Crain's Detroit Business, July 1, 2019 issue by Crain's Detroit Business

Dimon, Duggan team up in Detroit Page 8

New auto show aims for January Page 3

JULY 1 - 7, 2019 | crainsdetroit.com

REAL ESTATE

Boom times for demolition contractors Demolition derby

High-profile properties go under the wrecking ball

In all, more than 1,000 acres of land that houses or housed name-brand developments have been cleared or in line to be, maki the way for new uses ranging from apartments to hotels, retail to office, R&D and warehouse space.

Palace of Auburn Hills

Pontiac Silverdome

Village at Bloomfield

Summit Place Mall

By Kirk Pinho

kpinho@crain.com

Times have been good for the demolishers. In the past two or three years, some of the most prominent properties in Southeast Michigan have been torn down, face the wrecking ball or are in the process of being razed. Last week, the Detroit Pistons confirmed years of speculation that the team’s former home, the Palace of Auburn Hills, would be scrapped for new buildings to rise in its place. In all, more than 1,000 acres of land that house or housed namebrand developments in the region have been cleared or are in line to be, making the way for new uses ranging from apartments to hotels, retail to office, R&D and warehouse space. To some, they will always be associated with their histories: Stadiums, steel mills, auto plants, malls. To others, their demises are representative of a series of sometimes singular, sometimes colliding factors: Teams moving, shopping trends changing, demographics shifting, industries evolving and dying, urban planning priorities reconfigured. Still, these changes and others have proven good for demolition companies. According to IBISWorld, a Santa Monica-based research company, the American demolition and wrecking industry has grown from $5.25 billion in revenue in 2016 to an estimated $5.92 billion this year, growth of 12.76 percent. Yet it’s still 7.14 percent smaller than the $6.37 billion industry it was in 2009. SEE DEMOLITION, PAGE 19

ENTREPRENEURSHIP

6 Championship Drive, Auburn Hills Demolition is expected to begin this fall. Mixed-use development planned. 1

1200 Featherstone, Pontiac 127 acres, demolished in 2017. Currently vacant, on the market.

In all, more than 1,000 acres of land that houses or housed name-brand developments have been cleared or in line to be, making the way for new uses ranging from apartments to hotels, retail to office, R&D and warehouse space.

Liberty Park of America

Northland Center

3 4

Oakland County

Hazel Park Raceway

Macomb County

696

Lake St Clair

7 75

33600 Mound Road, Sterling Heights Demolished 2018. Construction underway on industrial/ warehouse space. 5

21500 Northwestern Highway, Southfield 125 acres, partially demolished. To become mixed-use development. 7

1400 E 10 Mile Road, 96 Hazel Park 131 acres, demolished in two phases. Now warehouse, distribution space. 6

Wayne County Consolidated Jail

Joe Louis Arena

Former McLouth Steel Products Corp. Washtenaw County

Wayne County

275 HWY-401 Essex

Gratiot Avenue and 8 St. Antoine, Detroit Demolished 2018. To become mixed-use development.

19 Steve Yzerman Drive, Detroit Demolition underway. To become mixed-use development. 9

1491 W. Jefferson Ave., Trenton 186 acres, demolition in progress. To become logistics hub. 10

maps4news.com/©HERE

maps4news.com/©HERE Crain’s Detroit Business graphic by Kirk Pinho and David Kordalski

Monroe

Old boss, new boss: StockX leaders plan tag-team growth clivengood@crain.com

Cutler: Takes over day-to-day operations

With StockX on a venture capital-fueled march toward going public, Josh Luber is stepping aside as CEO of the online marketplace for collectible sneakers, handbags and streetwear that he co-founded with billionaire busi-

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NEWSPAPER

1967 Telegraph Road, Bloomfield Township Demolished 2017. Now mixed-use with retail, medical, hospitality, residential. 4

Demolition derby

By Chad Livengood

Luber: Remains StockX’s frontman

Telegraph Road and Elizabeth Lake Road, Waterford Township Demolition underway. To become office and retail space.

nessman Dan Gilbert. But Luber is not stepping away from Detroit’s first tech unicorn. The sneakerhead visionary behind creating a “stock market of things” will remain the company’s frontman, pitching the concept of both StockX’s bread-and-butter secondary marketplace for rare Adidas Yeezy sneakers

and the potential for highly coveted consumer goods to bypass traditional retail outlets and go straight to StockX.com. “We didn’t realize in the beginning how important it was going to be to explain how powerful this model is,” Luber said Wednesday in a telephone interview. “The whole reason we’ve

grown like this really is because of the model. But it’s not a simple concept, particularly when we say ‘stock market of things.’ That’s not something people get right away and understand why this is better than eBay and why this is better than a consignment model.” SEE STOCKX, PAGE 20

INSIDE

Special Report: Diversity & Inclusion Companies tout intentions, but results from programs lag. Page 10 << Diversity in mentorship. Page 12

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MICHIGAN BRIEFS

INSIDE

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

Nessel sues to shut down Enbridge’s Line 5 oil pipeline Attorney General Dana Nessel made a high-stakes legal move Thursday to shut down Enbridge Energy’s controversial underwater oil pipelines in the Straits of Mackinac, arguing the risk of an oil spill poses a “catastrophic” danger to the state’s economy and natural resources. Nessel filed a lawsuit in Ingham County Circuit Court seeking a declaratory judgment that the 1953 easement agreement that allowed for construction of twin 20-inch oil pipelines at the bottom of Lake Michigan “violates the public trust doctrine and is therefore void,” according to the lawsuit. The lawsuit also claims Enbridge’s Line 5 pipeline is a public nuisance and “likely to cause pollution, impairment and destruction of water and other natural resources,” according to the 28-page complaint. She cited cost estimates of a Great Lakes oil spill ranging from $1.87 billion to $5.6 billion as a reason why Line 5 should be decommissioned, despite there being no record of any leak of oil from the pipeline since it was constructed 66 years ago. “In any event, regardless of the

precise details of these estimates, it is now apparent that the continued operation of the Straits pipeline presents a substantial, inherent risk of an oil spill and that such a spill would have grave ecological and economic consequences, impairing public rights in the Great Lakes and its resources,” Nessel wrote in the lawsuit. “Given the magnitude of the threatened harm, continuation of oil transport through the Straits pipelines is fundamentally unreasonable and inconsistent with the state’s perpetual duty to protect the inalienable public trust.” Nessel’s suit does not propose a specific timeline for shutting down Line 5 at the waterway connecting Lakes Michigan and Huron. But the Democratic attorney general wants a judge to order Enbridge to “cease operation of the Straits pipelines as soon as possible after a reasonable notice period to allow orderly adjustments by affected parties,” according to the lawsuit. Oil refineries in Sarnia, Ontario, and Toledo and Marathon Petroleum Corp.’s Detroit refinery rely on Line 5 for light crude oil feedstock. Line 5 also transports natural gas liquids used to make propane gas. Michigan is the nation’s second-largest consumer of propane gas and Line 5 supplies 55 percent of the state’s propane, according to the National Propane Gas Association.

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OPINION

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RUMBLINGS

WEEK ON THE WEB

introduce alternative modes of transportation. As the AV industry buds in Southeast Michigan, Grand Rapids has also been targeted by mobility companies and initiatives. An automated transit bus pilot program could also be heading to the city. CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Michigan Attorney General Dana Nessel took legal action Thursday seeking to shut down Enbridge Energy’s Line 5 oil pipeline, which crosses the Straits of Mackinac in St. Ignace as twin 20-inch pipelines and surfaces in Mackinaw City.

May Mobility set to roll out driverless shuttles in Grand Rapids in July

May Mobility is expected to launch four autonomous shuttles in downtown Grand Rapids by late July. The Ann Arbor-based startup will roll out the six-seat vehicles on a 3.2mile downtown bus route in the city. The one-year pilot program was announced in September. The shuttles are already being tested in anticipation of the formal launch, according to a Facebook post from the city.

The program will cost $650,000, MLive reported Thursday. Crain’s previously reported that the city of Grand Rapids is contributing $250,000. A public-private partnership of nine Michigan-based companies called the Grand Rapids Autonomous Mobility Initiative is also supporting the program. The shuttles will be staffed with an attendant and run at a top speed of 25 mph, making a dozen stops along the route, according to MLive. The program aims to address congestion issues in a growing city and

CORRECTIONS  The story “Elusive profits push dairy farmers to find creative ways to survive” on Page 1 of the June 24 issue incorrectly stated the amount of milk cows at Horning Farms produced daily. The correct figure is roughly 30,000 pounds.  A story on Page 11 of the June 24 edition of Crain’s Detroit Business under the headline “What’s driving demand in Ann Arbor?” should have said that Michael Jurgenson became president and managing broker of the Ann Arbor-based Swisher Commercial real estate brokerage firm two years ago after joining the company in 2013.

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HEALTH CARE

FINANCE

Blues aim to team up with sister plans on Medicare By Jay Greene jgreene@crain.com

Low-income housing developer Cinnaire plans to sell 188 single-family homes like these on Fischer Street on Detroit’s east side to the families who rent them through a lease-purchase pilot program in a partnership with Cleveland-based CHN Housing Partners and the Opportunity Resource Fund. CHAD LIVENGOOD | CRAIN’S DETROIT BUSINESS

Homeownership help

JPMorgan Chase-funded program aims to convert Detroit renters into buyers By Chad Livengood clivengood@crain.com

JPMorgan Chase & Co.’s expanded economic investments and philanthropy in Detroit will include piloting a program to help renters become homeowners in situations that the bank itself wouldn’t be able to write a mortgage for. The New York City-based global banking giant has committed $1.5 million to replicate a Cleveland program that helps convert lower-income renters into homeowners.

Need to know

 Bank’s new round of philanthropy targets affordable housing  Cinnaire to sell 188 single-family homes to long-term renters  Cleveland-based organization bringing its lease-to-ownership program to Detroit

The grant will come from $20 million that JPMorgan Chase has dedicated to affordable housing initiatives in the city from the bank’s $50 million increase in investments and philanthropic do-

nations in Detroit by the end of 2022, said Peter Scher, head of corporate responsibility for the bank. JPMorgan Chase announced last Wednesday it is increasing its investment commitment in Detroit from $150 million to $200 million. Low-income housing developer Cinnaire is partnering with Cleveland-based CHN Housing Partners and the community development financial institution Opportunity Resource Fund to sell 188 houses Cinnaire owns in the city to longterm renters. SEE HOMES, PAGE 21

“You have these families that are paying rent and what we want to see if we can convert that rental payment into a mortgage payment … and have these families build some equity.” Peter Scher, head of corporate responsibility, JPMorgan Chase & Co.

AUTOMOTIVE

New auto show takes shape to fill January void By Dustin Walsh

dwalsh@crain.com

With the Detroit auto show moving to June in 2020, a new winter show is afoot. The Suburban Collection Showplace in Novi is organizing its own regional auto show to fill the void in January, the event center confirmed to Crain’s. The Southeast Michigan Auto Show is planned to take place over a weekend, Friday, Jan. 3 through Sunday, Jan. 5. Tickets for the show are expected to cost $10 for ages 13 and up; $5 for children aged 6 to 12; and presumably free for children under 6 years old, according to documents the Showplace distributed to local dealers and viewed by Crain’s. The event would include a VIP cocktail kick-off event on the night of Jan. 3 as well as seminars, an outdoor

Need to know

 Show would happen in January, after NAIAS moves to June  Organizers say automakers, dealers on board  Event would focus on marketing existing models to consumers

and indoor ride-and-drive experience, kid-friendly activities and merchandise vendors, according to its circulated document. Organizers say they have designed The Southeast Michigan Auto Show as a consumer-focused event as opposed to the international, media-driven flare of the North American International Auto Show held annually at Cobo Center, Blair Bowman, president of the convention center, told Crain’s. SEE AUTO SHOW, PAGE 21

SUBURBAN COLLECTION SHOWPLACE

The Suburban Collection Showcase is located on Grand River Avenue between Taft and Beck roads in Novi.

Blue Cross Blue Shield of Michigan has formed a new holding company to partner with Blues plans in other states to form joint ventures to sell new products under Medicare Advantage. The federally funded health insurance program for seniors is the nation’s fastest-growing health insurance sector, fueled by the aging baby boomer population. Executives at Blue Cross confirmed the strategy and said the Detroit-based health insurer’s board has approved creation of the new company, called Medicare Holdings. Talks are underway with several Blues plans that don’t currently offer Medicare Advantage HMO-type plans to their members, said Pritpal Virdee, newly appointed president of Medicare Holdings.

Need to know

 Blue Cross Michigan to create new holding company to team up with other Blues plans for Medicare Advantage plans  Medicare Advantage is fastest-growing health insurance sector in the nation  Blue Cross expects Medicare Advantage to become an even greater revenue producer

“Our Medicare plans are very successful in the marketplace. We have a lot of experience in this business, and this is a perfect opportunity and a natural progression for us to do this,” said Virdee, who has been with Blue Cross Michigan since 2017 and previously was senior vice president and COO of the company’s senior health services department. Medicare Advantage coverage is a form of Medicare coverage managed through private insurers. More than a third of Medicare-eligible seniors are insured through Medicare Advantage plans. The Michigan Blues operate a number of Medicare Advantage HMOs, PPOs, Medicare Part D drug plans, Medicare Advantage with Prescription Drug plans (MAPDs) and Medicare supplemental plans (Medigap). With 530,000 members, the mutual health insurer has the seventh-largest Medicare Advantage business in the nation. Blue Cross Michigan also is the second-largest Blues Medicare plan after Anthem and Michigan’s largest, the company said. “Our joint ventures will initially be in Medicare Advantage (HMOs) and maybe later Part D and MAPDs,” Virdee said. There are two primary reasons why the Michigan Blues are embarking on the joint venture plan, Virdee said. First, creating new plans supplements its consulting business, Advantasure, which was formed in 2016 to provide back office, compliance and call center services for Medicare Advantage plans. SEE BLUE CROSS, PAGE 20

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Henry Ford cardiology team performing first TAVR procedure at Allegiance Hospital in Jackson.

HENRY FORD HEALTH SYSTEM

Henry Ford extends minimally invasive heart procedures to Jackson, Macomb By Jay Greene jgreene@crain.com

Top cardiologists at Henry Ford Health System are training fellow cardiologists at Henry Ford Allegiance Hospital in Jackson and Henry Ford Macomb in Clinton Township to expand a popular alternative to open-heart surgery — a minimally invasive heart procedure called TAVR — to those hospitals for patient convenience. O’Neill TAVR, or transcatheter aortic valve replacement, has been approved by the Food and Drug Administration for use on all patients, not just high-risk or intermediate risk, greatly expanding the number of patients who are candidates, said William O’Neill, Henry Ford’s medical director of the structural heart program. “We made a strategic decision to expand our (7-year-old) program at Henry Ford Hospital because we realized patients in Jackson and Macomb were

Need to know

J Henry Ford cardiologists perform first minimally invasive heart procedure, called TAVR, at Allegiance Hospital in Jackson J Detroit-based health system is expanding valve replacement procedure to Allegiance and Henry Ford Macomb J TAVR is becoming a popular alternative to open-heart procedures for patients as technology improves

underserved,” said O’Neill, a Crain’s Health Care Hero in 2018. “It is a burden for patients to drive down to Detroit. We have been doing that the past two years. Most patients are over age of 70 and most can’t drive. It is really difficult,” O’Neill said. “It is more convenient for them to go to Jackson” or Macomb. TAVR works like this: Using thin catheters, cardiologists access the heart through the femoral vein in the groin region, threading the collapsed valve up through the tubing. Once properly positioned, a balloon expands the valve, lodging the new device in place. O’Neill said Henry Ford’s cardiology

team performed the first two procedures at Allegiance Hospital on Thursday. “So far we are two for two. The patients did very well and should be discharged in a couple days,” he said. Led by Henry Ford interventional cardiologists Tiberio Frisoli, M.D.; Matthew Jonovich, M.D.; and Usman Khokhar, M.D., the TAVR procedure to replace the aortic valve took about 1½ hours. Henry Ford Allegiance cardiothoracic surgeons Vincent Simonetti, M.D., and Mahender Macha, M.D., also attended the procedure. At Henry Ford Allegiance, renovations created an advanced cardiac catheterization laboratory, equipped with highly specialized imaging and procedural technology. Renovation costs for the catheterization labs and equipment costs, including cutting edge CT scanners, typically are about $1 million to $3 million. O’Neill said Henry Ford estimates about 50 to 75 low-risk patients can be treated in Jackson in the first year and as many as 100 in Macomb. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

Esperion lands $200 million funding deal ahead of expected U.S. drug approval By Annalise Frank afrank@crain.com

Ann Arbor-based drugmaker Esperion Therapeutics Inc. has agreed to pay an investor group a portion of revenue from proceeds of a soonto-launch drug in exchange for up to $200 million in funding. The group led by New York Citybased health care investment firm Oberland Capital Management Mayleben LLC would get a percentage of revenue from sales of Esperion’s cholesterol medication, which saw success in late-stage testing, got a boost through a European commercialization deal and is expected to get U.S.

Need to know

Ann Arbor-based drugmaker makes $200 million revenue-based funding agreement J

J Investor group led by New York firm to get percentage of cholesterol drug’s U.S. revenue J

FDA approval expected early next year

Food and Drug Administration approval early next year, according to a news release. A U.S. commercial rollout would follow. Under the revenue-based funding agreement, the group led by Oberland pays Esperion $125 million up front and another $25 million upon FDA approval. Esperion (NASDAQ: ESPR) also has the option to take another $50 million if it wants through the end of 2021. Esperion expects its repayment rate to Oberland to average out at 2 per-

cent of net U.S. revenue over the term, starting out at 7.5 percent and dropping to 2.5 percent, then 0.4 percent. The “massive” deal had attractive terms for the drugmaker, Tim Mayleben, Esperion’s president and CEO, said during a Wednesday conference call discussing the move. “This $200 million funding agreement ... is in our words unprecedented.” The investment is a step forward in commercializing the drugs, which, if approved, would be the company’s first on the market. This iteration of Esperion was founded in 2008, when as part of closing its Michigan operations, Pfizer Inc. sold the name “Esperion” to the company’s founder Roger Newton, one of the team members that discovered Lipitor. Annalise Frank: (313) 446-0416 Twitter: @annalise_frank

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with mentors who are General Motors retirees. Teams of 10 go into communities and complete projects. The interns are General Motors employees and can put that on their resumes. They learn life skills and earn a paycheck; their mentors help them budget that paycheck. Burns: Tell us more about your communitybased support. Rhadigan: Vehicle and road safety is one of our focus areas. Unfortunately, traffic accidents are the leading killer of people under 24 years old. Most of those accidents can be attributed to distracted driving. Human error causes 94 percent of all accidents. We’re working with DoSomething.org to encourage young drivers to buckle up and practice safe driving habits. We’ve also partnered with Safe Kids Worldwide for 20 years because we know that most car seats are not installed correctly; when they’re not, the consequences can be dire. Burns: How does your organization engage employees in volunteer activities? Rhadigan: We have Team GM Cares on our employee website with a plethora of volunteer opportunities. We spend a week in Detroit’s Cody Rouge neighborhood painting classrooms, cleaning up debris and brush. When you return, you see sustained change. Loyola High School, an all-male Jesuit school in Detroit, has about 140 students. Most students start off two or three grade levels behind; our goal is to turn that around. We are very proud that for nine years in a row we’ve had a 100 percent college acceptance rate.

Ed Siaje, Managing Director and Market Director, Bank of America, Private Bank

Larry Burns: Tell us about the services offered to nonprofits by Bank of America, Private Bank. Ed Siaje: We’re a bank with all the normal banking and services. But what sets us apart is our team of 200-plus staff members that works in the nonprofit institutional space. Each team member has deep expertise in helping nonprofits with everything from board governance to staff development to strategic planning to spending policy to asset allocation. It’s all about helping each nonprofit achieve its mission: that’s the ultimate goal. Because before you can start raising the dollars and cents, you have to have all the right governance, spending policies and other necessary components in place. Burns: You and your colleagues do the homework so that when you speak to a nonprofit’s board it is based on all that knowledge. Siaje: Every nonprofit is different and every mission is different, so in order to craft the right plan you must understand the organization and what it’s trying to achieve. That’s where we spend our time. Burns: How do you organize what a nonprofit needs? Siaje: We start by gaining an understanding of the nonprofit and what its challenges are. Once

we understand what it’s faced with, we use our expertise to help address those challenges. We have a conference call, ensure everyone understands the information we’re providing: the mission, the organization and where we need help. We emerge from that process with all the information to deliver that to the nonprofit’s board and leadership team. Burns: If someone wants to contact you for those services, what’s the best way to do that? Siaje: Anyone seeking services may either give us a phone call at (248) 631-0572 or email me directly at ed.siaje@ bankofamerica.com. Burns: You also serve as chair of the governance and nominating committee for the United Way here in Detroit. What goals and objectives do you have for our United Way? Siaje: For me it’s about connecting the United Way’s staff and its board to leverage that relationship and strengthen it. The other big objective for me is to build the right board, having the diversity that we need and having the right people in the room — people who want to roll up their sleeves and be involved. Burns: What else should we know about the work you do at Bank of America, Private Bank? Siaje: We’re a bank that wants to take care of the communities that we live, work and play in. We have all the business lines here in Michigan – small business, middle market business, investment management and all of the essential banking services.

Patti Poppe, President and CEO, CMS Energy Corporation and Consumers Energy Company

Larry Burns: As a CEO, what advice do you have for young people graduating? Patti Poppe: Number one, say please and thank you. Ask people to share with you what they know, and then thank them when they do. We’re lifelong learners. Second, eat your peas. Personally, I don’t like peas. The point of the saying is do the tough stuff. You learn with failure, you learn with challenge, you learn by working hard. Finally, stand up straight. Trust yourself, believe in yourself when you walk in any room. Burns: Tell us about CMS Energy. Poppe: In terms of children, I can’t think of anything better than having a planet that will serve them for their lifetime. We are very committed to thwarting climate change by taking aggressive actions to transition to cleaner renewable energy. We have been seen as leaders globally. Newsweek magazine picked us as one of the Top Ten Greenest Companies in the nation. We’ve reduced our carbon emissions by 38 percent — well ahead of mandates or regulations — allowing us to save water and waste that ends up in landfills. We have a shortterm goal to restore 5,000 acres of land in Michigan to natural habitat, but a longer-term goal of

adding 6,000 megawatts of solar energy with about 59 square miles of panels. Burns: Tell us about the CMS Energy Foundation. Poppe: We’re proud to align our foundation with our triple bottom line of serving people, planet and prosperity – not just profit. Our foundation is aligned to contribute to education. One way in which we contribute to education is through our Talent Pipeline Management Academy. We’ve partnered with the U.S. Chamber of Commerce to train community leaders to apply supply-chain methods to the talent pipeline. We have had 200 companies and 13 communities participate in our workshops to communicate to educational institutions the needs that they see for the future. It’s really predicting the talent demand. The foundation is also engaged in our FIRST Robotics relationship with K-12 students. The program creates an environment in a stadium with music and competition. The kids are total rock stars with their robots. Burns: Is there a general sense of how things are going in our state? Poppe: Our overarching theme is One Michigan. That doesn’t mean everyone has to think the same. In fact, because we have diversity of thought we can have better, more creative solutions that will last. As we think about Michigan children, what could be more important than grownups coming together to tackle the tough stuff and create an environment where our young people can thrive and grow and prosper for generations to come?

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‘DETROIT RISING’

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Q&A: Canada’s chief diplomat in Detroit weighs in on Line 5 Canadian officials have been warning Gov. Gretchen Whitmer and Attorney General Dana Nessel for months about the poCHAD tential negative LIVENGOOD consequences to Michigan’s economy and U.S.-Canada trade relations if they shut down Enbridge Energy’s Line 5 oil pipeline. Joe Comartin, the head of Canada’s consulate in Detroit, discussed the implications of stopping the flow of petroleum in Enbridge’s Line 5 during an interview for the Crain’s “Detroit Rising” podcast the week before Nessel made good on her promise to take Enbridge to court in a bid to decommission the pipeline. Comartin said shuttering Line 5 would have a “severe” impact on oil refineries in Sarnia, Ontario, as well as refineries that fractionate liquid natural gas into propane gas, which is exported back into Michigan. He also acknowledged that Calgary-based Enbridge has a credibility problem following its disastrous 2010 oil spill on the Kalamazoo River — the costliest inland oil spill in U.S. history. Here’s a partial transcript of Comartin’s comments on Line 5 and Enbridge. They’ve been edited for length and clarity.

“Quite frankly, I think our position would be if we were asked back in 195354, from this perspective today that that thing should have never been allowed in the first place, it should have always been underground.”

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Crain’s Detroit Business: Dana Nessel has threatened to potentially shut down Line 5. What would be the impact of that for Canada, broadly, and Ontario, specifically? Comartin: The impact on the refin-

eries would be very severe in terms of the refinery in Sarnia because the bulk of its refining is done off of Line 5. Although it will have a similar impact on the refineries here in Michigan and in Ohio that also receive the crude from this line. But the impact on that one refinery in Sarnia — it would basically have to shut down. Where would they get their light crude oil?

Right now, in talking to Enbridge, they would have to bring it in by ship, by rail — most of it would come in from rail. Some might come in by trucks, but it would mostly be from rail.

‘Detroit Rising’ podcasts To hear Chad Livengood’s full interview with Joe Comartin, listen to the Detroit Rising podcast online at soundcloud.com/ crainsdetroit, on the Crain’s Detroit Business iTunes channel or wherever you get your podcasts.

Joe Comartin Is there rail capacity? Are there rail cars for this?

Not right now because of other problems we’re having in terms of shipping fuel in Canada into the United States right now out of Alberta. Almost all of the rail cars that would be available for that are being occupied at the present time. So there would be a shortage for that Sarnia refinery and the refineries downstream?

Yeah. And that very much is the concern is what the consequences are for not just that refinery, but then what happens to supply here in Michigan — both in the Upper and Lower peninsula — and parts of Ohio as well as Ontario. What kind of talks have you had with Michigan or even federal officials or members of Congress about the position of Canada about the need for this pipeline to continue?

I think you have to appreciate the number of issues in Canada right now around pipelines. We just had a major announcement about another pipeline on the western end of the continent. But this goes back to the agreements Canada has with the United States in terms of the flow of fuel, the priority we give to the United States to access to that natural resource coming out of Michigan. The end result of all of that, here’s a lot of discussion going on, not just about this pipeline, but a number of others that are coming into the United States. We supply something like 43 percent of all of the energy fuel that’s brought into the United States. This particular pipeline is just one small part of it. ... At the national level, our government has communicated very clearly to the governor ... that we have a long-term relationship between our two coun-

tries, this is just one aspect of it around energy. Quite frankly, I think our position would be if we were asked back in 1953-54, from this perspective today that that thing should have never been allowed in the first place, it should have always been underground. To lay it on the bed of a waterway as busy as that one is at Mackinac, from an environmental standpoint today, would be totally unacceptable. But the reality today is that it’s there. It’s a major source for fuel and energy in Michigan as it is to Ontario and Ohio for that matter. To take the position that they have of being able to shut that down tends to ignore ... the consequences of that both to Canada and to the United States — and Michigan in particular. It is not in keeping with relationship that we’ve historically had.

“It’s a major source for fuel and energy in Michigan as it is to Ontario and Ohio for that matter. To take the position that they have of being able to shut that down tends to ignore ... the consequences of that both to Canada and to the United States — and Michigan in particular.” Has this factored into the trade negotiations for the new U.S.Mexico-Canada trade agreement?

As far as I’m aware, it did not surface there at all at the time when those negotiations were going on. So much of it was focused on manufacturing, the auto industry in particular. The opponents of this pipeline have portrayed it as a Canadian company with a pipeline that starts in Alberta and ends in Ontario and it’s Canadian oil for Canada. But there’s actually oil coming out of North Dakota that ends in Line 5. Has Enbridge done a good enough job communicating its own story to the public and politicians in particular?

If I can be critical of Enbridge it would be only that whatever they tried to sell in terms of the messaging, it has not been as successful as it needed to be. ... I think the problem Enbridge obviously has is one of credibility because of what happened at Kalamazoo in terms of that (oil) spill and how that was handled. ... But it’s quite obvious that we have a great deal of the population in Michigan who do not understand what the consequences are going to be if that (pipeline) gets shut down arbitrarily. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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REAL ESTATE INSIDER

Developer looks to flip First Independence Bank building In this week’s installment of Detroit Real Estate Flipping Insider, I present to you the First Independence Bank building on Michigan AveKIRK nue downtown. PINHO Developer Roger Basmajian is now asking $10.9 million for the building at 44 Michigan Ave. at Griswold Street that he bought at the very end of 2015 for $2.45 million, a markup of 345 percent. That’s a whopping asking price at $519.05 per square foot; the purchase price when Basmajian bought the 21,000-square-foot building was $116.67 per square foot. It also comes just two months after he announced a series of projects, including an $8 million redevelopment of the building for a single retail tenant. “Even though this is one of our prized properties and in an absolute stellar location, other projects have taken priority, and that is the reason we are now contemplating a sale,” Basmajian said in an email, later noting that those projects are on Broadway and in the Paradise Valley Cultural and Entertainment District. The property is being marketed by Farmington Hills-based Keystone Commercial Real Estate LLC, which successfully handled another down-

COSTAR GROUP INC.

Developer Roger Basmajian paid $2.45 million for this building at 44 Michigan Ave. in downtown Detroit at the end of 2015. It is now for sale for $10.9 million.

“Even though this is one of our prized properties and in an absolute stellar location, other projects have taken priority, and that is the reason we are now contemplating a sale.” Roger Basmajian

town flip in recent months: The Fowler Building, which had been owned by New York-based Sequoia Property Partners until it sold to Dan Gilbert’s

Bedrock LLC for an undisclosed amount. Sequoia bought the Fowler Building in 2012 for just $700,000 and did zero work on it, even though virtually every other building around it has undergone at least some rehabilitation and change of tenants since then. It then listed late last year for $22 million. A sale at that price would have amounted to $396.40 per square foot (I would eat a sock if Gilbert paid that much for it), compared with $12.61 per square foot when Sequoia bought the eight-story building in August 2012. In other recent flipping history: J Galapagos Art Space founder Robert Elmes sold Gilbert a building near Corktown at 1800 18th St. for an un-

The ‘King of Coupons,’ Valassis Communications founder, dies at 89 By Annalise Frank afrank@crain.com

George Valassis, the “King of Coupons” and founder of the Livonia-based Valassis Communications Inc., died June 22 in Florida. He was 89. Valassis, a Toledo native born in 1929, built one of the largest newspaper coupon and insert- and direct-mail companies in the world. He started the company in 1970 in Oak Park, and it became a pioneer in the industry. The longtime businessman was very sick over the past Valassis year as kidney cancer spread to his liver, Valassis’ wife, Sandra, told Crain’s. “He lasted a long time. I mean, he had his first operation in 1992,” Sandra Valassis said. “So he was a fighter ...” While he was in the hospital, more than a dozen nurses found out about Valassis’ printing company and came to his room to thank him for all the success they’d had couponing, Sandra Valassis said. “He would laugh, he would get a real kick out of it” when he’d be recognized over the years for his Valassis Communications days, she said. “The Valassis organization ex-

Need to know

JJGeorge Valassis died Saturday in

Jupiter, Fla.

JJToledo native started Valassis Communications in Oak Park in 1970 JJNewspaper coupon and insert- and direct-mail company grew into one of world’s largest

presses its deepest sympathy to the family of George Valassis, a visionary who believed ordinary people could achieve extraordinary things, a belief we still hold true today,” Valassis CEO Dan Singleton said in an emailed statement to Crain’s. When Valassis started the business — in his home — he was doing contract printing work for a variety of products. Two years later, in 1972, he “modernized — and nationalized — the coupon business” by inventing the free-standing insert, trade publication Printing Impressions reported in a 2000 feature. “For the first time, coupon advertisers were offered a professional coupon program that had guaranteed publishing dates and market distribution (weekly distribution nationwide via Sunday newspapers),” Printing Impressions wrote. “Also, because of the cooperative nature of the insert, it was now affordable for advertisers to run a national coupon program.” Valassis sold the company in 1986 for nearly $400 million to Sydney, Australia-based Consolidated Press Holdings Ltd., which took it public

in 1992, Crain’s previously reported. By the 1990s, Valassis came to own half of the nation’s coupon market, but saw its core business erode as the daily newspaper industry rapidly began to decline. It struggled with its coupon business in the mid-2000s, and sought to diversify, branching into in-store marketing and investing in digital coupon services. In 2013-14, the company — then profitable with $2 billion in annual revenue — was sold to San Antonio-based Harland Clarke Holdings Corp. At that time, an 85-year-old Valassis was maintaining homes in Clarkston and Manalapan, Fla., and investing in innovative products and ideas. The golf enthusiast then settled in Jupiter, Fla. In recent years, Valassis invested in Advanced Power Control Solutions LLC, which created a retrofit system to allow coal-fired power plants to burn a mixture of natural gas and coal, a solution to both reduce emissions and help plants meet stringent federal environmental standards. Valassis also invested in football helmets aimed at better injury prevention. Valassis graduated from the University of Michigan with a degree in business and engineering. He and his wife endowed four professorships in urology at the University of Michigan. Crain’s reporter Anisa Jibrell contributed to this report.

disclosed price. Several years ago, Elmes listed it for $6.25 million after paying just $500,000 for it in 2013. And the market has only made gains since then due in large part to ... J Ford Motor Co. paid a whopping $90 million last year to the Moroun family for Michigan Central Station, a price of $150 per square foot for the 104-year-old 600,000-square-foot building. The Dearborn-based automaker plans to anchor its $740 million Corktown autonomous and electric vehicle campus in the old train depot. J Fernando Palazuelo, the owner of the Packard Plant, is looking to divest from a nearby large vacant building at 1921 E. Ferry St. by selling it for $4.94 million, or $9.35 per square foot, after buying it in a Wayne County tax-foreclosure auction for less than $500,000. J Birmingham investor Zaid Elia, through the Royal Oak office of JLL, is marketing the Cadillac Tower building in downtown Detroit for sale after paying about $24 million for it in December, a rate of about $60 per square foot for the 400,000-squarefoot tower. Basmajian owns several buildings downtown, including those at 751 Griswold, 607 Shelby, 220 W. Congress and 1322 Broadway streets. He jumped into the Detroit real estate scene a few years ago after working on development deals in Ferndale and Royal Oak. The First Independence Bank

building was originally eight stories, and then six were torn down in the 1970s because of high operating expenses, making it a two-story building (along with basement space). There had been chatter in 2016 about building on top of it, but obviously that has yet to come to pass. First Independence Bank, which was founded in 1970, was founded to provide mortgage and commercial loans to the area’s underserved black community at a time when redlining made it difficult for them to buy homes.

Crowne Plaza in Auburn Hills listed Los Angeles-based brokerage CBRE Inc. has brought the Crowne Plaza Detroit North hotel in Auburn Hills to the market for an undisclosed asking price. The hotel has 190 rooms, according to the marketing materials. It has a restaurant in O’Malley’s Pub, fitness center, indoor pool and 5,000 square feet of meeting space. It opened in 1989 and has been owned by the same company for 25 years, according to CBRE. The hotel is owned by an entity with ties to B. F. Saul Co. Hospitality Group, based in Bethesda, Md., according to Auburn Hills property records. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

Real Estate Experience

In Your Corner.

Contact Casey Koppelman at ckoppelman@varnumlaw.com

National real estate practice Concentration on acquisitions, dispositions and leasing of multi-tenant retail, office and industrial properties Represents lenders, investors, operators, developers and borrowers Construction loans and structuring joint ventures Tier 1 Metropolitan Ranking Real Estate Law and Real Estate Litigation 2019

C R A I N ’ S D E T R O I T B U S I N E S S // J U LY 1 , 2 0 1 9

OPINION COMMENTARY

LETTERS

Duggan, Dimon make for a powerful team

Can WSU board learn to play nicely?

s Detroit Mayor Mike Duggan’s administration was racing this spring to assemble 215 acres of east side land needed for Fiat Chrysler Automobiles’ new assembly plant on Mack Avenue, they ran into an unforeseen holdout property owner. And, contrary to popular belief, it wasn’t the Moroun family with its 82 acres of prime industrial property at Mack and Conner. A 7-acre slice of land east of Jefferson Avenue owned by Conrail turned out to be the toughest piece of property to acquire during the city’s 60-day land-buying spree, according to Duggan. “Railroad companies don’t make decisions in 60 days,” Duggan said last week. “Our problem wasn’t the Morouns. Our problem was the railroad company.” Duggan phoned an unusual ally for help on what turned out to be a $500,000 land deal: East Coast bank executives at JPMorgan Chase & Co. Higher-ups at JPMorgan made some calls to Conrail executives and helped break the logjam, setting in motion FCA’s $2.5 billion investment and 5,000 new automotive jobs in the city, according to the mayor. This type of shuttle diplomacy had worked before. In 2015, when Duggan and the congressional delegation were lobbying Congress for federal funds for housing blight demolitions, the mayor enlisted JPMorgan Chase CEO Jamie Dimon, the year after Dimon had committed $100 million in grants and low-interest loans to the city. Dimon, head of the nation’s largest bank, was able to make Detroit’s case for blight funds in front of then-House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell — a Republican audience the Democratic mayor of a city one year removed from bankruptcy court couldn’t command at the time. After Dimon intervened, the blight funds got approved by Congress — a story Duggan tells often. JPMorgan Chase’s five-year-old phil-

Here we go again. Is the schism on the Wayne State University board of governors beyond repair? Let’s hope not — and it’s likely a good thing that the medical school board of visitors is getting involved when it comes to encouraging the resumption of conversations with Henry Ford. (Thank you Tom Simmer, M.D.) Board of governors members are elected by Michigan residents. Hence, the board’s constituents are not just the students, faculty and employees of the university, but the entire state. As taxpayers, we all contribute to Michigan’s public institutions of higher learning and should rightly expect that their boards have education and the state’s best interests at heart. That’s not what I’m seeing on the current board. It’s difficult to assess the board’s actions without considering them within the context of the university’s values, which include: J Collaboration: “When we work together, drawing upon various talents and perspectives, we achieve better results.” J Integrity: “We keep our word, live up to our commitments and are accountable to ourselves and each other.” J Innovation: “We are unafraid to try new things and learn by both failure and success.” I’m seeing some inconsistencies here. Is it an old-fashioned notion that a board, a committee, or a community group can respectfully work together and ask, “What can I do? How can I make a difference? How can we establish a productive and respectful dialogue that leads to positive action? How can we better our university and our community?” The WSU board of governors needs to focus on doing the right thing — even when they don’t agree on every detail. In the meantime, they have lowered the bar for board behavior. Ewa Matuszewski CEO Medical Network One Rochester

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Jamie Dimon, chairman and CEO of JPMorgan Chase & Co., toured Detroit’s North End neighborhood Thursday with Develop Detroit CEO Sonya Mays, whose organization is building new residential homes in between hundred-year-old houses on Mount Vernon Street, just off of Woodward Avenue.

CHAD LIVENGOOD clivengood@crain.com

anthropic and targeted investments in Detroit have morphed into more than just one of the world’s largest financial institutions with $2.5 trillion in assets sprinkling a couple hundred million dollars over the Motor City. Dimon and his team have become an outside voice for Detroit, validating the city’s post-bankruptcy progress in corners of the business and political worlds where the credibility of someone like Jamie Dimon matters. Like the halls of power in Washington. Or a railroad company’s C-suite in Philadelphia. For his part, Dimon didn’t personally make the phone call to Conrail.

“That wasn’t me,” the bank chief said in an interview last week during his two-day visit to Detroit. “They may have used my name. But it wasn’t me.” But Dimon’s name carries weight. And the Chase bank chairman and CEO doesn’t lend his name to just any big city mayor. His relationship with Duggan keeps blossoming, as evidenced by the bank’s pledge of $200 million toward revitalization initiatives by the end of 2022 — double what Dimon committed in 2014 while the city was still in bankruptcy court and its future was less than certain. “We see a mayor who’s extraordinary — with a smile,” Dimon told me. “Six years in, he turned the streetlights on, he got the ambulances back coming on time, he’s getting all of society working together, he’s not complaining, he’s working with the governors. Anyone that can help him, he applauds their help. He’s an extraordinary political leader. That’s the kind of leader we need all over America.” And although the 2020 Democratic field is “a little crowded now,” Dimon still thinks Duggan should be running

the country. “He’d be a great president,” Dimon added. Dimon came to town last Wednesday for a town hall meeting with Duggan and high school students, where they gave life and career advice. Later that evening, Duggan touted JPMorgan’s assistance in securing the land deal with Conrail at an event celebrating the bank’s work in the city at the Charles H. Wright Museum of African American History. On Thursday, Dimon had lunch with Detroit restaurateurs who have borrowed money from the Entrepreneurs of Color Fund his bank helped establish. Since 2016, 68 small-business owners have borrowed for construction and capital investments in their businesses from the Entrepreneurs of Color Fund and just one has defaulted, according to Duggan. Dimon also toured new residential construction in the North End neighborhood with Develop Detroit CEO Sonya Mays. The bank’s new round of philanthropy and investments is going to have a larger focus on housing, particularly homeownership. Dimon said their focus will remain on helping Duggan stabilize neighborhoods to attract residents back to the city — and other investment along once-abandoned commercial corridors. But in the neighborhoods, the comeback of families hinges on finding a solution to addressing the capital needs of the public school district’s buildings in the absence of new public debt to make improvements. When asked if JPMorgan Chase would get involved in Detroit’s schools, Dimon replied: “That’s very hard for a bank to get involved in the politics of that.” Then he paused. “But we study everything,” Dimon added. “If the mayor asked us to look at that, we’d look at that, too.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

Gilbert’s moves to change Detroit narrative bloom L

ast year, after Detroit failed to make the short list for Amazon’s HQ2, Dan Gilbert took to Twitter to lay out why he thought the bid failed. It didn’t have anything to do with talent or transit, he wrote in a letter titled “The Elephant in the Room.” “Old, negative reputations do not die easily,” he said. “I believe this is the single largest obstacle that we face. Outstanding state-of-the-art videos, well-packaged and eye-catching proposals, complex and generous tax incentives and highly compelling and improving metrics cannot nor will not overcome the strong negative connotations that the Detroit brand still needs to conquer.” His point was that Detroit had spent decades symbolizing urban

MICHAEL LEE malee@crain.com

decay and failure for the nation. And that brands are really hard to change. But one thing Gilbert has done over the past decade, aside from the flashy redevelopments and a fast-growing mortgage business, is plant seeds, many of them, to change that brand.

Last week, Detroit and the nation saw a couple of those seeds blossom. And they both carry promise, bit by bit, to change Detroit’s brand. In Northwest Detroit, the PGA conducted its first ever tournament in Detroit — and brought attention to a sector of the city far from Gilbert’s nerve center downtown. Neither the tournament nor the attention would have been there without Gilbert, whose Quicken Loans played the long game in bringing pro golf to Detroit — taking over the sponsorship of a tournament in Virginia, and then using its sponsorship muscle to move the tour date to Detroit. Another Gilbert seed put a national spotlight on Detroit as well — the

record-setting $110 million venture-capital investment in StockX, the “stock market of things” funded by Gilbert known for targeting sneaker collectors. It gives Detroit another “unicorn” tech company. Both of these developments brought a positive national spotlight to Detroit in a city that was long not accustomed to that. As Detroit works seemingly endlessly to rebrand itself from a rust belt relic into a city with a bright future, both the golf tournament and StockX are priceless evidence for those who haven’t been paying attention that change is afoot. And they did so in fields — golf and technology — that few people nationally would associate with Detroit.

Of course, a golf tournament does nothing to fix many of the ills that still grip the city — fully changing that brand will require changing the reality of dire poverty, failing schools and intractable blight. But as Gilbert recovers from the stroke he suffered in May, many have asked what the effect might be on the city that he’s focused his investment dollars — and his considerable force of will. Our community wishes a speedy and full recovery for Gilbert. But the Rocket Mortgage Classic and StockX’s success provide hope for a rebranding of Detroit and reassurance that the seeds Gilbert has planted will bear fruit for Detroit for years to come.

C R A I N ’ S D E T R O I T B U S I N E S S // J U LY 1 , 2 0 1 9

Affordable housing is the answer to many woes

hen the nonprofit Michigan League for Public Policy announced that Detroit’s lack of safe, affordable housing could become much worse in the next few years, and those most in need are likely to suffer the worst, I nodded my head. I know too well that housing is one of the biggest barriers to social, emotional and economic health and well-being for Michigan families and the dearth of affordable, safe housing in Detroit and throughout Michigan. Affordable housing is the top health and human service need in the country and in our state. In articles published online and in national media outlets, this urgent demand for good housing options comes up again and again as one of our most important focuses today. It’s a concern we’ve had as we serve people struggling to stay afloat and keep their families together — which has been a huge motivator for us to collaborate toward building more affordable housing communities through tax credit-financed projects around the state. For more than three decades, Samaritas has grown its affordable housing service to campuses, serving seniors, families and persons with disabilities. In July, we begin renovating the St. Joseph Seminary building in Grand Rapids. This site will include 52 apartments for seniors, seven of which will be seniors with disabilities. We are on track to submit several applications every year to MSHDA for tax credit financing approval to add sites throughout Michigan. Congress recognizes the severe need for affordable housing and so has established tax credit financing to meet this need. While securing these funds in an extremely competitive market for affordable housing development can be daunting, we soldier on with the hope that we can continue to be successful to expand our affordable housing services throughout the state and provide safe residences for so many Michigan residents. The need is increasing at a fast pace. While our legislators in Washington and in Lansing recognize and

OTHER VOICES Sam Beals

support this need, are we doing all we can do to empower every American with the tools they need to succeed? To survive? To thrive? The best thing we can do when creating affordable housing is take

the whole picture into account. Is the proposed site close to public transportation? Within a short distance of groceries? Medical and dental care? Urgent care? Community activities? Location is everything. An affordable housing community has no value if it’s far from the services and programs every day folks need to thrive. Better yet, affordable housing campuses that offer a service coordinator on staff better meet the needs of residents. Maintenance, security and programming are essential elements that guarantee safety and promote community. Doctor visits, field trips, parties,

Affordable housing is the top health and human service need in the country and in our state. planned activities on and off site, guest speakers and classes keep people connected, involved and aware. Seniors in affordable communities like to volunteer at faith centers and schools; when transportation is easily accessible or provided by the community, they fulfill the soul-deep need to be of value, to give to others, and their lives and health benefit as

do the people with whom they connect. As the need for affordable, safe housing continues to grow, we need to meet those needs — and exceed them. If we are only as strong as our weakest link, then we must all care deeply about the welfare and well-being of every member of society — and do what we can to bring full health, satisfaction and value to every person among us. That’s the promise that accompanies affordable housing if we are to turn things around. Sam Beals is CEO of Samaritas, a Detroit-based human services agency.

ROI is the first step. ROW is the journey.

Nominations open for Notable Women in Education Leadership, Law Crain’s Detroit Business is seeking nominations for notable women in law and education leadership. We will recognize Notable Women in Education Leadership in a special report on Sept. 23. If you know an outstanding woman superintendent, principal, administrator, board president or other leader, you can tell us about her at crainsdetroit.com/nominate. Higher education as well as K-12 leaders are eligible to apply. Nominations are due July 16. We will honor Notable Women in Law on Oct. 28. Nominations are due via crainsdetroit.com/nominate by Aug. 6. For questions about either program, contact special projects editor Amy Bragg: abragg@crain.com or (313) 446-1646.

ROI plays an important role in one’s financial position, which is why Greenleaf Trust’s sophisticated investment platforms (with over $12 billion in assets under advisement) are so robust. But without a holistic return on wealth (ROW) management strategy that integrates performance with tax planning, trusts, risk management, cash flow, retirement, estate planning, and charitable giving, ROI only goes so far. That’s why now is the perfect time to maximize your own return on wealth. The big picture is probably bigger and better than you know. Call us. Client relationships begin at $2 million.

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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 // J U LY 1 , 2 0 1 9

FOCUS

DIVERSITY AND INCLUSION

INTENTIONS AND REALITY On diversity, most workplaces say they’re committed, but results that last prove difficult to achieve

By Dustin Walsh | dwalsh@crain.com

orn out of a necessity to curb discrimination lawsuits, workplace diversity programs began to blossom across the U.S. in the 1970s and 1980s. By the 2000s, they became an imperative to business success — matching the look of the increasingly diverse U.S. consumer. Diversity, equity and inclusion programs are now commonplace. But, largely, they don’t work.

The benefits of a diverse workforce are well-studied. Companies with high ethnic and cultural diversity on executive teams were 33 percent more likely to have industry-leading profitability, according to a 2015 study by McKinsey & Co. But getting there is a challenge for most companies, and experts warn that traditional methods of combating bias and promoting inclusion aren’t increasing diversity. The reality is an effective diversity program is incredibly difficult to achieve and even harder to prove out as most companies don’t report their demographic makeup. Diversity in the workplace is complicated and often messy, but experts agree programs should be intentional, accountable ILLUSTRATION BY ANDREA UCINI FOR CRAIN’S

Steve Spreitzer, president and CEO and engage the entire workforce if activate bias or spark a backlash.” The study, which analyzed 30 years of Detroit-based Michigan Roundtable they are to stand a chance at success. Mandatory diversity training is of data from more than 800 U.S. com- for Diversity & Inclusion, said people the first stop for nearly all major panies and hundreds of interviews often see diversity programming more as a burden than an imperacompanies on the road to tive. The U.S. civil rights improving the racial and “It turns out that while people movement isn’t far in the gender makeup of their are easily taught to respond rear view mirror, and while workforce, but it rarely most leaders recognize it’s produces results, accord- correctly to a questionnaire important, they want the ing to a 2016 study by Har- about bias, they soon forget problem to simply fix itself, vard University. the right answers.” he said. “It turns out that while “Our history of hypeople are easily taught to — From a 2016 Harvard study on diversity programs per-segregation is so respond correctly to a questionnaire about bias, they soon with managers and executives, found baked into the individual and also forget the right answers,” the re- that mandatory diversity training re- systems, which puts a gravitational searchers said of their findings. “The sulted in a 9.2 percent drop in black pull toward token efforts,” Spreitzer positive effects of diversity training woman managers, a 4.5 percent drop said. “The result is more Rodney King rarely last beyond a day or two, and a in Asian men managers and a 5.4 per- than Martin Luther King.” number of studies suggest that it can cent drop in Asian woman managers. SEE DIVERSITY, PAGE 14

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SPECIAL REPORT: DIVERSITY AND INCLUSION

Visitors in the DIA galleries. “By 2040, the minorities will become majorities in the US. And we need to be ready to serve them,” said DIA director Salvador Salort-Pons. “The museum needs to be the mirror of the community.” DETROIT INSTITUTE OF ARTS

Cultural institutions ramp up diversity, inclusion efforts By Sherri Welch swelch@crain.com

Local cultural institutions that have historically served white audiences have focused on diversity, equity and inclusion in their programs and organizations to some degree for years. But with minority populations in the U.S. quickly becoming the majority, Detroit’s largest cultural institutions are ramping up their efforts to reflect, engage and include new communities. Building on DEI efforts focused on programming and internal operations, they are now seeking collaborations with non-arts nonprofits and the city of Detroit in a bid to connect more deeply to communities and the diverse populations in them. Their peer institutions that serve minority populations haven’t always had the funding to do outreach to new audiences, said CultureSource Executive Director Omari Rush, who is chairman of the Michigan Council for Arts and Cultural Affairs. But with new state funding, over the past year, the Charles H. Wright Museum of African American History, the Arab American National Museum and the Holocaust Memorial Center are also launching DEI work, taking educational programs and exhibits to new areas in the suburbs, on the western side of the state and as far north as the Upper Peninsula, among other efforts. No two cultural organizations are doing exactly the same thing when it comes to DEI, Rush said. The sector “is really grappling with this. There’s no play book … everyone is having to chart their own path.” Still, it’s incumbent on all arts and culture groups to be looking at it, he said, given their ability to nurture citizenship and strengthen communities by bringing diverse groups together through art. There’s also a business case for arts

Need to know

 Arts groups have focused on DEI to some degree for years but are working to expand those efforts  They’re seeking collaborations with schools, other nonprofits, city of Detroit to connect more deeply with local, diverse communities  Institutions serving minority populations also launching new DEI efforts, including statewide outreach

Rush

Blauvelt

and culture organizations to embrace diversity, Rush said, noting more diverse organizations have stronger economic outcomes because they are less reliant on any single source of revenue. With population shifts, “there will be less and less of one type of monolithic culture you can play to and be sure people are going to come,” he said. Cultural groups that aren’t embracing DEI will limit their ability to gain resources, to grow and to attract audiences, Rush said.

A renewed imperative Cultural institutions’ expanded DEI efforts are coming amid demographic shifts. The Washington, D.C.-based Brookings Institution last week reported that for the first time, non-Hispanic white residents now make up less than half (49.9 percent) of the nation’s under-age-15 population, based

on newly released 2018 U.S. Census Bureau estimates. The new data highlights the increasing racial diversity of the nation’s overall population, for which non-Hispanic whites now comprise only slightly more than two-fifths or just over 60 percent of all residents, Brookings said. The findings emphasize the new impetus cultural organizations are seeing to engage diverse audiences to keep their collections and programs relevant. For Michigan Opera Theatre, advancing the careers of opera singers of color has been a part of its culture from its early days, and the Detroit Symphony Orchestra has championed African American classical musicians through its Classical Roots Celebration launched over 40 years ago and a fellowship program for African Americans launched 30 years ago to build a pipeline of professional musicians. “So much of the opera canon is based in European fairy tales,” said MOT’s Chief Administrative Officer Patricia Walker. “We’re looking to make sure (everyone) … can see different kinds of heritage represented on stage” through operas reflecting, for example, Mexican and West African heritage and experiences. The Detroit Institute of Arts and Cranbrook are working to diversify their collections, each acquired over more than a century and comprised largely of works done by white, male artists. The Cranbrook Art Museum doesn’t have quite the same acquisition budget as the DIA, but the majority of things it’s purchased over the past few years since he took the helm of the museum have also been works by women and artists of color, Director Andrew Blauvelt said. “History demands that; for so long, museums have collected and reflected the tastes of the majority dominant culture.” SEE CULTURAL, PAGE 14

CONNECTION TO

COM M U N IT Y We travel your roads and live on your streets so we know well what is important to your community. Local knowledge and personal understanding – it’s all connected.

FISHBECK , THOMPSON, CARR & HUBER engineers | scientists | architects | constructors

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SPECIAL REPORT: DIVERSITY AND INCLUSION

Paying it forward Diversity in mentor/mentee pairs can make a lasting impact in careers, lives

By Diana Christensen Special to Crain’s Detroit Business

While the effectiveness of diversity programs in the workplace is mixed at best (see story, Page 10), mentorship works. One 2016 study by Cornell University’s School of Industrial and Labor Relations found that mentoring programs boosted minority representation in management by 9 percent to 24 percent, while boosting promotion and retention rates for minorities and women by 38 percent, compared to 15 percent for non-mentored employees. In a traditional, structured approach to mentorship, a senior leader mentors a younger up-and-comer — often, someone who looks like them, and faces challenges ahead that, say, a woman in an executive role might be able to help a more junior woman navigate. But diversity within mentorship has its own benefits. Diverse mentor/ mentee pairs have been shown to be better at solving more complex problems than homogenous groups. Diversity within a mentor relationship can help both mentor and mentee see things from different points of view based on age, life experience, culture, ethnicity and gender. Secretary of State Jocelyn Benson, the Chair on Michigan’s Task Force for Women in Sports, agrees. “It’s critical. You have to ensure all voices are heard, that multiple perspectives are guiding you, that those in position of power are opening doors that were previously closed, ensuring all our institutions are as good as they can be,” Benson said.

Shared experiences “How ever I’ve gotten here, it’s because of someone who took five minutes to share something of value,” said Rachna Govani, the founder of a startup that was acquired earlier this year. Govani grew up on the East Coast and graduated from New York University. After stints in product development at American Express and Recyclebank, she co-founded her company, Foodstand, in New York City, with the mission of helping people build healthier, more sustainable eating habits through guided challenges. Now Govani is the head of product at Diet ID, which acquired Foodstand in April. She and her husband, who is originally from Michigan, left New York for Detroit because they wanted to go where they could make an impact. Diet ID provides physicians, health care organizations and wellness centers with a digital tool to conduct a risk or dietary assessment, and then creates a daily dietary plan. “I only knew my husband and his parents when I first came here,” Govani said, “Mentorship only happens if you open your eyes to it and let the road sort of guide you, but you have to put yourself out there first.” For Govani, that meant a lot of coffee dates. Over coffee, a friend of a friend of a friend introduced her to a public health professor at the University of Michigan, which led Govani to

a spot in the 2017 cohort of the Desai Accelerator. “That program gave me a seat in the table in this community,” Govani said. “Which led to me meeting a lot of the leaders in Detroit, which would not have happened otherwise, if I hadn’t first attended that program, which wouldn’t have happened if I hadn’t first met with many other people over coffee.” Marc Hudson, the founder of Rocket Fiber, is a mentor to Govani. Hudson is white; Govani is South Asian. But Govani said she felt their common bond as founders of their startups was more important than any other factor. “Even though we’re coming from completely different industries and his company is at a much later stage than my own, he’s felt those emotions a founder feels,” Govani said. Hudson has helped guide Govani through the day-to-day work of a founder and how to manage the wins, losses and milestones along the way. “If you’re the founder or leader of your organization, it’s super lonely.

“Experience is a good first-time teacher. But it’s a very expensive first-time teacher.” — Marc Hudson, founder of Rocket Fiber

Even when you’re surrounded by your team, by your partners, you’re often times more alone in your thoughts than not,” said Govani. “You’re ‘on’ the whole time — it’s so necessary to always show strength, because part of your job is to illustrate how strong and well your company is doing.” That’s why, for a founder’s emotional well-being, “It’s critical to have these conversations.” It’s critical too, that more men, like Hudson, are willing to be emotionally vulnerable. Hudson admits he wasn’t the best student in high school, but that an instructor at Oakland Tech School saw his aptitude and motivated him to attend college. If that instructor hadn’t believed in him, he wouldn’t have gone to Michigan State University, where he was mentored by Kirsten Khire, the university’s communications manager. Khire treated him less like a student and more like a professional, he said. When he told her he was starting his own web site and digital marketing firm upon graduation, Khire told him MSU would be his first client. And they were. “I’ve failed a few times,” Hudson said. “Now that we are where we are, I want to pay it forward to other founders who may not have had the resources we had.” It’s about building an ecosystem, Hudson said, where everyone can learn from each other. “Experience is a good first-time teacher,” Hudson said, “But it’s a very expensive first-time teacher.”

A sense of belonging Gary and Tammy Paradoski, husband and wife, were the leaders of a junior Bible quiz group Terrence West was a part of as an elementary school student. “We had buzzers like in Jeopardy, and a point system. 50 points were rewarded for really difficult Bible scriptures, where 10 points was for a simpler quote,” West said. “I was more of a 10- or 20-point student.” West described the community that Tammy and Gary built as a kind of second family to him — a family that loved him, and looked out for him. West said Gary later helped him fill out the FAFSA and get into Eastern Michigan University. Once he got there, Gary helped West get a job at the bookstore to help pay for his books, bought a bedspread for his new dorm room and sent him care packages. “No one in my family came to see me” at college, West said. But Gary did. “These people I’m talking about, my first mentors … they’re white,” West said. “They came from suburban neighborhoods, from two-parent households … extremely different” from West’s upbringing with a single mom, he said. “For them to come in and give me that love and support, for them to choose to come to where I was at, a black kid living on the east side of the city, when they could have instead gone Downriver or somewhere else they were more familiar with to help people who looked more like them … the point is, it made a difference in my life,” West said. “It made me realize, no matter the discomfort, I add value to these spaces. On so many different occasions, when I didn’t feel (worthy), someone made me realize I have worth, and whatever I can do to help someone realize they have value, that they are worthy … I know firsthand how it can change the trajectory of a person’s life, and I will pay it forward.” West, who is now marketing and communications manager at Teach for America, had another mentor who played a pivotal role in his life and career: Bob Berg, the co-founder of the public relations agency West first worked for, Berg Muirhead and Associates, now Van Dyke Horn PR, after graduating from the University of Iowa’s journalism program. “He put me in spaces I wouldn’t normally be in, and it was tremendous for me,” West said. In paying it forward, “I initially wanted to help black men, but there aren’t a lot of black men in the field of public relations. But there are others, they’re here and they’re hungry, and that’s the most important thing,” West said. Anjelica Dudek was an intern at Van Dyke Horn while West was an account executive there, and he said she was good at seeking out advice and made it clear she wanted to be at the top of her game. She felt really new and inexperienced, but in the end, he said, she put in the work. “I talked to her about how to gain

Terrence West, left, stands next to mentee Anjelica Dudek at the Fisher Building in Detroit. West and Dudek met through Van Dyke-Horn while Anjelica was an intern. ELAINE CROMIE

confidence, told her she belongs in every room she’s in ... you belong in these spaces. I recognized that she really wants this, and so when I talked to Peter (Van Dyke), the CEO, and Marilyn (Horn), the president, I let them know, ‘Anjelica’s here.’” Dudek is currently a junior account executive at Van Dyke Horn.

Opportunities to help Uyoung Park Suggs participates in a national mentorship program for high school and college women interested in technology careers, called Built by Girls. Built by Girls matches young women with diverse working professionals, to help provide guidance and perspective on exploring potential career paths. Suggs’ first match was with Amanda Kim, a high school senior interested in mechanical engineering, who will be attending Georgia Tech this fall. Once a month, for an hour, they talk about soft skills, relationships, what to do in common workplace situations. They both said they also

loved the cultural aspect of relating to each other, as they’re both Korean American women. “I see this person as someone I want to guide and mentor, regardless of gender or color, but it’s unique in that we can share relatable stories on culture and diversity,” Suggs said. “When I first went into advertising, it was not diverse,” Suggs said. Though she said the industry was very open, it took time and exposure for diversity to become part of the conversation. “Sometimes there’s a knowledge gap or no awareness of my culture, but it’s never deterred me,” Suggs said. “I find most people are not badly intentioned, they may just have a lack of education. I look at it as an opportunity for education. I don’t build up walls, because then there would be no opportunity for growth. If I leave that door open and don’t get defensive, over time, all parties can learn from any given situation.” Humor has worked in her favor so many times in her career, Suggs said, and she said she learned that from her

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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 // J U LY 1 , 2 0 1 9

Efforts underway to make LGBT businesses more visible By Annalise Frank afrank@crain.com

Rachna Govani, left, and mentor Marc Hudson at Bamboo co-working space in Detroit. Gulati and Hudson met through a program called Backstage Accelerator. ELAINE CROMIE

Getting lesbian, gay, bisexual and transgender-owned businesses recognized in local governments’ efforts to make contracting more diverse may seem like a small sliver of the LGBT-rights agenda. But it’s part of larger work to show queer entrepreneurs as visible players in the business landscape. National and metro Detroit chambers of commerce are advocating for governments to recognize LGBTowned enterprises in government diversity initiatives aimed at businesses. It’s not a straightforward effort in Michigan, due to a large roadblock: The state disallows giving preference to minorities on government contracts. But Michigan has an option for businesses that register for bidding on state contracts to self-identify as minorities, and it recently added LGBTQ as an option — which allows the state to collect data on diversity in state spending on goods and services. There’s no imme-

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former manager at Microsoft, Margaret Birkett, better known as Peggy, who she referred to as her North Star. “She was hilarious, yes, and she made work so enjoyable, but more importantly, she was relatable, trustworthy, and her values and priorities aligned with mine. She prioritized work and family, and always brought a good perspective, in any given situation.” Suggs said she learned a lot from her on how to manage people in a highly matrixed company like Microsoft, but also how to make people not feel like they were just a cog in the wheel of a giant company. “The biggest thing is knowing who you are, being congruent with who you are, having good intentions, and the heart behind all that.” Suggs, innovation strategy director at Verizon Media, has worked at General Motors, Microsoft and Oath, while simultaneously lending her time to nonprofits such as StandUp For Kids, where she was the co-executive director for about five years in Detroit. StandUp For

Kids works to empower homeless and at-risk youth through counseling, mentoring and life-skills training in cities across the country. “When I think of mentorship, it’s about empathizing and putting yourself in someone’s shoes, and it’s a spectrum, where it can be formally structured like a program, (or) an organic situation, where you think, ‘Oh, this is a good place where I can help guide a person’s decision.’” It’s also a two-way street, she said — which is important to keep in mind for people who are thinking about becoming mentors, or who are seeking one. “There’s a lot of pressure when people think of mentorship, where people think they have to be at a certain level, or have a certain number in years of experience, or a certain title, and there’s the other side, where people don’t want to appear weak in asking for some guidance. When really it’s an opportunity for two people to learn from one another … it’s not a level thing, it’s people helping each other,” Suggs said.

Crain’s uses LGBT (lesbian, gay, bisexual and transgender) as an overarching acronym for a range of sexual and gender identities. Style varies when it comes to how journalists identify the community; LGBTQ or LGBTQIA+ are also used, adding in terms including queer and/or questioning, intersex, ally and/or asexual. Others prefer an umbrella term — queer, or something else — that includes gender and sexual minorities left out of the mainstream alphabet soup.

diate, direct benefit, but data is valuable and could influence decisions. Municipalities generally can’t give preference, either. But Kevin Heard, board of directors president for the Detroit Regional LGBT Chamber of Commerce, argues it’s still important to break LGBT into the conversation about government recognition of minority-owned businesses. The city of Detroit, for example, does certify woman-owned and minority-owned businesses, and targets them in inclusion efforts while not giving direct preference. It doesn’t recognize LGBT-owned businesses, though, and the national and local chambers want to change that. Verifying that a business owner is a member of the LGBT community might seem trickier to prove than, for example, veteran or racial minority status — but it’s already being done. The Detroit Regional LGBT Chamber of Commerce helps certify businesses through its countrywide affiliate, the National LGBT Chamber of Commerce. After being verified by the national chamber, a business can use that designation to seek opportunities with LGBT chamber corporate partners (including Battle Creek-based Kellogg Co. and Detroit-based General Motors Co.) who want to spend more with diverse companies. SEE LGBT, PAGE 16

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SPECIAL REPORT: DIVERSITY AND INCLUSION

CULTURAL FROM PAGE 11

Diversifying Cranbrook’s collection “is a personal thing for me, as a curator of color,” Blauvelt said. It’s also important that as part of an educational community, Cranbrook reflect other perspectives, he said. “We want to be sensitive to the world around us and reflect a broader view than has been done in the past,” he said.

Diversity within arts organizations In recent years, many of the major cultural institutions have also begun to focus on DEI within their own operations, working to diversify their boards, staffs and even volunteer bases. The DIA is measuring its efforts on that front. In 2016, it set a goal that its board would mirror the demographic makeup of Wayne, Oakland and Macomb counties which provide it with millage revenue to help fund its operations. This year, 37 percent of the museum’s 50-person board of directors are people of color. That’s up from 28 percent of 51 board members in 2016, DIA Director Salvador Salort-Pons said. The museum’s diversity dashboard shows a board that is 62 percent white, 28 percent African American, 4 percent Asian and 2 percent Hispanic/ Latino. Based on 2010 Census data — which the DIA is using as its benchmark — the combined population of Wayne, Oakland and Macomb counties is 67 percent white, 26 percent African American, 4 percent Asian and 4 percent Hispanic/Latino. Among its 380 employees, 61 percent are women. About 54 percent are white, and the balance people of color, he said. “By 2040, the minorities will become majorities in the U.S. And we need to be ready to serve them,” Salort-Pons said. “The museum needs to be the mirror of the community.”

DIVERSITY FROM PAGE 10

Leadership needs to lead Choice appears to be critical, according to experts. Voluntary diversity training leads to better results, according to the Harvard study, such as an increase of 9 percent of black male managers five years after implementation. But there’s a push-pull when it comes to implementing programs. While mandatory training is ineffectual, that doesn’t mean improving diversity shouldn’t be an enforceable goal for managers, said David Thomas, president of Morehouse College, an historically black men’s college in Atlanta, and former business professor at Harvard University and dean of the business school at Georgetown University. “The reason (diversity programs) fail or fail to produce the results with what they espouse is the same reason many of these initiatives failed for the last 40 years,” Thomas said. “Leadership is not engaged. It’s simply become a program owned by HR. They don’t put metrics around what they are trying to achieve. When they

At MOT, 59 percent of the 47-person board are male members and 84 percent are white, said Communications Manager Erica Hobbs. The board is working to increase its di- Salort-Pons versity as it nominates new members and says it has increased the number of minority members of the board in the past two years, but was unable to provide more specific details.

Connecting with communities Cultural institutions are using myriad ways to connect with their communities and the diverse populations in them. Over 80 percent of MOT’s education programs over the last two seasons have been with young people of color throughout Detroit and in other areas, including Pontiac and Flint more recently and in the past, low-income populations in the U.P., said Director of Education Andrea Scobie. MOT has also worked with middle school students in Dearborn schools, assisting them in writing their own opera about their cultural identity and the history of their families in this country, partially in English and partially in Arabic, Scobie said. “That sort of creative work is something we want to make sure more students and schools have access to.” Most, if not all, of the major cultural institutions are now taking their programs outside of their own walls and into communities. The DIA, which launched its Inside/ Out program to install pop-up reproductions of masterpieces in communities around the region a decade ago, more recently has begun commissioning and featuring works from local artists. It’s also done public art projects in communities including Detroit’s Osborn neighborhood and Clawson in Oakland County. Cranbrook is among the groups

based outside of Detroit that are bringing programs into the city to engage with new audiences, something it began in 2015 when Blauvelt was named director. In mid-June, Cranbrook’s “Material Detroit” performance and public art series of newly commissioned works and performances kicked off in the city. Like earlier Detroit programs, the newly launched Detroit programs compliment an exhibit at the Bloomfield Hills museum.

“Detroit is the center for art in this region,” and Cranbrook is 20 miles away, Blauvelt said. “I can’t pick up the building and move it there, so the next step is to take programming there.” Taking it a step further, cultural institutions are now looking for ways to leverage the arts to help address community issues. MOT is teaming up with organizations outside of the arts sector, like Neighborhood Services Organization, Detroit Hispanic Development Corp. and Downtown Boxing Gym to

look at how MOT can use its resources to advance the work of those nonprofits in new and creative ways, Walker said. And the DSO is in conversations with the city of Detroit and Detroit Public Schools Community District on how the DSO can help use the arts to uplift Detroit communities, Parsons said. “We’re at a particularly good point in our growth as a city to be working on all of these kinds of things, ideas and programs, ways we can open things up and accomplish projects together,” she said.

measure employee engagement, are they analyzing differences among demographic groups and holding managers accountable for eliminating those differences? That’s been the chronic failure of diversity programs since we started using the word diversity in the late 1980s.” General Motors Co. is among a growing throng of Fortune 500 companies that are setting and tracking goals to ensure their management teams reflect the diversity of their customers. The automaker set “aspirational targets” in 2014 to improve diversity among its ranks when it hired its first chief diversity officer, Ken Barrett. The goals were determined by cross-referencing demographic data within each job category and extrapolating that figure with the overall demographic population of that minority, said Barrett. For example, Hispanics make up approximately 17.8 percent of the U.S. population and about 7 percent of the those graduating from college with a degree in a science, technology, engineering and math field. Barrett declined to reveal the actual internal target, but said GM is targeting a figure of between 7 percent and 17

percent of new hires in STEM-related jobs to be Hispanic by 2022. In 2018, GM tripled the number of Hispanic engineers within its ranks since 2014, Barrett said, but still fell short of its aspirational mid-point goal. “We made progress, but we fell short,” Barrett said. “But now we see it. This is not a static thing. We can now work to improve from there.” GM did hit its target for hiring women within its ranks globally, but not for black engineers. Women account for 34 percent of GM’s global management positions, according to its most recent talent report. GM CEO Mary Barra also requires diversity reporting from her direct reports and quarterly reports identifying minorities with executive management potential, Barrett said. “It’s not just a recruiting piece,” Barrett said. “She wants to know how many minorities are identified as high potential. She looks at the data. It’s not just about counting heads, it’s making sure within this organization we drive the behaviors and have the accountability our customers demand of us.” But an increasingly diverse workforce doesn’t fix all the systemic biases within an organization, as GM has

found in recent months. In 2018, three separate lawsuits were filed against the automaker, alleging rampant racism at its Toledo Transmission Plant. The lawsuits allege years of racist language on the assembly line, swastikas drawn on

Training for respect, dignity

“Leadership is not engaged. It’s simply become a program owned by HR.” — David Thomas, president of Morehouse College

restroom walls and nooses suspended in the workplace. In May 2018, GM shut down a line at the plant and conducted anti-harassment and anti-discrimination training for all of its Toledo employees and more than 50,000 manufacturing employees across other U.S. sites. But as experts suggested about mandatory training, it didn’t appear to work for GM. In January this year, a toy monkey was displayed at the Toledo plant to taunt black coworkers, lawyers for current and former employees at the plant told Automotive News.

Amy Young, lecturer of business communication at University of Michigan, said these kinds of mandatory programs fail to teach the basic skills required to maintain diversity in the workplace — handling conflict that maintains dignity between all members. “These programs always say they are going to address the inequity or violations, but don’t focus on the real topic of dignity,” Young said. “They should be talking about how we can improve the way we relate to each other; to teach very basic skills. How to handle conflict while maintaining someone’s dignity.” Young said the top-down approach of diversity programs, for better or worse, leaves the majority — that is, white men — alienated from the company’s objective. “They often run from those programs,” Young said. “They feel they’ve heard that story before and they know what the agenda is. If you approach it this way, you’re going to get resistance. Don’t identify it as a white male issue, but train that there’s a business outcome for respect. Train-

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Olayami Dabls at the premiere of Dabls’ MBAD African Bead Museum’s new gallery space on June 22, curated by Material Detroit, Cranbrooks’ latest Detroit exhibit of performance and public art. SARAH BLANCHETTE | CRANBROOK ART MUSEUM

Michigan Opera Theatre’s multimedia production, “I, Too, Sing America,” incorporated opera, poetry, video, and narrative to explore the lives of groundbreaking African Americans in arts and sports. SYNTHIA STEIMAN / MICHIGAN OPERA THEATRE

The groups are also teaming up with peer institutions that traditionally have served minority populations. For example, the DIA has collaborated with the Wright Museum and continues to, said Salort-Pons. Collaborative exhibitions were held at both museums to commemorate the 50th anniversary of the 1967 uprising, for example. And in December, it teamed up with the Arab American National Museum to present world-renowned Arab musician Yasmine Hamdan in the DIA’s Ri-

Barnett

Thomas

ing to be respectful is really basic, but it does prevent some of these problems that are going on.” Young said the training is as basic as instructing managers to greet every single person in the office hallways. Only greeting familiar coworkers often results in other direct reports feeling alienated. “If it’s so easy, then why aren’t more people doing it?,” Young said. “This is a hard exercise and it has to be taught. At the surface, it does seem easy, but add the challenge of time pressures and it becomes very difficult and you don’t know how others perceive you.” The Harvard researchers concluded that many of the procedural initiatives designed to combat racist and sexist behavior, such as jobs tests, performance reviews and grievance

vera Courtyard. The Hamdan performance drew a crowd of 650 people, said Jumana Salamey, deputy director of the Dearborn museum.

Expanding audiences Institutions such as the Arab American National Museum, the Charles H. Wright Museum of African American History and the Jewish Holocaust Memorial Center are beginning their own concerted efforts to expand their systems, often did the opposite. Jobs tests often result in an employer testing outside job candidates — sometimes minorities — but not internal prospective Young hires — often white, with whom white hiring managers may already be familiar. “(A researcher) found that the team paid little attention when white men blew the math test but close attention when women and blacks did,” according to the Harvard study. “Because decision makers (deliberately or not) cherry-picked results, the testing amplified bias rather than quashed it.” Jobs tests reduced the number of black male managers by more than 10 percent, black women by more than 9 percent, Hispanic women by nearly 9 percent and Asian women by more than 9 percent, according to the Harvard research. More than 90 percent of midsized and large companies use performance ratings as a method to prevent bias, but the Harvard study shows five years after implementation it led to no

outreach to engage new audiences. With $500,000 grants to each from the Michigan Arts Council, over the past year the three have begun taking free presentations, traveling exhibits and cultural programs to cities including Marquette, Midland, Grand Rapids, Kalamazoo, Jackson and Port Huron. As of April, the Arab American National Museum’s traveling exhibit had drawn over 5,900 visitors in Kalamazoo, Midland and Grand Rapids during its stops in those cities, Salamey said. For its part, the Holocaust Memorial Center developed a pop-up traveling exhibit focused on Holocaust survivors who settled in Michigan to engage people around the state and to increase teacher training. Over the past year, the center has trained 560 teachers from 65 counties and 300 schools, said Rabbi Eli Mayerfeld, CEO, Holocaust Memorial Center in Farmington Hills, in an emailed statement. “With the rise in antisemitism in Michigan and throughout the world, support from the public and the state more racial diversity among managers, and actually led to a decrease of 4 percent among white women. Grievance systems caused a drop in all minority managers except Hispanic men by 2 percent to more than 11 percent. Researchers said this is caused by unfettered managerial bias, because said managers believed the system created fairness, thus relieving them of the personal responsibility.

What works? The most effective diversity program — mentoring — is one of the most difficult to pull off. Mentoring increases the ranks of diverse managers and leads to more diverse subordinates and more tolerant work environments, the Harvard study found. Mentoring improved the diversity of managers for black women by 18 percent, Hispanic women by nearly 24 percent and Asian women by 24 percent, according to the study. “Maintaining pipelines needs to be a top priority,” Thomas said. “Mentoring initiatives can be very effective when people are earlier in their career or moving into a brand new job. Connecting minorities to people within the organization that

grant has enabled us to extend our reach around the state to classrooms, libraries, public spaces while we increase the number of visitors at our museum,” he said. “Through all of these touch points, the Holocaust Memorial Center is fighting discrimination and bigotry to create a more inclusive, accepting community.”

Places of safety Beyond the joint outreach to other parts of the state, the Arab American National Museum has increased its school tour attendance and last year formed an equity and justice committee to get feedback from museum visitors on changing needs in the community, Salamey said. “What we found is that museums have organically shifted from being a space of looking and observing art and artifacts to a space of conversation, inclusion and safety.” “Museums have become safe spaces for people of color to celehelp them further their careers moves the needle.” But getting leaders to mentor workers from different racial and ethnic backgrounds is challenging. “People are naturally more likely to mentor people they identify with,”

“If it’s so easy, then why aren’t more people doing it? This is a hard exercise and it has to be taught.” — Amy Young, lecturer of business communication at University of Michigan

Thomas said. “They say, ‘I see in you what I saw in myself at that time in my career.’ When I look out, it’s easier for me to see myself in a young African American man than a young white female. I instinctively assume that guy wants to be like me, a chip off the old block. But she’s likely exhibiting the same behaviors. I should recognize that.” This disparity has become increasingly clear in the #MeToo movement.

brate their heritage as well as to have tough conversations about issues affecting them. We like to think that we are building community through art and dialogue,” Salamey said. The Wright Museum has also increased its programs in schools around the region and initiated talks with the diversity and community engagement officers at several corporations, said Ed Foxworth, director of external relations and interim director of education. This fall, it plans to hold professional development workshops with social studies teachers around the region to introduce them to the museum’s exhibitions and programs. “The mission of the museum is to open minds and change lives through the exploration of African American history,” Foxworth said. “Everyone needs to receive it, because African American history is American history.” Sherri Welch: 313 (446-1694) Twitter: @SherriWelch A survey by women’s empowerment nonprofit Lean In in May revealed that 60 percent of male managers were uncomfortable mentoring women due to the rise in public claims of sexual misconduct. Thomas calls these claims a red herring. “The MeToo thing is just an excuse they grant for something they weren’t going to do anyway,” Thomas said. “That’s the attempt of privileged men to claim victimization to explain why we haven’t been doing this all along.” The Harvard study indicates other successful diversity programs include self-managed teams, minority college recruitment, hiring diversity managers and diversity task forces. But Thomas warns that diversity programs are slow to change workplace culture and that’s the most critical piece of creating a diverse and inclusive workforce. “When Obama got elected, we decided we were in a post-racial America,” Thomas said. “One mistake (companies) make is thinking these programs are going to solve all their problems, all their challenges. They’re not.” 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 // J U LY 1 , 2 0 1 9

LGBT

FROM PAGE 13

To be certified, a company must be at least 51-percent LGBT owned and run. There are a variety of options for proving LGBT status, from proof of partnership to references that show a person is part of the community. Pushing inclusion in the public sector is key to furthering economic parity for LGBT businesses, said Jonathan Lovitz, senior vice president of the national chamber. The national chamber leads advocacy efforts, including in Michigan, but local affiliate chambers serve as vital connectors in the process, Lovitz said. Heard told Crain’s he has been working with Detroit City Council Member Scott Benson on the feasibility of introducing an LGBT-certification policy in Detroit — possibly in early 2020. Heard said the chambers would suggest using their already-established certification, which they say would make it easy on the city to recognize LGBT-owned businesses. “Detroit is very supportive of the LGBT community and we are interested in the LGBTQ business certification concept,” Charity Dean, director of the city of Detroit’s Department of Civil Rights, Inclusion and Opportunity, said in an emailed statement. “We are currently studying the issue and exploring the practicalities of whether this could work in the city of Detroit.” Enterprises certified with the city of Detroit as Detroit-based or with 51 percent Detroit-resident employees get credits that boost their odds when they bid with the city, but the

Kevin Heard

JACOB LEWKOW FOR CRAIN’S

city is barred by the state from giving those credits based on race or gender, Dean told Crain’s. “But we are very intentional about making sure the folks that can participate ... are from and look like Detroit,” she said. Minority-owned and woman-owned businesses are offered visibility on a city business registry for businesses, nonprofits and government agencies’ use, according to Detroit’s website. The city inclusion department also conducts outreach with minority-owned businesses to become pre-approved city vendors, according to Dean.

Massachusetts and more Governments across the country have diversity initiatives aimed at bettering access to state, municipal

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and corporate dollars. “Just having one powerful and important government contract can help a company establish itself as a large-scale, viable company ...” Lovitz said. Many set goals or try to encourage growth, and often include training or notifications about bidding opportunities, according to the National Conference of State Legislatures. Some do go further and enforce quotas. More than 10 states and local governments accept the national chamber’s LGBT business enterprise certification as part of programs aimed at increasing supplier diversity, including Pennsylvania; Jersey City, N.J.; Nashville; and Orlando, according to the chamber’s website. California passed in 2014 what the national chamber calls the U.S.’s first “public mandate” requiring inclusion of certified LGBT businesses in contracting — specifically for public utilities. And in 2015 Massachusetts became the first state to include certified LGBT business enterprises in its supplier diversity program. “... What we’ve seen every time a city or state intentionally includes our community is there’s a gold rush of LGBT entrepreneurs that show up and get certified,” Lovitz said.

By the numbers Nine companies in Southeast Michigan are certified LGBT-owned; 13 statewide. These numbers aren’t “huge,” Heard acknowledged, but he called it a “starting point,” saying around 30 more in Southeast Michigan have shown interest in learning about cer-

tification. He declined to disclose businesses’ identities. However, Crain’s previously reported that Ypsilanti-based Care One Inc. is LGBT-certified. The regional chamber has 74 member businesses. It’s not possible to know how many businesses are LGBT-owned, according to the national chamber; numbers are often underestimated due to stigmas associated with coming out. But the LGBT community contributes more than $1.7 trillion to the nation’s economy yearly, the national chamber found in its 2016 (most recent) America’s LGBT Economy report. As of 2019, the chamber has certified more than 1,200 businesses and works with more than 250 companies and government agencies. Four percent of Michiganders identify as LGBT, according to demographic data compiled by the Williams Institute at UCLA School of Law. The regional chamber roughly estimates there could be around 7,000 LGBT-owned businesses in Michigan. The estimated LGBT population is on the rise nationwide, while Michigan recently elected a trio of liberal leaders in Gov. Gretchen Whitmer, Attorney General Dana Nessel and Secretary of State Jocelyn Benson. Whitmer and state Democrats in early June renewed a battle to amend Michigan’s Elliott-Larsen Civil Rights Act to add protections for gay, lesbian and transgender residents. Elected leaders’ support is encouraging, Heard said, so maybe now’s the time for a push. Annalise Frank: (313) 446-0416 Twitter: @annalise_frank

CALENDAR UPCOMING EVENTS Investing in Futures: The economic and business benefits of making postsecondary education avaiable for incarcerated and formerly incarcerated students. 8-10:30 a.m. July 10. Detroit Regional Chamber. The discussion will frame the national and local conversations on this issue. Panelists will delve into findings from the Investing in Futures report and the Don’t Stop Now report, focusing on the established economic benefits of higher education in prison—in areas such as public Baruah safety, employment, and state economy. Panelists include: Sandy Baruah, president and CEO, Detroit Regional Chamber; Laura Tatum, director of Jobs and Education, Economic Security & Opportunity McQuade Initiative, Georgetown Center on Poverty and Inequality; Margaret diZerega, project director, Vera Institute of Justice; Matt Elliott, Michigan Market president and region executive, Bank of America; Heather Gay, education director, Michigan Department of Corrections; Brian Jones,

student, Eastern Michigan University; Barbara McQuade, former U.S. Attorney, Eastern District of Michigan; professor from practice, University of Michigan, legal analyst for NBC News and MSNBC; Robert Riney, president, health care operations and chief operating officer, Henry Ford Health System; Rebecca Silbert, senior fellow and director of Corrections to College, Opportunity Institute and Beverly Walker-Griffea, president, Mott Community College. Detroit Golf Club. Free. Website: eventbrite.com/e/investing-in-futures-the-economic-and-business-benefits-of-making-postseconda r y - e d u c a t i o n - av a i l a b l e - t i c kets-62608132610 Government Contracting 101. 9-11:30 a.m. July 18. Schoolcraft College. The class outlines the first steps for entrepreneurs and businesses wishing to gain access to government contracting. Topics include how to set up, find opportunities, market, explore small business benefits and sell to the U.S. government. Restricted to businesses located in Wayne, Oakland, Monroe, Washtenaw and Livingston counties. Schoolcraft College. $45. Email: ptac@ schoolcraft.edu Professional Edge Workshop. 8-9:30 a.m. Aug. 1. Birmingham Bloomfield Chamber. Chamber member and ambassador Ken Sewll leads a workshop “Investing in Relationships: The Art of Investing in Long-term Mutually Beneficial (Business) Relationships.” Birmingham Public Schools, Beverly Hills. Free. Email: thechamber@bbcc.com

SPOTLIGHT Norcia to follow Anderson as DTE CEO

DTE Energy Co. CEO Gerry Anderson will move to the position of executive chairman, and President and Chief Operating Officer Jerry Norcia will become CEO on July 1, the energy company said Monday. Anderson told Crain’s last week that he informed Norcia Detroit-based DTE’s board last December “it was the right time” to make the move because Norcia “was ready” to become CEO. Anderson said DTE’s succession plan was similar to how he became CEO, taking over for Anthony Earley in September 2010. In fact, Earley, who also became DTE’s executive chair, was also 61 at the time of the transition. Anderson said he plans to stay at DTE (NYSE: DTE) for several more years. Anderson joined DTE in 1993. He rose to various executive roles and was named president in 2004, CEO in 2010 and chairman in 2011.

Former DMC exec is CEO of Henry Ford Allegiance

Paula Autry, former president of DMC Sinai-Grace Hospital, has been hired as president and CEO of Henry Ford Allegiance Health in Jackson. On July 15, she will replace Georgia Fojtasek, who plans to retire July 31 after 25 years with Allegiance. Autry, 57, who Autry most recently was CEO of Lutheran Hospital of Indiana in Fort Wayne, also will become senior vice president and CEO of Henry Ford Health System’s South Central Michigan Market, which covers seven counties. Autry was with DMC from 2014 to July 2017, when she left “to pursue other opportunities,” according to DMC at the time. She was with Lutheran Hospital from 2017 to March 2019.

Children’s Foundation names new CFO

The Children’s Foundation, which formerly operated as Children’s Hospital of Michigan Foundation, has hired a chief financial officer — a newly created position. David Lochner, who has more than three decades worth of banking experience, was Lochner president of the eastern Michigan region of Columbus, Ohio-based Huntington National Bank before stepping down last year. Before that, he was president of the Michigan region for Akron, Ohiobased FirstMerit Bank, which merged into Huntington in 2016. At the Children’s Foundation, Lochner will work with executive leadership to develop and execute strategic partnerships, the nonprofit said in a news release.

bor, MI seeks a Senior Engineer, Active Safety & Testing to identify emerging topics which could have impact on one of the relevant regulatory affairs topics. Job code: LB-AAMI. Mail resume: Attn: HR Dept, 309 N Pastoria Ave., Sunnyvale, CA 94085. Must reference job title and job code.

C R A I N ’ S D E T R O I T B U S I N E S S // J U LY 1 , 2 0 1 9

REAL ESTATE

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Molex, LLC seeks Advanced Quality Planning (AQP) Engineers Advertising Section for Rochester Hills, MI to work w/ product dev team members to dev & maintain quality plans of a global design center for electronic cable asAUCTIONS semblies. Master’s in Industrial Eng/ Camera Ready Ad Materials related field +2yrs exp OR Bachelor’s To place your listing, contact Suzanne Janik at 313-446-6063 in Industrial Eng/related field +5yrs or email sjanik@crain.com exp req’d. Req’d Skills: Quality eng www.crainsdetroit.com/classifi eds exp & driving product dev process w/ electronic connector production facility in automotive industry, problem OFFICE SPACE solving methodologies (8D, root cause analysis) & corrective action implementation; GD&T, support Environ2,500 SQ FT mental Testing (Eng design/Design V Crain Communications seeks an experienced Senior Financial Analyst to alidation/Process Change WOODWARD/ 9 MILE join its Financial Validation), Services team. This position is responsible for providing Mgmt, PFMEA/DFMEA, Control finance support multiple publications to include core financial LOWER LEVEL Plans, PPAP, APQP,for qualifying suppli24 HR ACCESS - $1,500 MO analytical duties such as financial ers using CPK; TS-16949/VDA 6.3, management reporting, forecasting, 248-398-7000 SPC, MSA, and Poke-Yoke, Six-sigma, budgeting, analysis, as well as acting as a strategic business partner 30% and traveltheir req’d. to theMinitab. publishers teams. Send resume to: MLXjobs@ RECREATIONAL PROPERTY kochind.com, Ref: PRP

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Wayne State University President M. Roy Wilson (center of table) at a board of governors meeting in May.

Wayne State board factions break out into open legal battle over meeting vote By Jay Greene jgreene@crain.com

Open legal warfare has broken out between two factions on the Wayne State University board of governors, as four board members have sued the other four members over votes cast at last Friday’s board meeting. Governors led by Michael Busuito, M.D., who is one of three board members who chose not to attend the meeting, are charging in a complaint filed Thursday in Ingham County Circuit Court that the other four members violated open meeting laws by voting on two critical issues at the June 21 meeting. The four suing board members have also asked for a temporary injunction to halt the sublease approved by the board of a building at 400 Mack Ave. that would be used as headquarters of University Physician Group and Wayne Pediatrics, two organizations with ties to Wayne State. The board also approved a 3.2 percent student tuition increase for 2019-20 school year. The two factions of board members have clashed often since December when three board members voted against a three-year contract extension for President M. Roy Wilson. In March, the board split on whether to continue affiliation negotiations with Henry Ford Health System, stopping the talks. The four board members who filed the lawsuit and have been opposed to Wilson and the Henry Ford talks are Busuito, Dana Thompson, Sandra Hughes O’Brien and Anil Kumar, M.D., who was elected last November. Those board members who were at Friday’s board meeting, named in the lawsuit and are supportive of Wilson are Board Chair Kim Trent, Mark Gaffney, Marilyn Kelly and Bryan Barnhill III, who also was elected last November. Wayne State University is also named in the lawsuit. Contacted by Crain’s, Trent called the lawsuit “unfortunate” and said “four members of the board showed up for work Friday and four did not.” Trent said being present for meetings and fighting for positions is what governance is all about. “You present a cogent argument to support your position. You don’t decide not to show up to prevent a quorum” and a vote, she said. “Even if you have a contentious issue, you show. “On advice of our general counsel

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Two factions have clashed often over contract extension for President M. Roy Wilson, other issues 

(Louis Lessem), whom I trust, I feel we are on solid ground,” Trent said. She said the board members and university will contest the lawsuit and temporary restraining order. The four members who filed the lawsuit submitted a statement to Crain’s on Thursday evening. “In our continuing efforts to protect WSU and our community, we’ve asked the courts to stop the implementation of the items purportedly approved at a meeting where there was no quorum of the elected, voting members of the governing board,” Busuito, Kumar, Hughes O’Brien and Thompson said in their statement. “For months, the administration was aware that one of our fellow governors who was opposed to the real estate acquisition, would not be present at the scheduled meeting due to an out-of-the-country vacation he had planned prior to his election to the board. Without Dr. Kumar present, our colleagues believed they could, once and for all, out-vote us on an issue we had routinely opposed and defeated. “Once we realized the intent of our colleagues, we informed the board chair that we would not be attending the Friday board meeting. Our intent was to prevent the requisite quorum of five elected governing board members so that the real estate acquisition we had rejected time and again could not be approved without full Board consideration.” In their 11-page complaint, the four board members charge that the other four ignored the state’s open meetings law when they held the meeting with only four members. The fourth board member, Kumar, was on a scheduled several week family vacation, which sources said was planned months in advance. The lawsuit asks for the court to reverse all decisions made at the June 21 meeting. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

Digital Portfolio Manager In this role, you’ll be responsible for strategy, revenue and operations for the $1.3 million digital business, including Web sites, email newsletter products, webinars and special initiatives, for the Crain’s Detroit Business and Crain’s Cleveland Business sales teams.

 Board voted to sublease of building and approved 3.2 percent tuition increase while half were missing  University’s general counsel ruled President M. Roy Wilson could be counted toward quorum

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CRAIN’S READERS HAVE AN AVERAGE NET WORTH OF $1.6 MILLION

The Digital Engagement Manager is the driver and builder of revenue products that fulfill our commercial needs and Autoweek’s editorial ambitions. This is accomplished by working strategically with the Crain Product Management team. This role is critical to keeping Autoweek’s digital properties healthy and growing and helping us develop new products. Visit crain.com/careers/ for more information and available positions.

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

CRAIN'S LIST: LARGEST MINORITY-OWNED BUSINESSES

Ranked by 2018 revenue Company Address Rank Phone; Web site B

Majority owner

Local Revenue Revenue employees ($000,000) ($000,000) Percent Jan. 2019/ Minority group of 2018 2017 change 2018 ownership

Type of business

Piston Group 3000 Town Center, Suite 3250, Southfield 48075 (313) 541-8674; www.pistongroup.com

Vinnie Johnson chairman

Bridgewater Interiors LLC 4617 W. Fort St., Detroit 48209 (313) 842-3300; www.bridgewater-interiors.com

Ron Hall Jr. president and CEO

1,969.3

2,009.5

-2

1,443 1,170

The Diez Group 8111 Tireman Ave., Dearborn 48126 (313) 491-1200; www.thediezgroup.com

Gerald Diez chairman and CEO

1,265.0

1,190.0

375 NA

Detroit Manufacturing Systems LLC 12701 Southfield Road, Building A, Detroit 48223 (313) 243-0700; dmsna.com

Bruce Smith C CEO

918.8

802 829

Arvind Pradhan chairman

515.0

538.0

-4

51 56

Asian

Supplier of seating structures

Camaco LLC 37000 12 Mile Road, Suite 105, Farmington Hills 48331 (248) 442-6800; www.camacollc.com

NYX Inc. 36111 Schoolcraft Road, Livonia 48150 (734) 462-2385; www.nyxinc.com

Chain Sandhu chairman

452.0

423.0 D

1,892 1,725

Asian

Plastic injection molding

Acro Service Corp. 39209 W. Six Mile Road, Suite 250, Livonia 48152 (734) 591-1100; www.acrocorp.com

Ron Shahani president and CEO

371.0

354.1

837 1,886

Asian

Staff-augmentation, outsourcing and IT and engineering consulting

Elder Automotive Group 777 John R Road, Troy 48083 (248) 585-4000; www.elderautogroup.com

Tony Elder president

336.5 E

331.5 E

NA NA

Hispanic

Prestige Automotive 20200 E. Nine Mile Road, St. Clair Shores 48080 (586) 773-1550; www.prestigeautomotive.com

Gregory Jackson chairman and CEO

306.5

350.1

-12

166 166

African-American Automobile dealerships, insurance and real estate

Global Automotive Alliance LLC

William Pickard chairman

274.8

255.7

282 207

African-American Warehousing, contract assembly, freight forwarding, contract logistics, procurement, quality control and inventory management

Royal Oak Ford/Briarwood Ford

Eddie Hall Jr. president

230.8

198.8

260 231

African-American Automobile dealerships

The Ideal Group Inc.

Frank Venegas Jr. chairman and CEO

226.3

321.7

-30

423 313

Hispanic

General contracting, specialized miscellaneous steel manufacturing and distribution of protective barrier products

Technosoft Corp.

Radhakrishnan Gurusamy president and CEO

165.0

130.0

160 150

Asian

Digital transformation technology solutions and health care business process management

ChemicoMays LLC

Leon Richardson president and CEO

146.0

124.0

230 215

Systems Technology Group (STG)

Anup Popat chairman and CEO

142.0

131.0

600 550

Avis Ford Inc.

Walter Douglas Sr. chairman and CEO

128.7

128.5

NA 119

African-American Automobile dealership

Devon Industrial Group

David Burnley Sr. president and CEO

121.3

145.0

-16

85 70

African-American Contracting and construction management

MPS Group Inc. 38755 Hills Tech Drive, Farmington Hills 48331 (313) 841-7588; www.mpsgrp.com

Charlie Williams chairman

120.0

106.0

175 174

James Group International Inc.

John James chairman

119.0

128.0

-7

120 114

African-American Waste management and environmental program management services, paint shop management and cleaning, industrial cleaning and maintenance, emergency response, facility decommissioning and scrap metal management African-American Logistics and supply chain management

Advantage Management Group Inc-Advantage Living Centers 25800 Northwestern Hwy #720, Southfield 48075 (248) 569-8400; AdvantageLiving.net

Reginald Hartsfield and Kelsey Schwartz-Hastings, owners

114.0

108.0

1,618 1,671

Bill Perkins Automotive Group

Bill Perkins president

110.1

167.6

-34

75 85

African-American Automobile dealerships

Epitec Inc.

Jerome Sheppard CEO

98.0

77.2

840 750

African-American Professional staffing agency specializing in IT, engineering, accounting, finance and sales staffing

Michael Bates Chevrolet 23755 Allen Road, Woodhaven 48183 (734) 676-9600; www.michaelbateschevy.com

Michael Bates owner

88.7 E

87.4 E

NA NA

African-American Automobile dealership

Rapid Global Business Solutions Inc. (RGBSI)

Nanua Singh chairman and CEO

88.4

84.8

818 742

Asian

Systrand Manufacturing Corp.

Sharon Cannarsa president and CEO

78.9

81.2

-3

208 274

Native American

Clark St., Detroit 48210 10 2801 (313) 849-3222; www.gaasolutions.com Woodward Ave., Royal Oak 48067 11 27550 (248) 548-4100; www.royaloakford.com Clark St., Detroit 48209 12 2525 (313) 849-0000; www.weareideal.com Towne Square, 6th Floor, Southfield 48076 13 One (248) 603-2600; www.technosoftcorp.com Telegraph, Suite 120, Southfield 48033 14 25200 (248) 723-3263; www.thechemicogroup.com W. Big Beaver Road, Suite 500, Troy 48084 15 3001 (248) 643-9010; www.stgit.com Telegraph Road, Southfield 48034 16 29200 (248) 355-7500; www.avisford.com Griswold St., Suite 2050, Detroit 48226 17 535 (313) 221-1600; www.devonindustrial.com

W. Fort St., Detroit 48209 19 4335 (313) 841-0070; www.jamesgroupintl.com

S. Telegraph Road, Taylor 48180 21 13801 (734) 287-2600; www.taylorchevy.com Denso Drive, Suite 150, Southfield 48033 22 24800 (248) 353-6800; www.epitec.com

Stephenson Highway, Troy 48083 24 1200 (248) 589-1135; www.rgbsi.com

Allen Road, Brownstown Township 48183 25 19050 (734) 479-8100; www.systrand.com

$2,864.5

$1,707.9

68%

1,015 1,108

African-American Automotive supplier

African-American Automotive seating

Hispanic

Aluminum and steel sales, processing, service, warehousing and logistics centers: blanking exposed and unexposed, CTL, laser welding, precision slitting, milling, wash and oil and warehousing and logistics

African-American Automotive component manufacturing, module assembly and sequencing services

Automobile dealerships

African-American Chemical management and supply

Asian

Digital transformation, Big Data analytics; mobility solutions; cloud transformation; software application development outsourcing services

African-American Nursing homes, assisted living

Engineering design services, ERP, cloud services, staff augmentation, vendor management services, managed service provider, payroll Precision machining and assembly of automotive products

Want the full Excel version of this list â&#x20AC;&#x201D; and every Crain's list? Become a Data Member: CrainsDetroit.com/data This list of minority-owned businesses is an approximate compilation of the largest such businesses based in Wayne, Oakland, Macomb, Washtenaw or Livingston counties. It is not a complete listing but the most comprehensive available. Unless otherwise noted, the companies provided the information. NA = not available.

B Holding company for Piston Automotive, Irvin Automotive, Detroit Thermal Systems and Airea. C Andra Rush stepped down as CEO and sold her majority share in the company to Bruce Smith in August 2018. D Company estimate. E Crain's estimate.

C R A I N ’ S D E T R O I T B U S I N E S S // J U LY 1 , 2 0 1 9

Palace of Auburn Hills property sold for $22 million By Kirk Pinho kpinho@crain.com

A joint venture paid $22 million for the Palace of Auburn Hills property earlier this month, according to newly released public records. The purchase price for PAH Real Estate LLC, a partnership between Livonia-based Schostak Bros. & Co. and Detroit Pistons owner Tom Gores, is revealed online through an Oakland County land records website, although it is not spelled out in the deed that was recorded Monday. The deal was for $200,000 per acre for the 110-acre site. Representatives of the joint venture earlier this week did not reveal financial terms of the deal, which involves beginning demolition of the former Pistons home this fall and turning the 80 or so developable acres into office, tech, R&D and some retail space. An email seeking comment was sent Friday morning to representatives of Palace Sports & Entertainment as well as Schostak Development, a subsidiary of Schostak Bros. & Co. “Reasonable price,” said Anthony Sanna, senior managing director in the Birmingham office of Integra Realty Resources, an appraisal firm, of the Palace purchase price. “But you need to consider the cost of demolition, as the buyer needs to incur that cost as well to get to a developable site. That could add at least another $1 per square foot. Still a reasonable price, in all.” By way of comparison, a joint venture between Southfield-based General Development Co. LLC and Farmington Hills-based Friedman Integrated Real Estate Solutions LLC purchased

DEMOLITION FROM PAGE 1

“It there an uptick industry-wide? Yes,” said Brian McKinney, founder and CEO of Detroit-based demolition contractor Gayanga Co. He said his firm has grown from $400,000 in revenue in 2017 as a startup to $4 million last year. He projects $10 million this year as the company gets more contracts and diversifies into things like underground utility disconnections. “Those (stadium) demolitions probably would be occurring anyway, but think about the other ones like Summit Place Mall. There are definitely a lot.” Here are some of the most notable demolitions recently completed or pending, in descending order of acreage: J Former Visteon Corp. site: Amazon.com Inc. is building a new 1 million-square-foot distribution center on the former auto parts plant site at 23 Mile and Mound roads in Shelby Township. The site is 207 acres, was razed in 2013-14, and the Amazon building sits on 80 of the acres. The building opened earlier this year. J Former McLouth Steel Products Corp. site: This 186-acre property at 1491 W. Jefferson Ave. in Trenton along the Detroit River has been decaying for years. The Moroun family’s Warren-based Crown Enterprises Inc. paid Wayne County $4 million for the property on the condition that they invest at least $20 million within six years cleaning it up and redeveloping it. Crown Enterprises officials have said its 260 acres could be redeveloped into a logistics hub with access to rail, a port along the Trenton Channel of the Detroit River and

Former Pistons owner Bill Davidson built the 22,076-seat Palace of Auburn HIlls in 1988 for $90 million out of his own pocket.

211 acres in Auburn Hills from Chrysler Corp. during its bankruptcy in 2010 for $2.5 million, or $11,848 per acre. That property would later become the Oakland Technology Park, which houses companies including U.S. Farathane Corp., Henniges Automotive Inc., Faurecia North America Inc., Atlas Copco North America Inc. and Hirotec America Inc.. The Palace of Auburn Hills opened Aug. 13, 1988.

The Pistons played their last game at the Palace on April 10, 2017, before moving to the new Little Caesars Arena in Detroit along with the Detroit Red Wings, which began play there during the 2017-18 season. The Palace was also a popular concert venue, hosting acts including U2, Michael Jackson and Madonna. Real estate and development experts have long predicted that the Palace would eventually be demol-

ished and redeveloped. Crain’s first reported in April that Schostak had the Palace property under contract and planned to tear down the arena to make way for new tech and office development. The property that houses the 22,076-seat arena was rezoned in 2017 as a technology and research district in advance of the Pistons’ move, which was announced in November 2016.

nearby connections to I-75 and Detroit Metropolitan Airport. J Former Hazel Park Raceway: The 131-acre property at the southwest corner of 10 Mile and Dequindre roads in Hazel Park is undergoing a large redevelopment by New York City-based Ashley Capital, the largest industrial/warehouse developer in the region whose local office is in Canton Township. It purchased a 36acre chunk of the racetrack site and developed a 575,000-square-foot building, with plans for another $40 million battery plant there revealed last week. Demolition started last year on the remaining 95 acres of the racetrack property and was completed earlier this year. The $80 million redevelopment has over $21 million in state incentives, with nearly 1.5 million square feet of new space planned across two buildings. The first building is slated for occupancy in November. J Former Pontiac Silverdome site: Toronto-based owner Triple Properties Inc. began demolishing the former home of the Detroit Lions in December 2017 and, after a failed first attempt at an implosion of the upper ring, a second explosion took it down the following day. The 127-acre site on Featherstone off of M-59 has been cleared and is being marketed to users/buyers. J Northland Center site: Southfield is out to bid for a demolition contractor for the remaining 1 million square feet of the 1.4 million-square-foot former mall that sits on 125 acres, according to Michael Manion, a spokesman for the city. He said bids are due on July 11 and eight have bid so far. The city has been in discussions with three developers, the largest of which is San Diego-based Pacific Medical Buildings. Al Aceves,

executive director of the Southfield Downtown Development Authority, said earlier this year that a pair of smaller retail developers are considering portions of the site off the Lodge Freeway north of Eight Mile Road. Southfield bought the center for $2.4 million, months after it closed, in 2015 and began to demolish it in the fall 2017. J The Palace of Auburn Hills: The Detroit Pistons confirmed last week that the team’s former home would be razed to create a 110-acre site with about 80 acres of buildable land for more than 1 million square feet of mixed-use tech, office and R&D development. Demolition is expected to begin this fall. The new buildings could be leased from a partnership between Livonia-based Schostak Bros. & Co. and Pistons owner Tom Gores, or done as build-to-suits with the user ultimately purchasing them. Billionaire William Davidson, the Auburn Hills commercial and industrial glass industrialist who bought the Pistons for $8 million in 1974, spent $90 million to build the Palace with partners Robert Sosnick, the former president of Southfield-based developer Redico LLC, who died in 2000, and dealmaker David Hermelin, who also died in 2000. J Bloomfield Park/Village at Bloomfield: The 87-acre property at Telegraph and Square Lake roads in Bloomfield Township/Pontiac had long been considered an eyesore after developer Craig Schubiner failed to build his vision for a mixed-use complex amid the Great Recession. Southfield-based Redico LLC and California-based Pacific Coast Capital Partners LLC, or PCCP, are redeveloping the property with an Aldi grocery store, a two-story Menard store and a

Henry Ford Health System building, plus a Hampton Inn. Residential is also planned in the $250 million project. J Summit Place Mall/Oakland County Business Center: Demolition on the 74-acre blighted mall property on the Waterford Township/Pontiac border began earlier this year, with plans by a Southfield-based developer, Ari-El Enterprises Inc., to create a mixed-use project with office and retail space totaling about 1 million square feet. The $63 million project called the Oakland County Business Center received $12.9 million in brownfield incentives. The previous owner, Santa Monica-based SD Capital LLC, failed for years to put it to productive use. The 1.4 million-square-foot shopping center was condemned in December 2014. J Former Liberty Park of America site: Ashley Capital has demolished the former softball complex in Sterling Heights at 33600 Mound Road within the last year and started turning the 52-acre property into a speculative 650,000-square-foot industrial/warehouse building. The company spent about $2.4 million acquiring the property from former Liberty Park owner Armen Kalaydjian, said Susan Harvey, senior vice president in the Canton Township office of Ashley Capital. She declined to reveal a development cost. A building like that costs about $50 per square foot to build, putting it at about $30 million. Liberty Park opened in 1984, according to The Macomb Daily. J Former Wayne County Consolidated Jail site: Demolition on this 15-acre site at the eastern gateway to downtown Detroit began and was completed last year after a yearslong process to determine what to

In June 2017, Oakland County rejected an offer to buy the Palace for $370 million from Palace Sports & Entertainment. County Executive L. Brooks Patterson said at the time that it would have been a bad financial move for the county. Oakland University had been in discussions to purchase the property, Crain’s and other outlets reported in October. Palace Sports & Entertainment had asked several developers and other real estate companies last summer to pitch ideas and provide their assessments on the property’s value as well as how much it would cost to tear down the arena, a source familiar with the matter said at the time. Gores bought the Pistons and the Palace in 2011 for $325 million and spent $40 million in upgrades. Billionaire William Davidson, the Auburn Hills commercial and glass industrialist who bought the Pistons for $8 million in 1974, spent $90 million to build the Palace with partners Robert Sosnick, the former president of Southfield-based developer Redico LLC, who died in 2000, and dealmaker David Hermelin, who also died in 2000. Davidson died in 2009. Schostak Bros., founded in 1920, developed Livonia Mall and Macomb Mall in 1962, as well as one of metro Detroit’s first Kmart stores. The company is also developing Woodward Corners by Beaumont in Royal Oak along with Bloomfield Hills-based AF Jonna Development LLC, among other projects. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB do with the site after cost-overruns scuttled the project that began during the former Executive Robert Ficano’s administration. Ultimately, the county reached a deal with Detroit billionaire real estate and mortgage mogul Dan Gilbert to raze the half-built jail, construct a new consolidated criminal justice complex at East Warren Avenue and I-75 and make the Gratiot Avenue/I-375 jail site open to mixed-use redevelopment. Most recently, Crain’s reported that Gilbert and billionaire New York City real estate developer Stephen Ross were in discussions with the University of Michigan to create a “Detroit innovation center” that could house research and development for the university. J Joe Louis Arena: Exterior demolition on the former home of the Detroit Red Wings began earlier this month as the city and a bankruptcy-era creditor, Financial Guaranty Insurance Corp., try to figure out how to develop the site. That will take some time, however. Gotham Motown Recovery LLC, a FGIC subsidiary, and the city are asking City Council to approve giving Gotham Motown until June 15, 2021, to submit a plan for the 9-acre JLA property. The current deadline is 5 p.m. Jan. 15, 2020, under terms of a mediated settlement reached between the two parties in July 2018 after Gotham Motown sued in federal court in February 2018 for more time. The original deadline was Nov. 21, 2017, under terms of a settlement of Detroit debts reached in federal bankruptcy court in October 2014 when the city was under emergency management. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

C R A I N ’ S D E T R O I T B U S I N E S S // J U LY 1 , 2 0 1 9

STOCKX FROM PAGE 1

Scott Cutler, a veteran of e-commerce, will take over day-to-day operations of the company as it works to become a global business, connecting sellers with buyers of just about any consumer good that has resale and trade value. Luber and Cutler were in New York City on Wednesday together announcing $110 million in new venture capital — the largest in single VC round in state history — from DST Global, General Atlantic and GGV Capital. StockX’s new CEO comes to the Detroit startup from eBay, where he was senior vice president of the Americas for the San Jose, Calif.-based e-commerce giant that Luber has spent the past 40 months of StockX’s existence competing for buyers and sellers alike through a model that ensures the shoes it sells are authentic. Gilbert, the billionaire founder of Quicken Loans Inc., got into business with Luber after his own children bought sneakers on eBay that turned out to be fakes. Since launching in February 2016, the StockX website’s annual sales growth has leaped to $1 billion in gross merchandise volume, and the company has grown to 820 employees, half of whom are based in Detroit, according to the company. While Luber will retain the title of co-founder, remain on the board of directors and be a face of the StockX brand for buyers, sellers and manufacturers of sneakers and other collectible goods, Cutler plans to map out the infrastructure of expanding the company’s global footprint with an eye toward selling publicly traded stock in a company that publicly trades hard-to-find Air Jordan sneakers and Gucci handbags. “For any company, it’s always in the sights,” Cutler said of going public. StockX, which has an authentication center for processing orders in Detroit’s Corktown, is about to open its fifth authentication center in The Netherlands, expanding its reach into the European market. StockX has more than doubled its workforce since last summer, when Luber had 300 employees in Detroit and 50 at an authentication center in Tem-

BLUE CROSS FROM PAGE 3

“We see growth in (the Medicare) market sector with the number of people aging into Medicare increasing. Ten thousand people turn 65 every day,” he said. “There is a lot of growth potential. The success of Medicare Advantage programs is very high.” Internal Blue Cross documents obtained by Crain’s also show that Medicare Holding is expected to “grow revenue that adds to the financial contributions already being made to Blue Cross by the Emerging Markets Division.” Blue Cross’ Emerging Markets division, a high-revenue-producing group that also includes Advantasure, Senior Health Services and the Accident Fund Group, is headed up by Elizabeth Haar, former CEO of the Accident Fund. The document goes on to say “Emerging Markets continues to grow, evolve and diversify its busi-

“This is why we believe that we’re creating a model that nobody can compete up against because of its uniqueness of how we approach by pricing, discovery and liquidity and trading.” Scott Cutler

pe, Ariz., to serve West Coast sellers and buyers. The company has since opened its first brick-and-mortar store in New York’s trendy SoHo neighborhood, planted a team in Tokyo and opened a pop-up store in London. “You can imagine that the challenge is how is it that we create a seamless experience for a buyer in China and a seller coming from Europe,” Cutler said. “There’s a lot of work to make that a seamless, authenticated experience.” The new $110 million round of private financing will help the company build out its technological capabilities for processing online sales and payments, authenticating products and shipping them to buyers. StockX charges sellers a fee of 7 percent to 9.5 percent on sales — and buyers pay $10 to $13.95 for shipping. Going forward, Cutler sees growth in the business model Luber and his team have developed in which they use the StockX platform to market a shoe company’s release of a new sneaker as an “IPO” itself — creating exclusivity in the initial public sale of in-demand consumer merchandise and letting buyers bid up the price like eager stock market investors. “We see IPOs — IPOs as a product — as a great platform for brands to come into marketplaces to experience a dynamically priced product and have the opportunity to move a lot of product with dynamic pricing with customers that want to interact in this unique way,” Cutler told Crain’s. “This is why we believe that we’re creating a model that nobody can compete up against because of its uniqueness of how we approach by pricing, discovery and liquidity

and trading.” Cutler comes to StockX with a deep understanding of markets. He was previously an executive vice president and head of global listings at the New York Stock Exchange, where he taught a boot camp for business executives who want to take their company public. On Wednesday, Cutler was back

on the trading floor of the stock exchange as part of the media blitz he and Luber were making to tout the company’s $1 billion valuation. He’s also a bit of a sneakerhead himself, with a personal collection of about 150 pairs of collectible shoes. “I think, increasingly, as we become that primary destination

ness, designed to help us deliver positive financial returns, strengthen our company and keep health care costs more affordable for our customers.” Susan Moore, R.N., a health care quality consultant with Ortonville-based Health Care Resources, said health insurers around the country are investing in Medicare Advantage plans because it is highly profitable and growing quickly. “Everybody is out for the Medicare Advantage market and going against Humana. It is where the money is,” said Moore, who travels around the country advising plans on quality improvement. “I am not surprised Blue Cross is increasing its presence. It has deep pockets, and they most likely (will target) those markets where they have consulting services.” Over the past decade, Medicare Advantage membership has doubled to about 21 million enrollees, or about 38 percent of all Medicare beneficiaries. Nationally, there are 44 million people, accounting for 15 percent of the U.S. population, enrolled in the Medicare program. With

aging baby boomers, enrollment is expected to rise to 79 million by 2030. United is the market leader with 25 percent of the Medicare Advantage market, followed by Humana at 17 percent and the Blues plans collectively at 13 percent, said the Kaiser Family Foundation. Projections call for Medicare Advantage enrollment to account for 42 percent of beneficiaries by 2030, or about 33 million, said the Congressional Budget Office. “That is the opportunity” to sign up members, maybe those Blue Cross members who “have been (Blue Cross) commercial members and reach Medicare age” and opt to “stay with Blue Cross in a Medicare plan,” Virdee said. Of the 530,000 members in Michigan Blues’ Medicare Advantage plans, 90,000 are in HMO plans in Blue Care Network and 430,000 are in PPO plans in Blue Cross, he said. Blue Cross also has 85,000 outside of Michigan that are part of the PPO numbers. Virdee said he could not predict

growth in the Medicare market, although data shows nationally enrollment is growing at more than an 8 percent annual pace.

StockX is an online marketplace for collectible sneakers, handbags and streetwear that was co-founded with billionaire businessman Dan Gilbert. LARRY PEPLIN FOR CRAIN’S

where people come to find and shop and discover these types of products on our platform, we become more ‘retail-like’ in the fact people look to us as a place to buy literally anything and not as a ‘resale marketplace,’ which we don’t consider we are,” he said. Cutler said there’s no time frame for trying to put ownership of the

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Quality consulting Under the growth plan strategy for Medicare Holdings, which is expected to be renamed later this year, Blue Cross will create joint venture companies for Medicare Advantage plans with other Blues plans. The ownership stakes may vary depending on the arrangement, but he said the new plans will be “owned jointly.” “We will provide service for them to operate through Advantasure,” said Virdee, who said Advantasure has contracts with 17 Medicare Advantage plans. He declined to name them. Virdee said Blue Cross hopes to announce partnerships this fall. He said the clock is running on creating plans, receiving approvals from the Centers for Medicare and Medicaid Services to begin signing up members by Oct. 1, 2020, for coverage to

Blue Cross Blue Shield of Michigan has formed a new holding company to partner with Blues plans in other states to form joint ventures to sell new products under Medicare Advantage.

begin Jan. 1, 2021. “We have 15 months from now to go live,” he said A critical aspect of making a Medicare Advantage plan financially successful is scoring well on Medicare’s star rating system. Health plans are surveyed every year on more than 40

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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 // J U LY 1 , 2 0 1 9

AUTO SHOW FROM PAGE 3

“The event has been put together with the idea of supporting the dealer community in the area, which is extremely important to our economy,” Bowman said. “And is coalescing in a time frame where this is otherwise a gap. This is something that is totally distinct from the new, very cool, re-imagined and obviously reinvigorated event downtown in June.” Bowman hopes the Southeast Michigan Auto Show can support in a more formal way the North American International Auto Show. “We believe the two events will be mutually enhancing, and we want to work with and offer anything our event can do to educate attendees on what will be happening downtown (at the Detroit auto show next June),” Bowman said. “We are hopeful and expecting that to happen.” The Detroit Auto Dealers Association, however, doesn’t appear on board as of yet. “The NAIAS and DADA are not involved in the upcoming Southeast Michigan Auto Show, a threeday local dealer event,” Amanda Niswonger, spokesperson for the Detroit show, said in a statement to Crain’s. “We are focused on making the 2020 NAIAS the biggest and

HOMES

Blair Bowman

best event of its kind, creating more opportunities to engage industry, media and consumers from around the globe and showcasing the industries’ latest products and technology in the beautiful city of Detroit.” Bowman confirmed several automakers and dealerships have signed on to participate in the event, but declined to provide more detail. Two local dealer groups contacted by Crain’s declined to comment whether they planned to be involved in the event. A formal launch of the event is expected in the near future, Bowman confirmed. The Novi show is expected to focus exclusively on cars currently available on dealer lots, sidestepping the future landscape of mobility that is changing the NAIAS.

The DADA decided to move the Detroit show to June 2020 last July amid pressure to refresh the event. The decision was propelled by a need for automakers and suppliers to showcase new technologies, such as autonomous cars, crash-avoidance systems and ride-sharing applications, that are better experienced outside Cobo’s walls during warm weather opposed to Detroit’s often oppressive winter. The move to June is also designed to consolidate automakers’ product reveals back into the show itself. In recent years, many have chosen offsite locations to unveil new products, seeking to maximize coverage without competing with other companies’ products. Mercedes, BMW and Audi skipped the final winter Detroit auto show in January as automakers rethink marketing strategies. NAIAS also ran back to back with the Consumer Electronics Show in Las Vegas, which forced many auto companies to choose between the two. This week, NAIAS unveiled some of its plans, which include expanding the show to an additional 1 million square feet at Hart Plaza, panel discussions held at the adjacent Crowne Plaza hotel and a shortened press preview. Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh CHN Housing Partners has been administering a lease-to-ownership program in Cleveland that has resulted in 1,300 of 2,200 single family homes being sold to the families occupying them, said Kevin Nowak, the incoming executive director of CHN Housing Partners. JPMorgan Chase has supported CHN Housing Partners’ homeownership program with $500,000 in grants since 2004, Nowak said. Of the homes in Cleveland sold to date, 99 percent of them remain in the hands of the former renters, helping build equity and long-term wealth for those residents, Nowak said. “This program allows for low-income families that would not otherwise have a homeownership opportunity to have that,” said Nowak, a native west side Detroiter.

Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

JPMorgan Chase’s donation to the Opportunity Resource Fund will help with down payment assistance for 54 families to own the home they currently rent, Scher said. “You have these families that are paying rent and what we want to see if we can convert that rental payment into a mortgage payment … and have these families build some equity,” Scher said Based on federal mortgage underwriting guidelines, Scher said, “we could not write mortgages like this.” “Part of what we’re trying to innovate here is can we begin to change the model,” Scher told Crain’s. Under the criteria of the program, only renters with a consistent track record of paying their rent on time will be considered, he said.

“The presumption is if you kept up your rental payment — have a good track record there — you can keep up with your mortgage payments,” Scher said. The homes that Lansing-based Cinnaire will sell through the program were built about 15 years ago through low-income housing tax credits in Pingree Park and along Houston-Whittier on Detroit’s east side and University Grove near McNichols and Livernois on the northwest side, said Lucius Vassar, a senior vice president for Cinnaire. Cinnaire owns nearly 700 single-family homes it has developed over the years using low-income housing tax credits that the company would like to eventually sell to renters, Vassar said. “A huge part of this is also creating home-buyer readiness,” said Vassar, who is Cinnaire’s Detroit market leader.

measures in five categories, and Medicare hands out star ratings for each plan on a 1-5 scale. Star ratings are tied to bonuses and benchmark rates, and they can make a difference to consumers when choosing a plan. In 2012, Medicare

began to make 5 percent quality bonus payments to plans that achieve a 4-star rating or higher. In 2017, the Michigan Blues received a dose of bad news when Medicare dropped ratings for its eight HMO plans to 3.5 stars from 4, costing the Blues hundreds of thousands and possibly millions of dollars in bonus payments, said an inside source at Blue Cross who requested anonymity. Virdee declined to say how much Blue Cross lost in payments. “We have corrected all that and are in the midst of it,” said Virdee, noting that its Medicare PPO plans have received 4 stars for the sixth year in a row. “The bar is always raised, and Medicare expects plans to keep performing at a higher and higher standard.” Of the 40 measures, there are five categories Medicare uses in its star rating system to judge Medicare Advantage plans. They are staying healthy (screenings, tests and vaccines); managing chronic (longterm) conditions; plan responsiveness and care; member complaints

and customer service. Virdee declined to identify which one or more measurements Blue Cross slumped on. “It only takes one of them to go off-kilter. You keep performing and sometimes you can’t catch the changes” until it is too late, he said. Moore said health insurers track the Medicare star ratings at a high level because millions of dollars of bonus payments are at stake. “I am sure the stars go up to the boardroom because there is a big emphasis to stars. Management is held to account when they don’t hit at least 4s,” Moore said. “It is where the money is.” Other health insurers in Michigan are also competing heavily in Medicare Advantage, including Priority Health, which has the most plans with 4-star or higher ratings, and Health Alliance Plan of Michigan. Humana and United, the nation’s largest players, also compete for Medicare Advantage customers in Michigan. In 2019, all of Priority Health’s Medicare plans scored a

4-star or above rating. Priority’s HMO-POS Medicare Advantage plans are the only ones in Michigan to earn 4.5 stars, officials said. Like Blue Care, HAP had 4-star Medicare Advantage plans for several years, but in 2017 its HMO product dropped to 3.5 stars. Many of its other Medicare Advantage plans maintain 4 stars, officials said. Jon Cotton, president of ApexHealth, a startup Medicare Advantage managed-care company based in Grosse Pointe Farms, said the Medicare star rating system is good for consumers because it forces health plans to improve. Apex has received its Medicare license and will be signing up members this fall for 2020 in North Carolina, South Carolina, Virginia and Tennessee. “Health plans will live and die by the stars. You have to have those stars or it is guaranteed you will lose money,” said Cotton, former president of Meridian Health.

FROM PAGE 3

“stock market of things” on a stock exchange itself. “I believe if we execute well and build a global business and we’re able to execute on our plan, we’ll have options like that open to us in the future,” Cutler said.

y r l

15 aid edisucare’s are n 40

“The event has been put together with the idea of supporting the dealer community in the area, which is extremely important to our economy.”

Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

Jay Greene: (313) 446-0325 Twitter: @jaybgreene

crainsdetroit.com Editor-in-Chief Keith E. Crain Publisher KC Crain Group Publisher Mary Kramer, (313) 446-0399 or mkramer@crain.com Associate Publisher Lisa Rudy, (313) 446-6032 or lrudy@crain.com Managing Editor Michael Lee, (313) 446-1630 or malee@crain.com Product Director Kim Waatti, (313) 446-6764 or kwaatti@crain.com Digital Product Manager Carlos Portocarrero, (313) 446-6056 or cportocarrero@crain.com Creative Director David Kordalski, (216) 771-5169 or dkordalski@crain.com Assistant Managing Editor Dawn Riffenburg, (313) 446-5800 or driffenburg@crain.com News Editor Beth Reeber Valone, (313) 446-5875 or bvalone@crain.com Senior editor, Chad Livengood, (313) 446-1654 or clivengood@crain.com Special Projects Editor Amy Elliott Bragg, (313) 446-1646 or abragg@crain.com Design and Copy Editor Beth Jachman, (313) 446-0356 or bjachman@crain.com Research and Data Editor Sonya Hill, (313) 446-0402 or shill@crain.com Newsroom (313) 446-0329, FAX (313) 446-1687, TIP LINE (313) 446-6766

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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 // J U LY 1 , 2 0 1 9

THE WEEK ON THE WEB

RUMBLINGS

UAW workers approve contract deal with Faurecia for bonus, raise after brief strike

Rocket Mortgage Classic brings boost to golf club

JUNE 21-27 | For more, visit crainsdetroit.com

AW members at a Faurecia auto parts plant in Saline on Thursday ratified a new four-year labor contract that calls for significant wage hikes and a $2,500 signing bonus, the union said. A UAW spokesperson said Thursday that 83 percent of production workers voted to ratify the deal, along with 93 percent of the factory’s skilled trades workers. According to contract highlights given to workers by the union this week, hourly pay for operators with less than a year of experience would rise from $13 to $13.50 today to $20.25 by May 1, 2023. Process technicians making $22 hourly would receive an immediate $1.25-an-hour raise and would be paid $24.75 hourly by May 2023. Skilled-trades workers will see their hourly wage rise from $32 to $36. The new wages would be paid retroactively to June 1, with vacation time rollover and no increase in workers’ health care costs. The pact also creates a full-time union health and safety representative. The signing bonus calls for a $1,500 payment upon ratification and $1,000 in the first full pay period of January. “We are extremely pleased with the outcome and look forward to business as usual with our UAW partners,” Faurecia spokeswoman Misty Matthews said. The plant employs about 1,900 UAW members represented by UAW Local 892 and supplies interior parts to Fiat Chrysler Automobiles, Ford Motor Co. and Tesla Inc. A tentative labor agreement was reached last week after a brief strike. The Saline plant was originally built by Ford in 1966 and has undergone several ownership changes, most recently to Faurecia in 2012. Faurecia, headquartered in Nanterre, France, ranks No. 9 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $20.67 billion in 2018.

BUSINESS NEWS A new 20-story office tower downtown won’t be entirely privately financed, after all, now that Chemical Bank’s planned new headquarters has received $16.7 million in brownfield financing with a Tuesday vote of the Michigan Strategic Fund. The bank now says Detroit developments regularly need incentives and that as a result of its merger deal with TCF Bank, there is a change in plans that will see it going from owner of the building to a renter. The planned landlord would be an entity tied to Detroit-based real estate company Sterling Group, which Chemical Financial Chairman Gary Torgow founded and is now owned and run by Torgow’s sons. J Nordstrom will close its location in The Mall at Partridge Creek, leaving the outdoor Clinton Township mall without two of its anchor stores. The luxury department store chain J

NORDSTROM PARTRIDGE CREEK VIA FACEBOOK

Luxury department store chain Nordstrom Inc. plans to close its Clinton Township location in The Mall at Partridge Creek.

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

170

Approximate number of charities expected to benefit from last week's Rocket Mortgage Classic PGA golf tournament.

100

Number of additional jobs expected to be created by an expansion of KLA-Tencor's R&D center project in Ann Arbor Township, bringing the total to 600.

8-2

Score by which the University of Michigan lost in the final game of the College World Series, after coming within a game of what would have been the university’s first baseball championship since 1962.

run by Seattle-based Nordstrom Inc. (NYSE: JWN) is leaving after the mall lost another major tenant, Carson’s, last year. Chicago-based Starwood Retail Partners, owner of the outdoor Clinton Township mall, confirmed the closing in an emailed statement. J German lithium-ion battery maker Akasol AG plans to invest up to $40 million to open a manufacturing plant in Hazel Park to support European customers in the U.S. J Rockwell Medical Inc., a Wixom-based biopharmaceutical company, has completed the sale of $17.5 million of common stock to hire staff who will support sales and educational efforts for its Dialysate Triferic iron replacement drug. J Redico LLC broke ground this week on a 167-unit, multifamily apartment community in downtown Ann Arbor, shortly after closing on the prime piece of property north of Michigan Stadium. The Southfield developer assembled a city block of nine properties over the course of two years, according to Dale Watchowski, Redico’s president and CEO, who declined to provide in-

vestment details. The site is bounded by East Hoover Street, East Davis Avenue, Greene Street and Brown Street. The multifamily community at 950 Greene St., named Hoover + Greene, is expected to open by spring 2021. J Oxford-based manufacturer Barron Industries Inc. has purchased a 10,000-square-foot manufacturing center to accommodate new contracts from its aerospace customers.

he first-ever PGA event in Detroit has been good business for its host. The Detroit Golf Club was thrust into the national spotlight last week with coverage of the Rocket Mortgage Classic. Landing a PGA event, however, was many years in the making, and finally doing so has afforded the Northwest Detroit course, established in 1899, a major increase in visibility. When the world’s best golfers tee it up on your turf, demand to be a member there goes up. The club’s president Andy Glassberg recognized that when he oversaw improvements at the club’s two courses and set about pinning down a sponsor. “There’s no question that just as this tournament is raising the visibility of this city and what’s going on, it’s raising our visibility as well,” Glassberg told Crain’s at a media day a month before the tournament. “Our membership had been growing be-

fore, and I think the pace of that has picked up quite a bit.” Glassberg said his 700-member club has seen a big increase in enrollment since news of the tournament went public in July. He declined to say how many new members have signed up. Its current membership list, which it generally keeps private, boasts some big local names, including country singer Kid Rock, ex-NFL star Jerome Bettis, Mayor Mike Duggan and former mayors Dave Bing and Dennis Archer. The member initiation fee is $15,000 up front, or $10,000 paid over time for those 35 years and younger, Glassberg said. There are also yearly dues, which vary by membership level and typically increase to fund course renovations ahead of a PGA tour, for example. Glassberg declined to give more details. Unrelated to the PGA, the Detroit Golf Club is planning $4.5 million in renovations to its Albert Kahn-design clubhouse, which will be funded by members.

OTHER NEWS J The Michigan Legislature appropriated a $5 million grant to the Michigan Nonprofit Association to support its statewide outreach aimed at getting a complete count of Michigan residents in the 2020 Census. The grant nearly doubles the funding behind a nonprofit-led census outreach campaign that has been underway since 2017. J The city of Detroit plans to spend $500 million over five years upgrading aging water and sewer systems that have gone largely neglected for decades. The city’s Water and Sewerage Department is using a systematic neighborhood-by-neighborhood strategy, transitioning away from a more reactionary approach that focused on water main breaks and complaints, according to a news release. It’s the first “massive infrastructure upgrade” to the city’s water and sewer system since 1930, the release said. J A $1 million push to beef up Detroit’s recycling program is a key element of the city’s new Sustainable Action Agenda, which officials unveiled Friday. Led by the city’s first Office of Sustainability, the agenda is the culmination of a yearlong data collection and engagement period that garnered input from 6,800 residents, according to the city. The recycling improvement plan will satisfy a small part of the agenda, which includes 43 actions aimed at improving the livelihood of residents. J Hundreds of top cyclists from around the globe will speed through the streets of downtown Detroit next month for the Detroit Cycling Championship. The third annual event, hosted by the Detroit Athletic Club Foundation and set for July 13, will draw about 500 participants, DAC Director Kristin Ritter said.

PATTI KUKULA

Delmar Detroit, a bar and nightclub on a second-story rooftop in Greektown, opens Friday and will start out open just Friday and Saturday nights.

Nightclub, restaurant to open in Greektown A

restaurant and rooftop nightclub set to open in Greektown in coming weeks brings together Oakland County drinking and dining industry professionals with eyes on Detroit. Christopher Johnson of New American restaurant The Meeting House in Rochester partnered with Anthony Mancini of Hamlin Corner and Pronto bar in Royal Oak to create a two-level venue on a prominent Greektown corner. The Friend & Associate restaurant is expected to open in less than two weeks in the former Santorini Estiatorio restaurant space on the corner of Monroe Avenue and Beaubien Street, according to Patti Kukula, executive director of the Detroit Public Safety Foundation and an investor in the venture. Mancini and Johnson are the main co-owners. Friend & Associate is to occupy the 6,600-square-foot ground floor

space, with Delmar Detroit in 5,400 square feet on the rooftop level above. Delmar was set to debut Friday and will be open Friday and Saturday nights to start. A liquor license is active at the building, licensed by a business entity registered to Mancini, according to state records. Friend & Associate will have a bar menu with snacks and shareable food, as well as a more seasonal, creative dining room menu led by Johnson. Items range from Greek dishes to pierogi, New York strip steak, duck fat fries and soups and salad. Prices on the bar menu are around $10-$18, and the dining room will have dishes from $20 into the $50 range, Johnson said. “Food is my passion, and I really wanted to open another restaurant and doing something, you know, in the city was ideal,” Johnson said. He and Mancini also own a catering company, Eat Catering.

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