University No. 54 on its list of Best Bang for the Buck schools, its second year in a row on the list. The magazine also included WMU, the University of Michigan, Michigan State University and Michigan Technological University on its list of the top 100 U.S. universities, and MSU and Michigan Tech among the Best Bangs for the Buck. That is based on “the economic value students receive per dollar.” 䡲 As you may have noticed during Friday’s home football opener against Jacksonville State University, Michigan State University has dedicated a $24.5 million addition to Spartan Stadium. The North End Zone Complex is a 50,000-squarefoot addition, The Associated Press reported. 䡲 It has been a long time since an item about beer appeared in Michigan Briefs. So thank the folks at Thrillist.com, which put Michigan No. 4 on its ranking of best beer states. Also thank Thrillist — which describes itself as “a leading men’s digital lifestyle brand” — for providing the mission statement of the week: “We painstakingly wade through the crap to unearth greatness.” And as we know, greatness in men becomes a lifestyle after a few beers. 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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PILING ON: THE WORST-HIT CITIES

Flood leaves heap of money trouble Communities look to a disaster declaration for financial relief

Detroit and 12 suburbs saw their typical week’s trash quadruple because of last month’s floods. Here are the flood totals and what the communities normally would expect, as well as the equivalent number of normal weeks it would take to equal the trash caused by flooding. No. tons Aug. 11-24 Berkley 1,949 Center Line 322 Clawson 1,368 * Detroit 7,044 Ferndale 1,770 Hazel Park 1,030 Huntington Woods 2,270 Madison Heights 3,900 Oak Park 3,011 Pleasant Ridge 154 Royal Oak 5,153 St. Clair Shores 1,600 Warren (city est.) 9,000

2-week norm 224 84 176 2,240 456 270 66 350 428 38 1,030 861 3,000

Equivalent no. of weeks 17.4 7.7 15.5 6.3 7.8 7.6 68.7 22.3 14 8.1 10 3.7 6

* 14-day estimate, based on a 19-day reported total of 9,559. Norms computed from daily totals by two haulers.

BY CHAD HALCOM CRAIN’S DETROIT BUSINESS

9,223 Tons of trash collected in Detroit and 12 inner-ring suburbs of Oakland and Macomb counties in a normal two-week period

f the August flood damage didn’t hobble your community’s finances, then garbage removal costs in the aftermath might do the trick — unless Southeast Michigan can qualify for relief next week by way of the Federal Emergency Management Agency. Detroit and the 12 hardest-hit inner-ring suburbs of Oakland and Macomb counties together collected more than 38,500 tons of refuse between Aug. 11 and Aug. 24, either through private waste

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September 1, 2014

haulers like Waste Management Inc., Rizzo Environmental Services Inc. or Advanced Disposal or internally through city public works employees, according to figures furnished to Crain’s. That’s more than four times what the same communities collect during a normal two weeks; Huntington Woods, where at least 70 percent of homes had flooding, had more than 30 times its normal trash. That means overtime, equipment repairs, extra fuel and disposal fees that are already well into seven figures. See Flood, Page 20

MEDC aims to hook fishing, hunting dollars, Page 4 Company index These companies have significant mention in this week’s Crain’s Detroit Business: Advanced Disposal . . . . . . . . . . . . . . . . . . . . . . . . . 3 Amistee Air Duct Cleaning & Insulation . . . . . . . . . . 5 Annie Mac Financial . . . . . . . . . . . . . . . . . . . . . . . 13 Aubrey Lee Jr. & Associates . . . . . . . . . . . . . . . . . 13 Bank of Ann Arbor . . . . . . . . . . . . . . . . . . . . . . . . 12 Beaumont Health System . . . . . . . . . . . . . . . . . . . . 1 Belfor Franchise Group . . . . . . . . . . . . . . . . . . . . . . 5 Botsford Hospital . . . . . . . . . . . . . . . . . . . . . . . . . . 1 CBRE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Charter One . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 12 Chase Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Citrin Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Colliers International . . . . . . . . . . . . . . . . . . . . . . 22 Comerica Asset Management Group . . . . . . . . . . . 13 Comerica Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Donnelly Penman & Partners . . . . . . . . . . . . . . . . 11 Droste Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Ducts R Us Air Duct Cleaning . . . . . . . . . . . . . . . . . 5 Fifth Third Bank . . . . . . . . . . . . . . . . . . . . 12, 13, 14 FirstMerit Michigan . . . . . . . . . . . . . . . . . . . . . . . 12 Gregory J. Schwartz & Co. . . . . . . . . . . . . . . . . . . . 14 Huntington Bank . . . . . . . . . . . . . . . . . . . . . . 12, 14 IAV Automotive Engineering . . . . . . . . . . . . . . . . . 20 KeyBank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 13 Level One Bank . . . . . . . . . . . . . . . . . . . . . . . . 11, 12 LJPR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Loomis Sayles . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Managed Asset Portfolios . . . . . . . . . . . . . . . . . . . 13

38,571

Michigan Economic Development . . . . . . . . . . . . . . 4 Michigan Minority Supplier Development Council . . 1 NextEnergy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Oakland University . . . . . . . . . . . . . . . . . . . . . . . . . 1 Oakwood Healthcare . . . . . . . . . . . . . . . . . . . . . . . 1 Plante Moran Financial Advisors . . . . . . . . . . . . . . 13 PNC Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 14 Presidents Council, State Universities of Michigan . . 19 Public Sector Consultants . . . . . . . . . . . . . . . . . . . 19 Regional Transit Authority of Southeast Michigan . 21

Tons of trash collected in Detroit and the 12 hardest-hit inner-ring suburbs of Oakland and Macomb counties between Aug. 11 and Aug. 24

Rizzo Environmental Services . . . . . . . . . . . . . . . . . 3 Robinson Capital . . . . . . . . . . . . . . . . . . . . . . . . . 14 Schechter Investment Advisors . . . . . . . . . . . . . . . 13 Spickler Wealth Management Group . . . . . . . . . . . 14 Transportation Riders United . . . . . . . . . . . . . . . . 21 PHOTO ILLUSTRATION BY PIERRETTE DAGG

University of Michigan . . . . . . . . . . . . . . . . . . . . . 22 Visteon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Waste Management . . . . . . . . . . . . . . . . . . . . . . . . 3

Suppliers unveil the future at world car-tech conference BY DUSTIN WALSH CRAIN’S DETROIT BUSINESS

COURTESY OF VISTEON CORP.

Unlike the consumer-focused auto show, the ITS World Congress offers suppliers such as Visteon greater interaction with their customers.

Next week’s ITS World Congress 2014 in Detroit will highlight the global transportation industry’s future of connectivity, safety and automation. In some cases, these technologies push engineering to the furthest reaches of imagination, and others perform the simplest tasks overlooked in previous designs.

THIS WEEK @ WWW.CRAINSDETROIT.COM

The Sept. 7-11 event, which is in Detroit for the first time, is a big step for suppliers, local and global, to introduce the technology that’s making up more of their bottom lines. The global intelligent transportation market, including connected and autonomous cars, is projected to reach $33.75 billion by 2020, according to research by Dallas-based Markets and Markets. With government regulation on the horizon and technology improv-

ing at a clip, service providers, suppliers and automakers are racing to capitalize by bringing their best ideas to market. “This event comes at a unique point in time,” said Scott Belcher, president and CEO of the Washington, D.C.-based Intelligent Transportation Society of America. “Automakers are lining up to deliver greater and greater autonomy in See Car tech, Page 20

Ruminations on illumination Crain’s Amy Haimerl looks at efforts to turn the streetlights back on in Detroit’s neighborhoods – including her own, crainsdetroit.com/blogs CDB/AMY HAIMERL

Department index BUSINESS DIARY . . . . . . . . . . . . . . . . 17 CALENDAR . . . . . . . . . . . . . . . . . . . . 16 CAPITOL BRIEFINGS. . . . . . . . . . . . . . . 4 CLASSIFIED ADS . . . . . . . . . . . . . . . . 17 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 8 LETTERS . . . . . . . . . . . . . . . . . . . . . . . 8 MARY KRAMER . . . . . . . . . . . . . . . . . . 8 OPINION . . . . . . . . . . . . . . . . . . . . . . . 8 OTHER VOICES . . . . . . . . . . . . . . . . . . 9 PEOPLE . . . . . . . . . . . . . . . . . . . . . . 16 RUMBLINGS . . . . . . . . . . . . . . . . . . . 23 WEEK ON THE WEB . . . . . . . . . . . . . . 23

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MEDC on the hunt to spread the word about great outdoors The Michigan Economic sites, outdoorhub.com. Development Corp. is using The MEDC and DNR its marketing expertise, pooled their resources advertising budget and and spent $400,000 for the staff to reach out to site to create a landing hunters and anglers page for the state at outacross the country — indoorhub.com/puremich cluding metro Detroit — igan. as a new way to increase The authors of the site tourism and generate ecogenerate the content, nomic activity. which includes stories “Detroit is a great exand videos about great ample with an urban sethunting and fishing Chris Gautz ting, but there are these spots across the state. As opportunities for fishing,” said part of the deal, the MEDC and Michelle Grinnell, public relations DNR can repost the stories and manager for the MEDC. “It’s about videos the site creates on their reminding folks that urban areas own websites and through social also have these outdoor opportuni- media. ties.” “We wanted to tap into what was Lake St. Clair and the Detroit already happening and the experts River are two popular fishing there,” Grinnell said. spots in the state, she said. And it Mike Finney, president and also offers those anglers an opporCEO of the tunity to attend a Detroit Tigers MEDC, said it game after they are done, or find a makes sense to great place to eat, she said. work with the “We want to make it about a DNR to help protravel trip to Michigan,” she said. mote the state. To help make the connection and “So many spread the word about what the state assets are state has to offer, Grinnell said the under the direcMEDC has been pooling some of its tion of DNR,” he funding with that of the Department said. Finney of Natural Resources, as well as sharFinney said ing staff and resources on several the MEDC is also planning a proinitiatives to directly target niche motional campaign with the DNR audiences to encourage more hunt- to encourage people to purchase ing and fishing in the state. Last fall, the MEDC sponsored a fishing competition in Alpena put on by Major League Fishing and the Outdoor Channel. The competition was filmed and turned into a 13week show that aired on the Outdoor Channel earlier this year. Grinnell said Pure Michigan ads were then aired during the commercial slots. This month, another MEDC sponsorship will bring two fishing competitions to the state. On Sept. 4-7, there will be a Bass Pro Shops Bassmaster Open at Lake St. Clair. On Sept. 18, the Bassmaster Elite Series competition will come to Escanaba over four days, where the top 50 professional anglers will compete for $900,000 in prizes. Coverage of the tournament will be shown on ESPN2, ESPN Classic and the Outdoor Channel. Along with the sponsorship of those events, it also comes with a multipage spread in this month’s edition of Bassmaster Magazine highlighting the fishing opportunities in the state. Grinnell said the MEDC is also producing a video advertisement on Michigan’s 102 state parks that will be played as ads that appear at the start of Web videos on targeted websites. A big part of that effort is to promote Michigan’s state parks — the most recent addition being Belle Isle — which attract about 22 million annual visitors. The ads will focus on the recreational opportunities the state parks offer, which include fishing, she said.“We really want to talk directly to hunters and anglers,” she said. Another way the MEDC is doing that is with a digital advertising campaign with one of the more popular hunting and fishing web-

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the recreational passport. For an $11 annual fee that motorists pay when renewing their vehicle registration, the passport allows access to all 102 state parks. When state land, national park land and private land open to hunters are combined, there are 9.9 million acres of land for hunting open to the public in the state, as well as access to the Great Lakes and more than 11,000 inland lakes. Michigan’s hunter participation rate, the percent of the state’s population that has a hunting license, ranks third in the nation, and its fishing participation ranks fifth. In 2011, the state had 795,535 licensed hunters and more than 1.1 million licensed anglers, according to the DNR. “Hunting and fishing are big activities for Michigan residents,” she said. And now, Grinnell said, the MEDC and the DNR want to make sure a national audience is aware of the potential in the state. In 2011, hunters spent an estimated $2.3 billion in trip-related expenses and equipment in the state, and anglers spent an estimated $2.4 billion, according to the DNR. “They have a big economic impact on the state,” she said. Chris Gautz: (517) 403-4403, cgautz@crain.com. Twitter: @chrisgautz

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Amistee Air Duct acquires Ducts R Us, looks at 2nd competitor BY JAY GREENE CRAIN’S DETROIT BUSINESS

Novi-based Amistee Air Duct Cleaning & Insulation has acquired competitor Ducts R Us Air Duct Cleaning in Clinton Township and is in talks to acquire a second competitor in Southeast Michigan, said co-owners Mike McCowan and Steve Dickinson. With 25 percent revenue growth this year, Amistee projects it will hit $3.1 million in revenue by the end of year through a combination of internal growth and acquisitions, said Dickinson. The 9-year-old company with 30 employees recorded $2.8 million revenue in 2013. The company paid $125,000 to acquire Ducts R Us; the acquisition involved a book of business and some equipment. “We’re always looking to buy up smaller companies that can add to our growing fleet of trucks and list of services,” McCowan said. Dickinson said Amistee is in talks to acquire another smaller competing duct company in Southeast Michigan. He declined to name it. “We are seeing a lot of growth because of the economy and the flooding,” said Dickinson, noting the nearly 6-inch rainfall on Aug. 11. “When basements flood with sewer water, you have to clean and sanitize your walls and duct system.” Recently, Amistee also has experienced growth in contracting with a number of hospitals and nursing homes, Dickinson said. Some of the hospitals include Detroit Medical Center, Providence Hospital in Southfield and St. Joseph Hospital in Port Huron. To keep up with demand, Amistee expects to hire another five employees this year for its duct cleaning and insulation business, which it added four years ago. “We wanted to diversify and started doing a lot of insulation removal. Contractors wanted us to do installation as well, so we added that,” he said. “We want to be the biggest duct company in Michigan.” Amistee competes with a large number of independent and franchise duct cleaning companies in Southeast Michigan, including Ductz International LLC, an Ann Arbor-based national franchiser. J. Andrew Mengason, COO of Belfor Franchise Group, which oversees Ductz, said competition is stiff in the duct and dryer vent cleaning industries. “There are quite a few competitors with a wide spectrum of quality customer service and pricing,” said Mengason. “It is a very segmented market with new companies” regularly entering the marketplace. Ductz works mainly in the commercial arena on apartment buildings, universities, restaurants and retail shops, Mengason said. For residential work, Ductz also relies on referrals from heating and cooling companies and building contractors. As with Amistee, business boomed earlier this month for Ductz with companies trying to dry out and rebuild from flood damage. “When you have a disaster like Detroit saw” with the flooding in August, few homeowners had in-

Dickinson

McCowan

surance coverage that paid for restoration, Mengason said. “They may not (have the cash without insurance coverage to) be able to rebuild and clean out the ducts from mold and airborne

spores,” he said. “It is hard to explain that to the homeowner. They are focused on just getting the area cleaned out.” At Amistee, Dickinson said the company offers a variety of services to residential and commercial customers, including dryer vent cleaning and insulation installation, out of its new 14,000 square foot warehouse at 47807 Grand River Ave. in Novi. “We moved about a year ago from a 4,000-square-foot building,” Dickinson said. “We needed more space. We now have a training room with duct work and furnaces. It really helps for training.”

Dickinson said Amistee’s average job costs $450 to $500 with an average three-bedroom, 1,500-squarefoot house costing about $395. “Ducts are really crazy. The difficulty of the job really is a reflection of whoever lived there,” he said. “If you have pets, live on a dirt road, you could have 40 to 50 pounds of filth in your ducts. Newer homes can also have building debris, drywall dust and other things.” The company currently has nine large power vacuum trucks that pull 17,000 cubic feet of air per minute, two commercial units, two insulation units, and is able to

have onsite storage for emergency air duct cleaning services when natural disasters or fires emergencies occur. Amistee plans on continued growth in Southeast Michigan and is considering satellite offices throughout other parts of Michigan and Ohio, McCowan said. For the first time this year, Amistee also made Inc. Magazine’s list of top 5,000 growing companies coming in at No. 2,560 with 147 percent growth rate the last three years. Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

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CRAIN’S DETROIT BUSINESS

Calling all creatives, innovators, ‘expats’: Detroit is hopping in Sept. Idea-sharing, cultural immersion and a push to encourage investment in Detroit are some of the themes of a jam-packed lineup of events coming to the city in the next few weeks. The city is not only a stop on the speaker circuit but also serves as a host venue for creative conversations and displays. DAVE LEWINSKI

At the inaugural Dlectricity in 2012, children could explore Frontier Town, a kidsized tent camp just off Woodward Avenue.

At least six events in September will focus on Detroit as a center for innovation. Here’s an overview:

Techonomy Sept. 16 http://techonomy.com/conf/14detroit Location: Wayne State University Focus: U.S. reinvention Target audience: Local tech entrepreneurs, “curious” executives, urban enthusiasts Tickets: $195; tiered pricing for segments More about the event: Founded

five years ago by a former technology editor at Fortune magazine, Techonomy is in its third year in Detroit. A featured speaker this year is Jack Dorsey, CEO of Square and chairman of Twitter. In addition, the 50 finalists in the Accelerate Michigan business plan competition will be announced. Among many other speakers slated: Jean Case, CEO, Case Foundation; and Stacy Brown-Philpot, COO, Task Rabbit.

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Sept. 17-19 www.detroithomecoming.com Location: Various venues Focus: The goal of this invitation-only event is to bring “expatriates” back to Detroit to re-engage them with the city in its post-bankruptcy chapter. Crain’s Detroit Business is a lead convener of the event. Target audience: Successful people with ties to Detroit who now live and work elsewhere More about the event: More than 150 “expats” are expected. The host committee includes top executives and civic leaders; expats will hear from Gov. Rick Snyder, Mayor Mike Duggan and a host of local “doers” making a difference in Detroit. More speakers and attendee names are posted on the event website.

NewCo Sept. 18 http://det.newco.co Location: Downtown Detroit, Corktown, Midtown, Southwest and Eastern Market Focus: 58 companies participate in what has been dubbed a pub crawl of local businesses — without the alcohol. Companies market themselves as great places to work. Target audience: Prospective employees and clients Tickets: Prices range depending on packages; a VIP pass is $125. More about the event: Founded in San Francisco by Federated Media, NewCo has been staged in London, New York City and Silicon Valley. The VIP kickoff is Sept. 17 at the Madison Building, with David Farbman as keynote speaker. Farbman

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The annual Detroit Design Festival, presented by the Detroit Creative Corridor, kicks off Sept. 23.

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Detroit Design Festival Sept. 23-28 http://detroitdesignfestival.com Location: Various venues Focus: A showcase of creatives, this annual event is presented by the Detroit Creative Corridor in Midtown and neighborhoods in and around downtown, Midtown and Eastern Market. Target audience: Creative community, ranging from product design to architecture to fashion Tickets: Most festival events are free; check the website for details. More about the event: Venues will host studio tours, roundtable discussions, lectures, product and fashion shows, product launches, retail happenings and “design battles.” Sponsors include Gensler, the College for Creative Studies, the Knight Foundation and Vitamin T staffing agency.

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Dlectricity Sept. 26-27 (event runs from dusk to midnight) www.dlectricity.com Location: Woodward Avenue corridor in Detroit, from Orchestra Hall to the Detroit Institute of Arts Focus: Outdoor walking event featuring 35 installations using light and illumination as an art form Target audience: Everyone; Dlectricity is a free public event. More about the event: Founded two years ago, the inaugural event drew 75,000 spectators. A nighttime bicycle parade returns Sept. 27, sponsored by Shinola. Lead sponsor this year is DTE Energy Co.

Meeting of the Minds Sept. 30-Oct. 2 http://cityminded.org Location: Speakers and programs based at College for Creative Studies, with tours in Midtown and downtown Focus: Sponsored by Toyota and Cisco, this event is centered on urban sustainability and connected technology changes in host cities every year. Target audience: Professionals and executives from technology, government and other backgrounds Tickets/registration: $750 More about the event: This invitation-only event draws professionals who share an interest in the topics of “smart city development,” urban planning and technology.

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CRAIN’S DETROIT BUSINESS

OPINION

Tap BoA settlement to fight city’s blight H

ere’s an opportunity for the White House to give Detroit — and Michigan — a boost without spending a dime of taxpayer money: Simply allocate part of the $16.6 billion settlement reached with Bank of America this month over the mortgage meltdown to neighborhood-related projects. In Detroit, that would translate into funds for blight removal. Bank of America acquired Countrywide Financial in 2008. The sins of that lender have come back to haunt BoA, most recently in this latest agreement to pay up. Earlier, J.P. Morgan Chase reached a $13 billion settlement. Citigroup settled for $7 billion. The tally with the U.S. Justice Department is now $37 billion and counting. Credit rating agencies also signed off on giving high-quality ratings to bundled securities made up of subprime mortgages with high default rates. Detroit is an epicenter for that phenomenon. Drive or walk through any of Detroit’s middle-class neighborhoods, such as East English Village, and look at how many houses are still boarded up, the result of people who couldn’t qualify for traditional loans in the first place but were given teaser rates. These were among the types of subprime loans later bundled and sold off in pools, contributing to the mortgage mess. As the lenders pony up settlements, it seems all the fines should go toward those hurt most by the meltdown: people who lost their homes when they couldn’t refinance and neighborhoods whose values plummeted when homes went back to lenders in great volumes.

Flood trash totals add up to disaster The great Detroit flood generated a lot of trash. By a lot, we mean about 38,500 tons, almost four times the usual amount collected in a typical two-week span. As Chad Halcom reports on Page 3, the KENNY CORBIN sheer volume matters to the Piles of trash were all too familiar amount of federal assistance after the great Detroit flood in August. the region could qualify for. Public officials in the hardest-hit communities expect to meet with Federal Emergency Management Agency inspectors this week to assess public property damage and turn over early estimates of the local impact. They have a strong case to make. President Barack Obama should declare a federal disaster area in the region to help cover the cost of damage wrought by the 100-year storm.

MARY KRAMER A local fundraising challenge So what’s the next Ice Bucket Challenge? Here’s a local way to bring more money to worthy nonprofits in our region — and you don’t even have to get wet. But you can make it fun. It’s the RiseDetroit Challenge, powered by CrowdRise, a fundraising platform co-founded by Robert Wolfe. Wolfe is a 2004 alumnus of our “40 under 40” program; we honored him for starting Moosejaw Mountaineering, an online and storefront retailer of outdoor equipment and camping gear. When Wolfe sold the company, he and his siblings looked at opportunities to “make a difference.” CrowdRise is the result. CrowdRise earned national publicity in 2010 when The New York Times reported its role in helping runners in the New York City Marathon reach a near record for raising money for charity by using the open CrowdRise platform,

which works like Facebook or Twitter. Though Royal Oakbased CrowdRise did not work on the Ice Bucket Challenge for the ALS Association, it has helped individuals and organizations with personalized and creative promotions. The results are often hilarious. Like a guy in St. Louis raising money for multiple sclerosis (#sober4MS) by pledging to attend “bad” concerts — to hear performers like Cher — totally sober. In one post, he pledged that he and his buddies would attend the concert in drag, dressed as different versions of Cher, if he met a specific dollar goal. Or a young woman who pledged, for her cause: “When I raise $1,000, I will dye my hair blue.” “We’ve got stuff like that every 10 minutes,” Wolfe said. Nonprofits have until 5 p.m. Oct. 3 to sign up. They should go to Ap-

plyRiseDetroit.com. Individuals can be creative to boost giving to their favorite nonprofits, starting at noon on Sept. 15. The challenge ends Oct. 30. In between all the participating nonprofits will be vying for traffic — and dollars — at crowdrise.com/RiseDetroit. Nonprofits keep all the money they raise, and the nonprofits that raise the most dollars will get some of the $100,000 put up as prize money by Phillip Fisher’s Mission Throttle and the Marjorie S. Fisher Fund. Wolfe said he admired the Ice Bucket Challenge for two reasons: “It has shown, in a very big way, even though ALS is as serious a cause there is, you can still rally around it and make it fun. And second, I have two little kids. They actually know what ALS is now.” 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.

LETTERS Oakland drain needs to be fixed Editor: In response to the Aug. 25 article “Oakland official: Drain worked, but system was deluged”: All is not as it appears concerning the operation of the underground Kuhn Retention Treatment Basin. There are four emergency feces screens used when flow levels reach critical depths. The screens have 2inch slots instead of the half-inch slots on the regular 16 screens. That is the first part of the stormwater “treatment,” with the second being a dosing of sodium hypochlorite (bleach) to cut down on pathogens, bacteria, etc. The water and feces that get by the screens are then retained in the underground basin in the hope that the storm will end before the basin fills. The water is withheld, released only once, via gates, and it slowly re-

Crain’s Detroit Business welcomes letters to the editor. All letters will be considered for publication, provided they are signed and do not defame individuals or organizations. Letters may be edited for length and clarity. Write: Editor, Crain’s Detroit Business, 1155 Gratiot Ave., Detroit, MI 48207-2997. Email: cgoodaker@crain.com enters the Red Run Drain. An intense prolonged storm kills this strategy, as the basin just repeatedly fills and releases, involving billions of gallons of “treated” sewage overflow. Once the Red Run is full, all the local storm drains flowing into it are backed up, aka surcharged,

and any crack or misfit causes water to spew underground. This quickly adds to ground saturation, increasing inflow and infiltration of surrounding pipes. The water table rises quickly, causing flooding of homes. The Red Run Drain has nearly overflowed its banks, engulfing bridges downstream, multiple times. American Recovery and Reinvestment Act funds of about $20 million, involving the U.S. Army Corps of Engineers, were awarded in 2011 to repair the Red Run Drain, only to fail. No dredging of shoals occurred. The contractor was given an award by Oakland County/USACE for a job well done. The Red Run needs to be dredged See Letters, Page 9

KEITH CRAIN: Whom can we believe in election polling? Last week, there were a whole bunch of election surveys that told us who was ahead, who was behind, and who was gaining and falling back. Sorry, but I don’t believe any of them. It doesn’t matter if the results are good or bad for my political candidates, I just have become very suspicious about the sampling techniques being used today in a rapidly changing tech world. In a statewide battle, we all know that any Democrat is going in with a substantial lead — at least it would seem so until someone shows me otherwise. With the

labor unions and their support of Democratic candidates and the strong showing of Detroit as a Democratic stronghold, that is some lead, although no one knows exactly how much. But once you figure that out, it really gets muddy when you try to figure out the rest. I think that with two months to go, anything can happen. If you ask people today whom they support, they might change their minds once or twice between now

and Election Day. And I am very suspicious whether today’s polling methods are keeping up with today’s technology. First off, and this can be measured, just how inclined are various demographics to go to the polls and vote? Again, chances are that they won’t decide until much closer to Election Day. But the biggest change is the way the information is gathered. The advent of cellphones changes the entire information-gathering

equation. There are now more cellphones than land lines in Michigan. Many households now don’t even have a land line, so there is no traditional method of interviewing those households. The landscape is changing so rapidly, I just am not sure how accurate or timely any polling can be today. I expect some company that does polling will let me know why I am completely wrong, but until then, I think the elections in two months are completely up for grabs. It won’t be long before the new technology will be able to tell those pollsters exactly what we are

thinking long before we know what we’re thinking. It’s a rapidly changing world, and right now technology is confusing the data gatherers. In the future, we won’t even have to go to the polls. It might take a couple more election cycles, but sooner or later, we’ll be able to vote with our smartphones. This world of technology is changing very rapidly. But don’t fret: The politicians aren’t going to give up the mudslinging anytime soon. The technology may change, but politics doesn’t really change at all.

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Detroit, state should’ve challenged Wings arena plan ball League gives each ably not. It is likely that the current The Detroit Red Wings team an equal share of its NHL franchises are in the largest are building a new arena annual $7 billion in media- available hockey markets. The Red and have released a drawbased revenue, giving each Wings would thus have to move to a ing of the construction team more than $200 mil- market smaller than the least-valuplan. Olympia Developlion each year. In contrast, able franchise — the $175 million ment — a company owned the NHL shares only about Columbus Blue Jackets. That team by Red Wings owner Mike $200 million each year, net- generates $69 million in annual revIlitch —persuaded state ting each team just $6.7 enue, whereas the Red Wings, estipoliticians to spend $260 million annually. The NHL mated to be worth $470 million, genmillion in taxes for this does not share any ticket erate $96 million in revenue $650 million project. The Christopher revenue either (40 percent annually. Leaving what some estiarena will cost almost four Douglas of NFL ticket revenue is mate to be the NHL’s most valuable times more than the construction of Joe Louis Arena did shared). This means that NHL media market could cost the Red and will be one of the National teams need to be in large hockey Wings at least $27 million in revenue per year. The total value of the Hockey League’s most expensive markets to be profitable. But could the iconic Red Wings franchise would obviously suffer. ever. But it didn’t have to be this A Red Wings move to the subway — the Red Wings and Ilitch be profitable somewhere else? Probhad no real leverage over the politicians who voted in favor of this corporate welfare. In addition to the $260 million state subsidy, Olympia Development struck extra deals with the city of Detroit. The company will no longer owe the city a disputed $50 million to $80 million in television revenue. It will also gain $11 million annually by no longer sharing ticket and concession revenue with the city and keeping all naming rights revenue. When asked about the negotiations between the city of Detroit and Olympia about the revenue, Councilman Gabe Leland said, “It just didn’t seem like (Olympia representatives) were willing to budge.” Congratulations to our esteemed board member, In reality, Olympia had little David Thoms, for being selected by peers for leverage with the city. Professional sports franchises often extract inclusion in the 21st Edition of The Best Lawyers in special favors by threatening to move. But given the market realiAmerica in the practice areas of Litigation - Trusts ties of the NHL, the Red Wings could not have made a credible and Estates, Non-Proﬁt / Charities Law, Tax Law threat to move. An NHL franchise is almost comand Trusts and Estates, and for being named the Best pletely dependent on local revenue Lawyers’ 2014-15 Detroit Non-Proﬁt / Charities to turn a profit. The National Foot-

urbs might be a more serious concern for Detroit. In the mid-1970s, then-Red Wings owner Bruce Norris threatened just that. But this threat doesn’t hold much water either, given that 10 percent of Red Wings season ticket holders are Canadians. The Canadian cities that likely produce these fans have a combined population that almost matches Detroit’s. Moving farther away from the hockey market that centers near Detroit would be a risky business proposition. The state and city of Detroit should have negotiated with Olympia Development from a position of strength. They could have

refused to provide subsidies, and the Red Wings would have likely stayed in Detroit. Olympia would have just needed to do what most every other business needs to do to expand: raise capital from private sources. Instead, politicians caved to nearly the entire list of Olympia’s demands, needlessly costing taxpayers tens of millions of dollars per year. Christopher Douglas is an associate professor of economics at the University of Michigan-Flint and a member of the Board of Scholars at the Mackinac Center for Public Policy, a research and educational institute in Midland.

In the case of David Thoms, the jury has spoken.

Law “Lawyer of the Year.”

LETTERS CONTINUED

Well done and well deserved, sir.

■ From Page 8

deeper and the dredge material used to build the banks higher, increasing the volume of water the drain can handle. Using the Macomb Oakland Interceptor for Warren sewer volumes will also aid surcharging of the system. Oakland County needs Macomb County land (aka the Red Run) to drain itself, not the other way around. Willi Gutmann Warren

Transit center questions Editor: Regarding the story on the Troy Transit Center (Page 1, Aug. 18), here are a few questions that should be asked and answered: 䡲 What other train station in the world has cost more than $200,000 per daily boarder? 䡲 Where else on the planet is a train station located in one city and its platform in another city? 䡲 On the proposed platform, will there be a telephone, a heated waiting area, a washroom, or any button to summon police help? Elderly passengers who want to take a train from Troy to Chicago will want to know the answers. Richard Rosenbaum Birmingham

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A CONVERSATION WITH

Richard Hampson, Citizens Financial Group Inc.

Wealth Management In recent months, Rhode Islandbased Citizens Financial Group Inc. has been paying more attention to the Michigan market and its Charter One bank branches as it plans a spinoff from its parent, the Royal Bank of Scotland plc. In May, Citizens announced it had filed a proposed IPO of its common stock as a key part of separating from RBS, which is under pressure from the British government to repay billions in bailout money. The Michigan operation has closed branches and lost assets and market share over the last eight years. Richard Hampson, the new Michigan market president, tells Crain’s reporter Tom Henderson about his plans to grow the business. How did you get recruited to the new job? Were you headhunted? Citizens ID’d me as a candidate. I’d been in Michigan since 2001, the last four years in corporate banking with PNC, and Citizens approached me. Was there any trepidation by you, with all the trouble RBS had been under? No. Not at all. It’s a great opportunity. In the process of being recruited, it became very clear there was a commitment to the state. On June 30, my very first day on the job, my CEO announced the rebranding (of Charter One branches as Citizens Bank branches next year). Citizens has a solid commitment to the state. It had to help in the recruiting process that you were already here. No one had to sell you on the place. Absolutely. The state of Michigan came out of the recession better than a lot of states, and when I look at the economy here, there are very good signs. There are a lot of technology companies here or locating here. The auto companies are doing really well. What are your marching orders? To grow this market. To grow loans on the commercial side and to grow customers on the retail side. We’ve hired 15 bankers across our business units, already. This is a very important market for Citizens. What’s your background? I grew up in New Jersey. Soccer was my main sport. I still play it in an over-40 league here. I went to Boston College and played soccer there. I didn’t go there on a soccer scholarship, but I ended up on a partial scholarship. I got my master’s degree at Columbia a few years after graduating. After graduating from Boston College, I was a legal assistant for a law firm. I decided business school was what I wanted to do instead of law school. My first job out of Columbia was in the New York office of Brown Bros. Harriman & Co.

If you know someone interesting in banking, finance, technology or biotechnology whom Tom Henderson should interview, call (313) 446-0337 or write thenderson @crain.com.

GLENN TRIEST

Yes, more baby boomers means more need for financial advice, says Lisa Sampson of PNC Bank. So does an era of low interest rates, where CDs don’t cut it as an investment. “And you’ve got more people retiring now without pensions,” Sampson said, meaning they must maximize the returns on their money.

A wealth of interest hen Rhode Island-based Citizens Financial Group Inc. announced in June that it was hiring financial advisers here and would soon have wealth managers available in 30 of its Charter One branches in Southeast Michigan, it joined a growing list of banks targeting fee-based services for their affluent customers.

Small, midsize banks add financial advisory services to boost revenue

Some large banks, like Comerica and Chase, have had robust wealth management operations for years. Chase, for example, has $204.4 billion under management and 1,850 privateclient bankers firmwide; in Michigan, it has $10.6 billion under management and 50 private-client bankers. Money managers Comerica has $23.8 reveal their billion under manageinvestment ment. preferences, But now, midsize Page 13 and even small community banks are looking to increase their noninterest income by feebased financial advisory services. The same week Citizens announced it was launching wealth management and private

banking services in Southeast Michigan, seven-branch, Farmington Hills-based Level One Bank announced it was targeting the affluent, too, and had hired two veterans of wealth management. “It was part of the original plan when we launched the bank in 2009 to have a wealth management operation,” said bank president and CEO Patrick Fehring. “We’re primarily a business bank dealing with entrepreneurs. Most of them were already using money Fehring managers, so why not have them use us?” he said. Fehring said the likely growth strategy for

BY TOM HENDERSON CRAIN’S DETROIT BUSINESS

WHERE ARE THEY PUTTING MONEY?

the business unit will be to acquire small financial advisory practices next year. “Focusing on wealth management is a great business model,” said John Donnelly, managing director of the Grosse Pointe investment banking firm Donnelly Penman & Partners and a bank loan officer early in Donnelly his career. “Lending money is a high-risk, low-reward model. As a banker, you don’t put any capital at risk with a wealth management operation. You get high returns with no risk. Take a client with a $1 million portfolio. You get 1 percent a year to manage it, which is $10,000 a year of recurring revenue with no risk.” Donnelly and area bankers say there are several reasons why it makes sense for banks now to have a strong focus on offering financial services to the affluent. Wealth management adds to what bankers say is a more holistic approach toward business clients. A bank’s loans may have helped customers grow their businesses and, consequently, their net worth. Once customers have enough net worth to qualify for wealth-management services, why let other banks have that business? See Wealth, Page 12

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Focus: Wealth Management

Wealth: In era of low rates, more banks offer advice for a price ■ From Page 11

Aging baby boomer business owners held out from selling their companies at the bottom of the market during the recession or post-recession. Valuations are high again, and as owners sell for the kinds of earnings multiples that haven’t been seen since before the recession, they

suddenly have the net worth that qualifies for special attention. Baby boomers, in general, not just those in business, are retiring with more wealth than any previous generation. Bank of America’s Merrill Lynch operation has even created a wealth management position, direc-

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tor of financial gerontology, to oversee advisory services for the elderly. A low-interest-rate environment has put a squeeze on what bankers call the spread: the interest they pay to borrow money and the interest they charge to lend it. With lower returns on loans, banks need income from other sources. “Five years ago, a five-year balloon mortgage might have been at 7 percent. Today, it might be 4 percent,” said Tim Marshall, president and CEO of the Bank of Ann Arbor. “You do the arithmetic on a $5 million loan, that’s $150,000 in lost income. So, Marshall you offset that two ways. You grow your balance sheet, and you add noninterest products such as wealth management and trust services.” Marshall said he focused on beefing up wealth management when he joined the bank in 2004, seeing growth there as a way to offset losses from the next down cycle. The bank then had a little more than $200 million under management. Today, the Bank of Ann Arbor manages about $931 million. “What we make from loans is very, very low, so banks have to figure out a way to make more money and keep the doors open,” said Pete Gargasoulas, the Southfield-based vice president and senior portfolio manager of investment management and trust for the Fifth Third Private Bank. “We’ve expanded wealth management in Michigan and across the Fifth Third footprint. We’ve added staff here in the last year, and we expect to continue adding staff the next two or three years. We’ve got more than $1 billion under management in Southeast Michigan now, and we’re going to grow aggressively.” “There are a lot of baby boomers retiring with a lot of wealth, which creates more need for advisory services,” said Lisa Sampson, senior vice president and managing director of wealth management for PNC Bank in Southeast Michigan and Ann Arbor. Sampson is a 28-year veteran at PNC who has spent 17 years in wealth management, the past year in her current position. Thirtythree bankers report to her, with the bank preferring its wealth management customers have at least $1 million in liquidity. Sampson said the low-interestrate environment helps drive PNC’s focus on wealth management but also drives the need for customers to seek professional advice. They no longer can just plunk money in CDs and make a decent return. “And you’ve got more people retiring now without pensions,” she said. Without that source of money coming in each month, she said you need to maximize the returns on the money you do have.

A mission for Sandy Pierce When Akron, Ohio-based FirstMerit Corp. bought Flint-based Citizens Republic Bancorp Inc. last year, Sandy

ADVISERS ON THE GROW Growth of wealth managers in Michigan by some area banks: Bank of Ann Arbor: 15; one hired this past year, two planned for next year. Charter One: Has hired 15 wealth managers so far as part of a plan to offer that service at 30 branches in Southeast Michigan. Chase Bank: Has added 45 advisers in Michigan since 2012 but declined to provide a total for the private client group. Comerica Bank: 126 in Michigan, up six this past year. Fifth Third Bank: 18 in Southeast Michigan, up three this past year. FirstMerit Bank: 42, all hired this past year; several more planned next year. Huntington Bank: 10, with one added in the past six months. KeyBank: 8; one hired this year and another planned. Level One Bank: 2; both hired this past year, with plans to add a few next year through acquisition of small financial advisory firms. PNC Bank: 33; up five in two years. — Tom Henderson Pierce, the former president of Michigan operations for Charter One who was hired as chairman and CEO of FirstMerit Michigan, said she knew what one of her first tasks Pierce had to be: growing a wealth management operation from scratch. Citizens Republic didn’t provide that service, which has been a focus for FirstMerit. In the 16 months since shareholders approved the sale, FirstMerit Michigan has recruited 42 financial advisers. “We’re absolutely continuing to grow that business,” she said. Pierce said the bank generally provides wealth management services to customers who have at least $1 million in total bank busi-

ness, including loans, deposits and investible incomes. FirstMerit Bank has $6.5 billion under wealth management. It doesn’t break out numbers by state. Brent Wilder, associate director of public relations for Columbus, Ohio-based Huntington Bank, said the company recently shifted the role of regional presidents from a concentration on commercial banking to a broader focus, “including directline engagement with The Huntington Private Client Group.” Wilder said that emphasis began last year when Jim Dunlap, president of the West Michigan region, was named director of the group. “It’s a space that hasn’t been a focus for us,” said Eric Dietz, senior vice president in the Birmingham office of the Huntington Private Bank. “We’re trying to build a reputation as a relationship bank, so wealth management makes sense for us.” Dietz said that the bank’s new Dietz focus is directly related to recent and ongoing M&A activity by its business customers. “A lot of entrepreneurs are selling their businesses, and a lot of wealth is being generated. So it just makes sense for us to do this,” he said. Kirk Albert, Ann Arbor-based president of KeyBank’s Michigan operations, said the recession didn’t just bring on a low-interest environment, it caused customers to pay down a lot of debt as fast as they could, which in turn cut down on what banks were making on loans. “You have to look at other revenue sources, like trust, treasury management and wealth management,” said Albert, who said the bank has about $3.5 billion under management in Michigan. “Michigan is one of the best markets in our footprint for wealth density.” Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

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CRAIN’S DETROIT BUSINESS

September 1, 2014

Focus: Wealth Management

New concerns but same goal: What the experts like, dislike A s one set of concerns recedes into the distance, another set comes over the horizon for wealth managers to contemplate. Three years ago, a major concern was worry about a double-dip recession. Then it was worries that the so-called emerging-market countries of Brazil, Russia, India and China had run out of steam. Investors were particularly concerned that China, whose insatiable demand for commodities and seemingly insatiable demand for U.S. debt had buoyed world markets for years, was coming in for a hard landing. Last year, there was Europe to worry about. How bad would things get in Ireland, Spain, Greece and Cyprus? Would recession there tip the world into recession? Today, there’s turmoil in Ukraine, fighting in Gaza, bond defaults in Argentina, and continued high unemployment and negligible growth in much of Europe. With all of that in mind, here is where some area wealth management money managers are putting their clients’ money, and here are some things they are getting rid of or staying away from. — Tom Henderson

Jonathan Citrin Founder and executive chairman, The Citrin Group LLC, Birmingham Likes: The Japanese yen, the British pound, gold, the SGG exchange-traded Citrin sugar fund Dislikes: Oil, U.S. stocks Quote: “In such a screwed-up world, it’s a good time to pick up on some of the hedges that normally are not purchased until it’s a day late and a dollar short. There are things out of favor that people should be buying. This is a perfect time to rebalance a portfolio.”

Michael Dzialo President and chief investment officer, Managed Asset Portfolios LLC, Rochester Likes: Consumer staples; health care; European dividend-yielding Dzialo stocks; Swedish Match, a maker of tobacco products in Stockholm; Orkla ASA (the Norwegian equivalent of Procter & Gamble); Boskalis Westminster NV of the Netherlands, the world’s largest provider of dredging services; and European oil stocks, Total SA of France, Statoil ASA of Norway and Eni SpA of Italy Dislikes: Base metals, China and financials Quote: “There is too much debt in the system, and that creates investment headwinds. We’re stuck in this 2 percent growth mode, and I

don’t see that changing, so we continue to favor sectors that don’t need the economy to do well.”

Robert Gardner

Senior portfolio manager, Key Private Bank, Ann Arbor Likes: Large-cap stocks, European stocks Dislikes: Bonds, small-cap stocks, emerging-market Gardner stocks, commodities in general Quote: “We underweighted small caps at the beginning of the year, and that’s one call we got right. They’ve been very volatile and have underperformed, and we think that will continue.”

Pete Gargasoulas Vice president and senior portfolio manager, Fifth Third Private Bank, Southfield Likes: Real estate investment trusts; emerging markets; energy; Gargasoulas technology stocks such as Apple Inc., Qualcomm Inc. and Microsoft Corp.; dividend-paying oil stocks like Chevron Corp. and ConocoPhillips Co. Dislikes: Utilities and bonds with a wait-and-see attitude on commodities Quote: “There’s been a lot of choppiness in emerging markets, which will continue, but long-term I really like them. I expect them to be big winners over the next few years.”

Dennis Johnson Senior vice president and chief investment officer, Comerica Asset Management Group, Detroit Likes: Precious metals, real estate, private Johnson equity funds, health care, select industrials, energy, utilities, small-cap U.S. stocks, global equities Dislikes: Bonds Quote: “There were a lot of credit worries about the Eurozone in particular and other international markets in general, but they have worked through challenging times and have recovered quite nicely.”

Dislikes: Long-term bonds Quote: “Interest rates for long-term bonds are much more likely to go up than down. It’s been a 30-year bull market for bonds, and it’s coming to an end.”

Leon LaBrecque CEO, LJPR LLC, Troy Likes: Mid-cap and large-cap U.S. stocks; some emerging markets, particularly Russia; energy infrastructure; LaBrecque aluminum Dislikes: Japan, small caps, China, Argentina Quote: “I’m OK on the U.S. markets. I don’t think they are overvalued. With everything going on in the world, the U.S. is the tallest midget in the room. We are looking at Russia. You buy when there’s blood in the streets, and there’s blood in the streets in Russia.”

Aubrey Lee Jr. Founder, portfolio manager, Aubrey Lee Jr. & Associates, Merrill Lynch, Novi Likes: Technology, energy, industrials, Lee information technology, Europe, U.S. large-cap stocks that pay dividends, some municipal and corporate bonds Dislikes: Consumer discretionary, health care, financial stocks Quote: “If you look back at last year’s performance, consumer discretionary stocks were up 43 percent, financial stocks were up 35 percent and health care was up 41 percent. There’s nothing wrong with those stocks, but a lot of them are fully valued.”

Anne MacIntyre

MacIntyre

President and CEO, Annie Mac Financial LLC, Sterling Heights Likes: Bank-loan funds, small-cap U.S. stocks, emerging markets, domestic energy Dislikes: Defense

sector, utilities Quote: “I’m not advocating that everyone buy a Russian index fund, but there are opportunities there.”

Bernie Kent Chairman and senior adviser, Schechter Investment Advisors LLC, Birmingham Likes: Short-term bonds, cash-value life insurance policies, high-yield Kent corporate bonds, hiring active managers for international stocks instead of using indexed funds

Nancy Meconi

Meconi

Partner, Plante Moran Financial Advisors, Auburn Hills Likes: International equities; emerging markets; realasset funds that See Experts, Page 14

Page 13

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CRAIN’S DETROIT BUSINESS

Focus: Wealth Management

Experts: Investments they like, dislike in the year ahead ■ From Page 13

include hedges against inflation, such as master limited partnerships, real estate investment trusts and Treasury Inflation-Protected Securities and precious metals Dislikes: Long-term bonds, high yield bonds Quote: “What’s different this year is we don’t really see any screaming buys in the broad asset classes. We don’t have any significant overweights or underweights in particular. It the past few years, there were more obvious opportunities.”

Jim Robinson CEO, Robinson Capital LLC, Grosse Pointe Likes: Japan, Europe, energy infrastructure in the long term Dislikes: Bonds; small-cap stocks; precious metals; Robinson the economies of Brazil, Russia, India and China Quote: “Europe is looking more interesting, although it would help if Ukraine got resolved. But they’re

continuing to provide central bank stimulation. And I still like Japan. It’s doing all the right things and remains interesting. The U.S.? The market had such a strong year last year, it’s hard to be excited about anything now.”

Lisa Sampson

Sampson

Senior vice president and managing director of wealth

management for Southeast Michigan and Ann Arbor, PNC Bank Likes: Emerging markets, large-cap stocks, dividend-yielding stocks, a basket of commodities Dislikes: Bonds Quote: “On average, we like a 65-35 mix of equities and fixed-income assets, although we’ve been short on bonds based on predictions of a rise in interest rates.”

Peter Schwartz Principal, Gregory J. Schwartz & Co., Bloomfield Hills

Likes: Emerging and foreign markets, U.S. small-cap stocks, dividend-paying stocks, natural gas, Coca-Cola, consumer discretionary Dislikes: China, small- and midcap stocks Schwartz Quote: “Gold is more attractive now as a small hedge than it was a year ago. It’s like first insurance for your home. You hope you don’t need it. I’m not a gold bug, but now that U.S. markets are at an all-time high, it’s a good hedge in case there’s a 10-20 percent market correction.”

David Sowerby Chief market strategist and portfolio manager, Loomis Sayles & Co. LP, Bloomfield Hills Likes: Emerging markets such as India, Mexico and South Korea; Sowerby small-cap stocks over the long term; corporate debt; bank-loan funds; energy infrastructure; health care services and equipment; online companies with strong advertising Dislikes: Utilities, telecom, U.S. treasuries, hedge funds Quote: “We’re in the middle of the sixth inning of a bull market, which began in March 2009, so portfolios should be positioned for the next two or three years.”

Melissa Spickler Founder and managing director, The Spickler Wealth Management Group, Merrill Lynch, Bloomfield Hills Likes: Dividendyielding stocks, Spickler stocks that have had two consecutive quarters of earnings-per-share growth, annuities that pay a death benefit, established large-cap foreign stocks, some gold as a hedge Dislikes: Emerging markets, longterm bonds Quote: “I use gold as a hedge in tough times, and these are very nervous times right now.”

Confident Warren

Managing my family’s wealth is complex and time-consuming, which is why I am grateful for FirstFamily® Advisors. Now I have one team who helps me coordinate my ﬁnancial, investment, legal and tax advisors. Together, they can put their expertise and experience toward helping to ensure my family’s legacy. And I can spend more time with my family, conﬁdent that my legacy will continue on.

Brian Wolfe

TO L E A R N MOR E A B O U T F I R S T M E R I T F I R S T FA M I LY, C O N T A C T : Ken Duetsch II, Senior Vice President,

at 248-430-1255 or ken.duetsch@firstmerit.com. Follow the latest market trends @firstmerit_mkt *Warren reflects a composite of clients with whom we’ve worked; he does not represent any one person. “FirstFamily® Advisors” is the marketing name for a segment of FirstMerit PrivateBank, the area designed to assist high net worth individuals, and is neither a Registered Investment Advisor nor a Registered Investment Company. Non-deposit trust products are not insured by the FDIC, are not deposits or obligations of FirstMerit Bank, N.A., or any of its affiliates, are not guaranteed by FirstMerit Bank, N.A. or any of its affiliates, and are subject to investment risk, including possible loss of principal invested. Member FDIC

2744_FM14

Senior trust officer, Huntington Bank, Birmingham Likes: Alternative assets, including private equity funds and hedge funds; real estate Wolfe investment trusts; commodities Dislikes: Emerging markets, smallcap stocks Quote: “There’s more volatility in markets than ever before, but clients have become more immune to it. When the Russians shot down the plane in the Ukraine, there was distress in the markets for 10 hours. Now, people shrug these things off and move on.”

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CRAIN’S DETROIT BUSINESS

SAN FRANCISCO GIANTS

PEOPLE

DETROIT TIGERS

EDUCATION

IN THE SPOTLIGHT

FRIDAY SEPTEMBER 5 • 7:08 PM

Montague

SATURDAY

Wadsworth

Evan Montague to associate vice president of recruitment and student enrollment, Washtenaw Community College, Ann Arbor, from dean of students, Lansing Community College, Lansing. Michael Wadsworth to assistant dean of students, division of student affairs and enrollment management, Oakland University, Rochester Hills, from director for residential life, Albion College, Albion.

SEPTEMBER 6 • 1:08 PM

SUNDAY

September 1, 2014

FINANCE

SEPTEMBER 7 • 8:00 00 PM

Bobbi Jo Lucas to vice president and head of retail Fifth banking,

Sunday Kids Day ay “Back to School” Lunch nch Box to all kids 14 and under

Third Bank Eastern Michigan, Southfield, from vice president and market manager.

The Oakland County Community Mental Health Authority has appointed Anya Eliassen its CFO and Donald Cope its chief information officer. Eliassen replaces Willie Brooks, who was named executive director in May. Eliassen, 34, most recently was controller of costing, through which she supervised members of the authority’s fiscal analyst team and oversaw the organization’s Eliassen financial management. She began her career at the agency as a purchasing clerk. Eliassen earned a bachelor’s degree in business administration Fifth Third Bank, Southfield. Also, Judith Rinkus to senior vice president of commercial banking for Southeast Michigan, from senior vice president, Bank of America, Troy; and Jeremy Garrett to vice president of commercial banking for Southeast Michigan, from first vice president of commercial banking, Flagstar Bank, Troy.

Matthew Jaeger to vice president of commercial banking for Southeast Michigan, FirstMerit Corp., Southfield, from vice president of commercial banking,

Lucas

MANUFACTURING Richard Bloomfield to vice president of sales, Hella Corp. Center USA Inc., Plymouth, from assistant general manager of sales and marketing,

from Baker College and an MBA in finance from the school’s Baker Center for Graduate Studies. Cope, 58, most recently was director of information systems for Newman Regional Health, Emporia, Kan. In addition to several director-level appointments, he has been a senior systems analyst, senior programmer analyst and programmer analysis consultant. Cope Cope earned a bachelor’s degree in health care management from Bellevue University, Bellevue, Neb., and is working on a master’s in health care administration. North American Lighting Inc., Farmington Hills.

TRANSPORTATION Steve Ruch to general manager of warehouse operations, Evans Distribution Systems, Melvindale, from director of IT deBloomfield velopment, Great Lakes Wine & Spirits LLC, Highland Park.

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CRAIN’S DETROIT BUSINESS

September 1, 2014

Page 17

Hotel could move into former movie studio site in Allen Park BY KIRK PINHO

600 Randolph SN LLC, a private N.Y.

CRAIN’S DETROIT BUSINESS

investment group, has purchased the 226,000-squarefoot Old Wayne County Building. COSTAR GROUP INC.

N.Y. investment group buys Old Wayne County Building BY KIRK PINHO CRAIN’S DETROIT BUSINESS

The vacant Old Wayne County Building officially has a new owner. The deal to sell to a private New York City investment group the building at 600 Randolph St. and a 120-space county-owned parking lot at 400 E. Fort St. in downtown Detroit for $13.4 million closed last week, said June West, director of communications for County Executive Robert Ficano. The 226,000-square-foot building was purchased by 600 Randolph SN LLC, the principals of which have not yet been identified. The investment group plans to spend up to $15 million on structural improvements and tenant build-outs, according to the county. The building, which had been owned by Old Wayne County Building LP, has been vacant since 2009. This is the buyer’s first real estate purchase in Southeast Michi-

gan. The building is expected to be renovated for single-tenant occupancy. Renovations on the interior and exterior are expected to begin immediately. Quinn Evans Architects Inc., which has offices in Detroit and Ann Arbor, is the architecture firm on the project. The building had been home to Wayne County executive branch employees until it was vacated after the county purchased the Guardian Building at 500 Griswold from Detroit-based Sterling Group in 2008 for $14.5 million. The Guardian Building purchase came after a dispute over lease rates with Old Wayne County Building LP, which includes Southfield-based Farbman Group Chairman and CEO Burton Farbman and others. The Detroit office of Jones Lang LaSalle represented Old Wayne County Building LP and was responsible for leasing the building. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB

A new hotel could come to a former movie studio site that helped push the city of Allen Park into emergency management. Rick Recny, director of asset management for New York Citybased Time Equities Inc., which closed on a $12 million deal to purchase the property on Aug. 22, said a letter of intent is expected to be executed next week to turn about 3 acres of the 104-acre former Unity Studios Inc. site into a hotel. Offers for purchasing that land will be reviewed Tuesday afternoon, Recny said. Robert Mihelich, first vice president of CBRE Inc., which represented both Time Equities and the city on the deal, said other plans for the frontage along Southfield Road include a total of 21,000 square feet of retail space and a free-standing restaurant. Other brokers on the deal were CBRE Senior Vice President Larry Emmons, who represented Time Equities; and Mihelich, Associate Lisa Loesel and Associate Arthur Itkis, who represented Allen Park. It’s been a long and painful road for the city and the former Visteon Corp. property at 16630-16640 Southfield Road. Jimmy Lifton, a Southfield native and Los Angeles movie producer, said in 2009 that he planned to build a $146 million film studio there to capitalize on Michigan’s lucrative new film incentives law of 2008. The city issued $31 million in bonds to buy the property to house Unity, but the company had leased less than 60,000 square feet and Lifton was in a dispute over

BUSINESS DIARY ACQUISITIONS & MERGERS Kapnick Insurance Group, Adrian, with offices in Ann Arbor and Southfield, acquired OPG Benefits, Brighton. Website: kapnick.com.

CALL FOR NOMINATIONS The Association of Fundraising Pro-

fessionals Greater Detroit Chapter is calling upon local nonprofits to submit their organizations’ volunteers to be recognized at the National Philanthropy Day Dinner, Nov. 12 at Cobo Center, Detroit. The event is presented by Crain’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.

EXPANSIONS Creform Corp., Greer, S.C., opened a new regional sales office at 29795 Hudson Drive, Novi, and also moved its sales engineering personnel, automated guided vehicle project assembly, installation and service, technical support, and structure assembly to that location from 49037 Wixom Tech Drive, Wixom. Telephone: (248) 926-2555. Website: creform.com. Biddergy.com, Kalamazoo, a provider of online auctions and related ser-

vices, opened a new location at 34901 Schoolcraft Road, Livonia. Telephone: (866) 260-1611. Website: biddergy.com. Lululemon Athletica, Vancouver, British Columbia, opened a store at Twelve Oaks Mall, 27500 Novi Road, Novi. Website: lululemon.com. Dakota Watch Co., Cincinnati, also opened a store at Twelve Oaks Mall. Telephone: (248) 513-8490. Website: dakotawatch.com. Society of St. Vincent de Paul Detroit, Detroit, opened a thrift store at 2375 Orchard Lake Road, West Bloomfield Township. Telephone: (248) 221-5129. Website: svdpdetroit.org. Halla Visteon Climate Control Corp., a subsidiary of Visteon Corp., Van Buren Township, opened a manufacturing facility in Atibaia, in the state of San Paulo, Brazil. Website: hvccglob al.com.

NEW SERVICES Plumbing Professors, Canton Township, a plumbing, sewer repair and epoxy pipe-lining company, launched a free weather app for iPhone and Android phones. Website: plumbingpro fessors.com.

Advanced Behavioral Rehabilitation LLC, Southfield, added interactive virtual classrooms for programs including Alcohol Insight and Aware-

whether the company was making lease payments. There were eviction discussions, but a resolution was later reached. No studio ever opened at the site, but Unity did operate a film school there for several months before moving out in 2010. The city was eventually left with more than $2 million in annual debt service payments on the bonds and rent revenue that wasn’t enough to cover the building’s operation. In May 2012, voters shot down a proposed property tax increase that would have raised more than $2.6 million toward the bond payments. Five months later, Gov. Rick Snyder appointed Emergency Manager

Joyce Parker, who announced the closing of the deal Tuesday. The city had more than $59 million in debt and $24 million in unfunded employee pension liability. But now it’s a new day for the site and the city as Time Equities’ ownership is expected to be for the long term, the developers said. “We are generally long-term asset holders,” Recny said. Last year, Time Equities purchased Travelers Towers I and II at 26555 and 26533 Evergreen Road in Southfield for $25.1 million from Lehman Bros. Holdings Inc. Recny said the office complex was 48 percent occupied at purchase, and it is now about 53 percent occupied.

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DIARY GUIDELINES Email news releases for Business Diary to cdbdepartments@ crain.com or mail to Departments, Crain’s Detroit Business, 1155 Gratiot Ave., Detroit, MI 48207-2997. 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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Biz cry heard: Shop class makes comeback, with govt. assist BY JEFF GREEN AND JOHN IRWIN BLOOMBERG NEWS

Two years out of high school, Evan Fischbach is earning $40,000 a year. His secret: shop class. Fischbach, 19, has known he wanted to work on cars ever since he took an automotive class in his junior year of high school in Saline. His college-educated parents wondered if he was aiming too low. Then, when Fischbach was still a junior, a local auto dealer desperate for mechanics hired him as an

apprentice in the service bay. Now he’s earning about three times as much as the average 19-year-old high school grad and slightly more than the nationFischbach al median, according to the U.S. Bureau of Labor Statistics. “Friends weren’t interested in auto shop when I suggested it, and now I think they wished they had tried it,” said Fischbach, who

works at LaFontaine Chrysler Dodge Jeep Ram. “I’m not rich, but I’m not hurting, either.” Fischbach is an all-too-rare success story that educators, legislators and executives are eager to replicate. With schools focused on preparing kids for college, shop class has gone the way of stenography class in much of the U.S. Companies from Toyota Motor Corp. to Siemens AG and IBM are pushing high schools to graduate students with the real-world skills business needs. The message is getting through. This year, for the first time in a decade, the U.S. government boosted funding for high school and college vocational education, though the $1.125 billion war chest is $188 million smaller than it was in 2004. Proponents say re-emphasizing vocational education will help reverse the hollowing-out of America’s middle class and combat rising inequality. Wage growth since 2009 has been the weakest since World War II even as the rich get richer.

Middle-class trajectory There are 29 million “middle-education” jobs that pay more than $35,000 a year, considered a threshold to the middle class, according to Georgetown University research. Of those, 22.9 million require only high school or some post highschool training. Fischbach’s job pays enough to launch him on a once-familiar trajectory: start a family, buy a home, pay taxes. Fifty years ago, most American kids in middle and high school attended shop class, where they learned to make ashtrays, rebuild

engines, weld metal and even market products. As the space race gave way to the high-tech era, policy makers decided such skills were unnecessary. College prep classes gradually supplanted shop, which by then was perceived as a place for slackers and stoners. “It became seen as a dumping ground for kids the regular school couldn’t figure out what to do with,” said James Stone, director of the National Research Center for Career and Technical Education in Louisville, Ky.

My kid? Those prejudices are even more prevalent now that many parents expect their offspring to attend a four-year college. While many parents agree that more students should attend vocational training, the prevailing attitude is: Not my kid. “For a lot of parents, and policy makers, it’s easier to say we need to send more kids to college,” Stone said. “Parents go, ‘Yes, that’s what I want to do. My kid will be successful.’ Then after four or five years, they come back with a lot of bills and they’re sleeping on the couch.” Yet businesses can’t find enough people to fix cars and work in factories. Mike Hughes, the service manager who hired Fischbach, finds himself competing with rival dealerships to recruit kids right out of high school. If he can’t find candidates there, he has to train them from scratch. “Nobody wants their kid to be a mechanic,” said Hughes, who estimates Fischbach eventually will pull down $60,000 a year. “They just don’t know how good of a living it is.”

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Like many of his contemporaries, Mike Dales, 28, didn’t bother with shop class because he was told college prep classes were more important than building bird houses. His school even charged an extra fee to take shop. After graduating, Dales dabbled in trade school before realizing that he wasn’t going to grasp the math needed for mechanical engineering. He ended up slinging crab claws at Red Lobster before taking a job last year at Area Tool and Manufacturing in Meadville, Pa., where he’s now making parts for the medical, automotive and tech industries. “It always amazes me what I can come up with” after starting with a “chunk of steel,” said Dales, who wishes someone had pointed him toward a vocation when he was a teen. The parents most likely to be dubious about shop class held down manufacturing jobs themselves, only to watch them disappear. The U.S. lost 6.1 million such jobs from 1997 to 2009. Only 644,000 have been added since, according to the BLS.

Laid-off parent “I mean, how do you walk into the classroom and talk to a 16- or 17-year-old kid about getting into

the shop when he had a parent who used to work there but was laid off 10 years ago?” said Ashleigh Smith, office manager of the shop where Dales works. “It’s difficult to explain that the industry is coming back when you have that kind of personal experience.” Advocates of vocational education are pushing high schools to identify students’ career interests earlier and guide them to both vocational and other classes to support that career whether the ultimate goal is college or not. Progress is patchy, and many of the newer programs require students to leave their neighborhood schools altogether or travel to class.

Higher caliber Rather than incur the expense of technical training classrooms in each school, New Jersey operates 60 public magnet schools in 21 counties where students can take classes on culinary arts and cosmetology, engineering, computers, landscape design, auto body repair and more. Eleven companies, among them Mercedes-Benz USA, BMW of North America, Lockheed Martin Corp. and Novo Nordisk A/S, partner with the schools. Last year, 32,254 kids enrolled, up 30 percent since 2000. The program has become so popular that some kids are being turned away, said Judy Savage, executive director of the New Jersey Council of County Vocational-Technical Schools. “There’s lots of interest in new programs that focus on both college and career,” Savage said. “We’re starting to attract a much higher caliber of students.” Three years ago, New York City started the Pathways in Technology Early College High School in conjunction with IBM, New York City College of Technology and the City University of New York. The six-year high school was designed to help students apply classroom work and real-world skills toward an associate degree in computers or engineering at graduation. IBM provides internships.

Clueless students Even degree colleges are starting to see the benefits of vocational courses. Seth Bates, who teaches applied engineering at San Jose State University, started a remedial shop class for aspiring engineers who can’t use a power drill properly. “By 1995, a student who came to us who had actually worked with tools was exceedingly rare, and now it’s almost unheard of,” he said. “Maybe it’s 1 out of 50 today. Most of them come in without a clue.” Kyle Jennings, an advanced placement student at Saline High School, is determined to know his way around a machine shop by the time he starts an engineering degree. His dad, a Ford Motor Co. engineer, persuaded him to take shop. His friends mostly think it’s an “easy A” and has zero career value, he said. “These classes really will help,” said Jennings, as he ferreted out a pressure leak in a Jeep Liberty one day in auto class. “You need to know how to work with machines.”

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OU: Academic year starts with a new president, new construction â&#x2013; From Page 1

graduation and retention rates, as well as attracting more students from out of state and internationally. As of 2011, 40 percent of OUâ&#x20AC;&#x2122;s students had graduated within six years of starting their higher education. The national average is 42 percent. That year, the universityâ&#x20AC;&#x2122;s retention rate â&#x20AC;&#x201D; which tracks how many full-time students from the previous academic year enrolled in the fall â&#x20AC;&#x201D; was 73 percent, according to BLM. The national average is 71 percent. â&#x20AC;&#x153;There is very good evidence to say that if you live on campus, you have a higher probability of graduating on time and your student retention is better,â&#x20AC;? Hynd said. â&#x20AC;&#x153;If you come in as a freshman and live in a residence hall, there is a much higher probability that youâ&#x20AC;&#x2122;re going to come back for your sophomore year.â&#x20AC;?

Keeping students near OUâ&#x20AC;&#x2122;s construction blitz â&#x20AC;&#x201D; paid for with a combination of state funds, donor contributions and bonds â&#x20AC;&#x201D; isnâ&#x20AC;&#x2122;t limited to the 127,000-square-foot new engineering and computer science building or the residence hall. Among OUâ&#x20AC;&#x2122;s other projects are the $62 million Human Health Building, which is 172,000 square feet and was completed in 2012, and the 151-foot Elliott Tower, funded through a $6.5 million donation from R. Hugh Elliott, CEO of Auburn Hills-based Elliott Group International Inc., and his wife, Nancy Elliott. The tower was completed last month, and a dedication ceremony will be held on Sept. 19. In addition, OU last month completed a $24 million parking deck with 1,244 spots, part of $65 million in campus expansion and improvement projects the board of trustees approved in February 2013. The university is also completing a new recreation and athletic outdoor complex with softball diamonds, eight tennis courts, an eight-lane outdoor track and restroom facilities. That project is expected to be finished this fall.

Oakland Universityâ&#x20AC;&#x2122;s sixth residence hall is part of the universityâ&#x20AC;&#x2122;s strategy of increasing student graduation, retention rates and attracting more outof-state students. OAKLAND UNIVERSITY

Additionally, a $5 million, 108,000-square-foot multipurpose training facility is being constructed with a full soccer field, and baseball and softball batting cages. â&#x20AC;&#x153;It is a combination of meeting demands, forward thinking and addressing the two major areas of need in the community: STEM (science, technology, engineering and medicine) and health-related degrees,â&#x20AC;? said Mike Boulus, executive director of the Presidents Council, State Universities of Michigan. â&#x20AC;&#x153;The new dorm will help bolster their goal to become more of a residential university.â&#x20AC;? Jeff Williams, CEO of Public Sector Consultants Inc., a nonpartisan Lansing-based think tank, said OUâ&#x20AC;&#x2122;s capital improvement plans have been needed. â&#x20AC;&#x153;They have a good plan put forth,â&#x20AC;? he said. â&#x20AC;&#x153;This is a way they can make the institution stand out. Itâ&#x20AC;&#x2122;s not as important as academics, but itâ&#x20AC;&#x2122;s still key.â&#x20AC;?

Building a brand Capital improvements are just one component of the universityâ&#x20AC;&#x2122;s overall mission, however. Hynd wants to determine which programs or groups of programs set it apart from other schools â&#x20AC;&#x201D; the University of Michigan or Michigan State University, for example. If he is able to do that â&#x20AC;&#x201D; and make OUâ&#x20AC;&#x2122;s offerings in the health care field, for instance, better known â&#x20AC;&#x201D; the university can begin

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attracting more out-of-state and international students, he said. In 2011, the Oakland University William Beaumont School of Medicine opened its doors to its first class of 50 students. In May, those students will graduate. The class of 2016 has 75 members, and the classes of 2017 and 2018 each have 100 members, according to OU. Creating the clusters of distinction also helps the universityâ&#x20AC;&#x2122;s bottom line when attracting out-ofstate or international students, Hynd said. â&#x20AC;&#x153;The typical model is that if you can get one out-of-state student, they are paying for one-and-a-half in-state studentsâ&#x20AC;? through higher tuition and fees. Tuition for in-state students is $353.75 a credit hour and $795.75 for out-of-state students. â&#x20AC;&#x153;Most public institutions across the country are more than happy to admit those students because

they typically carry the freight for in-state students,â&#x20AC;? he said. Attracting those students has been difficult, however. Out-of-state and international students represented 4.15 percent of last yearâ&#x20AC;&#x2122;s total enrollment of 19,311, according to OU. Thatâ&#x20AC;&#x2122;s up marginally from 3.55 percent in 2012 and 3.17 percent in 2011. Bringing out-of-state and international students to OU automatically thrusts it into a highly competitive arena with universities both in Michigan and across the country, Williams said. Attracting them is particularly important because of a shrinking college-age population, Williams said.

Presidentâ&#x20AC;&#x2122;s to-do list While increasing graduation and retention rates are at the top of

his mind, Hynd has other ideas about where his time and energy should be focused. Among them: Potentially creating a new master of business administration in engineering program. OU has 139 bachelorâ&#x20AC;&#x2122;s degree programs and 125 doctoral, masterâ&#x20AC;&#x2122;s and certificate programs. Increase diversity. According to OU, 79 percent of its students are white, while 9.2 percent are African-American. Asian/Pacific Islanders make up 5.3 percent of the student body, while Hispanics make up 2.8 percent and Native Americans make up 1.1 percent. To attract more female engineering majors, highlighting that OU has the fourth-highest percentage of tenure/tenure-track engineering faculty members who are female, according to data from the American Society for Engineering Education. Increasing awareness of faculty membersâ&#x20AC;&#x2122; expertise in their subject areas so they can provide advice to businesses and municipalities more frequently. Being more active in outreach efforts to its nearly 100,000 alumni, 71 percent of whom live in Michigan. Specifics on those efforts havenâ&#x20AC;&#x2122;t yet been formulated, but Hynd says changes can be expected in the near term. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m thrilled to death to do it,â&#x20AC;? he said, â&#x20AC;&#x153;and we are starting with a very solid foundation.â&#x20AC;? Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB

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Car tech: The future ■ From Page 3

their vehicles, so this has become an important conversation.” Connectivity, or cars talking to each other and infrastructure, will be regulated in the near future, he said. The National Highway Traffic Safety Administration has unveiled its plan to require cars to communicate wirelessly to warn drivers of danger and thwart dangerous situations with active safety systems. Just two of the possible features that rely on vehicle-to-vehicle technology — one that warns drivers if they don’t have enough time to make a left turn and another that urges them to stop if another car is about to run a red light — could prevent 25,000 to 592,000 crashes and save 49 to 1,083 lives annually when the entire U.S. vehicle fleet has the technology, according to NHTSA’s report. Van Buren Township-based Visteon Corp. will showcase its human-machine interaction technology, including brake-light warning, slippery-condition-road warning and stopped-vehicleahead warning, during a ride-anddrive demonstration on Belle Isle. “Our focus is vehicle-to-vehicle communications and how we enable opportunities in this space,” said Tim Yerdon, Visteon’s global director of innovation and design. “We’re enabling technology to seamlessly integrate into the driver and passenger experience.” For suppliers, the event is a onestop shop to interact with customers on tomorrow’s technology, unlike the North American International Auto Show in January, Yerdon said. “From a supplier perspective … this event really gives the opportunity to have the customers’ undivided attention,” he said. “While the auto show is great, it has a more consumer element.” Northville-based IAV Automotive Engineering Inc. is using the World Congress to show customers its expertise in safety system engineering, said Chris Hennessy, vice president of engineering. IAV will showcase an algorithm for an emerging braking system, the interface for that system and the braking controls design. Hennessy said that while each supplier is focusing on only one aspect of a complete system, it’s working to integrate the whole package. “Unlike a tier-one supplier, we’ll be there to demonstrate or tech knowledge, the intellectual property we have to integrate all aspects of the systems,” Hennessy said. “Everyone is coming at this from a different perspective, but we’re positioning ourselves to show that we can meet all the layers in developing these systems.” Also demonstrating technology on Belle Isle will be Southfieldbased Denso International America Inc., San Antonio-based Southwest Research Institute, Michigan Technological University, Troy-based Valeo North America Inc., Atlanta-based Verizon Telematics, Troy-based Delphi Automotive plc, General Motors Co. and many others. Toyota Motor Corp., Honda Motor Co. Ltd., Meritor WABCO and others will demonstrate technologies at the Atwater Parking Garage near

ITS WORLD CONGRESS 2014 Highlights of the Sept. 7-11 event at Belle Isle and Cobo Center: Advanced transportation demonstrations at Belle Isle and the Atwater Parking Garage on the riverfront Michigan Festival presented by ITS Michigan — a networking event featuring Michigan beer, wine, food and music at the Belle Isle Casino Keynote addresses from General Motors Co. CEO Mary Barra and Ford Motor Co. Chairman Bill Ford Jr. A chief technology officer summit to discuss tech plans for the future of transportation. A policy roundtable, bringing local, national and international transportation secretaries together to connected and autonomous car policy and preparation Dozens of town hall, executive, technical and interactive sessions for attendees Technical tours of the Southeast Michigan Transportation Operations Center, OnStar command center and others Emergency Responder Day on Tuesday, Sept. 9, which will highlight future first-responder technologies Registration costs range from $225 to $1,540. For more information, visit www.itsworldcongress.org the Detroit riverfront. Detroit-based advanced energy nonprofit NextEnergy will have demonstrations with Qualcomm Inc. and Chrysler Group LLC at its campus on Burroughs Street. Jean Redfield, NextEnergy’s CEO, said the event is the right time to advance the conversation of what future mobility will look like and how policy decisions are made to support it. “Technology is already driving consumer purchasing decisions,” Redfield said. “We’re getting a sense of what the future may bring, but we need to make sure the policy and infrastructure issues are met.” On Sept. 7, the conference will host a policy roundtable to tackle transportation issues centered on technology. Robert Slimp, CEO of Kansas City-based infrastructure construction firm HNTB Corp., will keynote the policy roundtable, which will also include a moderated discussion. “When are we going to have the infrastructure to rely on these technologies as the norm?” Redfield said. “This is important, getting all these people together to explore what’s possible.” Cobo Center will host the conference portion of the event, which will have nearly 100 sessions ranging from improving traffic safety to policy issues to business models. Mary Barra, GM CEO; Bill Ford, Ford Motor Co. executive chairman; Lowell McAdam, Verizon Communications CEO and chairman; and others will keynote several panels during the conference. “There’s going to be a lot of thought leadership,” Belcher said. “These technologies are very real, it’s happening, and the market is being created as we speak. This is the most important conference for the future of transportation.”

Berkley DPS workers Tom Benaglio (left) and Rod Halas help out Tringali, the Berkley waste and refuge contractor, collect the piles of waterdamaged belongings from the curbside of Cambridge Street on Aug. 19. AP PHOTO/DETROIT NEWS, DAVID MEARS

Flood: A heap of money troubles ■ From Page 3

Detroit alone had reached $922,000 in extra labor and disposal costs as of Friday, according to COO Gary Brown, and Warren had reported about $157,600 in overtime for its city Sanitation Division to collect about 9,000 tons of refuse in the two weeks after the flood, according to Mayor James Fouts. Center Line estimates $32,000 in added costs to collect 322 tons over two weeks. Another 12 less-impacted suburbs reported collecting about 10,600 tons combined in 14 days compared with their typical 8,100 tons over two weeks — about a 31 percent increase. Waste haulers reported deploying dozens of additional trucks and crews, even on typically idle weekends, to help get the communities current on waste collection and return to regularly scheduled waste collection this week. The data could be particularly significant as public officials in the hardest-hit communities expect to meet with FEMA inspectors to assess public property damage and turn over some estimates by Wednesday of the fiscal impact. If President Barack Obama to declares a federal disaster area in the region, it could qualify the local communities for cost reimbursement. “We’re hoping to be eligible for a reimbursement. Not sure it’s really going to happen, but it would be nice,” said Gary McKinney, superintendent of public works for Center Line. “From what we’re being told this week, the federal criteria is (applied the same way to) everybody, regardless of the community location or size, and it comes down to things like how many were permanently displaced or how many homes are a total loss. “A lot of people lost a lot of property in these floods, but we’re not sure if it all counts in the right way.” Be that as it may, someone will be left holding the check for trash cost overruns. Most municipal waste hauler contracts include a monthly fee for regular collection and disposal, usually computed by total households, as well as a list of hourly fees that come into play for seasonal events like a fall cleanup or unscheduled runs. “Most of the contracts have a force majeure, or act of God provi-

sion, for how to handle special pickup times like this, because this is a very unusual circumstance. My father first started working in this line of business almost 50 years ago and even he’s never seen anything like this,” said Chuck Rizzo, president and CEO of Rizzo Environmental. “But we’re trying to work with the communities we serve to handle that.” Rizzo estimates the cost overruns could top $1 million across all of the communities it serves in southern Macomb and Oakland counties, and the damage in Detroit required more than 50 additional truck crews over one weekend in mid-August. Brown estimates Rizzo and Advanced together logged about $270,000 in overtime labor plus $200,000 in disposal costs in Detroit as of last week. The city hoped to finish extra pickups Friday, complete a follow-up inspection of neighborhoods over the weekend, and resume normal pickup times this week. “These cost figures are probably going to change based on ancillary charges we haven’t received yet, and any other service calls that come in,” he said. Rizzo said his company also deployed truck crews over a week ago to help out in Huntington Woods, which isn’t a Rizzo customer but was overwhelmed with more than 30 times its standard amount of trash. It was expecting to make the same kind of excursion this past weekend to Dearborn. Huntington Woods had extensive collection needs in large part because more than 70 percent of the tiny city’s 2,400 households sustained some basement flooding or other damage, said manager Claire Galed of the city Department of Public Works. Officials at FEMA were conducting damage assessments of homes and businesses in various communities last week and were expected to revisit the same areas Wednesday to inspect public property damage, said Vicki Wolber, director of emergency management and communications for Macomb County. That assessment will likely include the trash bill. “Debris management is one of the classifications of damage you can get aid for, if we do get a pres-

idential declaration,” she said. “There are all different types of funding the president can open up — they can do no public assistance, and offer just individual assistance, or go further than that. It all depends on the information they gather over these weeks. And if they do open that program, it’s a question of what you can recover. You’re not going to be able to double dip if there’s insurance, and every disaster’s treated differently.” Wolber and Rizzo both said the hardest-hit communities so far appear to be along the I-696 corridor, particularly between Van Dyke Road and I-75. Brown said some hard-hit Detroit neighborhoods were on the northeast and lower east sides, but inspections were going to continue into the weekend. Wayne, Oakland and Macomb counties together have estimated the Great Detroit Flood surpassed $980 million in public and private property damage, and that number could climb after last week’s property inspections. Wayne has claimed more than $344 million in flood damage for 94,000 residents and public buildings, while Oakland had a preliminary estimate of $337 million and Macomb estimates more than $300 million in such damage. Warren alone estimates more than $230 million total damage, including damage to more than 20,000 homes according to Fouts. Madison Heights estimates it has collected almost 3,900 tons, more than 43 percent of what it normally collects annually since Aug. 11, said Jeffrey Mueller, assistant city manager and director of public services for that city. He still hopes, however, that the added costs will come in under six figures since the extra collections wrapped up sooner than expected last week. Mueller estimates the city sustained $28 million in damage to private property and $2 million to public property. “I think there is going to be a negotiation with the hauler (on costs),” he said. “If we don’t get help it would have to come out of the general fund and may affect other services, but there’s still a chance FEMA will help.” Chad Halcom: (313) 446-6796, chalcom@crain.com. Twitter: @chadhalcom

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RTA: New regional transit chief maps his course ■ From Page 1

ly,” Ford said. The nine-member Regional Transit Authority of Southeast Michigan board voted unanimously on May 21 to hire Ford as its CEO, and it took until Aug. 20 for a signed three-year contract to be approved — primarily because of benefits negotiations, but also because Ford’s former employer tried to keep him. Ford, 52, has been CEO of the Ann Arbor Area Transportation Authority since 2009, and was a transit consultant before that. He has a 60-day notification requirement in his current contract, so he will start his RTA job by Oct. 1 or in midOctober, said RTA board Chairman Paul Hillegonds. “We’re hoping he’ll be able to get his board to waive the 60 Hillegonds days,” he said. Ford said his initial plan is a listening tour, to travel the RTA’s region (Wayne, Oakland, Macomb and Washtenaw counties) to hear transportation concerns, and needs and wants from riders, bus drivers, executives and politicians. “People have needs that aren’t being met,” he said. The RTA also needs to clearly spell out its vision and goals, Ford said. “What is it we’re really trying to get done here? What is regional? Why is (the RTA) important and what is it going to do?” he said.

Job one: A new tax As RTA CEO, Ford will be tasked with getting the Detroit Department of Transportation, the Suburban Mobility Authority for Regional Transportation, the Detroit Transportation Corp. (better known as The People Mover), and his old Ann Arbor bus system to coordinate services and play nice. The M-1 Rail streetcar project under construction in Detroit eventually will be turned over to the RTA, too, its backers have said. At the same time, the RTA board has a stated goal of getting a tax issue on the 2016 ballot. It wants voters to approve a dedicated source of funds to pay for a bus rapid transit system, which still is in the study phase. There is hope on that front: Voters in Wayne, Oakland and Macomb counties on Aug. 5 overwhelmingly approved a four-year, 0.41-mill tax increase that will generate an additional $28 million annually for the SMART system. But first, Ford must find an office and some employees to handle the day-to-day operations of the RTA. The Southeast Michigan Council of Governments office in Detroit has been providing the RTA with interim space and staff support. “His initial task will certainly to be to hire a staff,” Hillegonds said. “It will be his responsibility to identify a staff of four at least, to help with communications planning, the strategic part of the job as we move ahead with studying additional corridors for bus rapid transit.” The RTA will host a board re-

treat this fall to discuss a work plan and expectations for Ford’s first year, Hillegonds said. Chief among the goals will be the bus rapid transit initiative. SEMCOG is handling the alternative analysis studies for the Gratiot, Michigan and Woodward avenue corridors, paid for with federal funding. “At the same time, we have the mandate of working with the local bus providers on better coordination,” Hillegonds said. All federal and state funding for DDOT, SMART, AATA and the People Mover goes through the RTA, which approves grants and the operating and capital plans for those agencies. Early discussions about coordinating improved service among the transit agencies include developing a uniform route map, a single pass accepted by all four providers, and betting scheduling for riders who transfer between systems, Hillegonds said. Also on the agenda will be updating the master plan developed by the RTA’s predecessor agency, the Regional Transportation Coordinating Council. The RTCC was the four elected leaders of the city and Wayne, Oakland and Macomb counties, and it hired John Hertel (now SMART’s CEO) to lead a regional mass transit effort. The result was a $10 billion, 25year build-as-needed plan for improved and expanded bus service, light rail and commuter trains over 406 miles in Wayne, Oakland and Macomb counties, along with suggestions for a governance plan and likely funding options. Later, a plan was refined to a 110-mile, 23-stop rapid transit regional bus system — the basis for the BRT plan that will be put in front of voters in 2016. Under a bus rapid transit system, buses operate much like a rail line, with specialized train-like wheeled vehicles with dedicated lanes. They would run along Gratiot, Woodward and Michigan avenues. Studying M-59 for the BRT plan also is an RTA goal, Hillegonds said. The results will be used to form a transit plan for which the RTA will ask voters to approve a tax in 2016. “We feel by then we should have enough information on (the) master plan for the corridors,” Hillegonds said. The tax would be the local funding required to access matching federal funding to build and operate a BRT system. The RTA would have to apply for such funding from Washington, and the process is vigorously competitive and often lengthy. Hillegonds said it likely would be two or three years after a vote before a rapid transit system would be operational. The RTA would have to apply for the federal money “It is competitive, and we do need a millage passed first in Southeast Michigan before those federal dollars will flow,” he said. Part of the reason the RTA board hired Ford was his success with transit funding ballot issues. In May, more than 70 percent of

voters in Ann Arbor, Ypsilanti and Ypsilanti Township approved a new 0.7-mill property tax to fund the AAATA — a campaign led by Ford. The new tax is expected to give the transit agency an additional $4.4 million to fund a plan to increase bus service. Ann Arbor residents already pay a 2-mill AAATA tax, while Ypsilanti residents already pay 1 mill for it. Ford intends to adopt the same strategy for the RTA that worked in Ann Arbor: a clear message to residents. “We were deliberative (in Ann Arbor) about what we were going to deliver and what it was going to cost,” he said. “A variety of folks all saw the benefit of that.”

Ford’s compensation: A big ask To get a CEO who already has persuaded voters to approve a transit tax, the RTA had to dig deeper into its pockets. The contract negotiations took four months because the AAATA wanted to keep Ford, Hillegonds said. That agency was paying him $185,000 annually, and had boosted his pay, with retroactive raises, in a bid to keep him. “There was a bit of competition,” Hillegonds said. “It did mean that we had to go beyond what we had initially budgeted for a CEO.” Ford said the talks were long because there was no base to work from. “When you’re trying to start something from scratch, it takes time,” he said, noting that topics such as insurance took time to negotiate so that “both parties’ interests are protected.” Ford’s base salary is $200,000 annually. With deferred income, retirement, and benefits, his annual total compensation is $310,000, Hillegonds said. That accounts for a third of the RTA’s annual operating budget. Ford’s total compensation is within the range typical of comparable metro regions with populations of more than 100,000, Hillegonds said. That range was $250,000 to $450,000 annually in total compensation, he said, according to data provided to the RTA by the American Public Transportation Association. The base salary for Patrick Foye, executive director of the immense Port Authority of New York and New Jersey, which has a $2.6 billion annual budget, was $289,667 last year. “(Ford has) a wealth of experience not only in Ann Arbor but as a consultant and in management roles. He had a real passion for improved transit, and also for outreach. He’s a guy that likes to ride the buses, get to know employees and work with customers,” Hillegonds said. “He’s the right person at a very challenging time for us.” The RTA has $2.9 million in funding budgeted from the Michigan Department of Transportation and the state Legislature, Hillegonds said. That accounts for a $900,000 annual operating budget for the next three years. The RTA has a $6.5 million federal grant earmarked for planning the three corridors and staffs a

planner to undertake that work, Hillegonds said. The authority also is in the process of applying for an undisclosed amount of operating money from the Troy-based Kresge Foundation, he said. The uncertainty over funding makes the 2016 tax vote critical, Hillegonds said. “Our challenge will be doing the coordination and planning work that will convince the citizens of Southeast Michigan that this bus rapid transit plan is worthy of millage support,” he said. “If we don’t succeed, our sources of funding are very uncertain after three years.” Ford wasn’t the RTA’s first choice. Hertel was offered, and accepted, the RTA CEO job in 2013, but he stepped away in January because the organization still had no money for staff. Hertel, a longtime figure in mass transit, continued to run SMART while working without a contract at the RTA. Ford said he’s met with Hertel several times over the years, and discussed the RTA job with him. He described it as a “good working relationship” that will deepen as the RTA works with SMART. The RTA was created by the state in 2012 — after more than 40 years of failures to do so — to coordinate various transit agencies in Wayne, Oakland, Macomb and Washtenaw counties.

Track record in transit In 2009, Ford was hired from a pool of 60 candidates to run Ann Arbor’s transportation system (which has formed a committee to handle hiring his replacement). The job had been vacant for two years. He was running his own company, Camas, Wash.-based MG Ford Consulting, when he was hired. Before that, Ford was COO and assistant general manager of the San Joaquin Regional Transit District in Stockton, Calif., from 2007 to 2008, and held a variety of management roles at the Tri-County Metropolitan Transportation District in Portland, Ore., from 2002 to 2007. He was director of operations and maintenance for Community Transit in Everett, Wash., from 1991 to 2001, and worked at Greyhound Lines Inc. as a manager from 1983 to 1991. Longtime metro Detroit transit advocate Megan Owens said he’s optimistic about Ford’s hiring, based on his track record in Ann Arbor, and for the increasingly pro-transit attitudes she senses in the region. “I’m hopeful that will be an opportunity to discuss what we want in this region for mass transit, and what we’re willing to pay for,” said Owens, executive director of Detroit-based Transportation Riders United, an organization dedicated to improving and promoting transportation access and mobility in the Detroit area. “I think we’re poised for progress over the next couple of years. A lot more people and players are interested in the need for transit improvement.” Bill Shea: (313) 446-1626, bshea@crain.com. Twitter: @bill_shea19

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Merger: Beaumont Health deal imminent, but decisions remain ■ From Page 1

something final to announce, Beaumont Health will share it with the community,” said Matt Friedman, Beaumont’s spokesman and co-founder of Farmington Hills-based Tanner Friedman, in a statement to Crain’s. However, more than a dozen physicians, consultants and other executives have provided Crain’s with a glimpse at some Michalski of the deliberations. Both Michalski and Brian Connolly, Oakwood’s CEO, will step down later this year or soon after a new CEO is hired. Sources Connolly said discussions are ongoing about compensation for departing executives, including Michalski and Connolly. Paul LaCasse, D.O., Botsford’s CEO, will be retained and be in LaCasse charge of system integration, sources said. But sources said Beaumont Health is unclear who will be the new system’s CFO, COO, chief medical officer, chief information officer and chief nursing officer, among other top executives. As a result, tension is said to be high among Beaumont, Oakwood and Botsford executives and physician leaders as they appear to be in the dark about who will survive in the new organization. “The new organization officially goes online Sept. 1, and none of the executives know what their jobs will be,” said one consultant in metro Detroit. “(Michalski) has kept things to himself. There is a great desk of anxiety among the upper ranks.” Some Beaumont physicians also are perplexed because of the lack of information from management

MORE ABOUT THE MERGER Other facts about the impending merger of Beaumont Health System, Oakwood Healthcare and Botsford Hospital: The Federal Trade Commission and state Attorney General Bill Schuette’s office have to make the final signoff on the deal. Beaumont Health filed a preliminary application with the FTC for a merger under the Hart-Scott-Rodino Act, and a knowledgeable source told Crain’s that the FTC has given preliminary approval. Joy Yearout, a spokesman for Schuette’s office, said the attorney general has informed Beaumont Health that it has no objections to the deal. Relationships with current vendors, such as law firms, food service, banks and others are expected to continue for the time being. The new corporate headquarters could be, at least temporarily, in Southfield. Executives have said the new headquarters would be equidistant from the three systems’ current headquarters. Several sources said Oakwood wanted the headquarters at its Dearborn corporate office location at Parklane Towers. Other possible locations included Farmington Hills on the Botsford campus, but Beaumont officials prefer not to locate the headquarters at any existing hospital location. — Jay Greene about the merger. “There has been some rumbling of doctors because they have been kept in the dark,” said one of the physicians. “Beaumont’s reputation has always been to work closely with physicians, and that is not happening now.”

The cost reduction challenge There has been difficulty in finding the more than $134 million in originally projected annual savings from the merger after the first three years, starting in 2018. Experts say Beaumont should be able to find a minimum of $380 million in annual savings, or 10 percent of the $3.8 billion revenue combined system. Estimates of projected savings and other community benefits from the merger were part of antitrust regulatory filings submitted this summer to the Federal Trade Commission. Closing of the merger deal would be contingent on the regulatory agency’s belief that the combination would not lessen competition and raise consumer prices. Beaumont Health executives have said they intend to reduce costs without closing facilities or implementing across-the-board layoffs, an approach experts say will take longer to achieve. Payroll and benefits account for about 60 percent of expenses. Experts say merged hospitals need to cut costs quickly to show that financial benefits accrue to

the community and not to the health systems in the form of higher prices for medical services. Michalski has said workforce downsizing would be accomplished through natural attrition, retirements and voluntary resignations. Still, experts say Beaumont will save millions by cutting duplicative top vice presidents from the executive team. Fewer administrative managers also will be needed as departments, such as finance, billing, purchasing and marketing, are consolidated. However, sources say no decisions have been made on whether to consolidate such clinical services as cardiovascular, oncology and orthopedics. Experts say primary areas of savings come from downsizing management and support staff and consolidating duplicative services, which sometime drives overutilization and excessive spending. “There is no talk about merging or consolidating,” said one source. “Politically it can’t be done. The physicians don’t want to see services diminished at any hospital.” But another Beaumont doctor said many midlevel and senior administrative staff can be cut to generate cost savings at most hospitals. “If you look at the number of employees at the (Beaumont) Troy and Grosse Pointe hospitals, you’ll see that there is a pretty full complement of administrators,” she said. “You can’t cut food services,

Colliers International closes downtown Detroit office BY KIRK PINHO CRAIN’S DETROIT BUSINESS

The small Detroit office of Colliers International Inc., based in the Madison Office Building next to Ford Field, has been shut down. Paul Choukourian, managing director of the Colliers office in Southfield, said the company moved downtown in February 2013 to service the lease listing for the 99,000-square-foot building at 1900 St. Antoine St. “The listing is winding down, and two of our brokers have recently left Colliers, so we decided to support Detroit from our Southfield office for now,” Choukourian said. The two brokers no longer with

the company are former Vice President Brian Schwartz and Senior Associate Broker Peter Jankowski. Messages sent to them have not been returned. “I do anticipate opening a more permanent and larger office in the Detroit central business district in the near future,” Choukourian said. The company still has sale and lease listings in the city. Choukourian said Colliers recently hired Kevan Bowers as senior associate to work out of the Southfield office and concentrate on Detroit deals. Colliers had been marketing the Madison Office Building, formerly occupied by PricewaterhouseCoop-

ers LLP, for lease after PwC left for 70,000 square feet of space in One Detroit Center at 500 Woodward Ave. Southfield-based Etkin LLC, owner of the Madison Office Building, now will market it for lease, said Josh Suardini, Etkin’s vice president of leasing and development. Choukourian has been Colliers’ managing director since March 2011. He said that since that time, he has hired more than 30 brokers and revenue has increased more than 125 percent. Colliers also has an Ann Arbor office at 400 E. Washington St. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB

housekeeping or nurses much more than they have been cut. … Because of the distances, they can’t really cut operating rooms, MRIs, or CT scanners.” The Beaumont physician added this: “When we took over Grosse Pointe, we just added services there because the doctors wanted what was available at Royal Oak.” Led by Michalski, Beaumont executives said savings would primarily come from efficiencies gained from operating a single electronic health record, and consolidating billing, collections, purchasing and other back-office business functions. Michalski and fellow CEOs Connolly and LaCasse have said Beaumont Health will cut clinical costs by adopting best clinical practices, improving care coordination through sharing of electronic health records, and increasing quality and patient safety to reduce costly readmissions. “We don’t know about how they are going to cut costs other than saving money on information technology and supplies,” said a Beaumont-affiliated physician. Another Oakwood physician said: “The physician cultures are certainly more aligned than they were with the attempted (Henry) Ford merger” with Beaumont that came apart over physician opposition and cultural differences. A physician on the staff of Beaumont and Oakwood — reflecting the general attitudes of many people Crain’s interviewed — said he believes the merger will be completed. “Beaumont will have the upper hand because it is larger, but there will be differences that will need to be worked out,” he said.

Getting ready The Droste Group, a Troy-based consulting company, has been hired to manage corporate culture change of the new system. Sources said executives and physicians of the three organizations have been interviewed or surveyed about corporate culture. Executives for the Droste Group declined comment. Droste was hired to help ease in the transition of the merger and to

assess the compatibility of the three organizations. Sources also said Droste was charged with helping managers design a proposed new corporate culture for Beaumont Health and test that against potential managers and physician leaders to see how well it fits. Despite the Droste Group’s work, “Beaumont is having a hard time understanding the culture at Oakwood,” said a physician who practices at Beaumont and Oakwood. “Oakwood has three competing physician groups. When they compete, there are a lot of politics involved. Beaumont has its own cultural issues. Merging this will be hard, because who will be the heads of the departments?”

Reform drives mergers Under the Beaumont Health banner, the goal of the new system is to offer lower-cost and higher quality medical care to health insurers, employers and consumers than competing systems. If consummated, the new system would control a 30 percent market share with eight hospitals, 3,337 beds, 153 outpatient sites, 5,000 physicians and 33,093 employees. Most health systems in Michigan and nationally also are attempting to reach that goal of lower cost and higher quality under the Patient Protection and Affordable Care Act, or Obamacare, as quality and cost data become more transparent to the public. Earlier this summer, Together Health Network was formed in a non-asset transaction by Livoniabased Trinity Health and Warrenbased Ascension Health Michigan to conduct managed-care contracting for 27 hospitals and 5,000 doctors. In July, Garden City Hospital completed its sale to for-profit Prime Healthcare Services. Crittenton Hospital Medical Center in Rochester Hills also announced it is exploring a sale. Sources have told Crain’s they include McLaren Health Care Corp. and Detroit Medical Center, which is owned by Tenet Healthcare Corp. Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

Gift funds UM program to increase awareness of finance careers for women The University of Michigan has announced the creation of a program to increase awareness among undergraduate students about careers for women in finance and ease access to those careers through coursework, mentorship and workshops. The Och Initiative for Women in Finance at the Ross School of Business is the result of a gift from Jane and Daniel Och of Scarsdale, N.Y., through the Jane and Daniel Och Family Foundation. The size of the gift was not disclosed. Jane Och, who earned a mas-

ter’s degree in accounting from the Ross School, is a former associate at Goldman Sachs. Daniel Och founded Och-Ziff Capital Management Group LLC in 1994, one of the world’s largest institutional alternative asset managers. He is CEO, executive managing director and chairman. The couple has served on the leadership board of the Victors for Michigan campaign, a $4 billion campaign launched last November. This gift counts as part of that campaign. — Tom Henderson

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September 1, 2014

RUMBLINGS Studio brings Channel 7 back to city ore than six decades after going on the air for the first time from the Maccabees Building in Detroit, Southfield-based WXYZ-Channel 7 is replanting some of its Detroit roots in one of Dan Gilbert’s buildings. The station said last week that it will expand its operations with a glass-enclosed, outward-facing studio inside the ground-floor lobby of the 13-story Chase Tower, at 611 Woodward Ave. The ABC affiliate said that come fall, it will broadcast its “7 Action News at Noon with Joanne Purtan” from the location. The station’s main studio will remain at Broadcast House in Southfield, where Channel 7 has been headquartered since 1959. “The studio will also quickly become a familiar sight in other WXYZChannel 7 and TV20 Detroit programming as well as both stations’ digital platforms,” the station said in a release. Also in the Chase Tower are 2,500 employees of Gilbert’s Quicken Loans Inc. mortgage and J.P. Morgan Chase Bank. “This is a historic step in our mission to be the best station in Detroit and the best station for Detroit,” Ed Fernandez, WXYZ vice president and general manager, said in a statement. “This studio will give ‘7 Action News’ viewers an exciting front-row seat to the city’s incredible rebirth and allow us to connect in meaningful new ways with people making a difference and guiding Detroit’s transformation.” The affiliate’s owner, Cincinnati-based E.W. Scripps Co., earlier this year bought the local MyNetworkTV affiliate, WMYD-Channel 20, from New York Citybased Granite Broadcasting Corp. as part of a $110 mil-

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lion cash deal. WXYZ has begun airing its news on the station at 10 p.m.

Al Taubman takes ALS ice bucket challenge An ALS Ice Bucket Challenge issued by a leading ALS researcher has been accepted by the man whose name is on a building where such research is done. Last week, Eva Feldman, M.D., director of the A. Alfred Taubman Medical Research Institute at the University of Michigan, challenged Taubman himself to take part in the social media phenomenon in which people post videos of dumping icy water on themselves Taubman — and challenge others to do it. They then donate to the ALS Association. Wearing a UM varsitystyle jacket and hat, Taubman accepted the challenge, “in recognition of the groundbreaking work being done at the Taubman institute to find a cure for ALS.” Taubman, 90, said in the video he reduced the volume of water he would pour over his head, “so that the Ice Bucket Challenge will not result in my kicking the bucket.” He then challenged his sons Robert and William. Taubman has long been a supporter of UM and the research conducted there to find a cure for ALS (amyotrophic lateral sclerosis, long known as Lou Gehrig’s Disease), an ailment of the nerve cells in the brain and spinal cord that control voluntary muscle movement. It usually leads to death

COURTESY OF WXYZ-CHANNEL 7

This artist’s rendering shows Channel 7’s planned glass-enclosed studio in the ground-floor lobby of the Chase Tower.

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WEEK ON THE WEB FROM WWW.CRAINSDETROIT.COM, WEEK OF AUG. 23-29

within three to five years. There is no cure.

Toronto-based barber chain plans 3 metro Detroit spots Canadian brothers John and Tom White are bringing the Toronto-based Taylor & Colt male-oriented barber and spa franchise to the U.S., and they’re starting in Ann Arbor, Rochester Hills and Birmingham. The barber shops offer hair and grooming services, including hot-towel shaves and teeth whitening. Services range from $35 to $50. The Ann Arbor Taylor & Colt, expected to open in late October or early November, is on the street level of the Michigan Theater, at 601 E. Liberty St. The Rochester Hills location, at 120 Village Main inside the Village of Rochester Hills shopping center, is also expected to open in late October or early November. A Birmingham location has yet to be finalized. The brothers said they will invest $725,000 in the three shops. They estimate $1 million in revenue for each store by the second or third year of operations. Taylor & Colt isn’t the only high-end barber shop coming to the Detroit area. Last month, Crain’s reported that Fellow Barber, based in Brooklyn, plans to set up shop this fall at 441 W. Canfield St., also home to Shinola/Detroit LLC and Willys Detroit.

BITS & PIECES The Detroit Metro Convention & Visitors Bureau bestowed its 20th annual Recognition of Service Excellence Awards during a ceremony last week at Detroit’s Fox Theatre. The ROSE awards are customer service honors for the hospitality workforce. The winners: 䡲 Attractions and Casinos: Jordon Lyons, tour guide, Motown Museum 䡲 Behind the Scenes: Krysten Cole, logistics coordinator, The Fillmore Detroit 䡲 Hotels: Seabronetta Barr, guest services, The Townsend Hotel 䡲 Restaurants: Shawniqua Smith, sales associate, Ocean Prime 䡲 Transportation: Dawn Carroll, Delta Sky Club representative, Delta Air Lines 䡲 Volunteers: Mamie Burton, volunteer, DMCVB 䡲 Overall Service Champion: Hank Sower, historic presenter, The Henry Ford The Henry Ford received the first William F. McLaughlin Hospitality Award for Service Excellence, awarded for superior customer service and named for a former DMCVB president.

Hong Kong firm acquires control of airbag maker ong Kong private equity firm FountainVest Partners completed a deal to become the majority shareholder in Sterling Heights-based automotive airbag maker Key Safety Systems Inc. The deal could be worth as much as $800 million; existing owners New York hedge fund Crestview Partners LP and some KSS management will retain shares in Key Safety.

ON THE MOVE 䡲 Peggy Burns, assistant

dean for advancement in the College of Literature, Science and the Arts at the University of Michigan, was named senior vice president of philanthropy at Detroitbased Henry Ford Health System, effective Nov. 3. She will succeed interim philanthropy head Mary Jane Vogt. 䡲 Invest Detroit will announce Tuesday that Patricia Glaza has joined the nonprofit as a vice president who will also serve as a managing director of its two investment funds, the First Step Fund and the Detroit Innovate Fund. Glaza was a principal in the Birmingham office of Arsenal Venture Partners, a Florida-based venture capital firm. 䡲 Jim Haveman is resigning as director of the Michigan Department of Community Health, effective Sept. 12, after suffering a mild stroke, AP reported. Chief Deputy Director Nick Lyon will succeed Haveman, who became health director in 2012 and also served in the post in 1996-2003.

COMPANY NEWS 䡲 Southfield-based Lear Corp. officially agreed to acquire the world’s largest supplier of automotive leather, Auburn Hillsbased Eagle Ottawa LLC, for $850 million, as previously reported by Crain’s. Lear expects to close on the deal in the first quarter of 2015. 䡲 Plymouth Townshipbased Metaldyne Corp., which last month merged three casted-metal component suppliers into Metaldyne Performance Group Inc., filed with the U.S. Securities and Exchange Commission for an initial public offering through which it expects to raise $150 million. 䡲 Transform Automotive LLC, the Sterling Heightsbased machined, metalstamped and laser-welded parts supplier, plans to invest nearly $42 million to

lease and build out a new transmission parts manufacturing plant in the Cherry Creek Corporate Park in Shelby Township. The project is backed by a $550,000 Michigan Business Development Program grant on the condition it creates 77 new jobs. 䡲 Macomb Mall in Roseville will add Swedenbased clothing shop H&M to its retail roster. H&M’s seventh metro Detroit location will open in the fall of 2015. 䡲 Troy-based Flagstar Bancorp Inc. filed a form 8-K with the U.S. Securities and Exchange Commission, saying it was in discussions with the Consumer Financial Protection Bureau to settle alleged violations of federal consumer financial laws. 䡲 Robert Bosch LLC, the Farmington Hills-based supplier, announced it is breaking ground on a $40 million, 220,500-square-foot expansion of its Plymouth Township technical center. 䡲 Community Health and Social Services Center Inc. and The Wellness Plan, both in Detroit, will receive federal grants for $189,000 and $250,000, respectively, as part of a $1.7 million award given to seven Michigan health care centers to improve services. 䡲 Detroit-based Strategic Staffing Solutions said it will continue sponsoring the five horses in the Detroit Police Department’s Mounted Police Division through next year, AP reported. 䡲 Traverse City-based West Bay Exploration shut down oil drilling operations it had just started in Shelby Township in response to the community’s passage of a six-month moratorium against drilling in residential areas, AP reported. 䡲 The General Motors Co. Tech Center said it would start a bike-sharing program for the 19,000 employees of the Warren site, working with Massachsetts-based private bike-sharing company Zagster, AP reported.

OTHER NEWS 䡲 The Michigan Strategic Fund board approved six projects expected to add more than 300 manufacturing jobs to the region and nearly 500 new apartments in Detroit. One, the $61 million Orleans Landing, will bring residential and retail/commercial space into 20 new buildings along the Detroit River on environmentally remediated land. 䡲 The Dec. 26 college football bowl game at Ford Field will be called the Quick Lane Bowl, sponsored by Dearborn-based Ford Motor Co.owned Quick Lane Tire & Auto Centers chain. The game, to match teams from the Big Ten Conference and Atlantic Coast Conference, replaces

the Little Caesars Pizza Bowl. 䡲 The city of Detroit won a commitment from Barclays plc for $275 million in financing to fund the city’s exit from bankruptcy if a judge approves its debt-cutting plans at a trial scheduled to start this week, Bloomberg reported. 䡲 After the Michigan Finance Authority began issuing $1.8 billion of revenue bonds on behalf of the Detroit Water and Sewerage Department to finance the purchase of debt from investors, Standard & Poor’s gave the department a BBB+ rating, the eighthhighest rank and one showing confidence in risk, Bloomberg reported. Moody’s Investors Service and Fitch Ratings Inc. assigned lower ratings. Separately, the water department resumed shutting off water to customers who are at least 60 days behind or owe more than $150, AP reported. 䡲 The Michigan Building, at Cass and Bagley avenues, is close to havng a new owner in Dennis Kefallinos, the Detroit real estate investor in the final stages of purchasing Bagley Acquisition Corp., which owns the building. The price was not disclosed. 䡲 Detroit Public Schools Emergency Manager Jack Martin canceled plans to cut teachers’ and administrators’ pay by 10 percent and increase class sizes to help overcome a $127 million budget deficit. 䡲 The city of Detroit is seeking proposals to redevelop the former Brewster Wheeler Recreation Center. Budget cuts forced the closing of the center in 2006. 䡲 The University of Michigan earned $2.6 million for the lease of Michigan Stadium by the organizers of the exhibition soccer match between Manchester United and Real Madrid Aug. 2. 䡲 Court-ordered oversight of the Detroit Police Department for use of excessive force and illegal arrests ended after 11 years when a federal judge agreed to drop the use of a court-appointed monitor, AP reported. 䡲 Comerica Bank’s Michigan Economic Activity Index went up 3.7 percentage points in June to 127.8, continuing a May climb that ended a six-month decline. 䡲 The Federal Emergency Management Agency started evaluations of damage from recent flooding in metro Detroit and elsewhere in Michigan, AP reported.

OBITUARIES 䡲 Jerome “Jerry” Williams, co-owner and vice president of sales and marketing of Chesterfield Townshipbased Prism Plastics LLC, died Aug. 27 following surgery to remove fluid from his lungs. He was 51.

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