Crain's Detroit Business, Jan. 6, 2020 issue by Crain's Detroit Business

Stephen Ross

NEWSMAKERS O

ne of two billionaires behind the University of Michigan’s planned Detroit Center for Innovation, real estate developer Stephen Ross is Crain’s Newsmaker of the Year. And in observance of Crain’s 35th anniversary, we are creating a new honor, the Newsmaker Hall of Fame. The honoree is the man who helped sell Ross on Detroit, Dan Gilbert. Ross will be featured and Gilbert honored at a luncheon saluting all the Newsmakers on Feb. 21 at the MGM Grand Detroit. For tickets, go to crainsdetroit.com/ newsmaker.

CRAINSDETROIT.COM I JANUARY 6, 2020 M. Roy Wilson

NEWSMAKER HALL OF FAME

DECADE OF DAN How Gilbert changed Detroit’s trajectory

M. Roy Wilson | Page 19 Gretchen Whitmer

BY CHAD LIVENGOOD

In early 2009, Quicken Loans was trying to weather the worst housing foreclosure crisis in the nation’s history while two of Detroit’s Big 3 automakers were begging for federal bailouts — and the mortgage company’s chairman was stewing about Wayne County building a new jail at the foot of downtown Detroit. Matt Cullen had been working for Quicken Loans Chairman Dan Gilbert for only about a year when the boss called him into his office in a Livonia low-rise office building alongside I-275. Gilbert was fuming about Wayne County’s plans to build a new 2,000bed jail on Gratiot Avenue alongside I-375. “This doesn’t make any sense,” Gilbert told Cullen. “You have to get into it and try and change the trajectory of this thing.” Cullen came to work for Gilbert from the real estate shop at General Motors Co. — one of the automakers freefalling into bankruptcy at the time — and was flummoxed by the boss’ demand. “Well, there’s a couple of problems with that — we’re not even in Detroit,” he told Gilbert. “And this thing is already cooked.” Cullen was wrong. And it was an example of strategic thinking that would play out over and over in the ensuing year — which might as well be called the Downtown Decade of Dan. For that influence, which has landed Gilbert on Crain’s annual list of top newsmakers no less than eight times, Crain’s will honor Gilbert at our annual Newsmaker of the Year luncheon with our first Newsmaker Hall of Fame award. The jail construction project melted down in 2012 when then-Wayne County Executive Bob Ficano had to abandon the project after sinking $150 million of taxpayer money into the ground. See GILBERT on Page 21

Gretchen Whitmer | Page 18 Mark Stewart

Stephen Ross Page 10

Fran Parker

Fran Parker | Page 12 Tom Shea

Mark Stewart | Page 17 David Provost

Tom Shea | Page 13 David Provost | Page 16

Gary Jones

Andrew Brisbo

Gary Jones | Page 13 Suzanne Shank Andrew Brisbo | Page 15

NEWSPAPER

ILLUSTRATIONS FOR CRAIN’S DETROIT BUSINESS BY CHRIS MORRIS

Suzanne Shank | Page 14

NEED TO KNOW

THE GREEN OOZE

THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT `LEVEL ONE CLOSES DEAL FOR ANN ARBOR BANCORP THE NEWS: Farmington Hills-based Level One Bancorp. on Thursday completed its $67.8 million acquisition of Ann Arbor Bancorp. The combined bank’s 15 banking centers in Ann Arbor, metro Detroit and Grand Rapids will operate as Level One (NASDAQ: LEVL) and be headed by Level One CEO Patrick Fehring. Ann Arbor Bancorp’s three locations, doing business as Ann Arbor State Bank, will be rebranded and integrated into Level One’s system by March 23, the release said. WHY IT MATTERS: The deal creates a bank with $1.8 billion in assets and $1.5 billion in deposits, which would move it from the 20th-largest bank in Michigan to 14th-largest. It’s the fifth acquisition since Level One’s founding in 2007 by regional banking veteran Fehring.

`FCA TO OPEN DETROIT INNOVATION HUB THE NEWS: FCA US LLC and the Michigan Minority Supplier Development Council are partnering with a Silicon Valley-based tech accelerator to open an innovation hub in downtown Detroit. The automaker and nonprofit are working with Plug and Play tech center to open the hub by June. It will be called Plug and Play Detroit powered by AmplifyD, which stands for “Amplify: Diversity.” The location has not been

Not a festive green

decided, FCA spokesman Kevin Frazier said. FCA is a “founding partner” in the hub, which represents a “significant investment” for the company, he said.

` Making national news from Southeast Michigan over the holidays? An outpouring of green ooze. The apparent pollution leaking out onto I-696 at I-75, photos of which were run by media nationwide, is believed to have emanated from the site of Electro Plating Systems in Madison Heights, which was shut down by the state in 2016 for environmental violations. Its owner, Gary Sayers, has received a federal prison sentence. The state has done some testing of the area and found cancer-causing chemicals remaining after a $1.5 million EPA cleanup in 2016, and regulators are drilling around the site to figure out how widespread the contamination might be. So far, the state has found that no drinking water has been contaminated.

WHY IT MATTERS: The hub will welcome “all technology startups, with an emphasis on those owned by women and minorities,” the release said. The plan comes at a time when FCA is investing about $2.5 billion at the Mack Avenue Engine Plant on Detroit’s east side, which is expected to add 4,950 jobs in the city.

A green substance oozes out onto I-696 at I-75 in metro Detroit. | MDOT

`LIONS WILL BE — PARTLY — UNDER NEW MANAGEMENT THE NEWS: The Detroit Lions are giving head coach Matt Patricia and General Manager Bob Quinn another year after a dismal 3-13 record in 2019. But some of the team’s coaching staff will be on the way out. Patricia fired six assistants, including several position coaches and two strength coaches. And defensive coordinator Paul Pasqualoni is leaving to be closer to his family, and offensive line coach Jeff Davidson is taking an indefinite

leave from the profession. WHY IT MATTERS: There isn’t anyone in Detroit below retirement age who can remember the Lions’ last NFL championship in 1958. And team owner Martha Firestone Ford has made clear that she wants a winner. The team’s poor performance means the Lions will have the third pick in the draft this year.

`MICHIGAN’S MINIMUM WAGE INCHES UP 20 CENTS THE NEWS: Michigan’s minimum wage workers got a New Year’s Day raise that’s just below the increased cost of living for metro Detroit. The $9.45 hourly minimum is increasing to $9.65 under a 2018 citizens-initiated law that puts in place gradual increases to $12.05 per hour by 2030.

WHY IT MATTERS: The higher regular minimum wage will add to employers’ costs but amount to a 2.12 percent increase in wages. Employers are getting a cut in their unemployment insurance tax ranging from $65 to $217 per employee due to the elimination of a special tax the state imposed in 2012 to pay off unemployment system losses sustained during the Great Recession.

` ENBRIDGE CREWS RETRIEVE ROD FROM LAKE MICHIGAN THE NEWS: Temperatures just above freezing at the Straits of Mackinac between Christmas and New Year’s allowed Enbridge Energy’s crews to retrieve a 45-foot-long borehole rod they left at the bottom of Lake Michigan this fall during a geotechnical investigation for a planned underground oil pipeline tunnel. WHY IT MATTERS: In early December, Enbridge disclosed that it had lost two steel drilling rods during a fourmonth-long geotechnical investigation to plot the path of a tunnel the company wants to build under the bedrock of the Straits of Mackinac to house its controversial Line 5 oil pipeline. The Michigan Department of Environment, Great Lakes and Energy had chastised Enbridge for not informing the agency about the debris at the bottom of Lake Michigan until Nov. 19, more than two months after the rods were lost.

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HEALTH CARE

Beaumont responds to staffing complaints Concerns at Trenton, Royal Oak hospitals BY JAY GREENE

STORING UP STEM CELLS ENTREPRENEURSHIP

Forever Labs president, chief science officer and co-founder Mark Katakowski and CEO Steven Clausnitzer in the company’s Ann Arbor laboratory. | FOREVER LABS

Forever Labs grows market, increases funding with storage process BY TOM HENDERSON

Forever Labs Inc., an Ann Arbor stem-cell company that graduated from the prestigious Y Combinator incubator program in Silicon Valley in 2017, has started raising a Series A round of funding that it hopes to close out soon at $6 million to $8 million. Company CEO Steven Clausnitzer said one use of funds will be to increase the sales and marketing team. Forever Labs stores something called mesenchymal stem cells, which are taken from customers’ bone marrow and can be reinjected years or decades later to fight diseases or slow the aging process. The company currently partners

with 17 physicians around the country. They withdraw bone marrow from customers in a 15-minute procedure and ship it to Ann Arbor, where it is processed in a centrifuge to concentrate the stem cells, which are then grown into much larger volumes, from tens of thousands of cells to hundreds of millions. They are then shipped to an FDA-compliant biorepository in Indianapolis and cryogenically frozen and stored. One of the doctors is Michael Banffy, the team physician for the Los Angeles Dodgers baseball team and the Los Angeles Rams football team. Forever Labs’ graduation from the three-month Y Combinator program in the summer of 2017 came with a

three-minute pitch for capital before 700 would-be investors. That resulted in seed funding of $2 million, which included institutional investors — Milwaukee-based Northwestern Mutual Capital LLC; FundersClub, an online community for accredited individuals; Silicon Valley-based Babel Ventures and Silicon Badia, a VC firm based in New York and Amman, Jordan — as well as wealthy individuals, including Kevin Love, a player for the Cleveland Cavaliers of the National Basketball Association, and Li Jiang, an investor in tech startups who early in 2018 posted a video of himself getting his bone marrow extracted. See STEM CELLS on Page 24

“PEOPLE WERE TRYING TO RECRUIT US TO SILICON VALLEY AFTER Y COMBINATOR. THERE WAS A RICH NETWORK OF SUPPORT THERE, BUT WE’RE MICHIGAN GUYS. WE WANTED TO BE HERE. ” — Steven Clausnitzer, Forever Labs CEO

Beaumont Health, an eight-hospital system based in Southfield, has responded to surgeon and nurse complaints about short surgical staffing at its Trenton hospital by hiring more staff and opening a dialogue between management and front-line providers, a move that its surgery chief has said is a good first step toward repairing a breakdown of trust. Over the past several months, Beaumont has cut nurse anesthetist costs at its Trenton and Royal Oak hospitals as part of a restructuring and expense-reduction effort that also includes at least 50 layoffs or resignations of primarily managers and executives in its corporate office and operating units. Four doctors and four nurses, several of whom requested anonymity, told Crain’s that the cutbacks and other operating changes have resulted in widespread confusion among its clinical staff and patients at Beaumont’s Royal Oak and Trenton hospitals. At 1,070-bed Beaumont Hospital in Royal Oak, Beaumont has decided to change how it staffs anesthesiology services at the family birthing center at its flagship hospital. In mid-January, Beaumont will end regular use of certified registered nurse anesthetists for monitoring epidural medications. The nurse anesthetists will be transferred to other departments. CRNAs are advanced practice nurses specializing in anesthesia and pain management. Beaumont Hospital Trenton, the 200bed Downriver hospital, is so shortstaffed of CRNAs, surgical technologists, nurses and housekeepers that it idled at least three of its 11 operating rooms, eliminated block scheduling and was taking elective surgeries on a “first come, first serve basis,” said Zachary Lewis, D.O., a general surgeon and chairman of Trenton’s surgery department, in an interview Dec. 19 with Crain’s. See BEAUMONT on Page 25

INFRASTRUCTURE

Administrative law judge criticizes DTE’s proposed energy plan Public Service Commission ruling expected in February BY JAY GREENE

A state administrative law judge has rejected DTE Energy Co.’s long-term energy plan, sending a recommendation for denial and refiling to the Michigan Public Service Commission. The commission doesn’t have to follow the judge’s recommendation, but does weigh the opinions in making its final decision, expected Feb. 20. In the 197-page opinion, Judge Sally Wallace said several provisions of DTE’s proposal, called an integrated

resource plan, don’t comply with the state’s 2016 energy law, which mandated such plans. She said other aspects of the plan used outdated data and flawed modeling that understated the benefits of renewable energy and energy efficiency and relied more on traditional energy sources, especially natural gas. Several environmental and renewable-energy advocates criticized DTE’s plan, which was filed in April 2019, and intervened in the case. They included Michigan Attorney General Dana Nes-

sel, the Union of Concerned Scientists, the Environmental Law and Policy Center and the Michigan Environmental Council. In a statement, DTE said: “We are thoroughly evaluating the ... recommendation in preparation for filing our response, the next step in the Integrated Resource Plan process. We respect and understand that the (judge’s) recommendation is a part of the IRP process. ... See DTE on Page 23

A state administrative law judge said DTE’s long-term energy plan understated the benefits of renewable energy. | DTE ENERGY JANUARY 6, 2020 | CRAIN’S DETROIT BUSINESS | 3

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4 | CRAIN’S DETROIT BUSINESS | JANUARY 6, 2020

Development projects in and around Detroit died, were dramatically scaled back, delayed or completely reimagined in 2019. | LARRY PEPLIN FOR CRAIN’S DETROIT BUSINESS

Real estate development in metro Detroit was in flux in 2019 At the start of 2019, I reported on the Baker College campus consolidation into downtown Ferndale. At the end of 2019, I reported on the Baker ColKirk lege campus conPINHO solidation into downtown Royal Oak. That, in itself, is a perfect illustration of a year in which a not insignificant chunk of the development pipeline in Detroit and its suburbs was in flux. Projects in and around Detroit were buried, at times unceremoniously, in the development graveyard or dramatically scaled back, delayed or completely reimagined, much of the time at the whim of a labor market in which costs have risen by most estimates around 30 percent. But other times, residents torpedoed them, as was the case in Birmingham and Ferndale and Washington Township. I’ve seen no evidence the choppy seas will calm this year. Yes, there has been some general sense that the labor market will loosen up a bit, driving costs down at least slightly. But even so, it will be too little too late for those developers whose projects ended up scrapped. There have been plenty of examples of real estate projects seriously or fatally wounded in 2019: ` The Platform LLC’s effort to build high-end condominiums in the TechTown neighborhood has been shelved as construction costs cut into profit margins. (A contractor switch has also delayed one of its nearby ground-up developments.) ` Likewise, a plan by The Means Group Inc. and Holdwick Development Group for luxury condos was abandoned in favor of a Cambria Hotel. ` Executives from Dan Gilbert’s Bedrock LLC are no longer sure the development being built on the site of the former J.L. Hudson’s department store will end up housing the tallest building in the state. ` Likewise, Bedrock’s efforts to develop office, residential and retail space on the Monroe Blocks site has been pushed back as a redesign is underway, even after a ground-breaking ceremony a year ago.

` Dennis Archer Jr. and Bloomfield Hills-based Lormax Stern Development Co. LLC have scrapped the 213 apartments planned for a mixed-use development that is now one use: a Meijer Inc. grocery store on East Jefferson Avenue. ` In Brush Park, New York City-based RHEAL Capital Management LLC and Livonia-based Schostak Bros. & Co. are no longer doing hundreds of apartments in the neighborhood north of downtown, doomed by high construction costs and financing woes. ` A plan in Birmingham to bring a flagship RH luxury store was torched when voters shot down a bond measure that would have paid for a new parking deck to support it. ` In Ferndale, a parking issue killed Baker College’s plan to build a new consolidated campus along Nine Mile Road in the hip downtown area.

YES, THERE HAS BEEN SOME GENERAL SENSE THAT THE LABOR MARKET WILL LOOSEN UP A BIT, DRIVING COSTS DOWN AT LEAST SLIGHTLY. BUT EVEN SO, IT WILL BE TOO LITTLE TOO LATE FOR THOSE DEVELOPERS WHOSE PROJECTS ENDED UP SCRAPPED. ` In Washington Township, a millage that would have allowed for the purchase of the Total Sports Park complex failed in a spectacular defeat at the polls. Untold numbers of others at varying stages in the development process have blown through previously disclosed timelines. If I missed any in my list above, or there are some I don’t know about, let me know.

Other news from the year that was It’s not just the roller coaster development year that has made news. Here are some other real estate stories that caught my attention the last 12 months:

` A commercial real estate executive hasn’t been heard from in months after being implicated in a Ponzi scheme. ` The Ilitch family’s District Detroit still doesn’t have a single new residential unit, 5 1/2 years after it was unveiled. ` A large Southfield office complex got new owners after the previous ownership group allegedly neglected it and defaulted on a mortgage. ` The churn in Mayor Mike Duggan’s economic development and planning team continues, with F. Thomas Lewand, Maurice Cox and others leaving for new jobs or retiring. ` Amazon is going to the Pontiac Silverdome site; the Joe Louis Arena is coming down, to be redeveloped by the Sterling Group; and the Palace of Auburn Hills will be partially imploded in the spring after being purchased by a joint venture between Schostak Bros. and Detroit Pistons owner Tom Gores. ` Dan Gilbert suffered a stroke in May and returned home this summer after rehab in Chicago. ` Gilbert, Stephen Ross and the University of Michigan are planning to turn the former jail site downtown into the Detroit Center for Innovation. ` We learned that General Motors and Gilbert talked about him purchasing the Renaissance Center. ` Opportunity Zones started gaining more steam, as well as criticism, and a national report suggested improper Opportunity Zone influence by Gilbert’s team, which denied the accusation. ` Concern mounted in Eastern Market over tenants being squeezed out because of rising rents, and Russell Street Deli shuttered its doors after a dispute with Sanford Nelson.

Beaumont breaks ground on new building A new $40 million mental health facility by Beaumont Health and Universal Health Services broke ground in December and construction is to start early this year, with completion by the middle of 2021. The more than 100,000-squarefoot facility is to sit on 8 acres of Rotunda Drive land. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

MANUFACTURING

Canton Township-based toy maker plays for rebound

Magformers finds other ways to sell products after Toys ‘R’ Us closure bruised business BY KURT NAGL

When Toys “R” Us closed all of its more than 700 U.S. stores last year, Canton Township-based toy maker Magformers LLC lost its biggest brickand-mortar customer. The unexpected business loss threw a wrench in the company’s growth plans and forced it to find other channels to sell its products. With new contracts on the horizon, and its popular building block sets on a growing number of Christmas lists last year, the toy manufacturer is angling for a rebound. “When you take that kind of money from a manufacturer, it’s tough,” CEO Chris Tidwell said, referring to the multimillion-dollar hit it took when Toys “R” Us closed. “We’re tight this year (2019).” Magformers reached its peak revenue of $50 million in 2017. It was on pace to hit $37.5 million in 2019. Tidwell said the company, which employs 20, narrowly avoided layoffs amid the sales slide, but it halted plans to add more workers. While the manufacturer’s single largest customer is Amazon, its distribution deals with Meijer, Target, Walmart, Kohl’s and other chains account for 60 percent of revenue. Brick-and-mortar — specifically, entering more food and drug stores — is a key part of its expansion strategy. It recently landed a deal to be in Walgreens stores across the country, and a similar agreement with Rite Aid is in the works, Tidwell said. “As much as everyone says it’s all e-commerce, it’s not,” Tidwell said. “There’s still a lot of in-store presence.” Still, digital is eating away at the traditional toy industry. Toys were a $28 billion market in the U.S. last year, down 2 percent from the year prior, according to the New York-based Toy Association. The industry, fueled by equal parts nostalgia and innovation,

Tidwell

Magformers LLC, a toy maker based in Canton Township, is looking to bring revenue back up to where it peaked before Toys “R” Us closed all of its stores. | MAGFORMERS LLC

has faced stiff competition from digital media, with tablets and mobile phones replacing Power Rangers and Hot Wheels in kids’ grips. The toy market has long been dominated by household names that include Denmark-based Lego Group, New York-based Fisher-Price and California-based Mattel. Magformers’ value proposition, though, fits a growing niche: educational toys. Magformers’ marquee product is its 30- to 62-piece sets of magnetic shapes that can be arranged into different structures. It is marketed as a STEM-friendly, fun way for kids to learn colors, geometry and how to build 2D into 3D. It sells more than 200 types of products, including brands Tile Blox, Clicformers, Stick-O and a recent addition of plush toys. It

uses neodymium rare-earth magnets and patented design for reliable connectivity, according to the company. Its products are sold around the world, but its main market is the United States. The Ford Road headquarters houses administrative services such as sales, finance and marketing. A retail showroom opened there in 2017. Its products are manufactured in China and Belgium. In addition to making more of its toys available in stores and online, the company is working out a deal with Novi-based Learning Care Group Inc. to get toys into some of the more than 900 schools the company operates. Learning Care is the second-largest for-profit child care provider in the country with brands including Childtime, The Children’s

Courtyard, La Petite Academy, Montessori Unlimited and Tutor Time. Tidwell said he aims to work with educators in other states to incorporate Magformers into lesson plans, which would help build out its revenue stream. Magformers was launched in Med-

ford, Ore., in 2005 by entrepreneur Stephanie Hunts, who exited the business in 2017. Its majority owner is South Korea-based Gym World Inc., which had been an equal partner with Hunts until

she left. In 2012, the company hired Tidwell as CEO after approaching him about growing the company. Tidwell had been an executive at Wild Planet Entertainment, Mega Brands and Lego. In search of a cost-efficient, centralized location, Tidwell moved the company to Canton in 2012, building it up from a $2 million-a-year specialty toy maker into a midsize company. Tidwell said he expects company revenue to hit $50 million again in 2020 and grow from there. He plans to add four employees in 2020 and eventually staff more than 50 in the next few years as new revenue streams come online and brick-andmortar grows, on which Tidwell is banking. “I don’t believe the consumer is ever going to want to not have a physical buying experience,” he said. “We still need to use our senses.” Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl

BOOK OF LISTS

Get more Detroit business data with Enhanced Membership Excel version of Book of Lists now available The annual Book of Lists is the culmination of Crain’s year-round efforts to gather data on businesses, nonprofits and people in metro Detroit and across Michigan. But if you want more — a lot more — get the Excel version of The Book of Lists. It contains not hundreds but thousands of Detroit-area executives, including CFOs, COOs and others. For instance, we just added more than 300 executives to the Excel version of our popular Private 200 list. Now there are more than 1,300 executives in that Excel file alone. And it’s just one of the many digital lists in the Excel Book of Lists, which is available exclusively to Crain’s Enhanced and Premier Members. You can visit CrainsDetroit.com/data to learn more. JANUARY 6, 2020 | CRAIN’S DETROIT BUSINESS | 5

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Ann Arbor-based SkySpecs Inc., whose software allows for the automated inspection by drones of large wind farms, has finished raising a funding round of $17 million and will use the money to ramp up hiring and expand its global reach. “It’s a huge validation that what we are doing is a value add for industry,” CEO Danny Ellis told Crain’s of the Series C round. “We keep having good Ellis news.” The funding brings the company’s total raised to $29 million. In January 2018, the company, which was founded by four engineering students at the University of Michigan in 2012, raised a round of $8 million, following its first venture-capital round of $3 million in 2015. The company is not a licensee of the university. The most recent round was led by McRock InFund L.P. of Toronto and also included Equinor Energy Ventures of Norway and Evergy Ventures of Kansas City. Follow-on investors include Statkraft Ventures of Germany; UL Ventures of Northbrook, Ill., and Capital Midwest Fund of Mequon, Wis. “SkySpecs is a great story. They took on the challenge of making wind

farms more efficient with their autonomous drones and now dominate the autonomous wind-turbine inspection market,” said Jim Adox, managing director of the Ann Arbor office of Madison, Wis.-based Venture Investors LLC, which has invested in all of SkySpecs’ funding rounds. He is also on the company’s board of directors. “They are now using their inspection data to power innovative software to further improve the efficiency of wind farms. It’s a great company doing their piece to tackle global warming.” Ellis said the new funding round will help double the company’s current head count of 55 — “we have 25 job openings posted on our website, we’ll be on a big hiring spree over the next 12-18 months” — as well as allow it to build more machine learning and artificial intelligence into its Horizon software platform, beef up sales and marketing and rapidly expand sales in Australia, South America and Asia. SkySpecs has had support from a wide range of programs, with 2014 particularly newsworthy. That year, SkySpecs won the $500,000 first-place prize at the annual Accelerate Michigan Innovation event in Detroit after being a semifinalist in 2013 and winning $10,000 in the student category in 2012. It also won a small-business innovation research grant of $150,000 from the National Science Foundation, and Ellis was named a member of that year’s class of Crain’s 20 in their 20s.

Perhaps most important in terms of raising its national profile, that year SkySpecs was accepted into the Techstars incubation program in New York, which led to offers to move the company out of Michigan in exchange for funding, offers Ellis quickly declined. In 2013, SkySpecs won $50,000 for finishing first in the Michigan Clean Energy Venture Challenge, put on by UM and Detroit-based DTE Energy Co., the same year it raised a seed round of $595,000, led by the Detroit-based First Step Fund. “We had customers in 19 countries on all five continents this year, and we recently did our first job in Asia,” said Ellis, who declined to disclose the company’s revenue. He said he is prohibited by customers from mentioning them by name. The company is a good example of being flexible in going to market. When it launched, the plan was to build and sell carbon-fiber drones and flight controllers. Commercial-grade parts for drones weren’t readily available then, but by 2014, there were other makers of drones and drone parts in what had become a crowded competitive space. Instead of continuing to pursue a business model that was capital intensive and suddenly hyper-competitive, it made sense, instead, to make the sensors and software that would make others’ drones much more capable.

AWARDS

Deadline extended for Crain’s Notable Women in Health nominations You have more time to help us recognize outstanding women leaders in health care. We have extended the deadline to nominate a candidate to Monday, Jan. 13. After being nominated, candidates will have until Monday, Jan. 20, to complete a separate application. Crain’s Detroit Business will honor

the 2020 Notable Women in Health in a special report on March 16. Any woman currently working in health in Michigan and who has not earned a Notable Women in Michigan honor in the past 12 months is eligible for Notable Women recognition. Honorees may include doctors, nurses, health care organization

managers and executives, health innovators and entrepreneurs, researchers and academics and more. For more information about the program or to submit a nomination, visit crainsdetroit.com/nominate or contact Special Projects Editor Amy Bragg at abragg@crain.com or (313) 446-1646.

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advances you’ve made? Bloom: We’ve done better in identifying concussion in our youth and, to some degree, preventing it. There’s no way we can completely prevent concussions, but people are recognizing it more, making sure kids get out of play once they’ve sustained a concussion, and then following concussion protocols. We do know that if a kid has another concussion before the first one’s completely healed, they are at a much higher risk for worsened or more prolonged symptoms. Burns: Regarding concussions, is there a way to determine when enough is enough? Bloom: There is no way to determine how many concussions are too many. That said, our brain has a capacity to deal with concussions and when it occurs episodically or a few number of times it likely will not cause any long-term deficits. What we hear about in the NFL develops because of repetitive concussions over the course of an athlete’s career. Burns: Can you explain the connection between the opioid crisis and brain injury? Bloom: Opioid use is likely leading to something we call acquired brain injury by causing a lack of oxygen to the brain after opioids—even small amounts—have been ingested. Teenagers who use are more than twice as likely to become opioid dependent once they become adults. Whether that is a part of the addiction process or part of the difficulty with the brain making the decisions on that we don’t know.

Dr. Paul Thomas, Family Medicine Doctor, Plum Health DPC

Larry Burns: Plum Health DPC (Direct Primary Care) is the ﬁrst practice of its kind in Detroit and Wayne Country. Tell us more about your mission. Dr. Paul Thomas: We believe that health care should be affordable and accessible. We’ve lowered the cost of health care and allowed people to be more proactive in taking care of themselves. With this direct care model, my patients—or members—pay me directly. It’s $10 a month for kids and then it starts at $49 a month for adults. They can come see me any time they need to. They also have my cell phone number so they can call or text me anytime. Burns: What might a parent get for that $10 kid membership? Thomas: You have a doctor on call for you. You might send me a photo of a rash and I could walk you through that. Or you might be concerned about an ear infection and I’d want you to come in to be seen for that. Or you have your well visit. Burns: If somebody has insurance can they still be a member? Thomas: Yes. We see people who are uninsured, under-insured, and fully insured. Burns: What are the membership advantages

for adults? Thomas: Again, you have me on speed dial. We also do in-house labs and medications for all of our patients at significantly lower cost. For example, for a cholesterol panel at the hospital, you might be charged $100; at our office it’s $6. Or, if you came in to manage your blood pressure and you’re taking Lisinopril, that tablet might be $10 at the pharmacy for a one-month supply. At our office it’s 1 cent per pill, so your blood pressure medications now cost 30 cents a month. Burns: How’s the practice going? Thomas: We initially launched in 2016 as a house call practice. I had a small office in Southwest Detroit with about eight members. We’ve now grown to about 580 members. We hired a second doctor to help with the demand and we moved into a larger office in Corktown. Burns: What is in the future for Plum Health? Thomas: We want to continue to grow and bring on a new doctor perhaps every year to meet the demand. There are only 100 primary care physicians practicing in Detroit for 600,000 residents. That’s one doctor for every 6,000 residents. If you go north of Eight Mile into Oakland County there’s one primary care physician for every 600 residents. Burns: How can someone become a member? Thomas: Go to plumhealthdpc.com.

David Coulter, County Executive, Oakland County

Larry Burns: You’ve been in your Oakland County executive role for several months now; how’s it going? David Coulter: When you get to be the person who’s driving transformational change versus just doing what’s been done, when you actually get to lead real change, it’s exciting. The things I get to do really inspire me every day. Burns: What are some of the things that you and your team have as goals for Oakland County in 2020? Coulter: I’ve laid out three things. The ﬁrst one is Oakland County as the economic engine of Michigan. It has a GDP that’s bigger than 24 states. It’s very economically successful and I want to make sure that we preserve that by attracting and growing jobs. Second, I want to be more of a regional partner with the other counties and the City of Detroit. I don’t think Oakland County has always been perceived that way. I’ve joined a number of boards and have had quite a few meetings already with my counterparts in the region to make sure that Oakland County is doing things that lift up the whole region so that we can all be successful. Third is the health and

wellness of the residents, particularly the children, of Oakland County. We have a great health department. I think we do a lot of really good things and we do them well, but I’m asking questions like, ‘why are there disparities from community to community?’ ‘Are there access to health care issues that we need to address?’ Burns: What experiences have helped you as the county executive? Coulter: My style is to be collaborative. Which is to say I don’t have all the answers. I don’t pretend to always be the smartest person in the room. What I am good at is bringing smart people together, bringing the right people at the table, to work on these problems. Burns: You recently announced that you plan on running for a full term. What are your key messages to the voters? Coulter: The slogan of the campaign is Moving Forward Together. We’re in this together as a region, we’re in this together as communities within the county. I think when you put the partisan divide aside, most people want the same things. They want good schools for our families. They want good jobs. They want good health care and good wellness and prevention programs. If we focus more on the things that we all agree that we want, and then ﬁgure out in an honest way how to move there, I think we’ll be okay. That’s the kind of executive I’m trying to be.

COMMENTARY

Ilitch family missing golden opportunity on United Artists BY FRANCIS GRUNOW

Most Detroiters are too young to remember the United Artists Theatre being open. Only folks over 60 might be old enough to know a time when the theater, located on Bagley just off Grand Circus Park, was well maintained. Some seFrancis Grunow niors may even recall hints of a faded “Spanish Gothis former chair ic” grandeur that famed of the Arena architect C. Howard Crane District imbued in his 1928 movie Neighborhood palace, smaller, but every Advisory bit as fantastically ornate Committee and former executive as the Fabulous Fox, a few blocks away. director of This was the era of inPreservation Detroit. tricate plaster detail, mosaics in soaring vaulted ceilings and breathtaking balcony views. For an idea of the architectural heritage hiding in plain sight, look to the United Artists sister in Los Angeles, now rentable event space that is part of the Ace Hotel chain. It is exciting to think that the attached orange brick office tower may be renovated with apartments, joining the growing number of residential units downtown. However, the developer, Emmett Moten, claims that in order to make the residential project viable, the theater that gives the United Artists its name must be eliminated from the picture. And though the United Artists is listed on the National Register of Historic Places, it is not locally designated, meaning Detroit’s Historic District Commission cannot prevent demolition. Ilitch Holdings, owners of the United Artists building for the last quarter-century, has been

mum on the matter of the historic theater’s disposition. In fact, for as long as the Ilitch family has owned the United Artists, little has been done to meaningfully advance any redevelopment plan beyond artist renderings, splashy banners, and strategic cleaning and shoring up. That the family who garnered so much praise for its investment in the Fox Theatre and adjoining office renovation in the 1980s would be so noncommittal to a very similar reinvestment opportunity seems to suggest one long term strategy — the Ilitches never intended to do anything with the United Artists. Unfortunately, it’s not unlike the fate of most buildings owned by the family. In the case of the United Artists, it was also squarely in the way of the site for Comerica Park when plans were being finalized in the mid-1990s. You may remember the ballpark was first slated to be west of Woodward. Representing this process for the Ilitches was the same Emmett Moten, who had been chief development officer in the Young Administration, and was then handling land deals between the city and the Ilitches as vice president of Little Caesars Enterprises. Is that why the United Artists was gerrymandered out of the local Grand Circus Park historic district boundary being drafted at the time? It would certainly make demolishing it for a Tigers parking lot much easier.

The new decade brings a new reality about Michigan’s roads: The quality of the pavement on which motorists will be driving in 2020 is the best it’s been since 2006. All of those orange barrel slowdowns on the highways the past few summers are starting to pay off. But enjoy the smooth ride while it lasts, Michiganians (or Michiganders, if you will), because the percentage of roads in poor condition is still growing. The Michigan Department of Transportation’s pavement condition projections show that 46 percent of all state and local roads that are eligible for federal aid will be in poor condition in 2020. That’s twice as many poor condition roads as there were in 2006, according to MDOT’s Transportation Asset Management Council. The upside is 28 percent of Michigan roads are projected to be in good condition this year, topping the previous highwater mark of 24 percent in good condition set 14 years ago. The difference between 2006 and 2020 is 54 percent of the state’s blacktop was rated in fair condition 14 years ago. Today, it’s 26 percent. As one would reasonably expect, fair roads eventually become poor roads. And the deterioration from fair to poor has accelerated in recent years, even as the state Legislature has approved record funding for transportation through the 2015 legislation that is supposed to generate $1.2 billion more for roads by the 2021 fiscal year. That plan was half-funded by a 7-centsper-gallon gas tax increase and a 20 percent increase in vehicle registration fees in 2017. The remaining $600 million is coming from the state’s general fund through a gradual phase-in. The state’s pavement condition shows some alarming trends between 2006 (before the Great Recession ravaged Michigan’s economy and tax base) and 2018: ` In Jackson County, the percentage of pavement in poor condition skyrocketed from 2 percent in 2006 to 33 percent — a 15-fold increase in miles of road in poor shape. Fair condition roads rose 42 percent to 61 percent. ` In Macomb County, less than 15 percent of the pavement was rated in poor condition in 2016. At the end of 2018, this figure had tripled to 45.5 percent — a three-fold increase in miles of road rated in poor condition. ` Oakland County’s roads in poor condition more than doubled from 390 miles (23 percent) to 878 miles (49 percent). ` Emmet County went from 57 miles in poor condition (21 percent) to 110 miles (37 per-

See OPPORTUNITY on Page 9

MORE ON WJR ` Listen to Crain’s Group Publisher Mary Kramer and Managing Editor Michael Lee talk about the week’s stories every Monday morning at 6:15 a.m. Mondays on WJR 760 AM’s Paul W. Smith Show.

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited for length or clarity. Send letters to Crain’s Detroit Business, 1155 Gratiot Ave, Detroit, MI 48207, or email crainsdetroit@crain.com. Please include your complete name, city from which you are writing and a phone number for fact-checking purposes. 8 | CRAIN’S DETROIT BUSINESS | JANUARY 6, 2020

Chad

LIVENGOOD

cent). ` Ditto for Wayne County (17 percent poor to 45 percent). TAMC’s data is compiled by state and county road agencies through annual surveys of pavement conditions and published in the type of online dashboards that were mandated by former Gov. Rick Snyder’s administration in a move that added a corporate boardroom feel to governance in Michigan. Snyder, a stereotypical data-driven corporate decision-maker, required government agencies large and small to put relevant metrics into dashboards not just for public transparency purposes, but also to guide policymakers in their analysis of problems and potential solutions. In Gov. Gretchen Whitmer’s failed bid last year to get the Legislature to pass a mas- PAVEMENT IN sive fuel tax increase, the first-year Demo- GOOD cratic governor spoke CONDITION WILL in point-of-no-return terms about the TOP OUT AT 33 state’s crumbling in- PERCENT IN 2022 frastructure, citing the data dashboards AND THEN START her predecessor left SLIPPING AGAIN behind. And Snyder’s dash- AS THE 2020S boards don’t lie: ROLL ON. Michigan’s road conditions are headed in that direction. Pavement in good condition will top out at 33 percent in 2022 — a year after the 2015 road-funding deal is fully funded — and then start slipping again as the 2020s roll on. Based on the current taxpayer investment and the cost of everything from gravel to labor, the state’s pavement forecast calls for poor condition roads to hover between 45 percent and 47 percent through 2030. In other words, barring some political breakthrough in Lansing on long-term road funding, Michigan’s bad roads are here to stay. Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

DANIEL SAAD

Enjoy Michigan roads — this may be as good as they get

Sound off: Crain’s considers longer opinion pieces from guest writers on issues of interest to business readers. Email ideas to Managing Editor Michael Lee at malee@crain.com.

MERGERS & ACQUISITIONS

Drug maker Gemphire completes merger with NeuroBo Biopharmaceutical company faced setbacks with clinical trials of its lead drug gemcabene BY CHAD LIVENGOOD

Livonia-based drug maker Gemphire Therapeutics Inc. completed a merger last week with Boston-based NeuroBo Pharmaceuticals Inc. through a stock swap that will create a publicly traded company owned primarily by NeuroBo shareholders. The newly combined company will carry the NeuroBo Pharmaceuticals name under the publicly traded NASDAQ ticker NRBO. When the merger was announced in late July, the deal called for about 96 percent of the company to be owned by NeuroBo shareholders. The two companies did not disclose a dollar value estimate for the all-stock deal. As of Monday, Gemphire’s shares were valued at 30 cents per share and the company had a market cap of $4.5 million, less than half of its $10 million market cap when the merger was announced in July. Gemphire was a clinical-stage biopharmaceutical company that had one lead drug, gemcabene, for treat-

OPPORTUNITY

From Page 8

Fortunately, for the United Artists at least, Comerica Park finally landed on the east side of Woodward. And now, decades later, Moten wants to turn it into apartments. That’s awesome. It seems like a no-brainer in the context of downtown’s burgeoning real estate market. But it’s not 1997 anymore. As Detroiters can’t we expect more? A renovated United Artists theater to complement Detroit’s entertainment district would be deservedly one of the most important and impressive preservation stories in Detroit. It would rival aspects of Gilbert’s incredible Book Tower project currently underway, and would surely be seen as Chris Ilitch’s homage to his parents and their vision for restoring the Fox. And therein lies the rub. The looming question that only grows with each passing year is what does Ilitch heir and Ilitch Holdings President and CEO Chris Ilitch actually believe? What is his vision for downtown now that Little Caesars Arena has been open for over two years? His family is worth billions and owns over 60 percent of the property in District Detroit, so much of it covered in asphalt parking lots and languishing under their watch for decades. If District Detroit is ever going to amount to anything more meaningful than a half-baked idea, it will be because the Ilitches actually evolve their strategy beyond land speculation. They must risk to spend the money needed to activate historic properties like the United Artists Theatre, to inspire a new generation of investment that will fill in the gaps and create the active neighborhood the Ilitches claim they want, and that Detroiters deserve. There’s no time like the present. Here’s to a new year and a new decade. And may the Ilitches resolve to do different in 2020. Or dispose of their properties to those who will.

ing nonalcoholic fatty liver disease that it acquired from Pfizer. The company had a $30 million initial public offering in August 2016. It faced a series Gullans of setbacks with gemcabene when the Food and Drug Administration halted clinical trials in 2018 after the health of some patients declined in a pediatric trial.

Gemphire’s stock subsequently plunged after the FDA shut down the clinical trials, even after the company reported successful trials on adult patients. After Gemphire’s shareholders approved the merger with NeuroBo, the company’s board of directors approved a reverse stock split of one new share of the new company for every 25 remaining shares. Gemphire President and CEO Steve Gullans will be one of six directors for the new NeuroBo Pharmaceuticals Inc.

Gullans, who previously spent two decades at the Harvard Medical

IT’S UNCLEAR WHERE THE NEW COMPANY WILL BE HEADQUARTERED AND WHAT WILL HAPPEN TO GEMPHIRE’S LIVONIA OFFICE. School and Brigham & Women’s Hospital in Boston, joined Gemphire

first as a board member and then became CEO in May 2018 with the intent of taking gemcabene to market. NeuroBo President and CEO John Brooks will remain in the top executive position in the newly combined company. It’s unclear where the new company will be headquartered and what will happen to Gemphire’s Livonia office. A company spokesperson was not available for comment last week. Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood

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JANUARY 6, 2020 | CRAIN’S DETROIT BUSINESS | 9

NEWSMAKERS

THE NEWSMAKER OF THE YEAR

STEPHEN ROSS

Chairman and founder, The Related Cos.

BY KIRK PINHO

n October, the man behind the largest private real estate development in U.S. history officially put to rest the uncertainty surrounding the eastern gateway into downtown. Stephen Ross, the New York City-based developer of the $25 billion Hudson Yards project, announced that he and fellow billionaire real estate mogul Dan Gilbert were building the Detroit Center for Innovation, a $300 million University of Michigan graduate school initiative for students in things like mobility, AI, sustainability, cybersecurity, financial technology and other fields. And there are signs that’s not all Ross has in mind in his hometown. As far as additional moves in Detroit, Ross says no final decisions have been made. But in speaking with him, a newfound bullishness is apparent.

Worth an estimated $7.6 billion as of Dec. 16, Ross, the nephew of the late Detroit businessman Max Fisher, for years had been reluctant to directly invest in real estate in his hometown, although he stuck a toe in the water in 2017 when he put $7.5 million into a $27.5 million housing project with the Ford Foundation and Detroit-based The Platform LLC. “A lot of things happened in Detroit,” he said. “The mayor has really turned that city around where it should be attractive. That entails an awful lot. People are upbeat. Young people want to live there in downtown. It’s an attraction. You can feel it. You have a mayor that’s looking to get things done and not create

obstacles; in other places, the obstacles are insurmountable.” Ross’ rising engagement in his hometown, as signified by the innovation center, is an encouraging sign for investment from a developer known for making big bets on ambitious projects. “The innovation center will act as a catalyst for the future of Detroit,” Ross said in an interview with Crain’s. “A lot of schools are trying to get on board in understanding what is needed with STEM courses, engineering, computer science, information science, business law. You are really creating the leaders of the future.” The announcement capped off a year of discussions on the project

ILLUSTRATIONW BY CHRIS MORRIS FOR CRAIN’S

10 | CRAIN’S DETROIT BUSINESS | JANUARY 6, 2020

“IT IS NOT AN EASY THING, DOING SOMETHING THAT IS SO UNIQUE AND VERY LARGE IN OF ITSELF. IT’S CREATING A WHOLE CAMPUS IN DOWNTOWN DETROIT ... IT’S A BIG UNDERTAKING.” — Stephen Ross

9 5 9 1 600

There’s always another tax code change coming.

and years of Mayor Mike Duggan, Gilbert and others prodding Ross, the founder of Related Cos., to invest in real estate in the city where he was born in 1940. When it’s complete, it’s also expected to have housing across buildings 10 to 15 stories high, a boutique hotel and conference center in the former Detroit Police Department headquarters at 1300 Beaubien St. and business incubator space on the 15-acre site of the now-demolished Wayne County Consolidated Jail project. The site has sat fallow for the better part of the decade, a county government albatross. After years of back and forth with Wayne County on whether to complete it or build a new criminal justice complex elsewhere, the county and Gilbert struck a deal that gave him the site at Gratiot Avenue and I-375 for new mixed-use development, something the founder and chairman of Quicken Loans Inc. has long called for. All in, the UM Innovation Center could cost more than $750 million, with construction starting by the end of the year and wrapping up in 2023. Ross declined to say how much of his own wealth he is spending on it (Gilbert is also a backer), but said in addition to his own contribution, a “substantial amount of money” has been raised in preliminary commitments. Some in the University of Michigan community have opposed the project because they believe it is “antithetical to the university’s stated values of equity, empowerment, and community-centered public engagement,” according to a student petition. Ross acknowledged the innovation center — modeled after Cornell Tech, an urban campus on Roosevelt Island in New York City — is ambitious, but remains confident. A variety of approvals are still needed for the project, and financing structure and tax incentives or abatements have not yet been determined. “It is not an easy thing, doing something that is so unique and very large in of itself,” said Ross, U-M’s largest donor, having contributed $350 million to the university, whose renowned business college bears his name. “It’s creating a whole campus in downtown Detroit ... it’s a big undertaking.”

We’re on it. A S S U R A N C E | TA X | A D V I S O R Y

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JANUARY 6, 2020 | CRAIN’S DETROIT BUSINESS | 11

FOCUS | NEWSMAKERS

FRAN PARKER TOM SHEA Founding executive director, UAW Retiree Medical Benefits Trust CEO, OneStream Software LLC, Rochester BY SHERRI WELCH

hen Fran Parker first began reviewing the early benefits covered by the UAW Retiree Medical Benefits Trust, she found something amusing. Office visits weren’t covered for retirees. But fertility treatments were. Like vehicles built in Detroit, the bodies were different, but the chassis — or underlying benefits offered — were the same for retirees as for active individuals, even though their needs were different, she said.

And given that the trust is one of the largest health purchasers in the country, that model is something other purchasers look at, she said. In 2008, shortly after retiring as CEO of Health Alliance Plan of Michigan, Parker became a consultant to the trust. She was named executive director in 2009, charged with developing the consolidated plan to provide health care benefits for retirees of General Motors Co., Ford Motor Co. and Chrysler LLC, now Fiat Chrystler Automobiles, through three separate automaker funds. Data was a cornerstone of the foundation she put in place to track costs and target benefit enhancements.

Fran Parker

Parker, 65, the UAW trust’s founding executive director, retired at the end of December after spending the past decade creating a model for retiree care and a solid foundation for the trust, growing its assets by $7 billion to $56.7 billion by the end of 2018 and returning the plans to solvency. But she went beyond that,using her position as head of a large institutional investor to nudge publicly traded companies to look at diversity on their boards and launching a biennial conference to shine a light on the lack of diversity among investment managers. Those efforts are sparking a growing number of institutional investors in other parts of the country to also look at diversity among board members and portfolio managers. At launch, the trust had a combined $26.9 billion shortfall, which ballooned in 2011 to $33 billion due to stock market declines. In December, Parker said, she was

fectively managing and growing the assets,” Udow-Phillips said.

IN DECEMBER, PARKER SAID, SHE WAS HAPPY TO REPORT THAT ALL THREE TRUSTS WERE FULLY FUNDED AT 100 PERCENT OR BETTER. happy to report that all three trusts were fully funded at 100 percent or better. That’s good news for the 631,240 retirees and their dependents covered as of Dec. 1, 2019, and the projected 72,600 more expected to join the trust upon retirement. There was heavy skepticism early on that the trust could last the 80 or so years needed to meet the needs of eligible retirees, said Marianne Udow-Phillips, executive director of the Center for Health and Research Transformation in Ann Arbor, on whose board Parker serves. But the skepticism is gone. “(Parker) has been able to keep the retirees at the center, while ef-

12 | CRAIN’S DETROIT BUSINESS | JANUARY 6, 2020

See PARKER on Page 19

BY TOM HENDERSON

nicorns used to be as rare in Michigan as, well, unicorns. The word is venture-capital slang for a growing tech company that has hit a valuation of at least $1 billion. It was rumored that unicorns existed, maybe even plentifully, in Silicon Valley or along Route 128 in Boston, but they were nonexistent here. There weren’t even rumors of their existence, and certainly no sightings. That has changed.

In October 2017, Ann Arbor-based Duo Security Inc., an internet security company, became a unicorn when it raised a funding round of $70 million, then the largest in state history, to give it a valuation of $1.17 billion. That proved conservative when the company was sold to San Jose, Calif.-based Cisco Systems Inc. last year for $2.35 billion. This past June, Detroit-based StockX, the “stock market for things” such as luxury sneakers — and one of Dan Gilbert’s portfolio companies — raised a state funding record of $110 million in a single round, which pushed its valuation well past $1 billion. Duo was in Ann Arbor, where it’s common for tech companies to get large funding rounds, and Gilbert is, well, Gilbert. Word of another state unicorn took nearly everyone by surprise, in part because it is based in Rochester, not exactly a tech hot bed, and in part because of how it got that unicorn status. In February, it was announced that New York-based KKR & Co. Inc., one of the country’s oldest and most legendary private-equity firms, had invested $500 million to assume a majority stake in OneStream Software LLC, a provider of finance- and performance-management software for mid-sized and large companies, including UPS, Sagent Pharmaceuticals, Post Holdings Inc., Fruit of the Loom and The Carlyle Group. The investment pushed the company’s valuation north of unicorn requirements. The company’s CEO, Tom Shea, said he turned down offers of equity capital in the past because the company has been profitable since it launched operations in 2012. “But when we got to 2018, and we were aproaching the goal we had set for ourselves of becoming a company with revenue of $100 million, I thought, ‘How can we scale this so we can become a $500 million company? Let’s talk to an investment banker focused on the right partner.’” He knew some local investment bankers with Wells Fargo and they soon introduced Shea to KKR. “It’s really been exciting and surreal,” said Shea on the funding and its aftermath. “I keep thinking back to the days when there were just a

few of us sitting here writing code. The thesis for bringing on KKR wasn’t just capital, but raising our profile, too. It was ‘Look, one of the best private-equity firms in the world is behind us.’” Shea said news of the deal helped OneStream land a CFO in November, Bill Koefoed, with a background at Microsoft and other big tech firms. “KKR brought us a level of excitement that has made hiring a lot easier. We’re scaling the business,” said Shea. Employment is at 420 now, up from 250 when the deal was announced, and is expected to hit 600 or so by the end of this year. About 120 work in two offices in Rochester. “We’re looking at either a third office in Rochester or consolidating into one big office.” The company has other offices in Atlanta; Stratford, Conn.; Lucerne, Switzerland; Manchester, England; and The Hague, Netherlands. Shea said the KKR funding will help the company expand into other geog-

“KKR BROUGHT US A LEVEL OF EXCITEMENT THAT HAS MADE HIRING A LOT EASIER. WE’RE SCALING THE BUSINESS. WE’RE LOOKING AT EITHER A THIRD OFFICE IN ROCHESTER OR CONSOLIDATING INTO ONE BIG OFFICE.” — Tom Shea

raphies and hopes KKR can help OneStream land big government contracts. David Petraeus, a retired U.S. Army general and former director of the Central Intelligence Agency, joined OneStream’s board after the deal closed. OneStream has been a bit of deja vu for Shea. He and two of the company’s founders had founded another data-collection software company called UpStream Software in 2000. It was sold to Hyperion in 2006. Shea stayed with the company for a year, leaving when

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Tom Shea Gary Jones

GARY JONES

Former United Auto Workers president

BY KURT NAGL

ter

little more than a week after the longest automotive strike in a decade ended, the man who led it, Gary Jones, stepped down from his post as president of the United Auto Workers union. A couple of weeks later, Jones, who had promised to rid the union of corruption, resigned in disgrace. He is one of more than a dozen officials ensnared in a federal corruption probe that has tarnished the UAW’s reputation and called its future into question.

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Hyperion was sold to Oracle. Noncompete agreements kept him and his partners from founding OneStream until 2010, though it didn’t really launch until 2012. “We all had money from the sale of UpStream, so for the first two years we just did R&D. We didn’t hang out a shingle and say, ‘Let’s get our first 10 customers.’ Late in 2012, we said ‘Let’s get that customer one through four, and then let’s get five through 10.’” Shea said the company doesn’t disclose revenue but said he wouldn’t

ILLUSTRATIONS BY CHRIS MORRIS FOR CRAIN’S

dispute a published report earlier this year that said the company had revenue of $88 million last year. “As of mid-year, we’ve had in excess of 60 percent growth,” he said. PE companies invest in companies with the idea of an profitable exit, most likely in the form of an initial public offering for OneStream. “Right now, we’re focused on scale,” said Shea. “An IPO is the eventual goal, but it’s not front-burnered. It won’t be in the next year or so. We have to do the work and scale the business.”

The six-week strike of General Motors Co. caused some stir, but its economic impact was relatively minimal and brief, said Marick Masters, a professor at Wayne State University with an expertise in labor unions. The UAW corruption saga, on the other hand, has been a slow and destructive burn for the past 2 1/2 years. “There’s no precedent for this at the UAW,” Masters said. “The UAW is grappling with structural and institutional problems. It’s really a very weakened organization.” Jones became president of the Detroit-based union in June 2018 after more than 40 years as a member. At the time, the union was in early damage control mode. A former Fiat Chrysler Automobiles financial analyst had been charged a year earlier with concealing payments to ex-UAW Vice President General Holiefield. It was beginning to look like the labor union had a deep-rooted corruption problem. Officials thought a lowkey union man like Jones could provide a good contrast to that image. Unlike many of his predecessors, Jones kept out of the spotlight. But talks of his alleged lavish and shady spending began to bubble up not long after he took office. In the midst of contract talks, his Canton home was raided by the FBI in August, about three weeks before the strike against GM started. The raid marked a major advancement of the FBI’s investigation and included the home of Dennis Williams, the former UAW president who groomed Jones as his replacement. Jones has not been formally charged. He is accused of helping to embezzle more than $1.5 million from the union, along with several other former officials. Ten people tied up in the scandal have been sent to prison so far. In early November, Jones requested a leave of absence, and Rory Gamble, vice president of the UAW-Ford department, stepped in to replace him. Later that month, Jones permanently resigned following a UAW board vote to remove him and former Regional Director Vance Pearson, who faces multiple charges in the scandal. Jones became the first UAW leader to leave mid-term since one of its most revered leaders, Walter Reuther, died in a plane crash in 1970. “There is no doubt that Jones is at violence with the best interests of representing the working people, if all the allegations are true,” Masters said. Jones could not be reached for comment. His attorney, J. Bruce Maffeo, who works for Philadelphia-based Cozen O’Connor PC, declined to comment.

Jones first joined the UAW at a Ford glass plant in Oklahoma in 1975, on the heels of the Watergate scandal and tail end of a recession. UAW membership would reach its peak in 1979 at 1.5 million members, which included the Canadian Auto Workers before it splintered from the UAW. Today, the UAW represents around 400,000 workers, a number that has remained steady since the Great Recession, which cost the union 150,000 members, according to UAW spokesman Brian Rothenberg. Fueled by globalization, foreign carmakers have strengthened their foothold since the economic downturn a decade ago, challenging the dominance of Detroit’s Big 3 and influence of the industry’s largest union. Rothenberg said the narrative of the declining UAW is countered by the

union negotiating “three really good contracts” with the GM, Fiat Chrysler and Ford Motor Co. recently and the automakers’ announcements of multibillion-dollar investments and new jobs. For now, though, the more urgent matter for the union is how to regain trust within its ranks. That means mitigating damage to its reputation and scrubbing itself clean of ex-officials such as Jones who have personified the corruption scandal. “We are committed at the UAW to take all necessary steps including continuing to implement ethics reforms and greater financial controls to prevent these type of charges from ever happening again,” Gamble, who is set to lead the organization until 2022, said in a November statement. “I think it will take a generation to come back,” Masters added.

JANUARY 6, 2020 | CRAIN’S DETROIT BUSINESS | 13

FOCUS | NEWSMAKERS

SUZANNE SHANK President and CEO, Siebert Williams Shank & Co., LLC BY ANNALISE FRANK

fter the long coming together of two Wall Street-walking entrepreneurs, Suzanne Shank is leading the U.S.’s biggest minority- and women-owned investment bank in transaction volume. The financial power player stationed in Detroit has merged her Siebert Cisneros Shank & Co. LLC — a major municipal bond underwriter with work in transportation, water and sewer, airport financing and more — with corporate bonding titan Williams Capital Group LP. “They had a small public finance practice and ... we had the opposite profile,” said Shank, who co-founded Siebert in 1996. “This merger, for me, really had us grow leaps and bounds in one fell swoop.” The deal closed Nov. 4. The merged firm, Siebert Williams Shank & Co., LLC, is dual-headquartered in New York City and Oakland, Calif., with 15 offices and more than 750 institutional investors. But, as its president and CEO, Shank will continue to direct the ship from a downtown Detroit high-rise, 150 West Jefferson. Shank, a 30-year financial services professional with a past in structural engineering, had known Williams Capital founder Christopher Williams for around two decades.

“THEY HAD A SMALL PUBLIC FINANCE PRACTICE AND ... WE HAD THE OPPOSITE PROFILE. THIS MERGER, FOR ME, REALLY HAD US GROW LEAPS AND BOUNDS IN ONE FELL SWOOP.” — Suzanne Shank

“Because we didn’t compete headto-head in a lot of situations, we always had a pretty friendly, collegial relationship,” Shank said of Williams. They had several conversations over the last 10 years or so and once got as far toward a tie-up as a non-disclosure agreement, according to Shank. But the business is very “deal-oriented” and it can be hard to make room for long-term strategic planning. Then, about a year ago, Shank was brainstorming how to gain more market share with the head of her corporate group. They discussed combining with a firm with “strong ethics and values — not always easy to find on Wall Street.” They reached out to Williams. What made it work this time? Siebert had hired a bench of deeply knowledgeable merger and acquisition professionals whose in-house experience helped, she said. And the commitment was deeper, with Shank

14 | CRAIN’S DETROIT BUSINESS | JANUARY 6, 2020

and Williams both spending long hours on it. “It easily felt like half my time,” said Shank, a Bloomfield Hills resident. While both companies crunched numbers, Williams, now chairman of the combined enterprise, said he and Shank also sussed out how their philosophies aligned. They are both entrepreneurs, accustomed to risk. “I found out you can learn a lot about a person when you negotiate with them,” he told Crain’s. “Throughout the entire negotiations, it’s a lot of give and take, and I think that we each recognized and felt comfortable that if there was something that was important to one of us, we would try to do what we could to accommodate that.” Bond Buyer reported in January that Siebert Cisneros Shank was one of the top 25 municipal bond underwriters in 2018 with $5.64 billion based on Thomson Reuters data. In the last five years, Siebert has been involved in almost 2,000 municipal financings, a press release at the time of the merger said. It was lead manager on over 200 of those totaling almost $30 billion. Williams Capital has worked on debt and equity financing for more than 65 of the Fortune 100 and has worked on more than 900 corporate debt and equity offerings, according to the release. The company’s infrastructure deals span the nation, but Shank’s local influence is also indubitable. Crain’s named the Georgia native among its Most Connected in the region in 2015. She was also one of Crain’s 100 Most Influential Women in 2016 and a 40 Under 40 honoree in 1998. She is on Consumers Energy’s board of directors, as well as boards including Detroit Institute of Arts, and Detroit Regional Chamber. “I never really aspired to be an entrepreneur or a CEO. My first career was an engineer,” Shank said. “I never thought we’d do a billion-dollar deal as a lead manager. (Now I) fly around the country and see major infrastructure projects my firm helped finance ... it’s great work ... You know for us, I think, we really want to be recognized for our value-add, more than our minority firm designation. And I think that it’s because of our strong performance and execution that we get hired over and over again by our clients. We live by repeat business.”

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Andrew Brisbo

ANDREW BRISBO

Executive director, Michigan Marijuana Regulatory Agency

BY DUSTIN WALSH

ales of marijuana for recreational consumption became legal in Michigan on Dec. 1 last year. It was the culmination of more than a decade of advocacy work to get the issue to voters and another year of regulatory frameworking for the first legal sales to occur in Ann Arbor last month. Marijuana — its use and the regulated industry it sustains — is controversial. But the man behind implementing the will of the voters and creating the rules under which the legal marijuana industry may blossom is anything but. Andrew Brisbo is a square.

Brisbo is a regulator personified, always neatly dressed and well spoken on the state’s role in refereeing the industry. For the past three years, he’s overseen the development of the rules governing the medical marijuana market as a result of a 2016 law, and since voters approved recreational sales in November 2018, he has met with thousands of stakeholders to draft and implement that industry’s rollout.

“ALLOWING ONE AGENCY TO OVERSEE THE PROGRAMS AND MAKE ALL THE DECISIONS SPED THINGS UP CONSIDERABLY.” — Andrew Brisbo

“Broadly speaking, despite the fact that these laws have seen a lot of focus because it’s marijuana, looking at it through our lens, we’re setting up things we’ve done before,” Brisbo said. “We know the ins and outs of regulation and establishing frameworks.” Brisbo has spent his entire career in Michigan’s regulatory compliance landscape — save a year driving a milk truck in Greater Lansing immediately after graduating from Central Michigan University with a bachelor’s in leisure services administration. He wanted to lead a parks and recreation department. In 2004, he joined the state as a regulation officer for the Michigan Gaming Control Board, inspecting and investigating Detroit’s three casinos for regulation compliance. But he quickly moved into a management role as the branch manager of a Secretary of State office in Ann Arbor. He moved on to other branches, but stayed with the state’s motor vehicle licensing department for more than three years. He became an analyst for the Bureau of Commercial Services inside the Department of Licensing and

ILLUSTRATIONS BY CHRIS MORRIS FOR CRAIN’S

Regulatory Affairs, primarily focused on occupational licensing before becoming a manager and then the licensing division director. When the state got serious about implementing the medical marijuana sales framework in 2017, then LARA Director Shelly Edgerton tapped Brisbo to create a team to draft the rules. The medical rollout was marred by a licensing board consisting of government outsiders, leading to a slow approval process and waves of application denials before it even got off the ground. “This industry and the regulatory program are under a constant state of evaluation,” Brisbo said. “A lot of what had to be done when the board was there took too long. The internal process that was included in the application process relied on a group of five external people — the mechanics of that took a lot of time and energy.” Gov. Gretchen Whitmer agreed and abolished the board with an executive order and combined the state’s medical and recreational licensing agencies into one — the Marijuana Regulatory Agency — and put Brisbo in charge in March 2019. “Allowing one agency to oversee the programs and make all the decisions sped things up considerably,” Brisbo said. The medical marijuana industry began to flourish, with dispensaries and grow operations cropping up all over the state. Now all Brisbo had to do was transfer that knowledge to the adultuse recreational side and get it up and running. Eight months after voters legalized recreational marijuana, the agency surprised the budding marijuana industry by releasing emergency orders in July that would allow for recreational sales on Dec. 1, 2019, several months ahead of the planned start in early 2020.

Robin Schneider, executive director of the Michigan Cannabis Industry Association, praises Brisbo for streamlining the licensing process for marijuana business. But she faults Brisbo for what she describes as his agency’s “cowboy move” to start recreational marijuana sales on Dec. 1, several months ahead of schedule amid a dwindling supply of cannabis for medical and recreational use. She described the sped-up start day as irrational and “not well thought out” during a Dec. 13 interview on WKAR-TV’s “Off The Record.” “From a national drug policy perspective, this is not what the rollout of a responsible adult-use program looks like,” Schneider said. “And I hesitate to say, but unfortunately I think Michigan is going to become the national model of how not to roll out an adult-use program.” Brisbo said the decision was made to push forward to combat the state’s already strong black market sales of marijuana. “We put that provision forward in July in order to provide an opportunity for the adult-use side of the market to move ahead with actually providing access to consumers in Michigan,” Brisbo said. “The concept here, broadly speaking, (is) there are consumers in Michigan who are accessing products one way or the other. The safest way to (buy marijuana) is through the regulated market with a safer product because of the testing procedures.” But that rollout was rocky, as only four adult recreational stores were able to get approval and open by Dec. 1 — netting a total of only $221,000 during the first day of sales. By comparison, first-day sales in Colorado on Jan. 1, 2014, exceeded $1 million. Product shortages have already gripped the industry, spiking legal marijuana prices as high as $500 per ounce, hundreds of dollars above black market prices. But Brisbo is not fazed. “The market is certainly going to be volatile in the early stages,” he said. “The medical market hasn’t stabilized yet, but the voters overwhelming passed the (recreational marijuana) ballot initiative. There was a short time for setting up the program. We took the medical side that was on wobbly legs and through the will of the voters, we have broadened the market. It’s going to take time for the market to catch up. This can be a divisive issue. The interests of public safety, business and municipal control. ... Individuals with a narrow focus on what we do can lose the complexity of these competing factors. I’m still confident the market will succeed.”

JANUARY 6, 2020 | CRAIN’S DETROIT BUSINESS | 15

David Provost

FOCUS | NEWSMAKERS

DAVID PROVOST Chairman, TCF Bank

BY CHAD LIVENGOOD

avid Provost is always talking to other bankers about merging or being bought up — by his bank. Provost engineered his 13th bank merger in 2019 — his biggest one yet — in combining Chemical Bank and TCF Bank, a merger of equals finalized in August that made the new TCF Bank the nation’s 27th-largest bank with $47 billion in assets, $35 billion in deposits and more than 500 branches in nine states.

It would seem like a career-topping deal for a longtime metro Detroit banker who gets nostalgic talking about his youth, ferrying Mackinac Island tourists on Shepler’s Ferry. “For a kid from Mackinaw City who drove the boats to Mackinac Island and back to be fortunate enough to have a great team and become chairman of the largest bank headquartered in the state of Michigan, I’m very, very fortunate,” Provost. But Provost is not ready to sail off

into a Straits of Mackinac sunset. His eyes remain wide open for the next big M&A deal, even as the retail banking operations of TCF get married to the relationship and business-minded banking of Chemical Bank, a century-old financial institution rooted in the 20th century rise of Dow Chemical in Midland. “There’s always ongoing conversations (about mergers),” Provost said. “You never not have the conversation.”

Heartfelt Congratulations to

Stephen M. Ross CRAIN’S 2019 NEWSMAKER OF THE YEAR

Your long and generous history of support and innovation is inspiring. We thank you for your help in propelling U-M, Detroit and our state into the future.

16 | CRAIN’S DETROIT BUSINESS | JANUARY 6, 2020

“THERE’S ALWAYS ONGOING CONVERSATIONS (ABOUT MERGERS). YOU NEVER NOT HAVE THE CONVERSATION.” — David Provost

Provost’s marching orders to TCF Bank CEO Craig Dahl are to remain “acquisition ready” as the new bank headquartered in Detroit starts to go after commercial and business clients that have long had their money deposited at Comerica Bank or national bank brands such as JPMorgan Chase & Co., the No. 2 and No. 1 banks by total deposits in Detroit. “We have 99 percent of the employees are working organic growth and building a great core bank,” Provost said. “And then we have a handful of us who are actually looking at strategic planning for other banks we might want to merge with or acquire.” Provost spent 13 years at the former Manufacturers National Bank in Detroit (which later was acquired by Comerica Bank) before he co-founded the Bank of Bloomfield Hills in 1989 and its subsidiary, The Private Bank. In 2006, Provost sold the Bank of Bloomfield Hills to Chicago-based Pri-

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vate Bancorp and the next year he was back on the hunt for a new bank — this time teaming up with Detroit real estate developer Gary Torgow. In the new bank management structure, Torgow serves as executive chairman of the board TCF Financial Corp., the holding company for TCF Bank. Provost carries the title of executive vice chairman of the board and executive chairman of TCF Bank. Tom Shafer holds the title of president and chief operating officer of TCF Bank and COO of the holding company. He became part of Provost and Torgow’s team in 2011 before his Warren, Ohio-based bank, First Place Bank, was acquired in 2013 by Talmer Bank, the Troy-based financial institution Provost and Torgow used to eventually merge with Chemical Bank. The merger with TCF Bank expanded Chemical Bank’s reach beyond its main operations in Michigan and Ohio into Illinois, Wisconsin and Minnesota, where the TCF brand originated when it was known as Twin City Federal. Dahl had already built out a leasing business with operations in metro Detroit that Chemical Bank did not have. While Provost and a small team of upper management at TCF Bank are looking for M&A opportunities, the new TCF Bank is hiring bankers in Chicago, Minneapolis, Milwaukee and Denver to use the bank’s existing retail banking operations to go after new commercial business. “If you can handle the business customers, you can handle most customers,” Provost said. “To be able to do that, you have to have relationships and you have to have products and services. That is what we’re building out.” In Detroit, the disappearance of locally-based business banks was “really one of the reasons our team in Gary Torgow and Tom Shafer decided to move Chemical’s headquarters to downtown Detroit,” Provost said. The bankers are trying to make their presence known in Detroit, donating $5 million to neighborhood redevelopment and buying the naming rights to the former Cobo Center (now called TCF Center). TCF Bank broke ground in the fourth quarter of 2019 on a new 20-story headquarters at Woodward Avenue and Elizabeth Street — across from Comerica Park — that's slated to open by the first quarter of 2022. Provost doesn’t mince words when asked if the bank’s Detroit strategy is aimed at taking on Comerica Bank. Comerica’s 2007 decision “in the middle of the night” to move its headquarters to Dallas gives the new TCF Bank an opportunity to position itself as the local business bank of choice, Provost said. “The fact that they really are concentrating in areas outside of Michigan leaves a real question as to why the state would continue to support them,” Provost told Crain’s. “And it’s a great opportunity for us.”

ILLUSTRATIONS BY CHRIS MORRIS FOR CRAIN’S

MARK STEWART COO, Fiat Chrysler Automobiles North American operations

BY DUSTIN WALSH

ark Stewart landed in the deep end of negotiations between FCA and the city of Detroit when he was hired in January 2019 to lead the automaker’s North American operations. Late CEO Sergio Marchionne jump-started discussions years earlier with Mayor Mike Duggan about a new factory to assemble the next-generation Jeep Grand Cherokee and a three-row Jeep SUV, but now it was Stewart’s to finish. The deal in Detroit was ambitious — to convert its Mack Avenue engine plants on Detroit’s east side into a new assembly plant as well as retool the Jefferson North Assembly plant. The new $1.6 billion Jeep plant in Detroit is the centerpiece of a $4.5 billion investment to retool and modernize several assembly sites in Southeast Michigan, including enhancements for production of electrified vehicles. But to open that plant, FCA needed the city to assemble the necessary land, and the company set a 60-day deadline to get it done. “We really needed that tight timeline to make the launch we were working towards,” Stewart said. “It is really important (for FCA) to bring that full-size SUV to market (as soon as possible).” The Duggan administration was able to secure the 215 acres around the Jefferson and Mack Avenue plant to secure a deal with FCA. The city’s land dealings included a controversial land swap with Moroun-owned Crown Enterprises Inc. The city struck a deal with the Morouns to pay $43.5 million and swap 117 acres of land in return for 82 acres near the plants. Stewart said the automaker had contingency plans for other sites if the Detroit land could not be acquired, but none were taken seriously. “Our A, B and C plans were to make this work,” Stewart said. “A lot of locations were looked at, but Mayor Duggan asked Sergio to give him time to make the pitch. The last assembly plant (built in Detroit) was 30 years ago, which was ours. Really, our efforts were to make this work, not on the contingency plan.” The FCA deal also received ample tax incentives — something Stewart became familiar with in his last job as vice president of operations for Amazon, managing customer fulfillment across 200 facilities with 180,000 employees. The Michigan Strategic Fund approved a brownfield remediation plan for redevelopment of the idled Mack

“OUR A, B AND C PLANS WERE TO MAKE THIS WORK.” — Mark Stewart

Avenue engine plant that will capture $93 million in local and school taxes generated at the site over 30 years. Those taxes will go toward repaying the Detroit Brownfield Redevelopment Authority, the city of Detroit and the Michigan Strategic Fund for loans all three governmental entities are incurring to develop the plant site for FCA. For those loans, the city of Detroit ensured Detroiters would get first dibs on the projected roughly 5,000 jobs to be created in the city through a $35.2 million community benefits agreement. FCA began accepting applications from Detroiters in August. More than 12,000 Detroit residents qualified to apply to FCA by attending Detroit at Work Job Readiness programming. Interviewing began in November. The FCA Detroit wages for production assistants start at $17 per hour, temporary employees start at $15.78 and skilled trades employees earn $34.72, according to Detroit at Work. Stewart said he’s most proud of the automaker’s commitment to hiring Detroiters. Construction on the project started in May, with an expected completion date in the fourth quarter of 2020. The only thing that could slow down that timeline is a harsh Michigan winter, Stewart said. “We’re a little concerned about a (polar) vortex hitting us,” Stewart said. “We’re micromanaging the construction, we just need Mother Nature to cooperate.” Now at a year back in the automotive industry — before Amazon, he was at ZF/TRW — Stewart said he’s having the time of his life. A self-proclaimed “Jeep guy,” Stewart recently acquired his first car, a Jeep CJ5. “There’s an ongoing dialogue of me being a car guy. It’s in my bloodstream,” Stewart said. “It’s good to be back. I’ve totally loved this last year in automotive.”

JANUARY 6, 2020 | CRAIN’S DETROIT BUSINESS | 17

FOCUS | NEWSMAKERS

GOV. GRETCHEN WHITMER 49th governor of Michigan

BY CHAD LIVENGOOD

hen Gov. Gretchen Whitmer assesses her first year in office, she downplays the political “acrimony” surrounding her first state budget and stalled-out road-funding plan and ticks off other headlines. “We’ve announced more auto jobs and more auto investment in the state than probably any governor has, at least in the last 50 years,” Whitmer said in a mid-December interview with Crain’s. Although some of the projects were under development before Whitmer took office, the Detroit 3 automakers alone in 2019 announced $9 billion of investment in Southeast Michigan auto plants tied to the eventual creation of about 10,800 new jobs. Whitmer signed two pieces of legislation that seemed improbable when she was sworn into office on New Year’s Day 2019: a major overhaul of Michigan’s no-fault auto insurance law that will make lifetime medical coverage optional and legalizing sports and online gambling. The Democratic governor said her use of executive power to set administrative rules will eventually “improve the quality of people’s lives.” “The overtime rules, when they’re enacted, will give 200,000 people in this state, hard-working people, a raise that’s long overdue,” she said of proposed rules to expand overtime pay eligibilty. Whitmer made national headlines in September when she moved to ban the sale of flavored e-cigarettes, just as public health officials were becoming increasingly alarmed about the potential health risks of vaping, particularly among teenagers. On Dec. 27, the Michigan Supreme Court dealt the governor a setback in her quest to get flavored vape juice off the shelves of retailers by refusing to let her skip the Court of Appeals. It's unlikely Whitmer's emergency rules will take effect before they expire on April 2. The state health department is working on permenant rules, Whitmer's office said. “We’ve done some wonderful things in this state in the last 12 months — and we’re just getting started.” Where Whitmer still hasn’t started making progress is improving the condition of Michigan’s roads after vowing as a candidate for governor to “fix the damn roads.” Her proposed 45-cent-per-gallon fuel tax hike to raise $2.5 billion in new taxes — $1.9 billion for roads — never got any traction in the Republican-controlled Legislature. House Democratic Leader Christine Greig of Farmington Hills declared Whitmer’s proposal to nearly triple the state’s 26.3-per-gallon gas tax “the extreme that won’t happen.” Negotiations broke down in September when GOP leaders wanted to infuse one-time surplus funds into

18 | CRAIN’S DETROIT BUSINESS | JANUARY 6, 2020

road repairs and incorporate refinancing school employee pension payments into a longer-term solution. Whitmer vetoed $375 million in one-time funds for roads and bridges, including a dedicated $68 million line-item to replace four aging bridges that she held press conferences on or under to demonstrate the need to replace them. “One-time dollars to fix a handful of bridges is about the least efficient and effective way that you can spend dollars in the transportation budget,” Whitmer said. “These bridges aren’t something that you just write a plan overnight for and execute the next week.” Whitmer’s original long-term road-funding proposal includes a plan by the Michigan Department of Transportation to bundle together 1,100 bad bridges across the state for a $1 billion, five-year replacement blitz aimed at getting contractors to bid on the jobs in bulk. Rebuilding hundreds of structurally obsolete bridges on scale “takes a considerable amount of planning and real, long-term investment,” Whitmer said. “The most expensive, inefficient way that we can do infrastructure is the way we have been doing, which is one-time gimmicks, like the one that was sent to me in the original budget,” she said. Whitmer’s attempt to use her record-setting line-item budget vetoes to restart road-funding talks didn’t work. A stalemate over the budget stretched into December before Whitmer and GOP legislative leaders cut a deal that restored other vetoed line items that earned the governor criticism from allies, including the axing of a $1 million program for autism services. The governor told Crain’s she intends to introduce a new road-funding plan in January. Looking ahead to 2020, Whitmer could play a key role in the March 10 Democratic presidential primary. As a female governor from a swing state in the Midwest, Whitmer’s name is frequently mentioned by national political pundits as a potential running mate for the Democratic Party’s nominee. “You know what ... ? At this point in my race for governor, some were still looking for another candidate to jump in the race,” Whitmer said. “I recognize that things can change.”

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M. Roy Wilson

M. ROY WILSON President, Wayne State University

BY JAY GREENE

Roy Wilson, M.D., is entering his seventh year as president of Wayne State University with a portfolio of accomplishments but also with half of the university’s board of governors wanting him fired. Wilson, 66, an ophthalmologist and researcher who has published papers on glaucoma and blindness in populations from the Caribbean to West Africa, previously has served as deputy director for strategic scientific planning and program coordination at the National Institute on Minority Health and Health Disparities of National Institutes of Health. He also was dean of the medical school at Creighton University in Omaha. The board conflict started in earnest during the fall of 2018 when Wayne State was finalizing its letter of intent to replace Detroit Medical Center with Henry Ford Health System as its primary teaching hospital. WSU has had an acrimonious rela-

“NOW I HAVE A GREATER LEVEL OF COMMITMENT TO DO WHAT I HAVE TO DO FOR THE BENEFIT OF WAYNE STATE AND THE PEOPLE OF DETROIT.” — M. Roy Wilson

tionship with DMC since the late 2000s, especially since it became a for-profit hospital in 2011. In a December 2018 board meeting, three governors — Michael Busuito, M.D., Sandra Hughes O’Brien and Dana Thompson — voted against a proposal to extend Wilson’s contract another three years to 2023. It was narrowly approved in a 5-3 vote. The three were joined in opposition to Wilson in 2019 by Anil Kumar, M.D., who was elected the previous November. In various statements, the four opposing governors contend Wilson has done a poor job leading Wayne State and has been generally ineffective. They also have criticized compensation levels Wilson approved for several consultants and former vice president of health affairs David Hefner. They were hired to help turn around the medical school and faculty practice plan and to negotiate contracts with DMC and an affiliation with Henry Ford. On the other side, four governors — former chairwoman Kim Trent, current chairwoman Marilyn Kelley, Mark Gaffney and Bryan Barnhill II — have consistently expressed support for Wilson. Moreover, during the past year the community has rallied around him in various ways. (Kim Trent resigned in December to take a job in Gov. Gretchen Whitmer’s administration

ILLUSTRATIONS BY CHRIS MORRIS FOR CRAIN’S

and was replaced by former New Detroit CEO Shirley Stancato.) Some 24 of Detroit’s top business leaders, the medical school’s board of visitors and former board members have penned letters talking about Wilson’s accomplishments. Wilson declined an interview with Crain’s due to the sensitivities involved with the governance issues. However, he has said repeatedly that he has no intention of resigning. In a previous story in March about Detroit business leaders issuing a letter of support, Wilson told Crain’s: “I initially was very discouraged with what is going on. I’ve never dealt with this before. The (messages) have been overwhelmingly supportive and encouraging. It has given me a lot of optimism in moving forward. “I am not political at all and do not ask people to do things for me. It was spontaneous. People just expressing themselves. Now I have a greater level of commitment to do what I have to do for the benefit of Wayne State and the people of Detroit,” Wilson said. Of all his achievements during his tenure, Wilson has said he is most proud of how Wayne State has increased graduation rates. Since he took office, Wayne State has nearly doubled its graduation rate to 47 percent from 26 percent. Wilson has said the school has more work to do to reach its goal of a 50 percent graduation rate before 2021. In 2020, Wayne State expects to complete several construction projects, including the STEM Innovation Learning Center, which will bring all of WSU’s science, technology, engineering, and math programs into one building. He also has pointed to moving the historic McKenzie house on Cass Avenue to the other side of the block on Second Avenue, allowing the expansion of the Hilberry Theater, which will allow the complex to house a new jazz center. Last year, Wayne State established a partnership with the Detroit Pistons that will allow for the construction of a new $25 million arena for the university’s men’s and women’s basketball teams. The arena also will serve as the home of the Pistons’ G League team.

PARKER

From Page 12

Noting high pharmacy costs, she sent letters to members, encouraging use of generics and giving them an incentive to do so. The dollars saved would help preserve the trust-funded benefits and even enhance them. Today, the fund’s generic use rate is 9697 percent, up from the low 70s a decade ago, Parker said, a move that saved tens of millions of dollars. Among other efforts, she also consolidated health care contracts, combining, for example, three separate Blue Cross Blue Shield of Michigan contracts for retirees at GM, Ford and Chrysler into one. Amid it all, she kept a mission-oriented focus on retiree care, working to restore benefits that had been cut by two of the three carmakers during bankruptcy and to enhance other benefits. She worked with insurance providers to craft benefits that made sense for retirees. And noting high numbers of emergency room visits, the trust began phasing in office visit coverage. Today, members are entitled to unlimited low- or no-copay primary care and specialty visits, Parker said. And as of Jan. 1, members were set to be able to secure generic medications via mail at $5 for a 90-day supply or $20 per year, she said last month. Parker used a letter-writing campaign to encourage board diversity at Michigan companies in the trust’s portfolio in 2011 when an Inforum report on the issue caught her attention. She pointed to the business benefits and asked them to consider diverse candidates. Companies like American Axle and Lear Corp. did, adding women to their boards. In 2016, Parker spurred the launch of the Midwest Diversity Initiative, a coalition of what is now 13 institutional investors with over $800 billion in assets. Using the same letter-writing approach, the group has spurred 24 public companies to commit to consider female and minority candidates for every open board seat. Ten have appointed a dozen diverse board members. In October, a second coalition, the Northeast Investors Diversity Initiative, launched with $283 billion in assets under management. Parker’s leadership “came at a critical time in sort of the arc we’re seeing in diversification of boards,” said Terry Barclay, president and CEO of Inforum, a professional organization that offers leadership development programs for women. “She provided additional energy and leverage at a critical time. And we are seeing numbers improve,” Barclay said. Parker also played a role in creating a coalition of investors taking on opioid accountability, and noting that investment managers are, by and large, white men, she led the launch of the biennial Diverse and Emerging Managers Forum, which drew over 200 to Detroit last fall, including the Kresge Foundation, Texas Teachers Retirement System and Goldman Sachs. Asset management firms owned and operated by diverse teams are proven to demonstrate equal or better performance than their peers, Parker said. “We’re a convener, whether it’s a convener for change in health care or in our investments,” she said.

JANUARY 6, 2020 | CRAIN’S DETROIT BUSINESS | 19

HELPING PEOPLE REVITALIZE AND THRIVE The YMCA of Metropolitan Detroit is committed to providing experiences that enhance:

» FAMILY AND COMMUNITY » CHILD AND YOUTH DEVELOPMENT » HEALTH AND WELLNESS YMCA OF METRO DETROIT The YMCA celebrated its 175th birthday last year. Originating in London, England, the first YMCA opened in 1844. Eight years later the Detroit Y was founded; it’s a spry 167-years-young. The global organization — serving 45 million people in 119 countries — commemorated its milestone anniversary through service. In 2019, The YMCA of Metropolitan Detroit: » Raised over $6.1 million to support children, youth and families. » Awarded over 2,000 families $1,400,000+ in scholarships to participate at the Y. » Provided over 200,000 healthy meals to over 1,000 children at over 30 locations. » Operated two Girls on the Run (GOTR) and STRIDE sessions for three 5k races serving over 5,000 children. » Engaged over 2,000 volunteers who provided over 40,000 hours of service. » Served over 4,000 children in resident and summer day camps throughout southeast Michigan to help mitigate summer learning loss.

Make Every Day Better, Join the YMCA, and become a vital partner in developing thriving, communities.

JANUARY PROMOTIONS

All Month: $0 Joiners fee 1st week: 75% off first month dues 2nd week: 50% off first month dues 3rd week: 25% off first month dues - ymcadetroit.org/join » Nurtured over 200 young adults with special needs in our inclusion programs. » Provided resources to 75,000 kids and families that made their lives better everyday as YMCA members. » Supported over 45 cancer survivors as part of our LiveStrong Program at three Ys.

» Provided over 4,000 children at 49 sites in Wayne, Oakland and Macomb counties with safe, fun and educational after school services. » Served over 200 Metropolitan Detroit youth in the Detroit Creativity Project, an improv education program, that began in 2011.

» Prepared over 200 Detroit youth for the world of work as a DESC (Detroit Employment Solutions Corporation), WIOA (Workforce Investment Act), and GDYT (Grow Detroit’s Young Talent) partner. » Operated 10 facilities with nine pools, two resident camps and four community initiatives. » Provided over 1,500 Metro Detroit children with free water safety and swim lessons. » Employed over 600 18-to-24-year-olds in Y summer day camps, as a leader in youth employment.

» Served as a platform for emerging visual artists, new exhibits are featured monthly at the Boll Family YMCA. » Provided over 1,900 kids at 14+ sites access to sports sampling and free play as the mobile equipment sharing partner SportPort of Project Play Southeast Michigan. » Served as a leading partner in the Community Education Commission (CEC), GOAL Line Project at Northwest Activity Center, a city of Detroit initiative, serving over 200 children annually.

METRO DETROIT YMCA LOCATIONS BIRMINGHAM FAMILY YMCA 400 E. Lincoln Street Birmingham, MI 48009 (248) 644-9036

CARLS FAMILY YMCA 300 Family Drive Milford, MI 48381 (248) 685-3020

FARMINGTON FAMILY YMCA 28100 Farmington Road Farmington Hills, MI 48334 (248) 553-4020

L IVONIA FAMILY YMCA 14255 Stark Road Livonia, MI 48154 (734) 261-2161

NORTH OAKLAND FAMILY YMCA 3378 E. Walton Boulevard Auburn Hills, MI 48326 (248) 370-9622

BOLL FAMILY YMCA 1401 Broadway Detroit, MI 48226 (313) 309-9622

DOWNRIVER FAMILY YMCA 16777 Northline Road Southgate, MI 48195 (734) 282-9622

LAKESHORE FAMILY YMCA 23401 East Jefferson St. Clair Shores, MI 48080 (586) 778-5811

MACOMB FAMILY YMCA 10 North River Road Mount Clemens, MI 48043 (586) 468-1411

SOUTH OAKLAND FAMILY YMCA 1016 West 11 Mile Road Royal Oak, MI 48067 (248) 547-0030

Customized Corporate Memberships are available » ymcadetroit.org/corporate-membership

GILBERT

From Page 1

Crews hired by Dan Gilbert’s real estate company ended up demolishing the half-built jail in 2018 — nine years after Gilbert stewed about the prospect of an institution of incarceration defining how people saw Detroit when they entered its eastern gateway. “We hadn’t moved downtown yet, or even understood how we would move downtown, and Dan was focused on how important this site was,” said Cullen, now the CEO of Gilbert’s Bedrock LLC real estate company. “I think that’s pretty incredible.” Detroit’s destiny has certainly taken a different course over the past decade that few could have predicted in the depths of the Great Recession, when GM and Chrysler’s collapse spelled almost certain doom for a city that was already suffering from a half-century of declining population and disinvestment. The automakers came back, reinvented their business models (hello, trucks and SUVs and goodbye sedans!) and have posted record profits in recent years. Fiat Chrysler Automobiles is now in the midst of converting two engine plants on Mack Avenue into a new Jeep assembly plant and GM has committed to retool the aging Poletown plant to build electric vehicles — two reversals of fortune few would have imagined after decades of watching the automakers build auto plants in Mexico or beyond. But this past decade in the city synonymous with the automobile has, in so many ways, been defined by a man who made his fortune selling mortgages and is now recovering following a stroke last May. After moving Quicken Loans downtown in 2010, Gilbert went on a dazzling real estate buying spree, gobbling up more than 100 properties. But instead of becoming yet another speculator who sits on empty, rotting properties — or razing buildings for more surface parking — Gilbert deployed capital throughout the central business district, turning around one distressed property after another. Suddenly, Detroit, the poorest big city in America, had a John Varvatos store selling $1,200 alpaca plaid coats. Last month, Buddy’s Pizza, the postwar originator of Detroit-style pizza pies, opened a downtown pizzeria in the Gilbert-owned Madison Building (two years after Angelina Italian Bistro closed, citing Gilbert’s rising rents). Over the past decade, Gilbert the real estate mogul has reshaped downtown. His employees’ desire for outdoor public space to enjoy Detroit is but one reason why there are basketball courts in Cadillac Square. Gilbert was an early backer of the QLine, buying naming rights for the streetcar and giving his employees passes to boost ridership and cut down on parking congestion. He even got the operating company for the Detroit newspapers to sell The Detroit News’ historic Lafayette Boulevard building to him and then move into his renovated Federal Reserve building on Fort Street and become tenants. Then he bought the long-vacant Detroit Free Press building on Lafayette and is currently renovating that 14-story-tall Albert Kahn-designed hulk. Quicken Loans and the family of companies (there are literally dozens of them) swelled to a Detroit workforce of 17,000 — more employees downtown than GM, Blue Cross Blue Shield and the Detroit Medical Center combined. Gilbert’s moves bought him great

“THERE’S CLEAR EVIDENCE THAT DAN’S COMMITMENT AND ENTHUSIASM ABOUT THE CITY OF DETROIT REMAINS. HE’S STILL MAKING THE BIG DECISIONS, THE BIG STRATEGIC PLAYS.” — MATT CULLEN, CEO OF BEDROCK LLC QUICKEN LOANS

fanfare, adding credibility to a narrative in the national media that Detroit was a comeback city. The likes of JPMorgan Chase CEO Jamie Dimon bought it. Ford Motor Co. bought the decrepit Michigan Central Station train depot — an unimaginable redevelopment

project prior to Gilbert’s downtown crusade — as Henry Ford’s great-grandson, Bill Ford Jr., follows Gilbert’s fundamental belief that innovation will be borne from cities, not sterile suburban office parks. After largely filling up his main downtown buildings with employees

Quicken Loans’ move to what was called the Compuware Building began a run of downtown investment by Dan Gilbert unrivaled in the city’s history. | CRAIN’S DETROIT BUSINESS

and tenants, Gilbert vowed to go to vertical in a city where a skyscraper hasn’t been built since the 1970s construction of the Renaissance Center. Politicians rushed to help the billionaire make it happen. Then-Gov. Rick Snyder even crossed his nonew-tax incentives red line to help Gilbert justify breaking ground on a skyscraper at the base of the former J.L. Hudson’s department store. As Gilbert made real estate moves and Quicken Loans scrapped and clawed to be No. 1 in the residential mortgage origination business, the billionaire businessman started moving into other areas of Detroit life. After Gilbert co-chaired a 2013 task force on blight and testified in federal court about it in Detroit’s bankruptcy case, his company’s philanthropic arm went looking for solutions to preventing neighborhood blight and destabilization. The Quicken Loans Community Fund used community groups to hire Detroiters to canvass neighborhoods and educate low-income homeowners about their right to get exempted from paying property taxes — a proactive measure meant to stem the

tide of foreclosures running through the county treasurer’s office. And to illustrate just how closely aligned Gilbert’s company is with Mayor Mike Duggan’s administration, the Quicken Loans Community Fund recently paid a consultant to help the city’s building department redesign its notoriously difficult permitting and inspection processes and forms — effectively pulling city bureaucrats into the digital age. Gilbert also stewed in recent years about the high price of auto insurance. During an October 2017 interview about the bid he was orchestrating to pitch Amazon on building a second headquarters in Detroit (which Duggan effectively outsourced to Gilbert), Gilbert told Crain’s reporters he wanted to reserve a few minutes at the end to discuss auto insurance. It turned into a 10-minute rant. Gilbert decried “the predatory plaintiff bar” of personal injury attorneys and “certain parts” of the medical industry that he said work together to “profit enormously and unjustly from this crazy law.” Now, it’s not uncommon for businesspeople to have opinions. Even about laws they know little about. But Gilbert dispatched a team of lobbyists and consultants to the Capitol to engage in a campaign to get the Legislature to eliminate mandatory medical coverage for auto insurance. He threatened a 2020 ballot campaign. In less than two years, Gilbert did what an army of insurance industry lobbyists had failed to do over a couple of decades, getting the Legislature and governor to bend to his will. On the Sunday of Memorial Day weekend, two days after lawmakers passed that historic reform, Gilbert suffered a debilitating stroke and has rarely been seen publicly since. Gilbert’s condition and long-term prognosis have been a tightly held secret within his privately held company. The 57-year-old Gilbert hasn’t granted any media interviews. A video message he sent to employees from a rehabilitation center in downtown Chicago leaked out of the company’s walls in August, showing a bearded Gilbert praising Quicken Loans workers. His public absence in Detroit over the past six months has left a question mark for some downtown observers about what the next decade will hold, underscoring how Gilbert has, in many ways, held the full faith and credit of the city’s future in his hands. Or maybe we’ve held our full faith and credit in Gilbert to propel the city forward. The lieutenants in Gilbert’s business empire insist he’s still making major decisions. Steel beams will come out of ground at the Hudson’s site this year, Cullen said, attempting to erase any doubts that Gilbert intends to build an iconic skyscraper at a site that invokes memories of downtown shopping before Hudson’s closed in 1983. An architect was hired for renovation of the Book Tower. And “post-Dan’s stroke,” Cullen said, the company’s leaders finalized a proposal with New York City developer Stephen Ross to build a University of Michigan innovation center and satellite campus at the one-time jail site. “There’s clear evidence that Dan’s commitment and enthusiasm about the city of Detroit remains,” Cullen said. “He’s still making the big decisions, the big strategic plays.” Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood JANUARY 6, 2020 | CRAIN’S DETROIT BUSINESS | 21

PLACE

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elopment cution of achieving brands: hcare, Ad r focused marketer ing their could be

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Product Development Engineer (PDE001): Oversee automotive interior & exterior lighting product development engineering projects from concept to production launch & identify & resolve technical issues within the project. Coordinate, propose, test & validate new designs & improve upon existing product designs.To apply, submit resume to Jobs@Grakon.com and reference ID#.

Receivership sale of assets of Visiting Physicians BusiMolex, LLC seeks Advanced Quality Planning (AQP) Engineers ness Residential Physicians Association, PLLC & RPA Manfor Rochester Hills, MI to work w/product dev team members to dev & mainagement, Inc. includes account tain quality plans of a global design center for electronic cable assemblies. receivables, 7 vehicles, outstandAdvertising Section Mgmt/related field +2yrs exp OR Bachelor’s Master’s in Ind Eng/ Quality/Risk ing insurance, Medicare and Medin Ind Eng/ Quality/Risk Mgmt/related field +5yrs exp req’d. Req’d Skills: Qualicaid claims, office equipment, ofity eng w/ new product dev process w/electronic connector production facility fice furniture, medical supplies, in auto industry, problem solving methodologies (8D, root cause analysis) & and intellectual property. corrective action implementation; Supply Chain, Risk Analysis, GD&T, SupContact Sonya Goll at (248) port Environ Testing (Eng design/Design Validation/Process Validation), Proc354-7906 ext. 2234 or sgoll@ ess Improvement Coach, Change Mgmt, PFMEA/DFMEA, Control Plans, additional sbplclaw.com To placeforyour listing,inforcontact PPAP, Suzanne Janik at 313-446-0455 or email sjanik@crain.com APQP, Qualifying Suppliers using CPK, IATF, SPC, MSA, Poke-Yoke, mation, form purchase agreeSix-Sigma, Minitab. 30% travel req’d. ment, financials of business, and www.crainsdetroit.com/classifieds Send resume to: MLXjobs@kochind.com, Ref: JH deadlines for offers.

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Project Coordinator REAL ARKET LACE ESTATE

to drive improvements into productivity, capability & speed throughout the divisional product dev. Master’s in Ind Eng or related field +2yrs exp or Bachelor’s in Ind Eng or related field +5yrs exp req’d. Req’d Skills: exp w/electronic connectorsare in auto industry improvement to projects, setting up product We looking for w/business a Project Coordinator join Plastics News anddev the processes, & project mgmt; PLM solutions (teamcenter, enovia, SAP, Crain Global Polymer Group. Core competencies includewindchill), solid written JIRA, Agile, data modeling & visualization dev using Qlik, Power BI, Tableau); and verbal communication skills, excellent organizational skills,assets website Receivership sale Six Sigma. Send resume to: MLXjobs@kochind.com, Ref:of AJ

of Visiting Physicians editing, high level of detail and the ability to multi-task andBusimeet Residential deadlines. This position is located in theness Detroit office and Physicians will report to Association, PLLC & RPA ManDelight your Clients withthe theEvents Best ofDirector. Michigan agement, Inc. includes account 2,280 ACRES ACRES FOR FOR SALE SALE 2,280 Handmade Nut, Baked Goods & receivables, 7 vehicles, outstandChocolate Gift Trays. ing insurance, Medicare and MedDOUBLE EAGLE EAGLE RANCH RANCH Visitlogo crain.com/careers/ for more information DOUBLE FREE Holiday cards w/your & message icaid claims, office equipment, ofNorth Central Michigan North Central Michigan andDelivery! available positions. fice furniture, medical supplies, Guaranteed Christmas TheDoubleEagleRanch.com TheDoubleEagleRanch.com and intellectual property. NibblesGifts.com 248-737-8088 Call Kyle: 248-444-6262 Call Kyle: 248-444-6262 Contact Sonya Goll at (248) 354-7906 ext. 2234 or sgoll@ Visit our store at 32550 Northwestern Hwy, Farmington Hills sbplclaw.com for additional inforDirector, Digital Operationsmation, form purchase agreement, financials of business, and Executive Director, Audience Development deadlines for offers. We are seeking an exceptional Director – Digital Operations to oversee & Analytics ad ops and ad solutions departments. We are seeking candidates who: -Lead through change; -Are comfortable working in imperfect situations; As a forward-thinking and transformational Audience Development Executive, you will lead the strategy, -Operate development, execution of with and a sense of urgency; -Are fascinated by ad tech and Crain’s readers aremarketing practices audience plans via effective withrevenue the goalopportunities of achieving as a function of Ad Operations; -Love developing revenue sixto of Crain providing Communications’ brands: insights,core analysis, recommendations for revenue 75%growth moreacross likely BIDSand WANTED Automotive News, Crain’s Business Publications, Modern Healthcare, Ad generation and optimization; -Take ownership of major projects and * bePensions college graduates Age, & Investments, Polymer Group. leveraging your focused vendorBy relationships to drive forward a corporate vision; -Work cohesively ROI mindset and your experience as awith modern, multi-channel marketer various business units; -Are comfortable in a technical setting; and RESIDENTIAL PROPERTY Connect withhow Suzanne at you’ll decide best Janik to engage audience members during their solver and identifying opportunities -Are in their element as a problem sjanik@crain.com customer journeys, and how best to allocate Position could be acrossresources. the business. for all your recruiting needs. 2,280 ACRES FOR SALE based in Detroit, Chicago, or New York Visit City.crain.com/careers/ for more information * Visit crain.com/careers/ DOUBLE EAGLE RANCH *The Media Audit for more information and available positions. North Central Michigan and available positions. RESIDENTIAL PROPERTY PROPERTY RESIDENTIAL

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CRAIN’S READERS ARE CRAIN’S READERS TO 4.5x MORE LIKELY HAVE AN AVERAGE INFLUENCE NET CORPORATE WORTH OF $1.6 FINANCING MILLION Accounts Receivable Specialist DECISIONS

DEALS&DETAILS  CONTRACTS  BAE Systems Inc., Arlington, Va., a defense contracting company, has won a $249 million contract modification from the U.S. Army to complete an additional 60 M109A7 self-propelled howitzers that will bring improved artillery capabilities to the Army’s Armored Brigade Combat Teams. Work on the contract will take place at several facilities within the company’s combat vehicles manufacturing network including: Sterling Heights, Aiken, S.C., Elgin, Okla., and York, Pa. Website: baesystems. com/US

 EXPANSIONS  Clinc Inc., Ann Arbor, an artificial intelligence software company, is expanding in March into the former Kiwanis Thrift Sale space at 301 W. Washington St., Ann Arbor, giving the company three floors and 21,276 square feet of space. Website: clinc. com

 MERGERS & ACQUISITIONS  Alline Salon Group LLC, Bloomfield Hills, a hair salon operator of Supercuts, Cost Cutters and Holiday Hair salon businesses, has an agreement with Regis Corp., Edina, Minn., a hair salon chain operator, for the sale and conversion of 133 company-owned salons mostly in Pennsylvania. The salons being acquired are currently branded as Holiday Hair, Famous Hair, Best Cuts, CityLooks, Style America and BoRics Hair Care.

or 313-446-0455

Visit crain.com/careers/ for more information and available positions.

Crain Communications is currently seeking an Accounts Receivable Specialist. This position will report to the Accounts Receivable Manager and will be located in our downtown Detroit location. The ideal candidate will be highly motivated, have an upbeat attitude and must be a team player.

Contact Suzanne Janik at sjanik@crain.com or 313-446-0455 for details.

YOU MADE NEWS IN CRAIN’S 22 | CRAIN’S DETROIT BUSINESS | JANUARY 6, 2020

Share your success with custom Reprints, E-prints and more! Contact Laura Picariello at lpicariello@crain.com

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 TUESDAY, JAN. 7 2020 Michigan Economic Outlook. 11:30 a.m.-1:30 p.m. Detroit Economic Club. Grant Thornton chief economist Diane Swonk and Jeff Donofrio, director of Michigan’s Labor and Economic Opportunity Department, discuss the 2020 Michigan Economic Outlook. MotorCity Casino Hotel. $45 members, $55 guests of members. Website: econclub.org

 UPCOMING EVENTS Global Economic Outlook for 2020 and Beyond. 8-11:30 a.m. Jan. 16. Automation Alley. The annual economic outlook will feature international business experts discussing the shifting dynamics of the global economy and how companies can best position themselves to take advantage of the opportunities and challenges of doing business around the world in 2020. Automation Alley, Troy. $30 member; $50 nonmember; $40 member walk-in; $60 nonmember walk-in. Contact: Cathy Steiner, email: info@automationalley.com; phone: (248) 4573200.

*Signet Readership Study

Visit crain.com/careers/ for more information and available positions.

*The Media Audit

*Signet Readership Study

 Mercer Global Advisors Inc., Denver, Colo., a registered investment adviser, acquired SD Financial Pathways LLC, Dearborn, a wealth management firm. Websites: sdfinancialpathways.com, merceradvisors. com

 NEW SERVICES  Kapnick Insurance Group, Adrian, an insurance company, has begun offering diversity and inclusion consulting services to help clients create more diverse and inclusive workplaces. Erica White, a certified diversity professional through the National Diversity Council and a client executive with Kapnick, will be spearheading the new initiative. Also, Kapnick Insurance Group recently opened an office in Mumbai, India. Website: kapnick.com

CALENDAR

Business Development Sales Associate at sjanik@crain.com

The Global Polymer Group is looking for a Business Development/Sales for details. Associate who will be expected to work with inactive accounts and new prospects to pre-sell the brand with the objective to set up a meeting with the Regional Manager. They will work with the sales team to help establish relations to ensure a smooth transition of the account. The Business Development Associate will need to be able to effectively research and uncover new opportunities both endemic and nonendemic clients.

One hundred and five of the salons will be under the Holiday Hair banner and the rest will be converted to the Regis Cost Cutters brand. The transition and conversion began in early December and will continue into early 2020. In late 2018, the Alline Salon Group purchased and converted 66 stores to Supercuts in Michigan. In early 2019, it purchased and converted 190 salons in Ohio to Cost Cutters and Supercuts making it the largest Supercuts and Cost Cutters franchisee for Regis. With this sale, Alline will also be the company’s largest franchisee and the sole Holiday Hair franchisee. Websites: allinesalongroup.com, regiscorp. com

CEO Series: Mary Corrado. 8-9:30 a.m. Jan. 23. Troy Chamber of Commerce. Mary Corrado, American

Society of Employers president and CEO, will lead a presentation on workplace flexibility topics and trends. DoubleTree By Hilton, Bloomfield Hills. $32 members. $40 nonmembers. Contact: Troy Chamber of Commerce, email: theteam@ troychamber.com; phone: (248) 641-1606. 2020 Detroit Policy Conference. 8:30 a.m.-4:30 p.m. Jan. 29. Detroit Regional Chamber. The 2020 Detroit Policy Conference: Defining a Decade will discuss Detroit’s path to economic sustainability. Local and national leaders will highlight the work underway, new ideas, opportunities and challenges that will define the next 10 years for the Detroit region. MotorCity Casino Hotel. $169 members; $245 nonmembers. Contact: Katy Palahang, phone: (313) 596-0384. Tech248 Special Event: Business Processes that Boost Profits. 3-5 p.m. Jan. 30. Topic: Business Processes that Boost Profits, Increase Revenue and Reduce the Need for More Staff, by speaker Dan Izydorek, CEO and founder, PC Miracles. PC Miracles, Pontiac. Free. Advance registration required. Registration closes 9 a.m. Jan. 28. Contact: Sandra O’Connell, email: oconnells@oakgov.com; phone: (248) 858-7647 To submit calendar items visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

DTE

From Page 3

“As we continue to proceed through the IRP process, we remain committed to doing as much as we can, as fast as we can, to provide the communities we serve with more clean energy that is affordable and reliable.” Wallace said DTE’s IRP, which lays out a defined power generation plan for the next five years and then various alternate paths, doesn’t meet statutory requirements for a concrete long-term plan. She also said that by failing to solicit bids for renewable energy projects, the company’s cost assumptions for those projects are invalid. Under an IRP, regulated utilities like DTE are required to develop longterm plans on how they will meet electricity demand in their service areas. The plans also must include evaluations of energy waste reduction, supply sufficiency, demand response and the impact of state and federal environmental regulations. Any new generation source is required to be the lowest-cost and best option. Wallace also ruled that DTE failed to fully account for the cost savings available through increased energy efficiency. She said DTE should come back to the MPSC with a revised IRP regardless of whether the commission approves its current proposal. Margrethe Kearney, a staff attorney with the Environmental Law and Policy Center, said the MPSC should look carefully at DTE’s proposed plan and the process it used to develop it. She said utilities must develop IRPs with customer input and use the right pric-

A DTE employee attaches a new service line to a main pipeline | DTE ENERGY

es by using a competitive bidding process. “Key to this process is that the utility must be open to making changes that are good for customers,” Kearney said. “It was clear from the beginning that DTE had already decided how it wanted its plan to look, and was reluctant to consider new ways to lower costs for customers while maintaining reliability and protecting the environment.” Kearney said Wallace’s opinion found several errors and incorrect assumptions with DTE’s proposed plan. “The next step is for parties to explain to the commission itself where Judge Wallace got it right, and where she may not have gone far enough,” Kearney said. “But there can be no question that Judge Wallace’s lengthy opinion sends a strong message to DTE that they need to do better for

their customers.” Commissioners have wide flexibility in how they address the judge’s advisory recommendations. James Gignac, lead Midwest energy analyst with the Union of Concerned Scientists, said DTE and intervening parties have a deadline Thursday to file initial briefs on Wallace’s opinion. A second round of comments are due Jan. 21 with the MPSC scheduled to make a decision Feb. 20. He said DTE and other parties could contest that decision in state courts. “What is important and encouraging about the judge’s opinion is she came up with 15 findings for the commission to review,” Gignac said. “She found numerous deficiencies to what DTE submitted and ordered DTE to redo and refile its plan.” But Gignac said potentially it could take another 24 to 30 months before

the process is completed and DTE has a final energy plan. “There are practical impacts on rates and capital expenditures” for DTE customers related to the energy plan, Gignac said. Meanwhile, he said, “There are interim things the commission needs to address besides the IRP, including a (DTE) rate case and a renewable energy case.” Last year, Consumers Energy Co. of Jackson submitted its IRP and was approved by the commission after a contested hearing, he said. All Michigan utilities have been going through the energy plan approval process the past two years. “The approach Consumers took was much different. They had a plan to phase out all its coal-fired power plants and replace them with solar, energy efficiency” and other customer-friendly and environmentally conscious decisions, Gignac said. One of the problems with DTE’s energy plan is that the company submitted it in April 2019, about one year after it received state approval to build a new $1 billion, 1,100 megawatt natural gas-fired power plant in St. Clair County. The gas plant, which would power 850,000 homes, and related renewable energy projects would power more than 80 percent of DTE’s customers, the company said. “DTE said it does not need (additional) electricity capacity until 2029 because its Belle River plant is still operating. DTE should have done a better analysis of early retirement,” Gignac said. “Our concern with DTE is that they just assumed they would keep Belle River and Monroe (power plants) open longer. An IRP looks at new ways to generate power. This is

why it is important to get IRPs right, to give customers long-term options.” Asked if DTE made decisions based on its heavy investments in natural gas pipelines running through Michigan and the eastern states, Gignac said he isn’t sure of DTE’s motivation. “It does illustrate the importance of a combination of a strong renewable energy portfolio standard (that mandates renewable energy) and an IRP to provide a backstop, a minimum amount of renewable investment,” he said. “An IRP shows they are pursuing renewables. Michigan has not increased its (renewable standard). It is important for the commission to take a close look at what they are doing.” In early 2018, DTE announced its long-term energy plan and pledged to add 1,000 megawatts of solar and wind energy power by 2022, doubling its current capacity and investments in renewable energy. If built, DTE’s new projects would represent a $1.7 billion investment that would power more than 450,000 homes and increase DTE’s renewable energy portfolio standard to 15 percent of generation, up from about 10 percent. Crain’s previously reported that DTE plans to add 4,000 megawatts of renewable power over the next 20 years as it retires several aging coalfired plants. DTE has said that building the gas plant is the least costly option for customers, will help it reduce carbon emissions by 30 percent by 2030 and will replace some lost jobs due to coal plant closures in St. Clair County. Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene

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STEM CELLS

From Page 3

Forever Labs was one of 50 companies that presented on the first of two demo days. The website TechCrunch rated Forever Labs’ pitch as one of the top seven that first day. Subsequently, Forever Labs, which was founded in 2015 and had raised $750,000 from friends and family before starting at Y Combinator, raised an additional $1.5 million for its seed round. It is hoping the new funding round will include its first investments from Michigan venture-capital companies. The company is headquartered on Main Street in downtown Ann Arbor with a laboratory on Wagner Street on the west side of the city. The company currently has 12 fulltime equivalents and hopes to be at 15 in February with the hiring of three more for its in-house sales team, which currently is two people. “I think we’re one of the coolest companies in the country, but people in our backyard don’t know us,” said Clausnitzer. “People were trying to recruit us to Silicon Valley after Y Combinator. There was a rich network of support there, but we’re Michigan guys. We wanted to be here. And it’s maybe a fourth or less to pay for office and lab space here.” Clausnitzer grew up in Brighton. Company president, chief science officer and co-founder Mark Katakowski is a native of Rochester who got his Ph.D in medical physics from Oakland University in 2005. They are the largest shareholders in the company. There are two other co-founders — Edward Cibor, the chief management officer who also went through the Y Combinator program, and Laith Farjo, a physician and chief medical officer. “It is a real sign of how far the startup ecosystem has come here that a company like Forever Labs can successfully get through Y Combinator, raise several million dollars, and still be under the radar in our community,” said Chris Rizik, CEO and fund manager for Ann Arbor-based Renaissance Venture Capital, a fund of funds that invest in VC firms willing to do deals in Michigan. “The team at Forever Labs has clearly identified an opportunity on the cutting edge of health care, banking on the direction of future medical breakthroughs and the role that personal stem cells will play. If the future develops in the way they envision, the work that they’re doing now will be incredibly valuable.” Storing the stem cells is a bet by customers on future breakthroughs using the stem cells. Under federal guidelines, if mesenchymal stem cells taken from patients are grown and then frozen, they can only be reinjected for therapies approved by the U.S. Food and Drug Administration. No uses have been approved yet, but there are about 1,000 trials in various stages nationwide that have been approved by the FDA, and it is generally assumed that future primary uses will focus on treating age-related diseases such as osteoarthritis, stroke and heart disease. One Phase 2 study on regenerative treatment for heart failure is expected to finish in May at the University of Texas Health Science Center in Houston, with sponsorship by the National Heart, Lung and Blood Institute. Phase 2 studies test for efficacy, which if proven leads to larger Phase 3 studies to test whether a treatment works in a broader sample of patients. “Establishing safety and efficacy in a clinical trial process results in the best 24 | CRAIN’S DETROIT BUSINESS | JANUARY 6, 2020

Mark Katakowski and Steven Clausnitzer | FOREVER LABS

How it works Forever Labs’ technology lets people preserve their own “adult” stem cells so that they have them if effective treatments for disease are developed. The process: ` Bone marrow is withdrawn from the customer’s body. ` Stem cells are separated from that bone marrow. ` The stem cells are then replicated outside the body through a patented process. ` The cells are frozen and saved for potential future use.

medicine in the long run,” said Katakowski. “It is difficult to say which applications are going to have the most success or be approved. However, we believe that the writing is on the wall. Stem cells are growing more clinically valuable, and your stem cells accrue damage and decline in function with age. I anticipate that one day, storing our young biology will be part of standard medical practice.”

A rare invitation Forever Labs didn’t get into Y Combinator the traditional way. The incubator hosts 100 companies at a time at two cohorts a year. About 14,000 startup apply each year. But not Forever Labs. “We didn’t apply. They weren’t even on our radar,” Clausnitzer said. Clausnitzer and Katakowski met at Clausnitzer’s wedding in 2004 and became friends. In 2015, the two of them were chatting on the phone. Katakowski was a research scientist at Henry Ford Health System and Clausnitzer was a

manager of business development at American Express, and Katakowski told him research he was working on showed that mice who had been injected with stem cells lived longer and had fewer effects from osteoporosis. “When we gave late-middle-age mice genetically matched mesenchymal stem cells from young donors, we increased their life expectancy,” Katakowski told Crain’s. At the time, Katakowski was about to turn 40, and he told Clausnitzer he thought it would be cool, and helpful, to bank his own stem cells for future use. “He’s telling me that, and I’m getting excited. I was 38,” Clausnitzer said. “I like to joke that Forever Labs was born out of our own midlife crises.” Like kids in old black and white movies saying “Let’s put on a show,” Clausnitzer and Katakowski said “Let’s start a company.” Forever Labs was launched late that year and Clausnitzer quit his day job. Katakowski quit his in 2017. In 2016, Katakowski was on Hacker News, a social-media site affiliated with Y Combinator that focuses on technology and entrepreneurship. Someone had posted a link to a clinical trial studying the effects of using mesenchymal stem cells to treat stroke victims. The posting claimed that patients were experiencing benefits even months after their strokes, and Katakowksi posted that because of the therapeutic value of stem cells, he had not only banked his own stem cells but had co-founded a company to do the same for others. “We were deluged with calls,” said Clausnitzer. Soon, executives at tech companies in Silicon Valley were flying to Ann Arbor to get their stem cells banked. One was Paul Bohm, an ac-

tive angel investor and the creator of something called the Dropbox LANSync protocol, which syncs files on local area networks. Clausnitzer and Katakowski were also invited to Silicon Valley, where they met with potential customers and pitched the benefits of stem cells. One presentation was before 50 techies at a big house in the valley. “People started writing us checks,” said Clausnitzer. Sam Altman was the CEO of Y Combinator in 2017. He heard about Forever Labs through the Silicon Valley grapevine and asked Clausnitzer and Katakowski if they wanted a spot in the next class. “We moved out there for three months, even though my wife was three months pregnant,” said Clausnitzer. “It’s amazing. Y Combinator takes you from zero to 100 miles an hour.” (Altman is now the CEO of OpenAI, a lab co-founded with Elon Musk to conduct research into artificial intelligence.) While at Y Combinator, Katakowski also made a one-hour presentation at Google headquarters. There was enough interest that Forever Labs needed to find a Bay Area doctor to do the bone-marrow withdrawals and signed on Chad Roghair, who has a practice in Berkeley. While the storage of stem cells from umbilical cords has been common since the 1990s, Forever Labs was the first company to store adult stem cells for future use, though several others have launched since. Clausnitzer says a four-year head start on the competition will continue to be an advantage, as well as three patents it has applied for and others it is working on. “We think competition is a good thing. It helps get the word out,” he said. Other companies include Vault SC

Inc. of Marietta, Ga., and BioCardia Inc. of San Carlos, Calif. One of the patents Forever Labs has applied for covers the process for exponentially growing the number of a patient’s stem cells, something Katakowski calls dynamic incubation. Clausnitzer said the company expects to pass the 1,000-customer mark early this year. One customer is John Bogdasarian, the president and CEO of the Promanas Group, a real-estate investment firm in Ann Arbor, who posted a YouTube video about banking his own stem cells and who provides stem-cell banking for all of his employees as a fringe benefit. Forever Labs has two payment options. One is to pay $750 upfront and then $250 a year. The other is to pay a one-time payment of $5,000 with no annual fee. Generally, customers tend to be in their 30s, but Katakowski said his 71-year-old father has had his stem cells banked. If he needs stem cells implanted when he is 80, for example, his 71-year-old cells will be more vigorous than his 80-year-old cells. Currently, three doctors in Michigan do the procedure, in Brighton, Troy and Rochester. Forever Labs has also started a pilot with Kirkland, Wash.-based Sono Bello, which runs a national chain of liposuction facilities. Fat also has high concentrations of stem cells. Doctors at a Portland, Ore., facility will let liposuction patients know about Forever Labs and see if they are interested in having a bone-marrow procedure as well. If enough of them are willing to pay for it, Clausnitzer said Forever Labs will sign a contract with Sono Bello. Contact: thenderson@crain.com (231) 499-2817; @TomHenderson2

BEAUMONT

From Page 3

Since November, Lewis has written more than three letters to Beaumont executives and surgery staff to alert the eight-hospital system that its policies are affecting patient care and surgeons’ ability to practice at the hospital. He told Crain’s in mid-December his pleas “have fallen on deaf ears.” “I would be derelict in my duties if I were not to advocate for the department of surgery, my surgical colleagues and all its employees,” Lewis said a Dec. 1 letter to Beaumont administrators. “I write with a final sincere request that you find a way to address the critical staffing issues at Beaumont Trenton affecting the ORs and department of surgery.” Carolyn Wilson, Beaumont Health’s COO, acknowledged staff shortages at Trenton and in certain departments across the system. But she doesn’t agree with Lewis that understaffing at Trenton has impacted patient safety. She said the system is in the process of recruiting additional CRNAs, surgery nurses and other support staff at the Trenton hospital and other facilities. On Dec. 30, Beaumont Hospital Trenton acting president Lee Ann Odom emailed Trenton hospital employees to criticize Crain’s Dec. 23 online article that outlined physician and nurse complaints about OR staffing at Trenton. In her email, Odom acknowledged “frustrations of our surgeons and staff” about perioperative services at Trenton. “We have been working diligently to allay these concerns since October. The article is not reflective of who we are at Beaumont Trenton,” she said. In her letter, which Lewis characterized as a “political response,” Odom listed recent accomplishments of the hospital, including receiving a “A” grade from The Leapfrog Group for patient safety, a No. 21 “best hospital” ranking in Michigan by U.S. News and World Report for 2019 and a five-star rating by Medicare. On allegations of staff shortages that have limited OR schedules, Odom said the hospital now has 12 full-time CRNAs and two others are in the employment process. Three Trenton surgeons told Crain’s in December that six surgical CRNAs had resigned, leaving only 10 to staff the ORs. But on Jan. 2, Lewis said in an email to Crain’s that the staffing situation began to improve after doctors and nurses complained and Crain’s published its Dec. 23 article. “(The) article did act as a catalyst for excellent dialog and movement on the part of the administration,” Lewis wrote. “We currently have temporary nurses filling roles as other nurses are being the trained. Beaumont has reached through the system to obtain CRNAs that are willing to staff certain days and cases to fill our needs until we can reach a permanent solution.” Lewis said he and Trenton’s surgery department are hopeful the situation will continue to improve. “The next few weeks will be very telling,” he said. On Dec. 20, Beaumont appointed Tammy Scarborough president of Beaumont’s Taylor, Trenton and Wayne hospitals. Scarborough comes from Akron-based Summa Health, which Beaumont recently acquired. Scarborough will step into the president role in February, replacing Christine Stesney-Ridenour, who left Beaumont in August. Odom also said in her email that

Beaumont Hospital in Royal Oak. | BEAUMONT HEALTH

Lewis

Beaumont Hospital Trenton opened in 1961. | BEAUMONT HEALTH

other additional staff are being recruited to support the hospital’s programs, including neurosurgery, vascular surgery and gastroenterology. However, three sources, who asked for anonymity, told Crain’s that several surgeons and doctors in those departments left or stopped serving Beaumont during the past several months because of disagreements with management on staffing and use of facilities. Despite the improved communication, Lewis said the ORs at Trenton are still understaffed and at least four surgeons are leaving Beaumont or asking for admitting privileges at nearby Henry Ford Wyandotte Hospital. Lewis said he has asked the Wyandotte administrator to permit Trenton surgeons to block schedule surgeries on Tuesdays so doctors and patients can plan for operations and other procedures. Raymond Laird, D.O, a general surgeon and Trenton’s vice chair of surgery, said he was conducting surgeries on 10 patients a week at Trenton two to three months ago. Now he is down to three per week because of the short staffing and lack of OR time. Laird and his surgeon wife Cristen Laird have applied for privileges at Henry Ford Wyandotte. On doctors leaving Beaumont Trenton to go to other hospitals, Wilson said: “I think doctors in Southeast Michigan and in other markets are going through change. It is fair to say there is general unrest. I don’t know of anything specific” that has

caused it, she said. But Laird said at one time Beaumont Trenton had 18 CRNAs. Over the past several months, nine have left, including the hospital’s lead CRNA who has 27 years experience, Laird said. In addition, Trenton has lost more than half of its 15 circulating nurses and 15 scrub technicians, he said. Earlier this year, Beaumont began a reorganization that has led so far this year to the reduction of more than 225 employees, including several dozen managers and executives, but officials say those reductions are unrelated to the current staff shortages. Lewis, as well as other doctors and nurses, aren’t so sure. They tell Crain’s they haven’t been given good reasons for the cutbacks or apparent lack of urgency to fill positions. “We’ve been a system for five years. The first 3 1/2 years Trenton was the most profitable in the system by their data and No. 1 in quality by their metrics,” Lewis told Crain’s. “Nobody here made demands. We just want to take care of more patients. We have been accused of not doing enough, the nurses not working hard enough. ... My only conclusion is they are trying to cut costs any way they can — saving money by not hiring nurses — to increase their margins.” In her letter, Odom denied reducing staff because of budgetary reasons or transferring patients unnecessarily to other Beaumont hospitals. “We pay overtime, and we have not limited recruitment, services or staff-

ing based on budget,” Odom said, adding: “We attempt to keep our patients close to the communities they live in. When we must transfer a patient, we work with patients to honor their choices and facilitate a transfer to the appropriate level of care.”

Cost-cutting plan Crain’s reported in August that Southfield-based Beaumont Health had laid off 175 of about 38,000 employees, the most during a year since 2008 and 2009 when about 600 were laid off during the recession. Beaumont also said hiring is up compared with hirings during the same period in 2018. In 2018, Beaumont increased operating income 3.4 percent to $174.4 million for a 3.9 percent margin from $168.6 million and a 4 percent margin in 2017. Total revenue increased 5 percent in 2018 to $4.66 billion from $4.44 billion in 2017. However, net income dipped to $142.1 million in 2018 from $321 million in 2017, primarily due to legal settlements and a dip in investment income. During the first nine months of 2019 ending Sept. 30, Beaumont steadily increased net income to $258.7 million, an increase of $132 million for the same period in 2018. Operating revenue also increased to $3.49 billion, a $103.4 million increase over the $3.39 billion reported in the third quarter of 2018, according to its latest financial report. However, net operating income for

Wilson

the first nine months of 2019 was $127.8 million, or a 3.7 percent operating margin, a $2.6 million decrease from 2018’s result of $130.3 million, or a 3.8 percent operating margin. Wilson said Beaumont has taken steps this fall to reduce costs because expenses are rising faster than its income this year. She said the budget process for 2020 identified a need to reduce expenses and improve efficiencies. As a result, Beaumont said in a statement to Crain’s, another 50 employees have been laid off or resigned since August, bringing the total to at least 225 for 2019. Most of the recent reductions were managers or executives, Beaumont said. Another issue related to staffing has to do with Beaumont’s 2020 budget. Over the past month, Wilson said Beaumont has been wrapping up budget planning for the new year. She said Beaumont plans to cut expenses in several areas for 2020, while maintaining quality and safety. “With payer revenue flat and the impact of auto no-fault ... we have to find efficiencies,” said Wilson, adding that supply costs are projected to increase by 5 percent and pharmacy by 6 percent. In 2020, Beaumont is projecting to lose $28 million on auto no-fault insurance payments in just one sixmonth period, Wilson said. Last summer, Michigan reformed its auto no-fault laws in an attempt to lower the nation’s highest premiums. The law, which goes into effect July 1, imposes fee schedules for medical providers that are expected to cut hospital and provider revenue rather significantly. Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene JANUARY 6, 2020 | CRAIN’S DETROIT BUSINESS | 25

THE CONVERSATION

For Tosha Tabron, money is a transformation tool INVEST DETROIT: Tosha Tabron, senior vice president of lending at Invest Detroit, has two objectives: making money move in the city’s neighborhoods and helping transform them into places where her kids can see a future. A northwest Detroit native, the banking and finance veteran has a unique understanding of the city. So, when JPMorgan Chase made its initial $100 million commitment to Detroit, Tabron was tapped to oversee it. She led CEO Jamie Dimon and other executives around town, telling them how it would be best spent. Five years later, the bank has doubled down, others have followed and there’s a lot more money for Tabron to move. | BY KURT NAGL ` How did you start down the banking and finance road? Tabron: There was this moment in time when I realized that money moves the world, and for me, it started at 6 years old when I saw money at a banking center and said, “I want to be around that.” My first job after graduating (from Grand Valley State University) was with Michigan National Bank, supporting small housing developers as an analyst and realizing how doing infield development, and how this kind of cleaning up of a block, even if it’s only 10 homes, would change the whole landscape of a neighborhood. So just moving money into the right hands could really change how a place could physically look. ` You started with Chase around the time it announced its big Detroit investment, right? I had been with Chase 60 days. They had charged me with completing the budget we had, which was about $1.5 million, and I had to move it in 90 days, so I made just over $1.5 million in investments in a few months. Just as I was wiping my brow, patting myself on the back, we got a call from Jamie Dimon and our team saying he’s obsessed with the city and he wants to do something special for our city — put all your best ideas on paper. I was orchestrating a number of players across the country that Jamie was bringing in to kind of get a sense for the city, and in nine months we put a plan together. ` What were you telling them about the city? I was telling them that this city has a lot to be invested in. It’s been disinvested for a long time. We need some disruptive programming here, and there’s a couple of agencies around the city that have been leading that type of work but that have been underfunded for a long time.

We went on tours. They got to see the devastation of disinvestment and blight in the city and said that we’ve got to put some things together that can address the physical development of the city. We need to work with the community development financial institutions that can do it in a way that we can’t.

ners. Myself and Melinda Clemons sitting around the table saying, “What else can we do to make sure that minority developers are included in what’s happening in the neighborhoods?” There’s not enough of them around the city. We created this program called Equitable Development Initiative. That program

` What was the biggest challenge of moving all that money? You’ve got a large institution that has done a significant amount of investment before, but it was still foreign to them — this type of landscape and not knowing all the partners. So, you’re really asking your executive team to trust that our risk tolerance is gonna have to be pretty high, and we’re gonna have to figure out how to build some of these partnerships to allocate these large chunks of money. These small organizations hadn’t been used to seeing multimillion-dollar investments and these big chunks that we wanted to give them. That meant that we really had to be flexible and willing to take some different types of risks with different organizations we had not taken those kinds of risks with before.

basically unlocked a lot of resources for minorities. It taught them what they needed and gave them the pieces that they were missing to actually do a commercial product. ` Why make the move to Invest Detroit? I get the opportunity to be on the ground. The work that I did was to fund all these CDFIs (community development financial institutions), but now is the time for me to really position the resources and the money to these blossoming entrepreneurs and developers. I was drawn to the fact that the city was taking an interest in CDFIs in a different way than they ever have in my career. We went from having only three CDFIs when I first started working in the city of Detroit, and now we have 16 operating in the market. It was just an opportunity for me to not only, quite frankly, spend Chase’s money, but you’ve got a number of corporate partners now, a number of philanthropic partners, all working together to do these catalytic projects. ` Why does this work matter to you? I care about making sure that as the growth of this city happens, the people and folks who have withstood the hard times have an opportunity to actually take advantage of the spotlight the city has right now. And that matters so that my kids have an opportunity to grow up and prosper in the city. I want my boys to have the same kind of pride for Detroit that my mother and father instilled in me. I want them to be proud of the city as well.

` What's been your proudest professional accomplishment? A mantra of mine has been making sure that minority developers and women developers come along for the ride with any kind of growth that happens in the neighborhoods. One of the things I’m proudest of is the programming that has happened and the number of investments that have happened to make sure that inclusive development continues to happen. For instance, after the Entrepreneurs of Color Fund was proven to be successful, we founded another program at Capital Impact Part-

READ ALL THE CONVERSATIONS AT CRAINSDETROIT.COM/THECONVERSATION

Tosha Tabron is senior vice president of lending at Invest Detroit.

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RUMBLINGS

Fischer confirmed as ambassador to Morocco DAVID FISCHER OF THE SUBURBAN COLLECTION WAS CONFIRMED by the U.S. Senate to be ambassador to Morocco Dec. 19, the day after the House of Representatives took a historic vote to impeach President Donald Trump. Fischer ran the Troy-based Suburban Collection car dealership group for decades. He resigned in the past week from his roles as chairman and CEO of The Suburban Collection and The Suburban Collection Holdings LLC. David Fischer Jr. has replaced him and was named president and CEO of both, according to a Suburban Collection spokesman. Fischer Sr. was sworn in for his new position Dec. 27. Trump nominated Fischer two years ago to be his administration’s liaison to the

Emirates in September and stepped down from Walbridge.

` SONGWRITER, PERFORMER ALLEE WILLIS REMEMBERED

Fischer

Willis

Northern African nation. Fischer Sr. was a mega-donor to the Trump inauguration. Both he and John Rakolta Jr., former CEO of the Detroit-based construction company Walbridge Aldinger Co. and former finance chairman of Mitt Romney’s two presidential campaigns in 2008 and 2012, donated $250,000. Rakolta was confirmed as ambassador to the United Arab

26 | CRAIN’S DETROIT BUSINESS | JANUARY 6, 2020

GRAMMY-WINNING SONGWRITER AND LONGTIME DETROIT BOOSTER ALLEE WILLIS died Dec. 24 in Los Angeles. She was 72. The Detroit native was notable for her collaboration with Earth, Wind and Fire, with whom she cowrote the hit songs “September” and “Boogie Wonderland.” She wrote the score of the Broadway musical “The Color Purple” and the theme song for the TV show “Friends,” earning a Tony and an Emmy nomination, respectively, for those works. Willis was also a lifelong Detroit

booster. She closed out the opening night of Detroit Homecoming at Michigan Central Station in 2017 with a performance of “September.” That year, Willis also debuted “The D,” her “love song to Detroit,” which she recorded over the course of five years. The song included the voices of over 5,000 Detroiters — a record number of vocalists on a single track. She told the New York Times in 2018 that growing up in Motown’s backyard taught her how to make music. “I would sit on the lawn” of the record studio, she told the Times. “You could watch everyone come in. But most importantly you could hear through the walls, which is how I became a songwriter.”

Crain’s Detroit Business is published by Crain Communications Inc. Chairman Keith E. Crain Vice Chairman Mary Kay Crain President KC Crain Senior Executive Vice President Chris Crain Secretary Lexie Crain Armstrong Chief Financial Officer Robert Recchia G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Editorial & Business Offices 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly, except the last issue in December, by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Contents copyright 2020 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is prohibited.

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