Crain's Detroit Business, Feb. 25, 2019 issue by Crain's Detroit Business

Tribute chef, Bigalora founder team up on Birmingham restaurant

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Ponyride tenants prepare for move

FEBRUARY 25 - MARCH 3, 2019 | crainsdetroit.com

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BIGGEST DEALS

DETROIT

BILLION-DOLLAR UPSWING Cobo deal

not enough for long-term solvency By Chad Livengood clivengood@crain.com

Owen’s Lightning Technologies LLC, which has its headquarters and operations in Oxford and a second plant ramping up in Orion Township north of The Palace of Auburn Hills, makes a plywood pallet sprayed with a proprietary chemical that almost instantly hardens into a tough, lightweight protective coating that can be sterilized — making the hybrid pallet ideal for shipping food, pharmaceuticals and electronics sensitive to spoilage or vibration damage.

The sale of Cobo Center’s naming rights to Chemical Bank puts Detroit’s convention center one step closer to be financially independent of taxpayer subsidies, but won’t guarantee long-term solvency for a facility that has long relied on city and state aid to stay afloat. The convention center’s management is under a mandate by the Legislature to make the facility independent of taxpayer subsidies by 2024, when a $5 million-per-year state subsidy is scheduled to go away. In 2017 and 2018, Cobo Center’s management firm, SMG/Cobo Center, posted net profits of $119,000 and $371,000, respectively, above convention center revenue of $13.7 million and parking revenue of $4.8 million, said Patrick Bero, CEO and CFO of the Detroit Regional Convention Facility Authority. That profit, which marks a major turnaround from years of multimillion-dollar deficits for Cobo Center, does not include the $5 million appropriation from taxes on hotels, liquor and cigarettes, which was invested in capital improvements during a year when the convention center had a record 1.55 million visitors, Bero said. “Two years in a row now, I’ve gotten into the black,” Bero told Crain’s. “But $119,000 and $371,000, while a nice accomplishment, that’s not operationally sustainable for 20 more years. I’ve got to get that number much higher. This $1.5 million pushes us further in that direction.” Under a deal struck last July, Chemical Bank will pay the Detroit Regional Convention Facility Authority $1.5 million annually for 22 years for the naming rights to the 59-year-old riverfront convention hall. Pending approval of federal bank regulators of Chemical Bank’s merger with TCF Bank, Cobo Center will be renamed TCF Center, Chemical Bank leaders said.

SEE PALLET, PAGE 22

SEE COBO, PAGE 23

GETTY IMAGES/ISTOCKPHOTO

n 2018, the big deals got bigger — often driven by strategic buyers flush with corporate cash. The total value of the 50 largest deals in Michigan roughly doubled, driven by consolidation across a num-

ber of industries and an increase in billion-dollar-plus sales like those of Meridian Health and Duo Security. Read more on Crain’s Biggest Deals of 2018 on Page 8 and see the full list of the 50 biggest deals starting on Page 10.

MANUFACTURING

Building a better pallet

Oakland County company aims for disruption with athlete investors By Bill Shea bshea@crain.com

Jeffrey Owen: Owns pallet manufacturer.

Jeffrey Owen grew up on a Kentucky tobacco farm, and expected to take it over from his father as his lifelong work. That was in the 1950s and ’60s. The end of federal tobacco subsidies in the 1970s altered his career trajectory in wholly unexpected ways. With tobacco no longer as the family’s sole cash crop, Owen’s father encouraged him to do something else. So, he ended up in industrial sales, eventually landing in crainsdetroit.com

Vol. 35 No. 8

metro Detroit’s auto industry before branching out on his own in a variety of industries, including plastics. Today, Owen is the millionaire owner of a new industrial pallet manufacturer in suburban Detroit that has designs on global expansion — and has attracted financial support from some of Detroit’s most famous sports names. What’s got the likes of Kirk Gibson and Henrik Zetterberg opening their wallets is a blend of technologies that appear to fill a logistical need.

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Despite high valuations, deals remained strong in 2018 By Dustin Walsh | dwalsh@crain.com

redriven by strategic buyers for whom tax n 2018, the big deals got bigger — often form freed up corporate cash. another company for growth, technoloStrategic buyers — companies that acquire equity, times outbid financial buyers — private gy or markets — drove up prices and at Biggest 50 top the of Michigan deals. Of hedge funds and the like — in the majority a handful were led by financial buyers. Deals in 2018, which start on Page 10, only That’s evident in the deal values compared to last year. The top 50 deals in 2018 represented an overall deal value of nearly $27.5 billion, compared with just short of $13 billion for the top 50 in 2017. “What we’re seeing is a lot of con-

Security Inc.; and the $1.08 billion acquisition of Benton Harbor-based Whirlpool’s compressor business by

Nidec Corp. Valuations, however, for the automotive industry — a sector that has historically dominated Crain’s Biggest Deals list — have been on the

Biggest deals of the past 10 years Year

2018 2017 2016 2015 2014

2013 2012

Deal

Tenneco Inc. acquired Federal-Mogul American Axle acquired Metaldyne Performance Group (MPG)

Value

LLC

Fortis Inc. acquired ITC Holdings Corp merged as Dow Chemical Co. and DuPont Co. equals ZF Friedrichshafen AG acquired TRW Automotive Holdings Corp.

Perrigo Co. and Elan Corp. PLC combined in Dublin, under a new corporate entity based Ireland General Motors Co. purchased International auto finance operations of Ally Financial

$5.4 billion $3.3 billion $11.3 billion $65.6 billion $12.4 billion $8.6 billion

$3.8 billion

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MICHIGAN BRIEFS

INSIDE

From staff and wire reports. Find the full stories at crainsdetroit.com

Lansing-based Auto-Owners Insurance to acquire California company Lansing-based Auto-Owners Insurance has entered an agreement to purchase Capital Insurance Group of Monterey, Calif., for an undisclosed amount of money. The transaction is contingent on regulatory approval, the companies said in a news release last week. With more than 47,500 licensed agents across 26 states, Auto-Owners provides different lines of insurance, including life, home, auto and business. “Capital Insurance Group is the premier regional independent agency carrier on the West Coast. Adding Capital Insurance Group and its affiliates to the Auto-Owners family of companies expands our operating footprint into four additional states, providing access to more families and businesses to insure, and giving us even greater geographic diversification,” Auto-Owners CEO Jeff Tagsold said in the release. Auto-Owners, a mutual insurance company, is affiliated with Concord, N.H.-based Concord General Mutual Insurance Co..

Founded in 1898, CIG insures personal lines and a vast array of commercial and agricultural businesses on the West Coast, including California, Washington, Oregon, Nevada and in Arizona — where Auto-Owners also writes insurance, the release said. Founded in 1916, Auto-Owners is rated A++ Superior by AM Best, a nationally renowned rating agency for insurance companies. It is one the country’s largest insurers, writing more than 5 million policies, the release said. It employs 5,200 people.

Commercial eel farm considered in St. Johns

A Florida-based company is considering building a $30 million eel farm in Michigan, which one state agriculture official said could be the first facility in the U.S. to commercially raise the long fish for food. Aqua Vida Aquaculture is considering land in an industrial park in St. Johns, just north of Lansing, The Lansing State Journal reported. The facility would occupy up to 2 acres and could create about 25 jobs. The facility would raise African longfin eel and American eel, said Kit Munday, the company’s founder. The fish are a source of “high quality protein” and are often grilled, stewed or roasted, he said. The proposed project would be “self-contained,” which means the eels wouldn’t come into contact with

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OPINION

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CHARLES AND CLINTON ROBERTSON VIA CREATIVE COMMONS 2.0

Eels are a source of food but hasn’t been a focus of American fish farming operations.

lakes or rivers, Munday said. The facility would use water that’s recirculated and reused. The facility would be the state’s first commercial farm that raises eel for food and it might be the first in the country, said Stephen Hussey, the aquaculture and poultry program manager for the Michigan Department of Agriculture and Rural Development. “We’re not aware of anyone in the U.S. that’s growing eels,” Hussey said. The state first heard of the idea in 2016, Hussey said. Officials have spent two years conducting a risk analysis of the proposal, which included a review of the potential that eels could spread disease or harm the environment, he said. The state has created guidelines to prevent potential risks, such as requirements on how eels should be screened and quarantined, as well as

specifics on the facility’s security and construction. The company must acquire an aquaculture research permit to move forward, Hussey said. The state hasn’t yet received any formal applications for licenses or permitting for the project, he said. Aqua Vida is still working to secure funding from investors and no timeline has been set for the project, Munday said.

GM invests $36 million at Lansing plant

General Motors Co. is investing $36 million at its Lansing Delta Township plant in Michigan to assist with “future crossover production.” The company, citing competitive factors, declined to provide specific details or timing of the investment. The plant produces the Buick En-

RUMBLINGS

WEEK ON THE WEB

clave and Chevrolet Traverse crossovers. Along with a nearby stamping plant, the site employs roughly 2,900 people, including more than 2,600 hourly UAW members. No jobs are expected to be created as a result of the investment, GM said. The Lansing Grand River factory is at least the fourth U.S. plant Barra has visited in recent weeks in the wake of heavy political backlash over the company’s plans to potentially end output at four U.S. plants and shutter Oshawa Assembly in Oshawa, Ontario, in 2019. GM is moving to end output at the plants in response to a steady decline in U.S. car sales as Americans increasingly embrace SUVs, crossovers and pickups. Barra recently visited Spring Hill Assembly in Tennessee and Arlington Assembly in Texas, where she was joined by General Motors CFO Dhivya Suryadevara and Alicia Boler Davis, the company’s head of global manufacturing. Barra has also visited GM’s pickup plant in Fort Wayne, Ind.

“Performance is power. When you work hard and perform well, you have the power to influence the future for yourself and your team.” – Patti Poppe CMS Energy and Consumers Energy President and CEO

Congratulations Patti on being named as a Crain’s Newsmaker of the Year. We salute your commitment to a clean energy future for Michigan and your passion to provide world class performance that delivers hometown service to our friends, families and neighbors. Meet Patti at ConsumersEnergy.com/hometownstory

PEOPLE

Leading with purpose

200104

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FOOD AND DRINK

CULINARY COLLABORATION Tribute chef pairs with Bigalora founder on new Birmingham restaurant By Annalise Frank afrank@crain.com

Takashi Yagihashi, a chef with a mammoth reputation in metro Detroit — and beyond — is returning to collaborate with a big name in Italian dining. The James Beard Award winner known locally for his work at the now-closed, much-celebrated Tribute restaurant in Farmington Hills plans to open a downtown Birmingham restaurant with Chef Luciano DelSignore. DelSignore launched growing Neapolitan-style pizza empire Bigalora Wood Fired Cucina, and his Bacco Ristorante is a longtime resident of Southfield. They’re coming together as a “con-

versation 15 years in the making” finally bears fruit, DelSignore said. The two knew each other years back through the local industry. Work has begun to construct fine-dining restaurant Pernoi in the 2,700-square-foot former Cafe Via bistro space at 310 E. Maple Road. It will have 64 seats, including its intimate bar, and a back patio that will seat around 30. Flexible barriers will allow for private dining of various sizes. “It fills a void that we’re missing,” DelSignore said. “Super high-end, white-tablecloth restaurants ... We have a lot of casual restaurants to go to and we’re filling the void, the niche, of something a little more cutting edge and high-end. SEE RESTAURANT, PAGE 23

NONPROFITS

Southwest Solutions slims down in bid to stabilize By Sherri Welch swelch@crain.com

PULP MEDIA

Restaurant industry veterans Takashi Yagihashi (left) and Luciano DelSignore are collaborating on a new Birmingham restaurant, Pernoi.

REDEVELOPMENT

Ponyride will ‘make it work’

For much of its first 49 years, Southwest Solutions couldn’t say no. When clients had needs for social services, it would look around for any agency addressing them. If nobody was providing those services, someone had to, former CEO John Van Camp told Crain’s in June 2017. Foundations, as well as housing and mental health leaders, also came to Southwest Solutions for help in addressing needs in the city through the years, Southwest Solutions Chairman Seth Lloyd said. And Van Camp, who retired in May 2018, “bless his heart,” would usually say yes, Lloyd said. But with declines in federal contract dollars for mental health and Head Start services, the organization’s benevolence caught up to it. Seeking to recover from a nearly $4 million deficit in fiscal 2017, Southwest Solutions is dialing back. It has exited Head Start, ended a handful of programs and made other cost-cutting moves that have shrunk its employee base from 460 in 2017 to 269 today.

Need to know

JJSouthwest Solutions has cut programs, shrunk employee base by nearly 200 and sold buildings to bring its costs in line with revenue JJExpects to be back in the black in 12-18 months JJLooking at simplified corporate structure, seven-figure investment in new IT system to position it for next 50 years

ALTERNATIVES FOR GIRLS

Sew Great Detroit, a social enterprise of Alternatives for Girls, operates out of the Ponyride nonprofit shared workspace in Corktown. It’ll move with Ponyride to Core City after the building sold.

Makers, nonprofits plan move after $3.3M sale of Corktown building By Annalise Frank afrank@crain.com

Corktown creative incubator Ponyride will be humming the next couple of months as makers and nonprofits prepare to move their industrial metal shelves, soap cutters, 35-pound cubetainers, sewing machines and various supplies about three miles northwest. More than 60 individuals and organizations are getting a new address after founder Phil Cooley sold the low-cost shared workspace nonprofit’s building at 1401 Vermont St. in Detroit’s Corktown neighborhood. The deal closed Feb. 15 for a sizable $3.3 million to developer Marc Nassif. The sale gives Ponyride oc-

casion to mold a more financially robust organization and pay back debts, Cooley said. Ponyride, started in 2011, houses artists, manufacturers, creative businesses, performance groups and individuals. The community’s mission is to give them an affordable home base that they’ll eventually outgrow. The nonprofit secured 15,000 square feet, to start, in a warehouse in Detroit’s Core City neighborhood about a six minute drive up I-96 or Rosa Parks Boulevard. Depending on how plans take shape, it could be a one- to two-year stay or a permanent solution, Cooley told Crain’s. The warehouse’s owner is 5301 Grand River LLC, registered to at-

torney Jay Bielfield. Bielfield didn’t respond to multiple requests for comment, and Alex Lauer, an agent with Real Estate One who worked with Cooley to make the deal, declined to provide more details on its ownership. Tenants making the journey to 5203 Loraine St. include graffiti jewelry social enterprise Rebel Nell, nonprofit Alternatives for Girls and the Detroit Public Theatre. As of last week, only around two or three weren’t joining, including print and design company Vector Lab, with a fourth — Anthology Coffee — branching off because it’s launching on its own in Eastern Market. SEE PONYRIDE, PAGE 24

“Ponyride as an organization did a lot of great work, but fiscally, we had some bills to pay ... We’re trying to really, fiscally, develop a model that allows us to stick around and use our smarts. ... We’d love to expand Ponyride and its philosophies.” Phil Cooley

Those moves should position Southwest to move its finances into the black within 12-18 months, said interim CEO Joseph Tasse, a veteran health care executive who oversaw hospital turnarounds before joining Southwest last October. At the same time, Southwest is developing plans for a seven-figure investment in new technology that would increase internal efficiencies, improving services to clients and systems such as billing that could bring it more revenue, Tasse said. And the organization is considering shrinking its structure from four separate, 501(c)3 nonprofits to improve client service, reduce internal administrative burdens and lower administrative costs associated with things like filing four audits, said Lloyd, retired senior vice president and general counsel of the former Oakwood Healthcare and a retired attorney with Dykema Gossett PLLC. Southwest had overextended itself to some degree as it took on risks to make social investments needed in the city of Detroit, Tasse said. “As funds tighten up, you have to be a little more introspective, take a little more of a business approach to the social investment and move forward.” SEE SOUTHWEST, PAGE 25

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 5 , 2 0 1 9

Beaumont to open urgent care in Royal Oak shopping center

Listening to you, caring for you.

By Jay Greene

At Ascension Michigan, good healthcare starts with listening, so we can provide the best care possible for you and your family’s specific needs.

jgreene@crain.com

Ascension Michigan

Restructuring Experience

In Your Corner.

Contact Brendan Best at bgbest@varnumlaw.com n n

Co-Chair of the Restructuring Practice Team National restructuring and insolvency practice, representing lenders, investors, owners, customers, and suppliers in distressed situations both in and out of court Metropolitan Ranking in Bankruptcy Litigation

2019

One of the 30 urgent care centers planned by Southfield-based Beaumont Health over the next year will be located at Woodward Corners, the multi-use shopping center under construction at the corner of Woodward Avenue and 13 Mile Road in Royal Oak. Beaumont officials earlier this month announced tenants at Woodward Corners, the former Northwood Shopping Center, that includes Beaumont Urgent Care, Meijer, Wahlburgers and New Order Coffee Roasters. The Royal Oak urgent care center, which will open in July, will be slightly larger than the average 5,000-square-foot centers under development, said COO Carolyn Wilson. At least six Beaumont urgent-care centers will open this year, including locations in Troy (spring), Allen Park (spring), Farmington Hills (fall), Grosse Pointe Farms (summer) and Livonia (winter). Beaumont currently operates only one full-service urgent care center, in West Bloomfield Township. But why put an urgent care at Woodward Corners, itself a 117,000-square-foot shopping outlet, right next to 1,100-bed Beaumont Hospital? “It’s about (ease of care and) community access to Beaumont Health. Woodward Corners is retail and a very busy corner. There will be a lot of people (coming) to enjoy the restaurant and shopping. It made a lot of sense to us” to locate an urgent care there, Wilson said. The overall Beaumont campus, which covers about 16 acres, is nearly a small city with 10,000 to 13,000 people working, visiting or receiving treatment there at any one time. “We will be locating the urgent cares close to (hospital) emergency departments. It is a lower-cost option for people with minor illnesses and reduces their total cost of care,” said Wilson, adding that the eight-hospital Beaumont system has 600,000 annual ER visits, including 100,000 on the Royal Oak campus. Last August, Beaumont Health signed an agreement with Atlanta-based WellStreet Urgent Care to finance and open 30 urgent care centers in metro Detroit. WellStreet will be the managing partner, but the centers will be backed by the Beaumont brand and staffed by a mix of Beaumont employees and new hires, Wilson said. Several other health systems in Southeast Michigan are also investing in ambulatory and urgent care centers, including Henry Ford Health System, Detroit Medical Center and Ascension Health Michigan. The reasons are multifold. Patients, employers and insurance companies are demanding lower costs and more convenient locations. The centers also will be connected to Beaumont doctors and facilities through its Epic electronic health record system to improve care coordination. Under the plan, Beaumont and WellStreet will jointly finance the centers, possible leases and property purchases on a 50-50 basis. Each center will vary in size and services, but the average center will cost about

Bernice Sessa: Named regional medical director.

Carolyn Wilson: Lower-cost option for patients.

Need to know

JJBeaumont begins to build out 30

urgent care center network with outpatient facility at Woodward Corners shopping center on Royal Oak campus JJProgress being made on deal with surgeons for outpatient surgery center also at Royal Oak JJBeaumont partnering for urgent care centers with for-profit WellPoint Urgent Care of Atlanta

$1 million and attract an average of 30 patients per day after three years of operation, Beaumont said At Woodward Corners, Wilson said the Royal Oak urgent center will be staffed by about 25 employees, including physicians, nurse practitioners, physician assistants, medical assistants, pharmacists and other office staff. Hours haven't been finalized, but the center will probably open at 7 a.m. and close between 8 p.m. and 9 p.m. Basic lab tests and film X-rays will be on site, with other diagnostic tests performed at the hospital, she said. To oversee the urgent care center operations, WellStreet and Beaumont have named Bernice Sessa, M.D., an emergency physician at Beaumont Hospital Troy, as regional medical director, and Jim Ray as regional vice president.

“It’s about (ease of care and) community access to Beaumont Health. Woodward Corners is retail and a very busy corner. There will be a lot of people (coming) to enjoy the restaurant and shopping. It made a lot of sense to us.” Carolyn Wilson

Several of the urgent care centers will be new facilities and some will be acquired by existing providers, Wilson said. “We are hoping to announce soon some acquisitions in targeted areas that we will fold into the joint venture,” she said. Beaumont currently operates an after-hours clinic for adults and pediatric patients at a medical office building near the north parking lot. Wilson said no decision has been made on closing that facility, designed for patients who don’t have a primary care doctor. “We will be talking with the doctors about what they want,” she

said. Another construction project underway at the Royal Oak campus is a 14,000-square-foot cardiovascular center for patients with heart failure. The $9 million Max & Debra Ernst Health Center, which the Ernsts donated $5 million toward, is being built next to the east tower entrance of the hospital. “We wanted to bring patients with heart failure together with doctors and diagnostics a little closer to parking to reduce their walk,” she said.

Beaumont moving ahead on outpatient orthopedic strategy The planned joint venture with Southfield-based Michigan Orthopedic Surgeons on a new orthopedic surgery and musculoskeletal center on the Royal Oak campus is moving ahead, albeit slowly. MOS, a 44-physician group practice composed primarily of Beaumont medical staff members, performs the bulk of inpatient surgeries at Beaumont hospitals, but does most of its outpatient surgeries at UnaSource Surgery Center in Troy. Dennis Viellieu, CEO of Michigan Orthopaedic Surgeons PLLC, said the surgery center project is moving forward and he hopes contracts can be signed in about 60 days. He said the two health organizations are discussing details that will be included in a certificate-of-need application to the state later this year. “We are now are looking at six months of planning the project, the building and the interior, to be followed by 18 months of construction,” Viellieu said. Wilson confirmed the surgery center planning is taking longer than she would like, but said there is a great need to develop an ambulatory surgery center at the Royal Oak campus to lower costs for patients and employers. Beaumont recently completed construction of a $5.5 million, 10,000-square-foot outpatient orthopedic center on the campus of Beaumont Hospital in Taylor. Services in the 12-room facility include examinations, imaging, access to specialists, and treatment plans for injuries. Patients will continue to receive surgery in the hospital’s operating rooms. Wilson said the Taylor and Royal Oak surgery centers are part of a Beaumont strategy to move more into the outpatient arena to capture more patients and managed-care and employer contracts, and make care more convenient. She said Beaumont has secured managed-care contracts with the major payers for the centers. “Taylor and Royal Oak makes sense. ... Separating inpatient and outpatient makes sense,” Wilson said. The two ambulatory centers will also include Beaumont orthopedic residents and fellows. One of Michigan’s largest health systems, Beaumont Health has total net revenue of $4.5 billion and includes eight hospitals with 3,429 beds, 187 outpatient sites, nearly 5,000 physicians, 38,000 employees and 3,500 volunteers. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 5 , 2 0 1 9

OPINION COMMENTARY

No shortage of schadenfreude

ne of my favorite words is one I rarely use. Schadenfreude (pronounced (SHAH-den froid-ah) is the German word for deriving pleasure from someone else’s misfortune. There has been plenty of that peculiar pleasure for me lately as I consume news from other Crain publications. Take public corruption, for example. Southeast Michigan has its share of cases, from Kwame Kilpatrick through the bribes-and-trash-hauling mess in Macomb County to the recent FBI raids in Taylor and scrutiny on towing contracts in the region. But Chicago — and Illinois — have us beat. Modern history includes indictments or convictions of governors and assorted politicians. The latest uproar concerns the powerful state House speaker caught on tape discussing zoning and hiring his law firm — an investigation that is rattling Chicago’s mayoral race because aldermen may be involved in “pay to play.” (It’s remarkable what kind of mischief can occur when power to say “yea” or “nay” to a business project rests with a single alderman.) Meanwhile, the populism wave rolling through the country is vividly on display in New York after Amazon walked away from the deal to create a major headquarters in Queens after social activists and state and local politicians criticized the deal hatched by the mayor and the governor. A headline last week from the Crain’s New York Business website said it all: “No shortage of finger-pointing in Amazon debacle.” To the criticism that the state and city ponied up too much with incentives worth $3 billion, Crain’s New York Business pointed out in its editorial that Amazon’s projected 25,000 workers would have generated tax revenue of $10 billion over 20 years. Not a bad yield. My schadenfreude is generally short-lived. There’s plenty of nonsense happening in our own back yard. Just last week, fast-food giant The Wendy’s Co. responded to a Feb. 4 resolution by the Ann Arbor City Council that called for a boycott of its restaurants — there are 250 in Michigan. Council members criticized Wendy’s for not signing up to support a Florida-based farm workers’ rights pact called the Fair Food Program. The partnership asks grocery and food chains to join to ensure fair

MARY KRAMER Group Publisher

My schadenfreude is generally short-lived. There’s plenty of nonsense happening in our own back yard. working conditions at the farms from which they buy produce. Wendy’s, mlive.com reported, said it had bought tomatoes in the Sunshine State but now buys them from indoor greenhouse farms, including farms in Michigan. Why council members in Ann Arbor are focused on a national food chain’s buying practices versus more local issues is anyone’s guess. (Hint: It’s one reason the city has been referred to as “the People’s Republic of Ann Arbor.”) Detroit, meanwhile, is laser-focused on local issues as developers line up to build housing, offices and retail in downtown, Midtown and surrounding neighborhoods. A natural tension develops between investors and developers on one side and activists and City Council members wanting to secure more social benefits for Detroit residents — jobs, job training, contracts for minority and women-owned enterprises. When Ford Motor Co. began investing in Corktown, it was quick to work with the city to create an advisory panel to shape its community benefits tied to that investment. Still, critics (many of whom I’m guessing don’t live in Corktown) want more. It’s a balancing act dictated by the risk the investor makes versus the potential reward. Anyone who doesn’t believe that can check out exactly who the biggest losers are in the Amazon fracas in Queens, N.Y. Mary Kramer is group publisher of Crain’s Detroit Business. You can hear her and Managing Editor Michael Lee at 6:15 a.m. Mondays on WJR 760 AM.

LETTERS

Ponyride shows the 'profit' in nonprofit

To the editor: The sale of Ponyride is an example of people, in this case the Cooleys, making a tremendous profit under the guise of a nonprofit organization.

They brand themselves as community activists but are lining their pockets with the profits, in this case $3.2 million in 8 years. They are no better than the Morouns. At least Matty and family do not try to hide what they are. Arnold Carpen Detroit

Albert Cobo is gone. Should Lewis Cass be next?

he logo of a bank will adorn the outside of Cobo Center by Labor Day. With Chemical Bank’s purchase of the naming rights of Detroit’s publicly owned convention hall, Mayor Mike Duggan declared it’s time to “turn the page” on the racial tensions Albert Cobo stoked as mayor that “still reverberate in the city of Detroit today.” Cobo’s name and bust are being removed from the convention center that he was instrumental in helping develop during a period of the 1950s when he’s most remembered for carrying out the removal of African-Americans from their homes and businesses. Should Lewis Cass’ statue be the next to go? Cass was Michigan’s territorial governor from 1813 to 1831 and is regarded as one of the state’s founding fathers (even though the New Hampshire-born attorney came here from Ohio). As governor in the decades before Michigan’s statehood in 1837, Cass championed the principle of “popular sovereignty” in letting individual territories decide whether to permit slavery. He sought the Democratic nomination for president in 1848 on a platform of letting southern states decide whether to maintain slavery. He also was President Andrew Jackson’s secretary of war who helped carry out the forced removal and relocation of Native Americans. For the past 130 years, Cass’ statute has stood in the U.S. Capitol’s National Statuary Hall as one of the most notable people in Michigan’s history. He went on to become a minister to France, U.S. senator and secretary of state in the run-up to the Civil War.

CHAD LIVENGOOD clivengood@crain.com

NATIONAL STATUARY HALL COLLECTION

A statue of Lewis Cass has stood in the National Statuary Hall of the U.S. Capitol since 1889. Cass was a pro-slavery territorial governor of Michigan from 1813 to 1831.

Cass is, technically, the Democrat representing Michigan, though the pre-Civil War Democratic Party does not match the modern incarnation. President Gerald Ford is the Republican representing Michigan. The modern Democratic Party has many other popular and influential figures who would surely better represent the modern values and principles of Michiganians — or Michiganders, for those who insist. The late Gov. G. Mennen “Soapy” Williams and former Attorney General Frank Kelley — who turned 94 in December — come to mind. It doesn’t have to be a politician. United Auto Workers leader Walter Reuther would seemingly qualify. The late U.S. Sen. Philip Hart’s name is already on the U.S. Senate’s office building in Washington, D.C. So how about John Dingell? In the wake of Dingell’s Feb. 7 death, one thing was certain: His impact on Michigan and the nation were immense. From environmental regulation and the Civil Rights Act to the passage of Medicare and his a role in saving Michigan’s auto industry from collapse a decade ago, Dingell was remembered as one of the most pivotal political figures of the 20th Century during his 59-year record-setting tenure in Congress. It would not be unprecedented to replace with a statue in the U.S. Capitol. In 2011, the State of Michigan traded out a statue of former Detroit Mayor and U.S. Sen. Zachariah Chandler — who succeeded Cass in the Senate — with a bronze statue of Ford, the only U.S. president to hail from Michigan. SEE CASS, PAGE 7

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 5 , 2 0 1 9

Healthy economy depends on water infrastructure, too

healthy economy is just as dependent on water as is every resident of Michigan, so it’s good to hear that Gov. Gretchen Whitmer’s plans to fix Michigan’s worn-out infrastructure include water and sewer systems that are 50 to 100 years old. While much attention has focused on Michigan roads, which are labeled among the worst in the nation, delivering safe water to businesses is crucial to the state’s economic recovery and growth, as well as to public health. Nearly half of all the water consumed in the U.S. is used to manufacture products; it takes about 39,000 gallons of water to manufacture one car. Every industry across the state relies on water, whether for making products, producing energy or delivering services. The “invisible infrastructure” for water often gets short shrift in public policy discussions, so it’s encouraging that Whitmer has created a Clean Water Public Advocate office. The new governor’s Rebuild Michigan Plan acknowledges that the state un-

OTHER VOICES Bonnifer Ballard

derfunds its water and sewer systems by $800 million a year. It calls for expedited replacement of old lead water lines in cities across the state, money to clean up contaminated groundwater and long-term funding

of improvements to water delivery and sewer systems through a beefedup Rebuild Michigan Bank. As the new administration digs into the buried infrastructure challenges, we encourage all branches of government to work together to make substantive changes geared to protect public health. The proposed restructured Michigan Department of Environmental Quality to the Department of Environment, Great Lakes and Energy needs a crystal-clear mandate, as well as the resources to implement it. That means adequate funding and staffing. More than 7.2 million Michigan residents get their water from the

state’s lakes, rivers and aquifers, and they draw from about 1,425 community water systems. Those customers pay less than $1 a day on average to have water delivered to their businesses, homes and schools. While users of those systems should expect to pay more for the kind of service they’ve come to expect, it’s time for the state and federal governments to step up and increase funding for the most basic and important commodity we use — clean, safe water. The Twenty First Century Infrastructure Commission made great strides in identifying and prioritizing Michigan’s water systems, roads,

bridges and other infrastructure needs. Answers to the funding challenges now need to be addressed. Our Great Lakes State is surrounded by 20 percent of the world’s surface freshwater. It ought to lead the way to protect and deliver clean, safe water. We hope Gov. Whitmer and the new Legislature can agree on solutions to make Michigan that leader. Bonnifer Ballard is executive director of Michigan Section/American Water Works Association. AWWA is a nonprofit, scientific and educational association dedicated to managing and treating water.

CASS FROM PAGE 6

Unlike Cass, Chandler was an ardent abolitionist, opposing slavery and coming out on the right side of history after the Civil War. Detroit’s Chandler Park is named after him and his statue stood in the U.S. Capitol from 1913 to 2011. Cass and Chandler may have paired well because they were 19th Century contemporaries. Ford and Dingell would pair better than Ford and Cass because they served in Congress together in the 1950s, ’60s and ’70s.

Perhaps this is a project of bipartisanship that the Legislature and Democratic Gov. Gretchen Whitmer can work on ... Commissioning a statue of a longtime Democratic congressman to donate to the U.S. Capitol’s National Statuary Hall Collection would likely require funding and authorization from the Republican-controlled Legislature. Perhaps this is a project of bipartisanship that the Legislature and Democratic Gov. Gretchen Whitmer can work on in the spirit of Whitmer’s call for “building bridges” at a time of deep partisan divisions in this country. Taking down Lewis Cass’ statue in the U.S. Capitol does not mean Cass can or should be erased from the history books. And neither should Albert Cobo, for that matter. Cass is kind of hard to escape. His name is everywhere: Cass Tech High School and Cass Avenue in Detroit; the Cass state office building in Lansing; Cass City and the Cass River in the Thumb; and Cass County in southwest Michigan and its county seat, Cassopolis. But if as a city, Detroit is trying to turn the page on Albert Cobo’s racism, perhaps it’s time to consider a new representative of Michigan’s contributions to the country in the hallways of the nation’s capital. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

Well-to-do. It’s what comes to mind, perhaps, when thinking about wealth management. But there’s another way to think about “well-to-do” that’s less about what one has, and more about what one does. You see, clients of Greenleaf Trust (with over $12 billion in assets under advisement) tend to be exceedingly generous, so they rely on us for holistic wealth management that integrates ROI with tax planning, trusts, risk management, cash flow, retirement, estate planning, charitable giving, and so on. We have every good reason to succeed, because in our experience the well-to-do, do a lot of good. If that’s you, give us a call.

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C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 5 , 2 0 1 9

FOCUS

CRAIN’S BIGGEST DEALS OF 2018

GETTY IMAGES/ISTOCKPHOTO

Despite high valuations, deals remained strong in 2018 By Dustin Walsh | dwalsh@crain.com

n 2018, the big deals got bigger — often driven by strategic buyers flush with corporate cash. Strategic buyers — companies that acquire another company for growth, technology or markets — drove up prices and at times outbid financial buyers — private equity, hedge funds and the like — in the majority of Michigan deals. Of the top 50 Biggest Deals in 2018, which start on Page 10, only a handful were led by financial buyers.

That’s evident in the deal values compared to last year. The top 50 deals in 2018 represented an overall deal value of nearly $27.5 billion, compared with just short of $13 billion for the top 50 in 2017. “What we’re seeing is a lot of consolidation in industries,” said David Larsen, partner at law firm Bodman PLC in Detroit. “Strategic buyers pay the highest price, and those deals are more about fit. Which is interesting for the region because names get preserved, employees get preserved more than with PE.” Larsen represented the Cotton family in the $2.5 billion deal to sell its Meridian Health Plan to New York’s WellCare Management Group Inc. That deal closed last September and Meridian, its name and employees are expected to remain under

WellCare. Meridian is a major employer in downtown Detroit and ranks fourth on Crain’s Private 200 list of largest privately held companies in metro Detroit with revenue of $3.8 billion in 2017. The company has become a major fixture in downtown Detroit since purchasing One Campus Martius with Dan Gilbert’s Bedrock LLC in 2015 for an estimated $140 million to $150 million. The majority of the other billion dollar-plus deals joined Meridian in local assets being sold to national or international companies. Those deals include: Tenneco Inc.’s $5.4 billion acquisition of Southfield-based Federal-Mogul LLC; Atos SE’s $3.67 billion acquisition of Troy-based Syntel Inc.; Cisco’s $2.35 billion acquisition of Ann Arbor-based Duo

Security Inc.; and the $1.08 billion acquisition of Benton Harbor-based Whirlpool’s compressor business by Nidec Corp. Valuations, however, for the automotive industry — a sector that has historically dominated Crain’s Biggest Deals list — have been on the decline, said Sean Silver, senior vice president of global commercial banking at Bank of America Merrill Lynch in Detroit. “An exception (to high valuations) would be traditional automotive, where the view is that multiples generally declined,” Silver said. “In some instances, this resulted in mismatches between seller expectations and what buyers were willing to pay, although there were certainly successful automotive transactions last year.” SEE DEALS, PAGE 21

Biggest deals of the past 10 years Year

Deal

Value

2018

Tenneco Inc. acquired Federal-Mogul LLC

$5.4 billion

2017

American Axle acquired Metaldyne Performance Group (MPG)

$3.3 billion

2016

Fortis Inc. acquired ITC Holdings Corp

$11.3 billion

2015

Dow Chemical Co. and DuPont Co. merged as equals

$65.6 billion

2014

ZF Friedrichshafen AG acquired TRW Automotive Holdings Corp.

2013

Perrigo Co. and Elan Corp. PLC combined under a new corporate entity based in Dublin, Ireland

2012

General Motors Co. purchased International auto finance operations of Ally Financial

2011

Delphi Automotive reacquired equity stake from General Motors Co.

2010

Toronto-Dominion Bank bought Chrysler Financial Corp.

2009

General Motors Co. (U.S. Government, UAW VEBA healthcare trust, Canadian government) acquired assets of former General Motors Corp. $46.8 billion

2008

Tata Motors Ltd. acquired Jaguar Ltd. and Land Rover Ltd. untils of Ford Motor Co.

Source: Crain’s Detroit Business Book of Lists

$12.4 billion $8.6 billion

$3.8 billion $6.3 billion $6.3 billion

$2.3 billion

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C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 5 , 2 0 1 9

CRAIN'S LIST: LARGEST MERGERS & ACQUISITIONS OF 2018 Rank

Target

Acquirer advisers

Target/Seller advisers

Date effective

Description

Tenneco Inc., Lake Forest, Ill.

Federal-Mogul LLC, Southfield

Winston & Strawn LLP; XMS Capital Partners LLC

Oct. 1, 2018

Sold by Icahn Enterprises. The purchase price $5,400.0 includes of $800 million in cash, 29.4 million shares of Tenneco common stock and assumption of debt.

Atos SE, France

Syntel Inc., Troy

Goldman Sachs & Co. LLC; Sullivan & Cromwell LLP

Oct. 9, 2018

Atos acquired all of the outstanding stock of Syntel for $41 per share in cash.

$3,670.1

The WellCare Management Group Inc., Newburgh, N.Y.

Meridian Health Plan, Detroit

Kirkland & Ellis LLP; JPMorgan Chase & Co.; Mayer Brown LLP; Innisfree M&A Inc. ; Barclays Capital Inc. Rothschild & Cie Banque; J.P. Morgan Securities Plc; BNP Paribas Corporate Finance; Latham & Watkins LLP; Weil, Gotshal & Manges LLP Kirkland & Ellis LLP; Moelis & Co.

Sept. 1, 2018

Sold by Caidan Enterprises Inc.. The transaction includes Meridian Health Plan of Illinois Inc. and Meridian Health Plan of Michigan Inc.

$2,500.0

Cisco Systems, Inc., San Jose, Calif.

Duo Security Inc., Ann Arbor

The Goldman Sachs Group Inc.; Fenwick & West LLP; Barclays Capital Inc.

Oct. 1, 2018

Duo Security, which will continue to be led by Dug Song, joins CiscoÕs Networking and Security business.

$2,350.0

Stryker Corp., Kalamazoo

K2M Group Holdings Inc., Leesburg, Va.

Skadden, Arps, Slate, Meagher & Flom LLP; Citigroup Global Markets Inc.

Nov. 9, 2018

Nidec Corp., Japan

Compressor business of Whirlpool Corp., Brazil

Sidley Austin LLP; JPMorgan Securities Japan Co. Ltd.; Kinstellar, s.r.o., advokatni kancelar; La Torre Morgese Cesˆro Rio

Under the terms of the agreement, Stryker $1,406.2 acquired all of the issued and outstanding shares of common stock of K2M for $27.50 per share plus additional cash. Sold by Whirlpool Corp. . As part of the deal, Nidec $1,080.0 agreed to acquire from Whirlpool the shares of multiple subsidiaries comprising the Embraco business, excluding Embraco Europe S.r.l.

Charles River Laboratories International Inc., Wilmington, Mass.

MPI Research Inc., Mattawan

Davis Polk & Wardwell LLP; Morgan Stanley & Co. LLC; Axinn, Veltrop & Harkrider LLP

Foley & Lardner LLP; Bodman PLC; Credit Suisse Securities (USA) LLC Gunderson Dettmer Stough Villeneuve Franklin & Hachigian LLP; Qatalyst Partners LP Simpson Thacher & Bartlett LLP; Broadridge Financial Solutions Inc.; Piper Jaffray & Co. Cleary Gottlieb Steen & Hamilton LLP; Citigroup Global Markets Inc.; Linklaters LLP (USA); Nimbus Capital SunTrust Robinson Humphrey Inc.; Jefferies LLC; Weil, Gotshal & Manges LLP

CIE Automotive SA , Spain

Roof systems business of Inteva Products LLC, Troy

SociŽtŽ GŽnŽrale, Sucursal en Espa–a; GBP Legal

Stonepeak Partners LP; D1 Capital Partners, New York, N.Y.

Lineage Logistics LLC, Novi

VICI Properties LP, Wilmington, Del.

Goldman Sachs & Co. LLC; Leasehold and real estate assets of Greektown Casino Kramer Levin Naftalis & Frankel LLP LLC, Detroit

Aptiv PLC , Troy

Winchester Interconnect, Middlebury, Conn.

Masco Corp. , Livonia

L.D. Kichler Co. Inc., Cleveland, Ohio

Kellogg Co., Battle Creek

Tolaram Africa Foods, Nigeria

Sentinel Capital Partners LP, New York, N.Y.

Pet Supplies Plus Inc., Livonia

1 2 3 4 5 6 7 8 9 9 11 12 13 14 15

Meta Financial Group Inc. , Sioux Crestmark Bancorp Inc., Falls, S.D. Troy

Sold by Avista Capital Holdings LP.

$800.0

Announced

Sold by Inteva Products LLC

$759.6

July 17, 2018

Sold by Bay Grove Capital. The two private equity firms acquired minority stake in Lineage Logistics, which is the second-largest refrigerated storage company globally. Sold by Greektown Casino LLC. The acquisition also includes assumption of certain liabilities of Greektown Mothership LLC, parent company of Greektown Holdings. Sold by Snow Phipps Group LLC. Winchester operates as an independent business unit within Aptiv's Signal & Power Solutions segment.

$700.0

Credit Suisse (USA) Inc. Announced

Davis Polk & Wardwell LLP; GCA Simpson Thacher & Advisors LLC Bartlett LLP; Lincoln International LLC Davis Polk & Wardwell LLP Western Reserve Partners LLC

Oct. 24, 2018

March 9, 2018 May 2, 2018

Raymond James & Associates Inc.; Katten Muchin Rosenman LLP; Regan & Associates Inc. Milbank, Tweed, Hadley & McCloy LLP

Baird and Houlihan Lokey; Weil, Gotshal & Manges LLP Sandler O'Neill + Partners LP; Dickinson Wright Paul, Weiss, Rifkind, Wharton & Garrison LLP; Deutsche Bank Securities Inc; Credit Suisse Securities (USA) LLC Sandler O'Neill + Partners LP; Donnelly Penman & Partners; Morrow & Co. LLC; Shumaker, Loop & Kendrick LLP Rothschild Inc.; J.P. Morgan Securities LLC; De Brauw Blackstone Westbroek PC ; Freshfields Bruckhaus Deringer Goldman Sachs & Co. LLC

$700.0

$650.0

$550.0 Sold by Tolaram Corporation Pte. Ltd.. The acquisition was funded through cash on hand and short-term borrowings. Sold by Irving Place Capital

$420.0

Each share of common stock of Crestmark will receive 2.65 shares of common stock of Meta Financial. Sold by Greektown Mothership LLC. Simultaneous with the closing of the transaction, Penn National will enter into a lease agreement with VICI Properties Inc. for the Greektown facility.

$302.1

Announced

Sold by Castle Creek Capital LLC; Patriot Financial Partners, L.P.. Under the terms of the agreement, each share of outstanding MBT common stock will be converted into a 0.275 share of First Merchants common stock.

$293.7

Announced

Sold by Tower International Inc. Financiere SNOP Dunois intended to fully finance the transaction with a debt delivered by BNP Paribas.

$290.6

Announced

Sold by Cooper-Standard Automotive Inc. ContiTech agreed to assume certain liabilities of Cooper-Standard associated with the AVS Business.

$265.5

June 30, 2018

Sold by Northfield Resorts.

$256.8

Sold by Clyde Blowers Capital IM LLP. The transaction was expected to be funded with the offering of notes of $396.87 million.

$245.0

Dec. 13, 2018

Aug. 1, 2018

Announced

First Merchants Corp., Muncie, Ind.

MBT Financial Corp., Monroe

Keefe, Bruyette, & Woods Inc.; Greenebaum Doll & McDonald PLLC

Financiere SNOP Dunois S.A., France

The European business of Tower International Inc., Belgium

Ernst & Young France; Flichy GrangŽ Avocats; Sullivan & Cromwell LLP; Cardinal Partners

ContiTech USA Inc., Fairlawn, Ohio

The antivibration systems Jones Day business of CooperStandard Holdings Inc. and 50% stake in Sujan Cooper Standard AVS Ltd., France

Sun Communities Inc. , Southfield

80 percent stake in Sun NG RV Resorts LLC, Grand Rapids

The Timken Co., North Canton, Ohio

Cone Drive Operations Inc., Jones Day Traverse City

McGuireWoods LLP

Sept. 1, 2018

Qiagen NV, Netherlands

NeuMoDx Molecular Inc., Ann Arbor

Jefferies LLC

Announced

April 3, 2018

Operational assets of Greektown Holdings LLC, Detroit

Announced

Penn National Gaming Inc., Wyomissing, Penn.

Value of transaction ($000,000)

Acquirer name

$350.0 B

$300.0

$234.0

SOURCE: S&P Global Market Intelligence, (Marketintelligence.spglobal.com), company submissions and Crain's research. In some cases, more than one estimated value of a transaction exists. In those cases, Crain's has chosen the value it believes to be most accurate. The list does not include all 2018 transactions, only those valued at $10 million or more. It is not a complete listing but the most comprehensive available.

B Crain's estimate.

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // F E B R U A R Y 2 5 , 2 0 1 9

CRAIN'S LIST: LARGEST MERGERS & ACQUISITIONS OF 2018 Rank

23 24 24 26 27 28

32 33 34

Target

Acquirer advisers

Target/Seller advisers

Date effective

Description

Stryker Corp., Kalamazoo

Invuity Inc., San Francisco, Calif.

Ropes & Gray LLP

Oct. 22, 2018

The consideration comprises of a price of $7.40 per share in cash.

$224.3

Dutch Infrastructure Fund B.V., Netherlands

American Roads LLC, Detroit

Agentis Capital; Allen & Overy LLP

Wilson Sonsini Goodrich & Rosati PC; Moelis & Company Kirkland & Ellis LLP; Evercore Inc.

July 16, 2018

Sold by Pike Pointe Holdings LLC

$220.0

Stryker Corp., Kalamazoo

HyperBranch Medical Technology Inc., Durham, N.C.

Sidley Austin LLP

Cooley LLP

Oct. 1, 2018

Sold by H.I.G. BioVentures LLC

$220.0

WestRock Co., Atlanta, Ga.

Plymouth Packaging Inc., Plymouth

Rogers & Hardin LLP

WestRock acquired substantially all the assets of Plymouth Packaging in an all-cash deal.

$201.9

RevSpring Inc., Livonia

Apex Revenue Technologies Kirkland & Ellis LLP LLC, Saint Paul, Minn.

Sold by WestView Capital Partners.

$200.0

NTT Communications Corp., Japan

Secure24 LLC, Southfield

Bodman PLC; Plante Jan. 5, 2018 Moran Corporate Finance Robert W. Baird & Co. Oct. 11, 2018 Inc.; Latham & Watkins LLP April 25, 2018

Secure24 operates as a standalone business unit of NTT.

$195.0 B

Altair Engineering Inc., Troy

Datawatch Corp., Bedford, Mass.

Dec. 12, 2018

Under the terms of the agreement, Altair commenced a tender offer to acquire all of the outstanding shares of Datawatch common stock for $13.10 in cash.

$187.2

JR Automomation, Holland

Esys Automotation, Auburn Hills

June 8, 2018

Under the deal, Esys will keep its name and corporate structure.

$180.0 B

BP plc, United Kingdom

BP Chargemaster, United Kingdom

July 31, 2018

Sold by Beringea LLC.

$170.3

Black Diamond Capital Management LLC, Greenwich, Conn.

GST AutoLeather Inc., Southfield

Under the terms of the transaction, the buyers formed a new entity to pay a cash consideration of $93.8 million, a $2.1 million settlement payment to unsecured creditors, a credit bid of $55.4 million and certain assumed liabilities and contracts.

$166.9

The purchase price includes $2.9 million in preliminary working capital.

$158.9 $145.0

June 15, 2018

Steelcase borrowed $75 million under its committed unsecured revolving credit facility as partial funding for the acquisition. Sold by New State Capital Partners LLC.

July 26, 2018

Sold by Hammond, Kennedy, Whitney & Co. Inc..

$132.0

Smith System Inc., Plano, Texas

U.S. Tsubaki Holdings Inc., Portland, Tenn.

Central Conveyor Company Jenner & Block LLP; Mori Hamada & Matsumoto LPC; Inc., Brighton GCA Advisors LLC

EWT Holdings III Corp., New York ProAct Services Corp., Ludington

40 41 41 41 44 44 46 47 48 49 49

Pepper Hamilton LLP

Choate, Hall & Stewart LLP; GCA Advisors LLC

Lazard Middle Market May 22, 2018 LLC; Kirkland & Ellis LLP; Pachulski Stang Ziehl & Jones LLP; Alvarez & Marsal North America LLC Sawaya Partners LLC May 31, 2018 Franklin Partners Inc.; Winthrop & Weinstine PA Morgan, Lewis & Bockius LLP; Duff & Phelps Corp. Morgan, Lewis & Bockius LLP; Lincoln Financial Advisors Corp. Raymond James Financial Inc.;Taft Stettinius & Hollister LLP William Blair & Co. LLC; Jones Day

July 12, 2018

October 5, 2018

Sold by The Babcock & Wilcox Co.; B&W Equity Investments LLC.

$130.0

Addleshaw Goddard

Jan. 31, 2018

Geometric Results, acquired the Londonbased Ultium in an all-cash deal subject to working capital adjustments.

$129.0

Honigman LLP

May 22, 2018

KPS Capital created Autokiniton to acquire L&W with plans to add bolt-on acquisitions under the Autokiniton name.

$112.0 B

$141.0

Autokiniton US Holdings Inc., New York, N.Y.

Babcock & Wilcox MEGTEC Skadden, Arps, Slate, Meagher & Flom LLP; Greenhill Law Group Holdings, Inc./Babcock & Wilcox Universal/MEGTEC LLC Systems, Inc., Barberton, Ohio Kirkland & Ellis LLP Ultium Business Outsourcing Group, United Kingdom L&W Engineering Co., New Paul, Weiss, Rifkind, Wharton & Garrison LLP Boston

Union Partners LLC, Oak Brook, Ill.

Contractors Steel Corp., Livonia

Stahl Cowen Crowley Addis LLC

Angle Advisors LLC; Varnum LLP

May 16, 2018

$110.0 B

Group Plastivaloire, France

TransNav Corp., New Baltimore

McDonald Hopkins LLC

Angle Advisors LLC; Varnum LLP

November 5, 2018

$100.0 B

O'Melveny & Myers LLP; Raymond James & Associates Inc. Pillsbury Winthrop Shaw Pittman LLP

Varnum LLP; Angle Advisors LLC

Oct. 15, 2018

FTI Consulting Inc.; Paul Hastings LLP

Steelcase Inc., Grand Rapids

DĹ¸rr Inc., Plymouth

RBC Capital Markets LLC; Lowenstein Sandler LLP; Richards, Layton & Finger PA; CMS Hasche Sigle PG v. RA u. STB mbH

Lassonde Industries Inc., Quebec, Old Orchard Brands LLC, Canada Sparta

35 36

Value of transaction ($000,000)

Acquirer name

29 30 31

Geometric Results Inc., Detroit

Malibu Boats LLC, Loudon, Tenn. Pursuit Boats, Fort Pierce, Fla.

Jefferies LLC; Bracewell July 2, 2018 LLP

Sold by S2 Yachts Inc.; Gen 123 Properties LLC. Malibu Boats funded the transaction with cash on hand and an existing credit facility. Sold by Rockland Capital LP

$100.0

Osaka Gas USA Corp., Houston, Texas

Michigan Power LP LLC, Ludington

Graphic Packaging International LLC, Atlanta, Georgia

Food service assets of Letica Corp., Rochester Hills

Sept. 30, 2018

Sold by Letica Corp.

$95.0

Rock Holdings Inc., Detroit

Dictionary.com / Thesaurus.com, Oakland, Calif.

Nov. 11, 2018

Sold by IAC/InterActive Corp.. Thesaurus.com is the 124th most trafficked website in the U.S., and Dictionary.com is 330th, according to Alexa.com.

$95.0 B

Ford Smart Mobility LLC, Dearborn

Spin, San Francisco, Calif.

Nov. 7, 2018

KinderCare Education LLC, Portland, Ore.

Rainbow Child Care Center , Troy

August 27, 2018

Rainbow employs about 3,000 people across its 150 $85.0 B child care centers in 16 states.

Steelcase Inc. , Grand Rapids

Orangebox Ltd., United Kingdom

Sept. 19, 2018

Under the deal, Orangebox will operate as an independent subsidiary under its own brand.

Huron Capital Partners LLC, Detroit

WD Lab Grown Diamonds, Beltsville, Md.

Perkins Cole LLP; Doeren Mayhew

Dec. 31, 2018

WD Labs makes laboratory grown diamonds for the $80.0 B jewelry, scientific and industrial industries.

MasterCraft Boat Co. LLC, Vonore, Tenn.

Crest Marine LLC, Owosso

BDO USA LLP; King & Spalding LLP; Egerton, McAfee, Armistead & Davis PC

Robert W. Baird & Co. Oct. 1, 2018 Inc.; Jaffe Raitt Heuer & Weiss PC

$100.0

$90.0 B

Crest Marine maintains its current headquarters and manufacturing facility in Owosso under the deal.

$83.4

$80.0

B Crain's estimate.

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 5 , 2 0 1 9

DTE, Ford link up for wind farm green energy project By Jay Greene jgreene@crain.com

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Ford Motor Co. has decided to use 100 percent renewable energy to power its Dearborn Truck Plant, where it produces the top-selling F-150, the Michigan Assembly Plant and several other buildings in metro Detroit — including Michigan Central Station. About 500,000 megawatt-hours of wind power, enough to power about 225,000 homes, will come from DTE Energy Co.’s MIGreenPower program. The renewable energy will supply electricity for the plants and to support Ford’s Research and Engineering Campus in Dearborn and the Corktown train station, which Ford is renovating. “Ford supports the implementation of renewable energy where the project can be tied to the customer’s facility, either directly or through the local distribution utility, and we believe that supports local jobs, improves the local environment and adds resiliency to the local grid,” George Andraos, Ford global director of energy and technology, said in a statement. Ford plans in June to announce a new global carbon reduction strategy that will focus on renewable energy. DTE said it plans to build or acquire new wind projects to source the MIGreenPower program that Ford has joined but did not say where they would be. The company now has 13 wind parks and 31 solar arrays. In January, the Michigan Public Service Commission approved a special rate structure for DTE to expand MIGreenPower, its voluntary renewable energy program for large corporate and industrial customers.

DTE ENERGY

DTE Energy has 13 wind parks in Michigan.

Need to know

JJFord to purchase 500,000 megawatt-hours of wind energy through DTE JJDTE recently got state OK for rate structure JJFacilities going 100 percent renewable include Michigan Central Station

Ford is the first company to take advantage of this new structure. In 2017, DTE launched a slightly different MIGreenPower program to residential customers in which people pay extra on their monthly bills to support renewable energy capacity. Michigan’s 2016 energy law mandated utilities to create a green pricing program. Once the new renewable projects supplying the program are online, Ford and other future industrial customers

that subscribe to MIGreenPrower will pay an additional rate charge equivalent to construction and ongoing operation costs, DTE said. Customers also will receive a bill credit based on lower regional projected energy costs. DTE plans to double its renewable energy capacity over the next five years, investing another $2 billion by 2024. It also proposes to build at least 3,000 more megawatts and solar and wind energy over the next 20 years. DTE currently produces about 1,000 megawatts of renewable energy, primarily wind. Each 1,000 megawatts powers about 450,000 homes. Two thousand megawatts would power about 40 percent of DTE’s 2.2 million Michigan electric customers. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

American Center for Mobility names Intel, IBM veteran as CEO By Dustin Walsh dwalsh@crain.com

After a leadership shakeup last year, the American Center for Mobility has hired a former executive in Intel’s automotive division as its permanent CEO. Michael Noblett will replace interim CEO Kirk Steudle, who served as the Ypsilanti Township-based autonomous and connected vehicle test site’s top executive since August, effective Monday. Noblett takes over at ACM after a turbulent year that saw several of Michael Noblett: its top executives depart. In April, Joins ACM from Andrew Smart, Intel. chief technology officer, left the organization, and COO Laurel Champion exited in June. CEO John Maddox departed in August. Maddox is now the senior director of autonomous safety and compliance at Lyft. ACM is a public-private partnership run by a nonprofit in conjunction with the state’s Department of Transportation, the Michigan Economic Development Corp., the University of Michigan, Ann Arbor’s SPARK business accelerator and Ypsilanti Township.

Need to know

J American Center for Mobility hires Michael Noblett as CEO J

Replaces interim CEO Kirk Steudle

Noblett takes over following leadership shakeup J

Leaders have touted it as a way to ensure high-paying auto jobs remain entrenched in Southeast Michigan. The state approved $35 million for the nonprofit that controls the joint partnership for the first phase of construction. By the time future phases are complete, the organization expects to spend $135 million on the overall construction of the facility. Seven companies, including Toyota and Visteon, paid $5 million apiece to be considered founding members of the facility. “Supporting” member Subaru and five other companies paid $2 million for ongoing use of the track. It’s not just for traditional OEMs and suppliers. AT&T and Microsoft have been using the facility to advance automotive connectivity. The facility is also leading an industry study on truck platooning and researching how autonomous driving technology may affect the nation’s workforce. It’s unclear whether the investors were unhappy with the former ACM

leadership or wanted to revise its goals. ACM’s board believes Noblett can take the test site from its startup-like operation to a mature organization that can deliver on its stated promise of becoming the premier autonomous vehicle validation site in the U.S. “The interest from industry and demand for greater programming at ACM hasn’t slowed since the doors opened in December 2017,” Steudle, who also retired as the director of MDOT in October, said in a press release. “As ACM moves into this new phase, I am confident Michael is the right leader to ensure forward movement and growth in the years to come.” Noblett joins Mark Chaput, who was recently promoted to COO from vice president of operations and construction, and Jeff Rupp, who joined the organization in May 2018 as chief technical officer and chief safety officer. Noblett joins the ACM team from Intel, where he served as the global segment lead of automotive industry sales. Before that, he served as a solutions manager for IBM’s North American internet of things division. He also spent several years as an engineering manager at General Motors Co. He earned a bachelor’s degree from Wayne State University. Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 5 , 2 0 1 9

Hygieia gets FDA approval for mobile app for diabetes care By Jay Greene jgreene@crain.com

Hygieia Inc., a medical device company based in Livonia, has won approval from the U.S. Food and Drug Administration for a mobile app for its d-Nav insulin monitoring system that patients can use to treat Type 2 diabetes. Last summer, Hygieia contracted with Blue Cross Blue Shield of Michigan to offer its d-Nav insulin monitoring system for Blue Cross PPO members and Blue Care Network HMO members. More than 30 million people in the U.S. have diabetes, according to the U.S. Centers for Disease Control and Prevention. The vast majority of them have Type 2 diabetes, where the body resists the effects of insulin it produces, or doesn’t produce enough. The FDA 510(k) approval for the d-Nav insulin-management app is the first in the nation that allows people with any form of diabetes to measure individual doses, get recommendations and connect to any glucose meter that shares data with the cloud, said Eran Bashan, Hygieia’s CEO and co-founder. “This FDA clearance is an important milestone in our mission to improve and simplify insulin management by making the d-Nav Service as convenient, simple and accessible as possible for patients and physicians who could benefit from it,” said Bashan in a statement. “Insulin therapy is critical to the health of more than 8 million people in the United States, but it is often ineffective, largely because it requires continual, personalized adjustment that is not practical for physicians and not manageable for patients. The d-Nav Service, including the user-friendly phone app, makes insulin therapy more effective, less time intensive and less costly for everyone involved.” Hygieia’s d-Nav insulin guidance service combines smart cloud-based technology and a small team of health care professionals to support primary care physicians and help people with diabetes achieve improved health through better sugar

knagl@crain.com

Gov. Gretchen Whitmer and Detroit Mayor Mike Duggan have been added to the list of speakers at the Detroit Regional Chamber’s Detroit Policy Conference next week. Whitmer is scheduled to deliver a keynote address, while Duggan will join a panel talk on the 2020 census moderated by Sandy Baruah, chamber president and CEO, according to the agenda on the chamber’s website. Themed “Detroit 2030: A Vision for the Future,” the two government leaders will discuss plans to take the city and the state forward. They join a lineup of business executives and other dignitaries set to attend the conference next Thursday at MotorCity Casino Hotel’s Sound Board.

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The d-Nav insulin testing device sends data to the cloud, where users can access it on a mobile app.

Need to know

Hygieia’s d-Nav insulin management system received FDA approval for mobile app 

App advises patients on correct insulin dosage amounts, lowering costs 

 Blue Cross PPO and HMO members have been testing d-Nav under three-year contract that began in 2018

control. The d-Nav system, which is about the size of a cellphone, uses cloudbased software to analyze blood sugar levels, or HbA1c. With the help of health care professionals and primary care doctors, it recommends to patients how much dosage they should give themselves based on body chemistry. The d-Nav Service has been in use for more than six years in Northern Ireland. It is available at no cost and with no co-pays to Blue Cross members with Type 2 diabetes in Southeast Michigan. Bashan said Blue Cross and Hygieia are discussing a plan to make d-Nav available to other groups of patients and regions. Last year, Hygieia conducted a pilot study to test d-Nav with about 200

Blue Cross diabetic patients, and the results showed great clinical improvement and lower costs. Savings averaged $6,000 per patient per year. In addition, 97 percent of patients also reduced their blood sugar, or HbA1c, glucose levels to under 9 percent. The average age of the study group was 60 and they had been on insulin an average seven years and had an HbA1c level above 7 percent. The normal blood glucose level for non-diabetics should be between 3.9 and 5.5 percent. Bashan said the company has no updated data on the additional Blue Cross patients enrolled in the program. The d-Nav phone app used in the pilot was limited in scope, pending FDA approval. The new FDA-approved technology has greater functionality that works with all types of insulin regimens and connects with any cloud-connected glucose meter, Bashan said Hygieia has said the use of the d-Nav service could save up to $100 million in pharmacy and other health care costs for diabetic patients in Michigan. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

Whitmer, Duggan join speaker list for chamber’s Detroit Policy Conference By Kurt Nagl

Need to know

Whitmer to deliver keynote, Duggan to participate in panel 

 Other speakers include Lt. Gov. Gilchrist, Dan Gilbert  Conference scheduled for Thursday at MotorCity SoundBoard

Mike Duggan: Detroit mayor joins list of speakers.

Gretchen Whitmer: Michigan governor to speak.

Quicken Loans founder and Chairman Dan Gilbert and Ignition Media Group CEO Dennis Archer Jr., the conference’s chair, are scheduled for a one-on-one talk on stage. Other speakers include Lt. Gov. Garlin Gilchrist II; Barry Matherly, CEO of the new Detroit Regional Partnership; economist Michael Porter; Katherine Gehl, former CEO of Milwaukee-based Gehl Foods; and Toronto-based author and placemaking expert Jay Pitter. A full lineup, schedule and registration can be found on the event’s website. Cost to attend is $209 for chamber members and $285 for nonmembers. A limited number of partial scholarships are available for select entrepreneurs and future leaders, according to the site.

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Detroit’s vision for new Jefferson Chalmers investment includes grocery store, affordable housing By Annalise Frank afrank@crain.com

The city of Detroit’s neighborhood development plans are pushing forward with visions for a new grocery store and renovated elementary school building in the Jefferson Chalmers area. The Jefferson Chalmers Neighborhood Framework Plan is part of the Strategic Neighborhood Fund, for which the city is halfway to its goal of raising $100 million. It’s a strategy by Mayor Mike Duggan’s administration to improve commercial corridors and attract investors outside downtown. The city said it has undergone multiple rounds of community engagement since it kicked off its neighborhood planning study for Jefferson Chalmers last March. It received 352 questionnaire responses; held focus groups, office hours and town hall meetings; and distributed fliers. Questionnaire respondents most often said they wanted a vibrant business district, parks improved, more safety, stable residential areas and blight removed, according to the city’s framework plan documents. The planning and development department announced the changes it’s targeting for the area on Detroit’s east side during a community engagement event at a Salvation Army on Saturday, project manager Allen Penniman said. “The energy of the room was extremely positive and optimistic to see these projects beginning to come to fruition,” said Penniman, adding that around 125 people attended. Tim Carroll, a spokesman for the

Need to know

JJCity announced plan for neighborhood

Saturday at community meeting

JJNew build on vacant lot on East Jefferson would include a grocery store and local shops JJPart of $100 million Strategic Neighborhood Fund 2.0

city, said he thinks there are “always some concerns and a kind of anxiety about development, sometimes,” but that “generally the room was really positive.” Here’s what the city plans, according to its framework document, with new tenants, a new grocery store and 82-136 residential units in the pipeline (on top of 508 existing units): JJNew build on a vacant lot at East Jefferson and Piper Street for a grocery store, local shops and residential. It would have around 68 “affordable” rental units, with a two-bedroom going for $958 a month, and 40,000 square feet of retail space. Penniman doesn’t yet know how much space the grocery store will take up, but he said residents want to see a full-service, affordable grocery tenant that sells fresh produce. A request for developer proposals is expected to go out in spring for the project. It’s the first phase of what could be a bigger development on a lot totaling 13 acres. JJRedevelopment of the former Guyton Elementary School for groundfloor community space and 40 rental units (again, “affordable” — $958 a month for a two-bedroom). The city says Detroit Public Schools Commu-

nity District’s outstanding $500 million in maintenance needs, declining enrollment and nearby Carstens Elementary-Middle School mean it’s not worth reopening Guyton as a school. A request for proposals is expected in spring. JJRenovation of the vacant Kresge Building will create offices for project lead Jefferson East Inc., a neighborhood redevelopment organization, and a restaurant called Mi Alma Kitchen, a $50,000 Motor City Match grant winner. JJRenovation of the distinctly ornate and also vacant Vanity Ballroom, with tenants yet to be decided. Jefferson East is also the project lead on this. JJSeeking developers to buy, rehabilitate and sell 10 vacant single-family homes and duplexes for around 16 affordable housing units. A spring RFP is expected. JJInvesting in park improvements and amenities, including for Alfred Brush Ford Park. JJStreetscape improvements for a more walkable shopping experience. JJImproving bus service and fixing issues with underground utilities. City representatives said cost estimates weren’t available for projects that require developers. The amount of direct city funding to be used for streetscapes and parks wasn’t immediately available, either. Money for the Jefferson Chalmers vision will come from the Strategic Neighborhood Fund, road bonds being used for commercial corridor improvements, the private developers who are eventually chosen, and federal and state incentives where applica-

ble. In abil rate ing a Tha Cou aver hou the

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 5 , 2 0 1 9

The city of Detroit unveiled plans for a new mixed-use building at East Jefferson Avenue and Piper Street in the Jefferson Chalmers neighborhood. A city of Detroit map (below) shows planned and underway residential and commercial developments and rehab efforts in the Jefferson Chalmers neighborhood on the east side. W ARCHITECTURE

residential units and more than half designated affordable. It’s expected to finish by fall. Jefferson Chalmers, known for historic buildings along Jefferson and waterfront areas, sits between Grosse Pointe Park and Detroit’s Marina District. It’s bounded to the north by East Jefferson and to the south by the riverfront and Alfred Brush Ford Park. As of December, the city was halfway to its goal of raising $100 million for neighborhood redevelopment through the fund. Duggan set a goal of raising the remaining $50 million by the end of 2019. Seven companies kicked in $5 million each for a total of $35 million toward the Strategic Neighborhood Fund, Duggan announced in December: American Axle & Manufacturing, Blue Cross Blue Shield of Michigan, Chemical Bank, Fifth Third Bank, Flagstar Bank, Huntington Bank and the Penske Corp. The Kresge Foundation previously donated $15 million. The SNF’s second round targets seven regions in Detroit:  Jefferson Chalmers — projects just announced  Grand River Northwest — planning complete and project announcements pending  Russell Woods/Nardin Park — planning started in 2018  Banglatown/Campau — planning started in 2018  Warrendale/Cody-Rouge — planning started in 2018  Gratiot/Seven Mile — planning starting in 2019  East Warren/Cadieux/East English Village — planning starting in 2019 It expands on a first $42 million SNF focused on Islandview/Greater Villages, Vernor/Southwest and Livernois-McNichols. Annalise Frank: (313) 446-0416 Twitter: @annalise_frank

We are only as strong as those who lead us. Thankfully, that’s you. Congratulations to Bill Ford, Jr., and all the 2018 newsmakers, for your leadership and dedication. We appreciate all your efforts, and keep making Michigan stronger.

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ble. In the realm of apartment affordability: The city is targeting rental rates affordable for households making around $28,400-$30,000 annually. That’s 50-60 percent of the Wayne County annual median income. The average for Jefferson Chalmers households is $29,750, according to the city.

Recent activity in Jefferson Chalmers includes the opening of a restaurant and city grant awardee, Norma G’s Caribbean Cuisine on East Jefferson Avenue. Also, Detroit-based Shelborne Development Corp. and Jefferson East Inc. are renovating two buildings on Marlborough Street — the Marlborough and IDAO buildings — in a $5.4 million project with 23

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Report: Growing African-American middle class vital for city’s economy

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Growing the middle class in Detroit, and particularly the African-American middle class, is key to equitable and prosperous growth, according to a new study from Detroit Future City. To restore a demographic that once defined the city and bring its share of the middle-class population on par with the regional and national averages of 38 percent, Detroit Future City has set a goal to add 33,800 middle-class households to the city. To ensure that Detroit — a city that is predominantly African-American — is growing equitably would require adding 27,700 Afric a n -A m e r i c a n middle-class households, Detroit Future City said in a new report, “Growing Detroit’s Afric a n -A m e r i c a n Anika Goss: Look Middle Class.” “If we want to at balanced build a stronger approach. economy for Detroit, we have to think about the middle class,” the main hub of a healthy tax base, Executive Director Anika Goss said. The report is funded by the Knight Foundation Fund of the Community Foundation for Southeast Michigan, and it follows a 2017 Detroit Future City report, “139 Square Miles,” which noted that 70 percent of Detroiters have household incomes of less than $50,000. That prompted this deep dive into the city’s middle class. In the new report, DFC defines the middle class as those with annual household income between $46,100 to $115,300 — under this definition, 64,700 of Detroit's 258,000 households, or about 25 percent, are middle class. Of those middle-class households, 51,400 are African-American. “To bring Detroit in line with the region and with the U.S., we have to really look at a much more balanced approach to growing our own middle class, attracting middle-class families and maintaining the middle class that are already here,” Goss said. The report outlines recommendations that Detroit Future City intends to use to call on policy-makers and investors to set strategies to meet those goals. That includes increased educational attainment and recruiting African-Americans in specific professions to help close the economic equity gap. It’s not just about attracting new middle-class residents, but retaining the city’s current residents and helping lower-income populations move up the economic continuum, Goss said. “If we’re actually going to take intentional steps to use the opportunity we have right now, then we can actually create a city where African Americans and everyone else has an opportunity to grow economically,” Goss said. “We believe the people we’re calling near-middle class ... if we actually create economic opportunities for people in that income bracket, they

To ensure that Detroit is growing equitably would require adding 27,700 African-American middle-class households, Detroit Future City said in a new report, “Growing Detroit’s African-American Middle Class.”

Need to know

Detroit Future City report points to growth of African-American middle class in Detroit as key to prosperity, equitable growth 

 Detroit’s middle class lags regional, national averages  Retaining current residents, helping lower-income people improve economic standing also vital

are much more likely to move up economically, much faster.” Since the turn of the 21st century, middle-class African-Americans have been the largest demographic to move out of the city to nearby suburbs, according to the Detroit Future City report. “When you look at other cities that have grown by traditional market forces, communities of color ... are often displaced through gentrification or left behind in the lower middle class, unable to take advantage of new investment opportunities,” Goss said. That’s something that has happened on the coasts and in other big cities including Chicago, Pittsburgh and Atlanta, she said. “Since market forces have taken place and they’ve begun to grow, there are fewer opportunities for lower-income communities of colors to take advantage of economic opportunities to improve their own economic condition, to move from lower-income to middle class or upper middle class,” Goss said. There’s a need to guard against gentrification in Detroit. But it’s more than that, she said. “It’s really about how to ensure pathways to ensure everyone is participating in the growth. ... Detroit has a unique opportunity to do that because we are just at the beginning of our growth trajectory. “We’re better positioned than any other place in the country to do this right, to grow inclusively.” Middle-class families or households comprise a majority in just 4 percent or 12 of the city’s 297 census tracts, giving Detroit among the lowest share of total middle-class neighborhoods among the 50 largest cities in the U.S., according to the report. Those Detroit neighborhoods include parts of: Grandmont Rosedale, the University District, Green Acres, Sherwood Forest, Palmer Woods, Boston Edison, East English Village, Regent Park, Indian Village and the downtown area. “As we look at how quickly Detroit is growing, it’s going to be really im-

portant to pay attention to how Detroiters actually can grow and benefit,” Goss said. “It’s not just an attraction strategy ... we have to ... actually think about what it requires for Detroit to grow and benefit and thrive,” Goss said. That means focusing on efforts such as increased access to two-year certificates and four-year degrees — often thought of as the doorway to a middle-class life — and efforts to bring the income degree holders in Detroit command on par with their peers in the suburbs, she said. It’s also about looking at efforts to retain the city’s current African-American middle class and bring back households in that demographic who have moved out of the city since the turn of the decade. Many have personal and emotional ties to the city that could bring them back, Goss said. But what would it take to bring them back? Detroit Future City talked with African-American residents in Detroit and in the suburbs. Their answers weren’t surprising, Goss said. They are looking for quality, walkable neighborhoods with good schools, a balance of homeowners to renters and a sense of community. That insight drove a neighborhood development approach in the “Growing Detroit’s African-American Middle Class” report, Goss said. It led Detroit Future City to question how far away the city is from actually making those places attractive to middle-class families, she said. While just 12 of the city’s census tracts are middle-class, there are 91 other census tracts where 30-50 percent of the households are middleor upper-middle class. Those “nearmiddle-class” neighborhoods could be areas of focus for development and other initiatives geared to retaining residents there and helping current residents on a path to the middle class, according to the report. “The reason we really felt like that was equally important was because the whole point of this report isn’t turning our backs away from people who are living low-income or living in poverty,” Goss said. “But the conversation really has to be about opportunity. … about pathways, so that when you’re looking at the income spectrum, if you’re on that other, lower-income side of middle class, you feel like there’s a place for you along the trajectory of income in Detroit.” Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 5 , 2 0 1 9

Q&A

Marc Norman: Detroit can learn from, teach other cities By Kirk Pinho kpinho@crain.com

Marc Norman, an associate professor of practice in urban and regional planning in the University of Michigan A. Alfred Taubman College of Architecture and Urban Planning, in October was named to the Federal Reserve Board’s Community Advisory Council for a Marc Norman: Issues manifest in three-year term that began this different ways. year. Now Norman, 52, has organized a conference, “Building Better Futures: Innovations in Equitable Development,” that was held Friday featuring key Detroit stakeholders and prominent developers to talk about the concept of equitable development and how it can be promoted. Norman is a graduate of the University of California-Berkeley and the University of California-Los Angeles. He has worked for the Los Angeles Planning Department, housing nonprofits, and in leadership positions with Lehman Bros., Duvernay + Brooks LLC and Deutsche Bank. He spoke with Crain’s reporter Kirk Pinho on Thursday before the daylong conference in Ann Arbor.

different ways. For example, the Bay Area has a really pernicious and intractable homelessness crisis and a real struggle with affordability. Detroit has a real struggle with affordability but it’s not necessarily housing values but incomes or access, or issues around mobility. What are some policy prescriptions that can address this?

I think Detroit still, even with investment in the last 5-10 years that’s been pretty profound, is incredibly affordable in comparison to other cities. The real issue is if people’s incomes

aren’t going up or if people’s access to jobs aren’t going up, you can build all the affordable housing in the world and it won’t address the problem. That’s a little over the top to say, but if people’s incomes are less than the cost to build the unit, that’s always going to put you behind. If every unit has to be subsidized, you’re going to have a very hard time solving the problem of affordability for people, so it has to be a multipronged strategy of reducing the cost of housing but increasing the incomes of people you are trying to serve.

What are the things you hope people realize from the conference?

Half of the day is devoted to people from a range of industries that are working in Detroit. What I’m excited about is that they’ll be in dialogue from people around the country working on these issues. The takeaway is where is the innovation happening and how can it be replicated in other places. Detroit is innovating in a lot of interesting ways, and for a city like New York or San Francisco or Washington, D.C., Detroit might be able to model a way before the investment overwhelms

neighborhoods or people that don’t currently have the ability to benefit from investment to model a kind of equitable outcome for that investment coming in. I think Detroit has seen what’s happening in other cities and can learn from those cities to create better or more equitable outcomes as more investment comes into Detroit — more opportunities for wealth creation, opportunities for higher paying jobs. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

Crain’s Detroit Business: For our audience, what is equitable development? Marc Norman: For me, it is develop-

ment that takes into account sort of historic moments where people were excluded either from ownership or opportunity. It’s development that understands the kind of historical patterns that excluded people from wealth opportunity and housing options and incorporates that history when thinking of current development.

How are we seeing that exclusion manifest itself today from your perspective?

This applies to Detroit, but not exclusively, in the racial wealth gap. I think at the minimum, African-American families have about 10 times less wealth than others. There’s historic legacy discrimination in lending in housing. It’s about opportunity, as well. The choices that were made around subsidies or infrastructure, and how those either harmed or benefited people inequitably. What can be done to address this?

I don’t have the answer. I wish I did. One of the reasons for the conference is to bring many different people together from all sides of the development ecosystem to have a conversation about how they are tackling the issue — in terms of how developers are working with cities and nonprofits, how policymakers are rethinking their systems of regulations and rules, how journalists are writing about neighborhoods and how they highlight innovation or change in neighborhoods. This is obviously not just a Detroit issue, but one that exists elsewhere.

I think what’s interesting about this topic is every city has the same issues, but they manifest themselves in

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Samsung signs lease for $62.7M battery plant, HQ in Auburn Hills By Anisa Jibrell

ajibrell@crain.com

Samsung is inching closer to the move-in date for its new $62.7 million automotive battery plant in Auburn Hills. The company is expected to move into the 137,560-square-foot facility by late spring or early summer, said Peter Kepic, senior vice president at Colliers International Detroit, which represents the building’s landlord, Joel Nosanchuk. The new building will serve as a battery pack plant and headquarters of auto battery operations for Samsung SDI America Inc., the U.S. subsidiary of Samsung’s storage battery manufacturing company, as well as a research and development tech center. The facility is the first of its kind in the U.S., Samsung said. Kepic declined to provide leasing terms of the center at 50 Continental Drive. Office space will take up around 15,000-20,000 square feet, and the rest will serve as shop and R&D space, Kepic said. The company has hired Magnum Industrial Building Co. of Bloomfield Hills and Birmingham-based Smith & Schurman Associates Inc. to design and build the new plant, according to Kepic. As part of the project, Samsung plans to create 461 jobs at the Au-

BorgWarner creates new company after acquiring Oregon-based car shops Need to know

By Kurt Nagl knagl@crain.com

Samsung’s new facitlity in Auburn Hills will serve as a battery pack plant and headquarters of auto battery operations for Samsung SDI America Inc., the U.S. subsidiary of Samsung’s storage battery manufacturing company.

Need to know

Company aims to move in by late spring or early summer 

 Project to house battery pack plant, HQ for Samsung SDI America Inc., R&D tech center  Previously announced plan to create 461 jobs

burn Hills facility by the end of 2024, including production line operators, factory managers and engineers, Crain’s reported in November.

The project garnered support from the Michigan Strategic Fund, which greenlit a $10 million Michigan Business Development Program grant. The company also landed a property tax abatement from the city of Auburn Hills and a 6-mill State Education Tax abatement. The technology conglomerate recorded approximately $217.1 billion in revenue for 2018. A Samsung spokesperson did not respond to a request for comment. Anisa Jibrell: (313) 446-0495 Twitter: @anisajibrell

Auburn Hills-based BorgWarner Inc. has acquired two Oregon-based specialty car shops and formed a new LLC focused on developing drivetrain technology for electric vehicles. BorgWarner (NYSE: BWA) acquired the assets of Rinehart Motion Systems LLC and AM Racing Inc., merged the operations of each and created Cascadia Motion LLC, said Kathy Graham, spokeswoman for BorgWarner. The newly formed company will be headquartered in the Portland, Ore., area. Brock Fraser, who had been BorgWarner’s executive director of innovations and investments, is general manager of the operation. He reports to Hakan Yilmaz, chief technology officer at BorgWarner. “Rinehart Motion Systems and AM Racing are two established companies in the specialty electric and hybrid propulsion sector,” Yilmaz said in a news release. “Bringing them together as Cascadia Motion will allow us to offer design, development and production of full electric and hybrid propulsion systems for niche and low-volume manufacturing applications.” Terms of the deals, which both closed last month, were not disclosed. The company also didn’t say

 Auburn Hills-based company creates Cascadia Motion LLC  New company to be based in Portland area  Cascadia will have "startup" atmosphere focused on small production

how many employees work at each company, but the number is small and there are plans to combine them under one roof, Graham said. “The key part for us was the fact that it enables us to do smaller prototype and development work rather than mass production runs,” she said. AM Racing, a privately held company founded in 2011, designs and manufactures racing powertrains, including electric motors and lithium battery packs. Founded in 2002, the privately held Rinehart Motion Systems supplies propulsion inverters and controls for electric and hybrid vehicles. Cascadia Motion aims to “leverage the proficiencies” of each company to create a “startup atmosphere designed to incubate new technologies,” the release said. Kurt Nagl: (313) 446-0337 Twitter: @kurt_nagl

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C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 5 , 2 0 1 9

CALENDAR

SPOTLIGHT

TUESDAY, FEB. 26

UPCOMING EVENTS

Breakfast of Champions: Leadership Oakland Hosts a Multi-generational Discussion. 7:30-9 a.m. An interactive session with Leadership Oakland alumni for leaders of all ages. Panelists: Napoleon Harrington, owner/therapist, Ambassador Counseling & Resource Group; Kayla Roney Smith, executive director, Hazel Park Promise Zone and College Access Network, and Gary Wolf, director of Branch Integration, Flagstar Bank. MSU Management Education Center, Troy. $32 members; $36 nonmembers. Contact: Susan Hollady, email: shollady@ leadershipoakland.com; phone: (248) 495-4781; website: leadershipoakland.com/breakfast-of-champions

16th Annual APACC East West Business Connection. 9:30 a.m.3:30 p.m. March 6. Asian Pacific American Chamber of Commerce. Networking, exhibits and buyer showcase. Laurel Manor, Livonia. $80 member; $105 nonmember. Registration closing date Feb. 20. Contact: Leonie Teichman, email: leonie@ apacc.net

The Role of Business: Creating Value in Society. 11:30 a.m.-1:30 p.m. Detroit Economic Club. Jim Hannan, executive vice president and CEO, Koch Enterprises, will discuss Koch Industries’ perspective on the role of business — to create value in society. Westin Book Cadillac. $45 members, $55 guests of members. Website: econclub.org

THURSDAY, FEB. 28 Detroit 2030: A Vision for the Future. 7:30 a.m.-4 p.m. Detroit Regional Chamber. Leaders from business, government and civic organizations will offer their vision for Detroit 2030 and discuss removing barriers to economic prosperity. Author Jay Pitter is the keynote speaker, and Dennis Archer Jr. will chair the event. MotorCity Casino Hotel Sound Board. $159 members; $235 nonmembers. Contact: Jordan Yagiela, phone: (313) 596-0384; email: jyagiela@detroitchamber.com

Economics of a Health Crisis: How Business Must Lead In the Battle Against Opioids. 11:30 a.m.-1:30 p.m. March 7. Detroit Economic Club. Chris Swift, chairman and CEO, The Hartford, will discuss actions that companies of all sizes can take to help reduce the impact of opioids in the workplace and steps that policymakers can take to support employers in fighting the epidemic. Cobo Center. $45 members, $55 guests of members. Website: econclub.org International Women’s Day Lunch. 11 a.m.-1:30 p.m. March 11. Detroit Regional Chamber. A panel of women executives will speak to business leaders on how they can engage in inclusive practices to foster diversity of thought and encourage all employees to have a voice. Speakers include: Ana Almeida, vice president, customer business unit, Faurecia Automotive Seating; Najah Bazzy, executive director and founder, Zaman International; Adrienne Bennett, president and CEO, Benkari Mechanical LLC; Leigh Ann Hello, vice president, The Cabinet Studio; and Moderator Christy McDonald, anchor, Detroit Public Television. Detroit Golf Club. $45 members; $65 nonmembers. Contact: Andrea Rayburn, phone: (313) 5960340; email: arayburn@detroitchamber.com

DMC’s Rehabilitation Institute of Michigan names permanent CEO

The Detroit Medical Center’s injury and trauma rehabilitation institute has a new permanent leader. Patty Jobbitt, who has served as interim CEO for the Rehabilitation Institute of Michigan since her predecessor William Restum retired on Aug. 31, will take Jobbitt on the title longterm, DMC announced Monday in a news release. The center provides physical medicine and rehab services for sports or other injuries, as well as strokes, brain injuries and other traumas. Its main campus is in Detroit, but it also operates more than 30 outpatient clinics in Southeast Michigan.

Jobbitt rose from a job as a staff physical therapist there in 1983 to supervisor, administrative director, COO and then CEO, the release said.

OU Beaumont medical school names interim dean

The Oakland University William Beaumont School of Medicine has named Duane Mezwa, M.D., as interim dean after founding Dean Robert Folberg, M.D., stepped down after a decade in the job. The appointment is effective immediately, Mezwa Beaumont Health said in a news release. Oakland University Senior Vice President for Academic Affairs and Provost James Lentini made the announcement last

week. “Duane understands OUWB on many levels and has already played an integral role in the success of the school from its formation until today,” Lentini said in the release. “As we discussed the future leadership of the medical school, he stood out as a natural fit to lead us as interim dean while a national search is conducted for a permanent dean.” Mezwa has been with Beaumont Health and its predecessors for 40 years, most recently serving as Health System chair and physician executive for diagnostic radiology and molecular imaging. He also is chair of the Department of Diagnostic Radiology and Molecular Imaging for the medical school. Among other roles, Mezwa is a past president of the Association of Program Directors in Radiology and the Michigan Radiological Society. Folberg announced he would be stepping down last month.

DEALS & DETAILS MERGERS & ACQUISITIONS J Mno-Bmadsen, Dowagiac, the non-gaming investment arm of the Pokagon Band of Pottawatomi Indians, acquired Enmark Tool & Gage, Fraser, designer and manufacturer of parts and components, as part of its manufacturing portfolio known as Mno-DREK. Websites: Mno-Bmadsen.com, EnmarkTool.com

CONTRACTS J

Guardhat Inc., Detroit, an indus-

trial safety technology company is collaborating with IBM Watson Internet of Things, Armonk, N.Y., a computer hardware company, to integrate its KYRA IoT platform with IBM Maximo Worker Insights to provide situational awareness using smart personal protection equipment. Websites: guardhat.com, ibm.com/ internet-of-things

EXPANSIONS J Nextaff, Louisville, Ky., a staffing agency, has opened its first metro Detroit location at 17177 Laurel Park

Drive, Suite 202, Livonia. Website: nextaff.com J Tint World Automotive Styling Centers, Boca Raton, Fla., an auto accessory and window tinting franchise, has opened its first Michigan store at 28780 Plymouth Road, Livonia. Website: tintworld.com J Ross Mortgage Corp., Troy, a residential mortgage lender, has opened an office in State College, Pa. Websites: rossmortgage.com, statecollege.rossmortgage.com Submit Deals & Details items to cdbdepartments@crain.com

Advertising Section

PEOPLE ON THE MOVE

To place your listing, visit www.crainsdetroit.com/people-on-the-move or for more information, please call Debora Stein at (917) 226-5470 or email dstein@crain.com. FINANCIAL SERVICES

HOSPITALITY & TOURISM

Fishbeck, Thompson, Carr & Huber, Inc.

Chemical Bank

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Daniel Walker has joined Chemical Bank as Chief Audit Executive. In his role as Chief Audit Executive, Walker will be responsible for leading the audit department in all of its functions, including leading the Bank’s SarbanesOxley (SOX) program for internal control over financial reporting. He will also lead the development and implementation of a risk-based audit plan for evaluating and assessing the operational, financial and compliance controls and processes of the Bank.

Yakima Brookins, MBA, CFE, is the first African American woman to become VP, Internal Audit of Regional Operations for MGM Resorts International (NYSE:MGM). As VP, she oversees 7 jurisdictions across the country, leading several audit teams in the planning, organizing, and monitoring of internal audit operations for MGM. A Detroit-native, she began her tenure at MGM with the company’s local hotel-casino in 2006 and relocated to Oxon Hill, Maryland in 2016 to head the National Harbor expansion.

Fishbeck, Thompson, Carr & Huber, Inc. (FTCH) is pleased to announce the appointment of Jeff Schumaker, PE to the role of president and CEO. Schumaker joined FTCH in November of 1996 as a structural engineer. In 2016, he was promoted to principal and senior vice president. Schumaker begins his role in a period of growth for the firm, as it recently opened its 11th office in Ann Arbor, Mich. and is making plans to open another office in Indiana later this year.

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For more information or questions regarding advertising in this section, please call Debora Stein at (917) 226-5470 or email: dstein@crain.com

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // F E B R U A R Y 2 5 , 2 0 1 9

SPECIAL REPORT: CRAINâ&#x20AC;&#x2122;S BIGGEST DEALS OF 2018

Advertising Section

CLASSIFIEDS

To place your listing, contact Kate Rozek at 313-446-0485 or email krozek@crain.com www.crainsdetroit.com/classifieds

JOB FRONT

POSITIONS AVAILABLE

Engineering

GETTY IMAGES/ISTOCKPHOTO

DEALS FROM PAGE 8

Only nine of the top 50 deals were strictly automotive in 2018, down from 13 in 2017. Strong brands also played a major role in this yearâ&#x20AC;&#x2122;s list, as many acquisitions will remain standalone units of their acquirer. French IT consulting and outsourcing firm Atos SE kept using the Syntel name after its acquisition, simply changing it to Atos Syntel. Duo Security will remain as a division under Ciscoâ&#x20AC;&#x2122;s networking and security business. Winchester Interconnect remains as a standalone business under Troy-based Aptivâ&#x20AC;&#x2122;s signal and power solutions segment. The list goes on. â&#x20AC;&#x153;Finding a strong buyer with synergies is key for a seller that wants to maintain its brand,â&#x20AC;? said Matt Zwack, managing director of Birmingham-based M&A advisory firm Angle Advisors LLC. â&#x20AC;&#x153;And a unique brand often allows companies to bolster their own name.â&#x20AC;? The strong economy, the corporate tax cuts and the hoards of cash companies have been sitting on led to a strong year for M&A deals, Zwack said. A December 2017 tax-code overhaul led by the Trump administration lowered the corporate tax rate to 21 percent from 35 percent, leaving already profitable companies with more room to make deals in an already strong economy.

â&#x20AC;&#x153;Finding a strong buyer with synergies is key for a seller that wants to maintain its brand.â&#x20AC;? Matt Zwack

â&#x20AC;&#x153;We saw a lot of cash coming off the bench,â&#x20AC;? Zwack said. â&#x20AC;&#x153;Everyone is performing well and they needed to deploy capital and they did so aggressively â&#x20AC;&#x201D; in many cases, outbidding financial buyers.â&#x20AC;? But challenges remain, and consolidation during the good times can make the bad times less painful. The boating industry was decimated in the Great Recession and manufacturers have been seeking ways to gobble up market share, which led Malibu Boats LLC to acquire Pursuit Boats from Holland-based S2 Yachts Inc. in a $100 million deal. Angle Advisors represented S2 on the deal. â&#x20AC;&#x153;That deal was very strategic and all about the brand,â&#x20AC;? Zwack said. â&#x20AC;&#x153;Boating is a bit of an out-of-favor industry, so ... (the deal) allows Malibu to expand their capabilities and take a better position to expand their market.â&#x20AC;? Malibuâ&#x20AC;&#x2122;s acquisition strategy has propelled strong growth with sales increasing to $497 million in 2018 from $282 million in 2017.

REAL ESTATE

Intel Americas, Inc. has opening(s) in Novi, MI. Combination ed/exp accepted in some positions in lieu of degree. To apply, email resume to Novi_jobs@intel.com and reference the job # below. Apply to each job # of interest. Applications will be accepted through 4/8/19. EOE

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C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 5 , 2 0 1 9

PALLET FROM PAGE 1

But that’s only part of what Owens says is Lightning’s business strategy to disrupt the century-old pallet industry. His better mousetrap is a small battery-operated Bluetooth-enabled sensor embedded in the pallet and actively transmits data that shippers crave for logistical quality control: Temperature, humidity and vibration, along with location, from a pallet that lasts much longer than traditional wood. That means, Owen said, clients shipping fragile cargo such as eggs or televisions on his pallets can know in real time not only where their products are on the road but can also monitor the conditions that can potentially ruin the shipment. Cargo can be re-routed to avoid bad roads, or tdrivers can be told to adjust the conditions in their climate-controlled trailers, he said. Lightning’s company literature claims that $35 billion worth of food is lost annually from temperature issues or impact damage during shipping. That’s why businesses seek safer, more fuel-efficient ways to move their products. They’ll save money because they’ll lose less product, and their shipping costs will be reduced with more efficient trips, according to Lightning. Owen, 68, said he has $100 million in pallet orders but declined to name clients because he said they fear retribution from other pallet suppliers. He did say that his customers include big-box retailers, the fast-food industry, and suppliers of produce and meats. “We know we can be profitable, bring higher return to our investment base, and a better solution to our customer base,” Owen said. “You’ve got to be able to take that technology and put it on a product and bring it to market. That’s the downfall of a lot of startups. They don’t have a clear-cut solution to market.” In addition to leasing its smart pallets, Lightning’s business strategy is to generate additional revenue by charging for the logistics data — a software-as-a-service play — and by selling carbon credits it believes it will qualify for via the hard data that documents fuel-efficient logistics made possible through its pallets. Owen estimates that each of his factories will produce pallets that will generate about $300 million worth of annual revenue, and the goal is 10 factories operational in five years. To finance his venture’s launch, Owen said he used some of the $35 million in proceeds from the 2009 sale of his past company, Palm Plastics, based in Morenci, south of Jackson near the Ohio state line. That company made goods ranging from 11 million plastic pallets to laundry baskets for the Martha Stewart retail line. So far, Lightning has raised $55 million from 50-plus investors, Owen said, and that includes money from notable Detroit sports stars such as former Detroit Tigers slugger and current TV broadcaster Gibson and several of the Swedish players on the Detroit Red Wings. Lightning will open a factory in Sweden in 2020, along with manufacturing plants in Nevada and South Carolina over the next couple of years, Owen said. South Africa and Asia are longer-term targets for factories. Owen lured the athletes when he hired outside help to raise money to launch Lightning, which he established in 2015 after paying $1 million for the chemical compound formula that eventually became his pallet coating. Owen said he hired Auburn Hillsbased strategic financial advisory firm Solyco Advisors to raise startup capital,

PHOTOS BY BRANDY BAKER FOR CRAIN’S

A worker moves wood pallets toward the coating operation where massive robotic arms use proprietary technology called “Exobond” to cover and seal them at Lightning Technologies’ facility in Oxford.

Lightning Technologies CEO Jeffrey Owen (left), Detroit Tigers great Kirk Gibson and Grow Michigan LLC cofounder/ board member Henry Brennan chat during a gathering of potential investors at Lightning Technologies coating operations.

including equity and debt financing. Solyco executives said they initially weren’t interested but became sold on the pallet concept after seeing what Lightning was creating. “It was a heavy lift, because it’s a startup,” said Damian Kassab, co-founder and partner at Solyco. “When I came up here and saw what he’d done, and got to see these facilities, I thought, ‘This is incredible.’” He termed what Lightning is doing as a “game changer, the next phase of logistics technology.” In addition to the money raised so far, Solyco got Lightning a credit facility of “hundreds of millions of dollars” from Troy-based Flagstar Bancorp Inc. That money is expected to fund the additional factories, which Owen said will cost $50 million each. Showing investors what Lightning is doing, and showing the orders so far, along with the expected revenue streams, made it easier to convince them to put up money, Kassab said. “The appeal to most investors to any startup is the upside,’” he said. “We think this is going to be a grand slam.” John Garcia, Solyco’s managing director, also raved about Lightning’s immediate earnings potential amid what he sees as a trend of a lot of tech investments that are sizzle without much steak. “This is a Detroit unicorn. There are a lot of donkeys with party hats out there,” he said. Lightning also has attracted interest from the state.

Grow Michigan CEO Patrick O’Keefe said his organization may lend Lightning up to $5 million, the maximum it’s permitted to invest in a company and the most it will have lent yet. Grow Michigan was launched in 2012 through the Michigan Economic Development Corp., Michigan Strategic Fund and 19 banks to offer subordinated debt to small businesses. Its average loan is about $2 million. “It checks a lot of boxes for us. It’s tech-based, it’s manufacturing, it’s based in Michigan, it’s job growth,” O’Keefe said. “The two operating plants that have manufacturing cells have proven the concept. We’re pretty high on what Lightning is trying to do here.” Lightning is an unusual investment for Grow Michigan because the organization is usually brought in by senior lenders later in the process for gap financing, said Henry Brennan, a Grow Michigan co-founder and board member. But because of what they see from the company, they opted to seek to put in their maximum possible investment. “This is a little off the fairway for us, but it’s very impressive what they’ve done operationally and financially.” Brennan said. Gibson, hero of the Detroit Tigers’ 1984 World Series and a noted outdoorsman, invested an undisclosed sum in Lightning because he finds the product fascinating and because he thinks it is better for the environment than the current pallets on the market. He cited the Lightning pallets as being hygienic, lighter, more fuel-efficient,

and made to last. “It’s innovative and somewhat disruptive to a 100-year-old industry. This kind of stuff really interests me,” he said. “It can make a difference. Beyond my investment, beyond the belief that it’s good, there’s a part of me that wants to help the way we ship our food, the ecology. We want to have impact here in a positive fashion. I think it’s cool. I love that it’s in Michigan. I think the product uses are endless.” The current Red Wings players who have put money into Lightning Technologies are Niklas Kronwall, Gustav Nyquist and Johan Franzen. Former Red Wings star Zetterberg also has put money into the company. Total Swedish investment, including the hockey players and others, accounts for $10 million, Owen said. Additionally, Lomas Brown, the former Detroit Lions offensive lineman and now the team’s radio color commentator, works for Lightning as a vice president and director of community relations. To get to this point, Owen had to have a product to bring to market. He was familiar with pallets from his prior company, and in the course of doing advisory work after selling Palm Plastics, he came across the makers of the chemical compound. He said he foresaw its industrial and commercial potential, so he bought it knowing that pallets could be an ideal application. Owen hired German chemical maker BASF and Lapeer-based commercial coatings firm Ultimate Linings to further refine the coating into what’s now the hard, 1-millimeter pallet coating that cures in seconds. The help ironed out kinks in durability in weather and humidity and its adhesiveness. He’s also relied heavily on Roland Heiberger, Lightning’s chief technology officer, to create the manufacturing processes. The result is a commercial shipping pallet that Owen says will last a decade, compared with standard wood pallets that he said have an average lifespan for 11 hauling trips, known as turns. The Brazilian, Russian, Chinese and Canadian wood that forms the interior bones of the pallets comes from sustainable farms with rapid-growth trees, Owen said, and there are no metal fasteners such as nails. He said he couldn’t find American hardwood sources that would allow him to keep costs down. The wood arrives in sea containers at the Orion Township facility, a leased 120,000-square-feet space in a building on Silverbell Road north of the Palace of

Auburn Hills. Inside, there are six German-made computerized wood milling machines — 10 more are on the way at $120,000 each — that turn the boards into the pallet pieces. An $850,000 filtration system sucks up the sawdust and pumps it outside to a contraption that contains it for resale to companies that use it for animal bedding and other uses. Leftover wood scraps are sold for use in cabinetry. More than 80 percent of Lightning’s wood becomes pallets, Owen said. Yet to arrive are the 10 South African-built “pods” (rather than a single line) that will form the assembly system to turn the milled wood into pallets. At least six Lightning-branded tractor trailer trucks will haul the pallets from Orion Township to the finishing facility in Oxford, Owen said. Owen said the machinery will be in place at the Orion Township facility by June and full production underway by the end of summer. The 60,000-square-foot Oxford facility, which also houses the company offices, is where Lightning’s wooden pallets are sprayed with a mixture of two chemicals — in technical terms, a polyurethane-polyurea hybrid material — to form what it calls “Exobond” that cures in seconds and makes the pallets nearly indestructible, flame retardant and impervious to liquids — unlike wood pallets that can absorb stuff and spoil cargo. Or simply break. In the Lightning manufacturing process, excess Exobond spray, in the form of pellets, is captured for reuse. Both manufacturing facilities are remarkably clean. Lightning also is seeking to use its Exobond for automotive use, such as for wiring harnesses, and recreational use like coolers. It said it already has such a licensing deal with a Polish furniture company. About 20,000 Lightning pallets are in circulation now, and once the Oxford-Orion Township operations are at full capacity, it will produce 3.5 million per year. Owen’s planned facilities in Nevada and South Carolina will produce the same number of pallets, as will the Swedish plant. The two U.S. plants are scheduled to open in 2020 and 2021, and European production will begin in the first quarter of 2020, he said. Talks are underway in Asia and South Africa for potential pallet manufacturing operations, Owen said. Laszlo Horvath, a professor at Virginia Tech’s Center For Packaging and Unit Load Design, has been doing third-party load capacity validation on the Lightning pallet to ensure it meets general industry criteria. He’s among the pallet industry’s top experts, and said he doesn’t know of any company marrying specific technologies as Lightning is doing — but the hybrid smart pallet concept is on companies’ radars. “It’s a race on who gets the first one and who gets the better sensor,” he said. Horvath estimated that there are about 36 million full plastic pallets in circulation, and each is about $60 to $80, and more than 540 million new wood pallets are produced annually that cost shippers about $25 each. Costwise, in a per-unit price and how that translates for leasing purposes, Lightning will fill a market price gap between wood and pure plastic, he said. Lightning’s $100 million in pallet orders so far represents six months of production at the first plant, Owen said. Lightning has 60 staffers now and at full production will have about 1,000, Owen said. Each plant will have 120 to 150 employees, he said. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 5 , 2 0 1 9

SPONSORED CONTENT

Chemical Bank has purchased the naming rights for Cobo Center.

COBO FROM PAGE 1

Chemical Bank’s naming rights purchase, which totals $33 million over 20 years, is about three times as much as Huntington Bank paid in 2016 for the 10-year naming rights to downtown Cleveland’s convention center, Crain’s Cleveland Business reported. Bero said he plans to use the annual naming-rights payments to cover the entire cost of administrative overhead and put the remaining money in a reserve account for replacement of capital equipment. “That is a hospitality industry best practice,” Bero said. “It’s particularly seen in the hotel industry — you put away a percentage of your money in a reserve for replacement, and you’re constantly refreshing the hotel. We’re doing the same thing here.” Before the creation of a regional governing board for Cobo Center and its five-year, $320 million renovation and addition that ended in August 2015, the facility lacked any kind of reserve fund for replacing broken furnishings and equipment, Bero said. “A facility as big as this has ongoing capital needs,” said Larry Alexander, chairman of the

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

five-member regional board that governs the convention center. “And this ($1.5 million annually from Chemical Bank) will go a long way to help us plan and fulfill those major capital needs moving forward.” The state’s $5 million subsidy of Cobo Center was part of $9 million that got invested in continuous capital improvements that go beyond the renovation project, Bero said. “It’s still a 1960s building in certain elements,” Bero said. “There’s stuff that’s not sexy. The piping on (the river side) of the building was installed in 1960.” Alexander is hopeful the TCF Bank brand will help draw more conventions and corporate meetings to the facility, thus improving its bottom line and lowering its dependence on the state or city for a subsidy. “Now with Chemical Bank as our partner, and having that brand attached to Cobo Center, it provides an opportunity for us to bring in even more people — more meetings, more conventions, more visitors,” said Alexander, who is also president and CEO of the Detroit Metro Convention & Visitors Bureau. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

RESTAURANT FROM PAGE 3

“We’re trying to create a high level of hospitality, and to me hospitality is from the moment you arrive to the property to the minute you leave the property.” The contemporary menu will take inspiration from DelSignore’s specialty, Italian, and Yagihashi’s in Japanese and French. “Those are the main parts of the menu,” DelSignore said. “Certainly once you open the pantry of the world, many ingredients emerge, and it’ll be a constantly evolving menu.” He declined to estimate menu item prices. Kyle Evans of Detroit-based Kyle Evans Design is creating a simple and elegant space with soft white and wood tones, Evans said. Space renovation led by Birmingham-based Tri-phase Commercial Construction LLC is expected to finish in early April. From there, the opening timeline depends on liquor license approval, DelSignore said. Cafe Via, which held one of Birmingham’s limited bistro licenses to serve alcohol in a small, pedestrian-friendly atmosphere, closed abruptly last March. Building owner and area developer Ted Fuller of Central Park Properties confirmed Pernoi would lease from him but directed further comment to Yagihashi and DelSignore. DelSignore said Fuller approached him about the space, and he brought the idea to Yagihashi. He declined to elaborate on the financial partnership with Yagihashi or how much they are investing in their new venture. Although Tribute closed in 2009, Yagihashi has a presence in the wider Southeast Michigan area. His noodle house Slurping Turtle has locations in Ann Arbor and Chicago. Yagihashi won a coveted James Beard Foundation award in 2003 for Best Chef: Midwest for

ANNALISE FRANK/CRAIN’S DETROIT BUSINESS

Cafe Via at 310 E. Maple Road in downtown Birmingham closed just less than a year ago.

Tribute, which opened in 1996. He left in 2005 to become executive chef at a Wynn hotel restaurant in Las Vegas. His now-closed Takashi restaurant in Chicago earned a Michelin star. He’s also been on the Food Network’s “Top Chef Masters” and “Iron Chef America.” Accolades-winning Tribute is largely seen as having raised the standard for fine dining in metro Detroit. DelSignore’s local reach is wide, as well. He’s been nominated for four James Beard chef awards between 2008 and 2013 for Bacco Ristorante, his flagship in Southfield. He founded Bigalora Wood Fired Cucina in 2010 as Pizzeria Biga in Southfield near Bacco. Now Bigalora is in Ann Arbor, Plymouth, Rochester Hills, Royal Oak, Southfield and Ford Field in Detroit. The Bigalora in Plymouth opened last month. Construction is still underway on a neighboring Arbor Brewing Co. location. The owners behind Bigalora, including DelSignore, bought the Ann Arbor-based craft brewer in 2017, aiming to expand its operations. DelSignore will remain involved in his other ventures as Pernoi moves forward, he said.

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C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 5 , 2 0 1 9

PONYRIDE

since the beginning. That’s when Stephen Nawara’s Beehive Recording Co. took up residence there, gutting the space for a 200-square-foot studio with burnt orange walls and a bit of a leakage problem that he says has been an “endless battle,” but “nothing I couldn’t deal with” and worth it for the affordable community. Nawara may not make the move to Core City, he said, but that was in the works before the sale. He wants windows and more independence so the loud music doesn’t clash with others. “I’ve seen so many people get started there and move on to bigger things,” he said. “I’m really happy they’re continuing to help Detroiters who have been here their whole lives. It’s an organization I am very proud to have been a part of. It’s a strange time for me, as a born-and-raised Detroiter.”

FROM PAGE 3

Several tenants interviewed by Crain’s said Ponyride has been transparent through the process and sought to assist tenants, upholding rent and current leases in “Ponyride 2.0,” as Cooley calls it. “We definitely learned from Ponyride 1.0 and now, moving up, our goal is really to plan out Ponyride 2.0,” he said. “Ponyride as an organization did a lot of great work, but fiscally, we had some bills to pay ... We’re trying to really, fiscally, develop a model that allows us to stick around and use our smarts ... We’d love to expand Ponyride and its philosophies.” Cooley estimated last week that the nonprofit will get nearly $1 million from the sale and he’ll get just a little more than that, personally, after taxes. Parts of the sum will go to paying off Ponyride’s approximately $100,000 in debt — it also owes $160,000 to Cooley — and to bonuses for some past employees. Leadership has budgeted $85,000 for labor and a box truck with a liftgate to help tenants move, Cooley said. They have until April 15 to leave the Corktown building. The date they can occupy the Core City building depends on city permitting, he said, but they have possible solutions in their back pockets if there’s a gap in the timing. “Our goal is we don’t want anyone to be shut down,” he said. “We know it’s not ideal, but it’s also making us sustainable for the future, so sometimes you have to go through a bit of extra work, sadly. “We’ll make it work. We always do.”

Changing conversation

ANNALISE FRANK/CRAIN’S DETROIT BUSINESS

Quirky business and nonprofit incubator Ponyride is moving out of its Corktown building in April after it sold for $3.3 million.

“It’s a price I’m willing to pay to have the below market-rate (rent) and the support of Ponyride,” she said. “Before I moved to Ponyride ... most of my profit was going back into overhead.”

The haul

Caitlyn Pisarski

It won’t be Caitlyn Pisarski’s first time packing up. She’s moved her soap-making business three times before — first out of her own kitchen. Aside from seasonal staff, Motor City Soap Co. is a one-woman team in around 250 square feet of Ponyride. Pisarski mixes oils into soap, slices it into bars and cures them on shelves for four to six weeks. While the soap is hardening, it is sensitive to fingerprints or nicks, and dust contamination. The only hitch is ... if I have soaps on the shelves getting ready to actually sell, that move will be more tricky, but if I plan out my batches accordingly it shouldn’t be an issue,” she said. “It’s certainly a bit of a production to move my studio,” between the industrial metal shelves, soap cutters that weigh around 20-30 pounds, and pails and airtight storage boxes of raw materials such as coconut oil, shea butter, palm oil and olive oil. But the part-time entrepreneur with a day job at Southwest Economic Solutions emphasizes that she’s had ample advance notice. “It’s a price I’m willing to pay to have the below-market-rate (rent) and the support of Ponyride,” she said. “Before I moved to Ponyride ... most of my profit was going back into overhead.” Pisarski has thrived in the shared community and is looking forward to the new connections Core City brings, she said. Cooley said they’ll give tenants the same amount of space or try to give those that are ready more, if there’s room. The nonprofit will honor current leases and rent rates, he and several tenants said.

tives for Girls’ social enterprise that trains women in cut-and-sew work. Ponyride will cover Sew Great’s moving expenses, said Amy Good, CEO of Alternatives for Girls. They’re scheduled to shift over the machines, four large fabric-cutting tables, spools of fabric, 10 containers of tools and other inventory between March 13 and April 15. The new space will be 600 square feet, up from the current 500 without a change in price, Good said. “We knew that the building was for sale, so of course uncertainty is not a good thing. So we’re just really happy at where things landed, that we get to maintain space and even a little more space that’s still really convenient to us, close to our headquarters (on West Grand Boulevard, just north of Michigan Avenue),” Good said. A large Ponyride tenant making the move to Core City, hair product maker Naturalicious, takes up 1,000 square feet and is growing, CEO and founder Gwen Jimmere said. The brand sells in more than 1,000 Sally Beauty stores across the country. It’s in need of more than double its current footprint. More space could allow Jimmere to bring in the rest of her 13-person team, some of whom work remotely. Another tenant, Detroit Public Theatre, will rehearse in Corktown Ponyride for a show that opens March 23, and then will work with Ponyride to find rehearsal space in April if the new area isn’t ready yet, co-producing artistic director Sarah Clare Corporandy said. The sounds of Ukrainian folk music, punk rock and a litany of other genres have emanated from the basement boiler room of Ponyride

KENYA MILLER FOR NATURALICIOUS

Hair product maker Naturalicious, founded by CEO Gwen Jimmere, is a tenant in nonprofit Ponyride’s shared working space in Corktown.

Several tenants declined to share what they pay in rent. But Cooley told Crain’s last week that rent starts at around $8 a square foot, including utilities, internet and waste handling. From there costs vary, and spaces can be rented on a temporary basis

for rehearsals or events, too. It’s an idiosyncratic mix at the boxy building on Vermont. As well as bulky soap cutters, moving trucks will need to transport more than 20 sewing machines owned by Sew Great Detroit, nonprofit Alterna-

Since the news of the building coming to market came out last February, the shape of the Corktown conversation has changed. Property values have spiked since Ford Motor Co. announced last summer it bought — and has since begun renovating — Michigan Central Station as the nucleus of a $740 million mobility-focused campus. O’Connor Real Estate listed the Ponyride building for $3.5 million. The agreed-upon sale came in at nearly $118 per square foot. Cooley originally bought it for $100,000 in 2011. The recent sale went through O’Connor Real Estate, founded by Phil and his brother Ryan Cooley. The brothers opened Slows Bar BQ with partners in 2005. The barbecue restaurant garnered national attention and was frequently featured in stories about Detroit’s rebirth. Buyer Nassif, senior managing director and partner of the local office of Dallas-based BBG Inc. and a Crain’s 40 Under 40 honoree, confirmed the $3.3 million sale price. He said approximately $1 million will be spent renovating the building for expected occupancy in July or August. Nassif is also the owner of the Brush Park building where BBG and other real estate companies make their offices. That building sold in December 2016 for $1.15 million. The building was the former home of the administrative offices of the Heidelberg Project nonprofit. Detroit-based Officita will lease the Corktown building to tenants, Nassif said. Premier Construction & Design, based in Farmington Hills, will be the contractor on the project while Detroit-based Beanstalk Real Estate Solutions will be the property manager. “It’s a unique asset with a long, colorful history and we are going to try to respect that in the renovation,” Nassif said. Rents are expected to be $18-$20 per square foot, minus the cost of utilities but including parking, Nassif said. James Tumey, vice president of brokerage for Friedman Urban, the Detroit office of Farmington Hillsbased Friedman Real Estate LLC, said he sought buyers for the Ponyride property and thought the sale price was fair. “It’s a great buy,” Tumey said. “That neighborhood in the next couple years is going to be so different, and Phil did an amazing job setting it up.” —Crain's reporter Kirk Pinho contributed to this report.

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 5 , 2 0 1 9

SOUTHWEST FROM PAGE 3

A history of growth Southwest grew from a small community mental health agency launched in 1972 into one of the region’s largest and most impactful human-services nonprofits, serving tens of thousands of people each year in Detroit through a structure of four connected nonprofits. Its programs range from mental-health services to supportive housing assistance and services for the homeless and veterans, affordable housing development, urban entrepreneur support and microlending, financial and homebuyer counseling, financial literacy and homeownership, workforce development, small-business training and support, and community engagement. Southwest has gained a national reputation for social innovation and was named Crain’s Best-Managed Nonprofit in 2005 for expanding its work well beyond mental health and managing a large number of programs to more fully meet the needs of its clients. And last spring, the Washington, D.C.-based National Council on Behavioral Health presented Van Camp with its Visionary Leadership award for his decades of work to strengthen behavioral health care. But the heart behind Southwest’s social services programs didn’t always keep pace with the business side of things. With about 70 percent of its annual budget coming from government contracts and grants and gifts that didn’t always include adequate overhead to operate programs, the strategy of taking on programs no one else offered was bound to catch up to Southwest. It ran a deficit of about $3.9 million in fiscal 2017, based on federal tax filings for the four nonprofit entities, as decreased funding for programs like Head Start and mental health services, along with other factors, began to impact its bottom line. Its revenue dropped to $45.9 million in fiscal 2017 from $49.8 million the year before. Tasse said Southwest expects to report a net loss for fiscal 2018 when it completes its accounting for the year. Southwest Solutions’ programs are delivered by three separate nonprofits that share back-office functions: Southwest Counseling Solutions, Southwest Economic Solutions and Southwest Housing Solutions. Could it consider spinning off any part of its operations? “We’ve had discussions about whether there ought to be some legal separation here,” Lloyd said. The breadth of programs that Southwest developed came to be because each helped move clients to self-sufficiency, he said. “If we ... cut off an arm or leg, our ability to do that has been depleted.”

Aligning costs with revenue Over the past year, Southwest has made a number of moves to bring its costs in line with revenue. It exited Head Start and Early Head Start early-childhood programs that served more than 400 children at the end of calendar 2017, after funding cuts made the operation unsustainable. Then, in May, it brought in Fred Leeb, principal of Leeb Partners LLC, as interim president and CEO to

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REPORTERS

Veterans at Piquette Square participate in a class on healthy eating.

identify strategies to help turn the nonprofit around. He stayed on for six months before turning his recommendations over the Southwest Solutions’ board and Tasse as incoming interim CEO last fall. “The whole plan we’re looking at really looks at certain domains of operation that we’re having to address. Some of it is organizational restructuring, asset sales, revenue enhancement, span of control,” Tasse said. Those moves are expected to reduce costs by several million during the current fiscal 2019 and fiscal 2020 years, he said. Among other moves, Southwest has eliminated three programs that didn’t have adequate or any funding streams. “I would say we’re kind of at a point now, if we can’t support it financially, we may not be able to do it as much going forward,” Tasse said. “Or, we’ll have to rely on the philanthropic community.” Southwest eliminated its Assertive Community Treatment program, which provided home-based mental health services to about 50 clients. It shifted about 40 of them to its integrated health clinic services program which also provides primary health care through an agreement with Covenant Community Care and referred the other 10 people to other providers. “We’re in a fee-for service environment,” said William Ward, executive director of Southwest Counseling. “The Medicaid codes that are attached to that (integrated health) benefit are a little bit more generous than the ones under ACT,” he said, noting that move, alone, is expected to produce a net gain of $50,000 to $60,000 this year. It also eliminated its Go-Getters Drop-In Center, a day center for mental health clients funded by a daily per-customer fee from Detroit Wayne County Mental Health Au-

thority that did not cover the costs of operating the program, Ward said. And it eliminated an evaluation department that provided outcomes data that went above and beyond what funders require but didn’t have revenue supporting it. The hope had been to ramp that evaluation department up and sell those services to other providers to help cover its costs, Lloyd said, but that never materialized. “We were left with something that was nice to have, but it was a luxury.” Southwest has also cut layers of management by increasing the number of people reporting to supervisors across its operations and cut positions with other program eliminations and expirations. With the exit from Head Start and additional moves and attrition, Southwest has shrunk from 460 employees in 2017 to 269 today. Over the past year, Southwest has been circumspect about looking at consolidating and eliminating some programs and identifying properties that are not essential to mission to reduce costs and generate needed cash, Tasse said. It has sold two buildings, yielding a combined $2.5 million: J The Go-Getters building on Vernor Highway, near the Michigan Central Train Depot to Christos Moisides for $700,000. J The former Third Precinct building at 21st Street and Vernor Highway in Southwest Detroit to Detroit School for Digital Technology for $1.8 milion. Today, Southwest is operating about 50 programs serving about 10,000 people annually on a budget of $40 million for fiscal 2019. The other third of its revenue beyond government contracts and philanthropy stems from areas including rehab of bank-owned homes and development of affordable housing and property management.

SOUTHWEST SOLUTIONS

Preparing for future “Once we have the core organizational development work done ... now we can begin to envision the future,” Tasse said. Southwest’s information-technology infrastructure hasn’t kept pace, he said. “Because we’re so grant-, government contract- and foundation-dependent, there’s a lot of reporting with that ... and I don’t think we’ve really geared up for that,” Tasse said. The organization is working with APEX Digital Solutions to assess its IT infrastructure and needs and considering a seven-figure investment in a new IT system. It is already approaching foundations for support. The new IT system would be “a game-changer,” Tasse said, improving client services, making financial reporting more efficient and programs more nimble by enabling, for example, electronic sharing of medical records between its mental health and primary care programs and strengthening billing and grants management to make sure dollars Southwest is owed are collected. “It’s grant management to make sure we don’t give money back, and we have in the past,” he said. On the leadership front, Southwest isn’t actively searching for a permanent CEO right now, Lloyd said. “We want to make sure when we do begin a (CEO) search in earnest, if we do … we want to make sure that we’ve got something … that will attract the best and brightest nationally to apply for the job.” “To the extent that we can provide a stable, well-run organization, which is what’s happening under Joe’s leadership, we’ll be far better able to attract interest on the part of the kind of people (we’re seeking.)” Sherri Welch: (313) 446-1694 Twitter:@SherriWelch

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C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 2 5 , 2 0 1 9

THE WEEK ON THE WEB

RUMBLINGS

JPMorgan Chase commits $15M for development in Detroit neighborhoods

1st Ford in 40 years joins Ford Foundation

FEB. 16 - 22 | For more, visit crainsdetroit.com

hase is committing $15 million for economic development in 10 Detroit neighborhoods targeted by the city’s Strategic Neighborhood Fund. The New York City-based bank is providing a $5 million grant for the city’s $130 million Strategic Neighborhood Fund 2.0 launched in April and $10 million for low-cost loans, 70 percent of which must be used for projects within the SNF footprint. The grant and loans, to be administered through Invest Detroit, are part of the bank’s overall $150 million commitment to the city. They will be used to help fund projects in key commercial areas throughout the city — outside of downtown, Midtown and areas already rife with new development. Peter Scher, head of corporate responsibility at Chase, announced the $15 million investment Thursday along with Mayor Mike Duggan at the Detroit School of Digital Technology in southwest Detroit. “(When we started), it was not just about growth for the sake of growth... not how many businesses open, but how many endure,” Scher said of its investment model of flexible capital and philanthropy in the city of Detroit — the first if its kind for the bank. Chase was the first organization to invest in the city’s Strategic Neighborhood Fund with a $5 million commitment in 2016. Since then, a second fund has been launched that has drawn philanthropic investments outpacing the first fund, Duggan said at the announcement, adding that he is working to secure more donations. The $130 million SNF 2.0 fund is comprised primarily of donations and bonds issued by the city. “We’re doing this to create opportunities,” Duggan said, adding that the bank’s investment is not just a PR stunt. “The hard work is being done by the entrepreneurs in the community.” The site of the event, the Detroit School for Digital Technology, was highlighted as proof that Chase’s investment model is working. The trade school opened in 2016 in the former Detroit Police Department’s Third Precinct near the Ambassador Bridge. The project was financed through the Chase Invest Detroit Fund, which was formed through a partnership with the bank and Community Development Financial Institutions Fund as part of Chase’s $150 million commitment. Founded in 1995, Invest Detroit is a nonprofit community development financial institution whose main function is to provide gap financing to projects that wouldn’t be completed without it. It supports real estate projects ranging from $50,000 to $2.5 million as well as small businesses. It has deployed more than $9 million through its venture capital fund, according to its website.

BUSINESS NEWS J Domino’s Pizza Inc. (NYSE: DPZ) shares tumbled last week after the Ann Arbor-based company’s samestore sales growth fell short of expec-

KURT NAGL/CRAIN’S DETROIT BUSINESS

Detroit Mayor Mike Duggan shakes hands with Peter Scher, global head of corporate responsibiity for JPMorgan Chase, on Thursday following a news conference at the Detroit School for Digital Technology in southwest Detroit to announce Chase’s $15 million commitment to the city.

Detroit digits A numbers-focused look at last week’s headlines:

$1.5 million Yearly cost to Chemical Bank for naming rights of Cobo Center

$15 million

New grant and loan investment by JPMorgan Chase in Detroit’s neighborhoods

500,000

Number of megawatt-hours of renewable wind energy Ford plans to buy from DTE Energy

tations in the U.S. and abroad. Domino’s said sales at established U.S. stores grew 5.6 percent in the fourth quarter, its 31st consecutive quarter of positive same-store sales. But Wall Street was forecasting growth of 6.8 percent, according to analysts polled by FactSet. Same-store sales growth at international stores slowed slightly to 2.4 percent. Domino’s CEO Ritch Allison said sales were strong in some key markets, including Russia and Brazil, but fell in others. J Delphi Technologies PLC (NYSE: DLPH) reported that fourth-quarter net income rose 141 percent to $135 million, while revenue decreased 9 percent from a year earlier to $1.2 billion. J Visteon Corp.’s (NASDAQ: VC) net income in the fourth quarter rose 72 percent to $43 million, while its adjusted earnings fell 27 percent to $74 million. J Monroe-based furniture maker La-Z-Boy Inc.’s shares jumped last week after reporting sales that beat the highest analyst estimates in the latest quarter. Same-store sales — a key gauge of retailer momentum — increased 6.7 percent at stores owned by the company. Revenue, meanwhile, was $467.6 million, above the average estimate from analysts. J Payless Inc. is liquidating its U.S. and Puerto Rico stores, including more than 40 in metro Detroit, and shutting down its online operations as the upheaval in the retail industry claims its latest victim. The discount shoe chain started liquidation sales last week, and expects the stores to

remain open until at least the end of March, according to a statement. The company was preparing to file for bankruptcy for the second time in two years, people with knowledge of the matter said recently. J Detroit-based cosmetics company The Lip Bar LLC is opening its first full retail shop in the alley behind the Shinola Hotel downtown. The vegan, cruelty-free lipstick line founded by entrepreneur Melissa Butler sells across the country through around 500 Target stores. J University of Detroit Mercy has received a $6.1 million donation — the largest in its 140-year history — that it will use to boost its business college. The gift comes from the estate of Arnold Jarboe, who died in 2016. It will be used to create a new chair position in the college of business to be filled by Evan Peterson. J Automotive supplier Dakkota Integrated Systems LLC of Brighton is laying off more than 100 workers at its plant in Brownstown Township, according to a notice filed with the state. The supplier plans to lay off a total of 106 employees at the plant at 19881 Brownstown Center Drive starting April 1, according to the WARN notice. The decision affects 89 hourly and 17 salaried employees. J Thermoplastic supplier Emabond Solutions LLC is planning to move its headquarters to Auburn Hills in an $842,000 move expected to create 25 jobs.

OTHER NEWS J Dan Gilbert and Michigan’s top elected leaders on Tuesday plan to announce the annual Forbes Under 30 Summit will take place in Detroit in the fall, sources confirmed to Crain’s on Friday. Gilbert, the founder and chairman of Quicken Loans Inc., will be joined by Gov. Gretchen Whitmer, Mayor Mike Duggan, Wayne County Executive Warren Evans and Forbes executives to make the announcement at The Madison Building. J Nonprofit LGBT Detroit is seeking $1 million to complete what its founder dubs the biggest African-American-led lesbian, gay, bisexual and transgender center property in North America. The organization, which is focused on support, education, health and awareness for Detroit’s LGBT residents, bought a building next door to its 3,800-square-foot center in the Murray Hill neighborhood.

The New York-based Ford Foundation Board of Trustees has named a member of the Ford family to its board for the first time in 43 years. Henry Ford III, 38, a member of the corporate strategy team at Ford Motor Co., has been elected to a six-year term on the foundation’s board. He is the son of Edsel Ford II, a longtime member of Ford Motor Co.'s board of directors. Ford is the great-grandson of Edsel Ford, who created the Ford Foundation in 1936. The younger Ford is the first family member to sit on the foundation’s board since his grandfather, Henry Ford II, resigned in 1976 after 33 years of service as president, chair and a trustee. Henry Ford II shaped the modern Ford Foundation, guiding it on a deliberate process of becoming independent. Under his leadership, it shifted to an international mission, expanded its board beyond the family and moved to New York City in 1953. Fast forward to 2006. Then-Michigan Attorney General Mike Cox launched an investigation of the foundation, alleging it had ignored the Ford family’s philanthropic wishes by reducing support for Michigan charities.

His investigation came amid sizable commitments by the foundation in Detroit. Between 2005 and 2007, the Ford Foundation committed $2 million to the Detroit RiverFront Henry Ford III Cons er vanc y’s RiverWalk project, $5 million to the Community Foundation for Southeast Michigan for neighborhood development along the city’s east riverfront and $8 million in grants and low-cost loans to ShoreBank Enterprise Detroit to spur economic development in Detroit. In spring 2007, it committed $25 million to the first round of funding to create the New Economy Initiative, a $100 million economic development push led by foundations. In 2014, under President Darren Walker, the foundation stepped up investments in Southeast Michigan with a $125 million commitment to the “Grand Bargain” that shored up Detroit pension funds.

NOAH KALINA, COURTESY OF SNARKITECTURE

New York-based design group Snarkitecture created The Beach, an installation with an abundance of antimicrobial plastic balls.

Ball pit installation coming to 1001 Woodward building T

he Campus Martius space home to a brightly colored roller rink this winter will now become a stark white ball pit. An art installation created by New York-based design group Snarkitecture that’s visited Washington, D.C., Chicago and other cities is coming to downtown Detroit. The Beach recreates a seaside experience with lounge chairs, two piers and a lake of recyclable, antimicrobial plastic balls. It’s coming March 1-April 14 to the ground-floor retail space in the 1001 Woodward skyscraper owned by Bedrock on the edge of Campus Martius Park. It’s free and will open 12-8 p.m. Wednesday-Friday, 10 a.m.-8 p.m. Saturday and 12-6 p.m. Sunday. It’s being produced by Detroit-based Library Street Collective

and funded by Dan Gilbert’s Bedrock LLC and Quicken Loans Community Fund. Library Street Collective has a significant art presence downtown and also worked with Bedrock to bring a skate park to the site of the incoming Monroe Blocks development, as well as the Rainbow City Roller Rink, which ran Nov. 30-Jan. 27. Detroit developer and Quicken Loans Inc. founder Gilbert’s family of companies has also recently activated downtown through winter and summer markets. Bedrock spokeswoman Gabrielle Poshaldo declined to disclose the ball pit installation’s cost. She said it wasn’t immediately known what would happen next with the space. Commerce Township-based CIR Group worked on fabricating materials for the exhibition.

What would you like the power to do? Listening to how people answer this question is how we learn what matters most to them, so we can help them achieve their goals. At Bank of America we are here to serve. We had one of our best years ever in 2018: strong recognition for customer service in every category, the highest levels of customer satisfaction and record financial results that allow us to keep investing in how we serve. That translates to a great team delivering the best capabilities for our clients and our communities. We can only be successful when our customers, clients, communities and employees share in that success. We are proud to be recognized for the work we do for you.

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Detroit is home for me and my team. We know this community and we are here to serve your needs and help you achieve your goals. That’s why we’re always asking:

What would you like the power to do? Let me know at: matthew.b.elliott@baml.com Matt Elliott Detroit Market President As always, protect your personal data. For assistance with a personal financial issue, please visit your nearest financial center. From FORTUNE®, September 2018 © 2018 Time Inc. Used under license. FORTUNE® is a registered trademark of Time Inc. and is used under license. FORTUNE and Time Inc. are not affiliated with, and do not endorse products or services of, Bank of America. © 2019 Bank of America Corporation. | Member FDIC | ARSFHQPS | TAD-12-18-0260

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