Crain's Detroit Business, March 30, 2020 issue by Crain's Detroit Business

THE CONVERSATION Robert Takla, chief of emergency medicine at St. John in Detroit, has never seen anything like the coronavirus crisis. PAGE 22

Racing to stop lake erosion PAGE 3

CRAINSDETROIT.COM I MARCH 30, 2020

THE COVID-19 CRISIS

DETROIT STEPS UP ONCE AGAIN Manufacturers make medical devices, gear; companies eye potential long-term pivot to medical BY DUSTIN WALSH

nonprofits who responded to a survey done last week by Michael Montgomery, a consultant and lecturer at University of Michigan-Dearborn, said they’ve already canceled events. Another 37 percent said they are considering it.

RCO Engineering typically manufactures interior components for General Motors, Lear and other automotive suppliers at its Roseville manufacturing campus. But now it’s making hospital face shields — ramping up from 3,500 per day Friday to 30,000 per day by April 2. RCO is one of 600 Michigan companies heeding the call to assist in the battle against the deadly COVID-19. The pivot to medical devices fills a desperate need for gear as nurses and doctors continue to perform their duties in deteriorating conditions — and for some companies is a way to keep themselves essential and keep operating. Last week, the state received a delivery of equipment from the national emergency stockpile, including 43,000 face shields and 95,000 N95 respirators, but it’s nowhere near enough, Gov. Gretchen Whitmer said in a press briefing on March 23. “... that allotment is barely enough to cover one shift at that hospital,” Whitmer said. “Not even a full day’s worth of shifts; one shift.” Southeast Michigan became the epicenter of the global outbreak last week with positive tests growing faster than anywhere else, local hospitals were overwhelmed and critical equipment shortages rampant. Meanwhile, the newly declared “Arsenal of Health” began shipping parts and fully assembled and manufactured personal protective equipment to hospitals around the state.

See FUNDRAISERS on Page 20

See ARSENAL on Page 20

Eric Yelsma of Detroit Denim presses plastic for face shields for COVID-19 responders. | BRENNA LANE

Spring fundraiser cancellations spur cash crunch Nonprofits scramble to figure out how to make up revenue; events could crowd 2nd half of year BY SHERRI WELCH

The cancellation of spring nonprofit fundraisers and closures associated with the COVID-19 outbreak are translating to cash flow concerns and a crowded calendar for the second half of the year. Some human service agencies,

arts groups and other nonprofits have canceled events outright. But many are pushing them out into the second half of the year. That could lead to some events getting lost in the throng. And the resulting loss of revenue could irreparably harm some nonprofits that were already operating on extremely

FOCUS | FAMILY-OWNED BUSINESS

GROWING UP  How three family-led companies scaled their operations. PAGE 10

NEWSPAPER

tight budgets with little reserves. A 2018 State of the Nonprofit Sector Survey, which got responses from nearly 3,400 nonprofit leaders across the country, reported that only a quarter had six months of cash on hand. And 19 percent said they had a month or less of cash on hand. Here in Michigan, 55 percent of 63

RETAIL

Van Elslander bids to buy back Art Van brand Offer made to bring at least the store’s name back in the family BY KURT NAGL

It might not be the end for the Art Van brand after all. Gary Van Elslander on Wednesday submitted a bid to buy the Art Van brand name and trademark, according to multiple sources familiar with the situation. The bottom fell out swiftly for Art Van Furniture Inc. earlier this month. It filed for Chapter 11 bankruptcy March 9 and announced its liquidation would last around two months. Operations

across all its stores ended abruptly 10 days later as the coronavirus outbreak took hold of the region. Art Van Furniture was acquired in 2017 by Bos- Van Elslander ton-based private equity firm Thomas H. Lee Partners LP for an estimated $550 million. The Art Van trademark is owned by its credi-

tors Hilco Merchant Resources LLC, based in Illinois, and FS KKR Capital Corp., based in Pennsylvania. Any purchase would need to go through the bankruptcy approval process, expected to wrap up around the end of April. Van Elslander's bid was for less than $1 million. The exact amount was not disclosed but will eventually be made public as part of the bankruptcy proceeding records. See ART VAN on Page 18

SPORTS

NEED TO KNOW THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT ` WHITMER ASKS FEMA FOR DISASTER DECLARATION FOR STATE OF MICHIGAN THE NEWS: Michigan Gov. Gretchen Whitmer has requested a disaster declaration from the Federal Emergency Management Agency for Michigan’s growing coronavirus outbreak. If approved, the request would bring federal funding and other relief to the state. WHY IT MATTERS: Michigan — which had one of the highest number of coronavirus cases in the U.S. as of Friday — is still weeks out from hitting the peak of the outbreak, according to state health director Dr. Joneigh Khaldun. Metro Detroit hospitals are already reaching capacity and have reported a shortage of supplies and personal protective equipment. But Whitmer suggested Friday that a growing rift with the White House is now affecting shipments of medical supplies to Michigan. President Trump has publicly criticized Whitmer’s response to the coronavirus on Fox News and on Twitter.

` DETROIT TO INSTALL TEMPORARY DAMS THE NEWS: The city of Detroit plans to start installing temporary dams this week for $2 million to protect against rising Detroit River levels. Detroit crews, the U.S. Army Corps of Engineers and subcontractors will do the

2 | CRAIN’S DETROIT BUSINESS | MARCH 30, 2020

work, expected to finish by May 1. The temporary Tiger Dam system Detroit is using is made up of stacked, flexible tubes filled with water. They can be stacked up to 32 feet high, weighing 65 pounds each without water and 6,300 pounds each filled.

WHY IT MATTERS: The barriers along the river and canal seawall on the city’s lower east side are an attempt to guard against flooding that ravaged the Jefferson Chalmers neighborhood last summer. The city wants to be proactive and protect its sewer system from getting overloaded and failing during storms, according to a release from the city, including the Conner Creek wet weather treatment facility.

Golf courses to close for three weeks under Whitmer’s stay-at-home order ` Gov. Gretchen Whitmer said Thursday that golf courses should close for three weeks to abide by her stay-at-home order, issued last Monday. Smoke shops and landscaping services were also deemed nonessential under the order. Many businesses have

been trying to figure out whether or not their operations might be considered essential under the order. The guidance was the latest attempt to clear things up as the state works to “flatten the curve” of the spreading COVID-19 in Michigan.

Until Thursday, golf courses were open for play as one of the only organized activities left to do in Michigan following business closures and public gathering bans from the governor’s office. | KURT NAGL/CRAIN’S DETROIT BUSINESS

` LONGTIME DETROIT RADIO, TV HOST BOB ALLISON DIES THE NEWS: Bob Allison, host of WWJ radio show “Ask Your Neighbor” and 1970s Detroit TV game show “Bowling for Dollars,” died Wednesday. He was 87.

WHY IT MATTERS: A generation of Detroiters grew up with Allison’s shows, but Allison and his wife, Maggie Allesee, are also well-known for their philanthropy. The couple has given millions of dollars to support local universities, health care, the arts and other causes. The gifts include a $3

million donation in 2000 to Hospice of Michigan for research, education and community outreach aimed at improving care for people who are seriously ill and a $2 million contribution to support Wayne State University’s dance and theater department in 2005.

FINANCE

INFRASTRUCTURE

Relief programs for small businesses spin up BY NICK MANES

Help from entities big and small is now making its way to Main Street businesses across Michigan. Beyond the $2 trillion stimulus plan making its way through Washington, the state, Southeast Michigan municipalities and entrepreneurial support entities are pushing forward with their own programs aimed to throw a lifeline to small businesses. Michigan’s economic performance had already been softening in recent months and the sudden halt of basically everything in the state with the exception of a handful of “essential” services such as grocery, pharmacies and delivery services has put the state into a tailspin. Unemployment claims spiked sharply for the week of March 15-21, before the stay-at-home order by Gov. Gretchen Whitmer which declared most businesses “nonessential,” with 127,810 claims. By comparison, the worst week of unemployment claims during the Great Reces- Anderson sion came in January 2009, when 77,000 people filed for unemployment. “The shocking number of unemployment claims this week underline the risk of a corona-depression,” said Patrick Anderson, CEO of Anderson Economic Group in East Lansing. “We estimated last week that 104 million workers would lose income in the next 45 days; a good number of them already have.” Small business experts, however, expect to see changes once the fog of coronavirus lifts, and they’re concerned that there’s likely to be gaps in the various programming intended as support. See RELIEF on Page 18

An excavator sits atop a pile of limestone boulders being used to block wave action from Lake Michigan earlier this year at the foot of Ferry Street in Montague, where a house fell into the surf recently. | DALE G. YOUNG FOR CRAIN’S DETROIT BUSINESS

RACING TO STOP EROSION Contractors inundated with shoreline construction work BY CHAD LIVENGOOD

At Shoreline Steel in New Haven, there are 2 million pounds of steel coil waiting to be rolled and manufactured into pilings that may save someone’s slice of paradise from washing away into one of the Great Lakes. “We’re backed up four to five weeks at least,” said Tom Lowther, a salesman for Shoreline Steel. “It’s just slammed right now.” The record-high water levels eating away at beachfront property along lakes Michigan and Huron have been a boon for excavating and engineering companies, as well as businesses that produce the steel and angular riprap boulders used to protect sandy property from being lost to the lakes.

Saving the beach State environmental regulators have seen a surge in permits requested for shoreline erosion control, dredging and construction work on waterfront structures such as marinas on property along Lakes Erie, Huron, Michigan, St. Clair and Superior.

` First quarter 2019: 109

` Fourth quarter 2018: 147 permits

SOURCE: MICHIGAN DEPARTMENT OF

With lake levels expected to continue rising this spring and summer, state environmental regulators have been inundated with permit requests for shoreline protection construction, which typically requires adding steel and rock walls to shield a sandy shore from additional erosion.

` Second quarter 2019: 179 ` Third quarter 2019: 299 ` Fourth quarter 2019: 510 permits (468 specifically for shoreline protection) ENVIRONMENT, GREAT LAKES AND ENERGY

In the fourth quarter of 2019, the Michigan Department of Environment, Great Lakes and Energy issued 468 permits for shoreline protection work, a three-fold increase from the final three months of 2018, state data shows. The sheer volume of permits is-

Online at crainsdetroit.com: High water levels threaten marina operations sued in October, November and December last year was 84 percent of the total number of permits issued in the previous 12 months, underscoring the increasing severity of property damage along Michigan’s tourist-attracting shores. “Our company is getting anywhere from three to five calls per day,” Mike Walton, co-owner of Molon Construction, a marine, residential and commercial excavating company in Traverse City. “There are a number of customers in dire straits because of elevated water and winds.” See EROSION on Page 18

HEALTH CARE

Small hospitals, surgery centers struggle to stay viable in face of coronavirus BY JAY GREENE

Stopping elective surgeries and procedures to free staff, supplies and beds to treat coronavirus patients is hurting revenue and employment for all health care facilities, but outpatient surgery centers and small, specialty or rural hospitals are feeling the pain particularly hard. Most specialty hospitals in metro Detroit that rely heavily on elective surgeries have lost 70-80 percent of their volume, some more, seen their monthly balance sheets turn to red, laid off staff and are standing by only for emergency and urgent procedures.

Straith Hospital for Special Surgery in Southfield. | STRAITH HOSPITAL

To help with the immediate public health crisis, they also have volunteered their free bed capacity to larger hospitals, executives say. Many small surgery centers have closed or dropped up to 90 percent of patient volume and have seen staff transfer to help larger hospitals or observe Gov. Gretchen Whitmer’s stay-at-home order, said Andrew Gwinnell, president of the Michigan Ambulatory Surgery Association and CEO of Troy-based Truvista Surgery Center. Several specialty hospitals in Southeast Michigan, including Straith Hospital for Special Surgery and Surgeons

Choice Medical Center, both in Southfield, and Pontiac General Hospital have cut back elective surgery and experienced monthly revenue declines of up to 80 percent, executives said. In mid-March, as coronavirus began to spread quickly across the U.S. and Michigan, public health experts and political officials began calling for health care facilities to stop elective surgeries as the surge of patients sickened by COVID-19 was expected to intensify and personal protective equipment supplies and staff were beginning to thin. See STRUGGLE on Page 17 MARCH 30, 2020 | CRAIN’S DETROIT BUSINESS | 3

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The city of Detroit envisions about 500 mixed-income residential units to be developed across several properties in the Corktown area west of downtown. | SCREENSHOT

City seeking HUD grant for project with about 500 residences in Corktown 800.456.3824 fishbeck.com

4 | CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS | MARCH 30, 2020

With coronavirus stories rightfully dominating the websites and pages of every newspaper in Michigan the last two weeks, I realized that someKirk thing fairly newsPINHO worthy was missed: The city of Detroit is pursuing an up-to-$30 million Choice Neighborhoods implementation grant through the U.S. Department of Housing and Urban Development. Fittingly, Detroit is also taking some very coronavirus-specific measures as part of the process for selecting what are very bureaucratically known as a Housing Implementation Entity and a People Implementation Entity (more on that later), including not accepting hard-copy responses to a request for qualifications issued last week and doing Zoom interviews of finalists, the RFQ says. I digress. If Choice Neighborhoods rings a bell, hereâ&#x20AC;&#x2122;s why: It is the same grant that Detroit attempted to secure for the Brewster Douglass housing projects site near Brush Park four years ago. After HUD awarded the grants to five other cities, the Detroit Housing Commission opted against applying for one the following year. Dan Gilbert and others are now working on plans for the site, which most recently called for 900-plus residential units floated two years ago. The vision for the greater Corktown area (which includes North Corktown) isnâ&#x20AC;&#x2122;t as large in terms of residences, but is definitely ambitious and larger in physical scope: Turning a large swath of publicly and privately owned land into new mixed-income market-rate and affordable housing totaling about 500 units. If it happens, it would take place over five years across a smattering of properties:

` Of those, 87 new units would serve as replacement units for Clement Kern Gardens, an existing affordable housing development which is on a 7.1-acre site at 1661 Bagley St. owned by Detroit-based American Community Developers. ` More mixed-income housing would be built on a site referred to as the â&#x20AC;&#x153;left fieldâ&#x20AC;? of the former Tiger Stadium property is envisioned. The site is at the Fisher Service Drive and Cochrane. ` Single-family and multifamily units on about 19 acres of property. ` Affordable housing is also envisioned for Bagley west of Rosa Parks

"WEâ&#x20AC;&#x2122;VE HEARD LOUD AND CLEAR FROM THE NEIGHBORHOOD THAT ITâ&#x20AC;&#x2122;S IMPORTANT THAT WE NOT ONLY PRESERVE THE EXISTING AFFORDABLE HOUSING, BUT WE ALSO CREATE NEW AFFORDABLE HOUSING OPTIONS, SO WE ARE LOOKING TO IDENTIFY LAND THAT THE CITY CONTROLS SO WE CAN MOST EASILY INCLUDE IT IN A MIXED-INCOME HOUSING DEVELOPMENT.â&#x20AC;? â&#x20AC;&#x201D; Julie Schneider, deputy director, Housing and Revitalization Department

near Michigan Central Station. Over the course of the process, a so-called â&#x20AC;&#x153;transformation planâ&#x20AC;? is crafted involving residents, nonprofits and developers. Julie Schneider, deputy director of the Housing and Revitalization Department, said last week that the Corktown effort dates back to last

year. â&#x20AC;&#x153;The Greater Corktown Neighborhood Framework Plan process has been going on since 2019,â&#x20AC;? she said. â&#x20AC;&#x153;As a part of that process, weâ&#x20AC;&#x2122;ve been doing a number of community engagement meetings with the Planning Department. Weâ&#x20AC;&#x2122;ve heard loud and clear from the neighborhood that itâ&#x20AC;&#x2122;s important that we not only preserve the existing affordable housing, but we also create new affordable housing options, so we are looking to identify land that the city controls so we can most easily include it in a mixed-income housing development.â&#x20AC;? It would join other large projects in the works in the historic neighborhood west of the central business district. Others include Ford Motor Co.â&#x20AC;&#x2122;s $750 million planned autonomous and electric vehicle campus anchored by Michigan Central Station, a new $45 million Godfrey Hotel, the first phase of the Elton Park development with 151 apartments as well as The Corner development with 111 rental units. â&#x20AC;&#x153;With all of the economic development happening in Corktown, it is critical that there is affordable housing developed alongside it,â&#x20AC;? Donald Rencher, director of the Housing and Revitalization Department, said in a press release. â&#x20AC;&#x153;Given the tremendous investment and trends that we are seeing, we are at an important time to ensure Corktown remains a place where Detroiters of all walks of life are welcome.â&#x20AC;? The city says that it will pursue the project even if it isnâ&#x20AC;&#x2122;t awarded the HUD grant. Proposals for both the Housing Implementation Entity (basically, the developer) and the People Implementation Entity (an organization provides a human services plan for the area) are due to the city by 5 p.m. April 17. Stay healthy and wash your hands. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

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FOOD AND DRINK

Restaurants adapt, earn less, shut doors during coronavirus crisis Two weeks into state order ending dine-in service, restaurateurs face harsh financial reality BY ANNALISE FRANK

Restaurant operators, two weeks into an unplanned experiment in dining room-free dining, are now facing a harsh calculus: whether they can keep running as carryout operations, or if they need to shut down, at least temporarily. Either way, there are bills to pay — it’s just a matter of how big. Restaurant owners face dwindling bottom lines as more customers choose to cook at home to avoid risk of infection. And Whitmer’s coronavirus-prompted order forcibly ending dine-in service March 16 caused restaurants to either temporarily close or shift to a solely carryout and/or delivery model, with the shutdown order extended to April 13 at the least. As a writer for Eater recently put it, the coronavirus pandemic “is uniquely poised to take down the restaurant industry as we know it.” Southwest Detroit restaurant Flowers of Vietnam started marketing a curbside menu four days after Michigan reported the first two positive tests for the coronavirus March 10. George Azar, chef and owner of the Vietnamese restaurant in a former Coney Island, spoke with Crain’s while on the line cooking Wednesday evening. His staff is down from 25-30 to around eight, the rest furloughed. “Anything we’re doing is just to survive right now,” he said. “We’re just trying to stay relevant and stay refreshing. “Overall, all of us (in the industry) are in the worst position we’ve been in in our lives and there’s no playbook to reference. We can’t call an old operator and say, ‘When this happened, what did you do?’ They’re in the same spot we’re in.” After redesigning its menu for carryout, Flowers of Vietnam is “doubling down” and looking at branding for eating at home, Azar said. He is trying out new items like buckets of chicken — a la KFC — with housemade biscuits and whipped palm sugar butter, Vietnamese-style barbecue spare ribs and a Vietnamese-flavored cinnamon roll that customers can heat up on their own. Flowers of Vietnam offers delivery to

Flowers of Vietnam at 4440 Vernor Highway in southwest Detroit is pivoting to carryout and delivery amid the coronavirus outbreak. | ANNALISE FRANK/CRAIN’S DETROIT BUSINESS

Astoria Pastry Shop at 541 Monroe St. is among food businesses in Greektown Detroit that have opted to close instead of remaining open for carryout and/or delivery amid the coronavirus outbreak. | ANNALISE FRANK/CRAIN’S DETROIT BUSINESS

Chef George Azar of Flowers of Vietnam in southwest Detroit | KELLY WITHERS

homes and cars via curbside pickup through online platform Tock and — like other local restaurants — is requesting online donations to help pay laid-off staff. COVID-19 has sparked mass unemployment, hitting service sectors hard. Sales have fallen by two-thirds, Azar said. The goal is to keep evolving, find new revenue and never close. Next is using this time to test out a Mexican concept Azar has in the works called Rey. It would be branded separately for takeout and delivery, but use the same kitchen as Flowers of Vietnam. Many other restaurants are also advertising menus adapted for a nearly

higher-end three-meal package for $39.99, with starters, sides, main dishes and dessert. Brad Greenhill, the chef who helms Takoi and Magnet in Detroit, has been advocating for government assistance for small businesses while he struggles to keep his restaurants alive and support displaced team members. Now the Thai-inspired and woodfired restaurants are offering meals and snacks under the banner of a “curbside market,” according to an email laying out the menu. It lists focaccia bread, a Thai coconut curry soup kit, a half chicken and other dishes. Customers order online, spec-

contact-free system of take-away meal planning. Eastern Market Brewing Co. is among those adapting for an increasingly contact-free food system. It first announced it would deliver beer from its new sister site in Ferndale, then closed its original location in Detroit to focus operations at The Ferndale Project. EMBC also sells a roster of coffee, pasties, pastries and merchandise online for delivery and curbside pickup. And it is advertising that it’s starting a Detroit-style pizza-making operation. Chef Matt Prentice at Three Cats cafe in downtown Clawson, meanwhile, cooked up an adjusted menu with a

ifying the make of their vehicles and text upon arriving so purchases can be delivered to cars or left on a designated pickup bench. But some operators have found that staying open is not worth either the health risk or the bottom-line risk — or both. Sweet Potato Sensations in the Old Redford neighborhood in northwest Detroit was planning to adjust its hours early last week but then opted to temporarily close. “I don’t want to put anyone in any kind of harm’s way to stay open,” said Espy Thomas, co-owner of the bakery that also serves soup, sandwiches and chicken and waffles. “It was a hard decision. People still need to eat. People are calling in, hungry.” Ten restaurants in Detroit’s Greektown district originally opted for carryout after their dining operations had to close, according to Melanie Markowicz, executive director of the Greektown Neighborhood Partnership. But she said just three of those were still open as of Wednesday: PizzaPapalis, Fishbone’s and Buffalo Wild Wings. “We were seeing some (business), but it wasn’t really worth it to stay open, on top of the fact I think it could be a little bit of a concern, distancing and all that,” said Tasso Teftsis, a partner in Astoria Pastry of Greektown and Royal Oak and Red Smoke Barbeque in Greektown. “We get a lot of carryout and deliveries, but we weren’t getting that because Quicken Loans employees have gone (to work remotely). A lot of employees downtown aren’t there.” The decision on closing varies widely across segments of the restaurant industry, said Justin Winslow, president and CEO of the Michigan Restaurant and Lodging Association. “If you’re operating in downtown Detroit with an upscale bistro or some sort of cafe that ... is all about the experience and drives people to your location, those are the ones that were (generally) the quickest to close, because carryout wasn’t really in their business plan,” he said. Contact: afrank@crain.com; (313) 446-0416; @annalise_frank

CORONAVIRUS

Plummeting hotel use won’t have effect on TCF bond repayment BY KIRK PINHO

Nose-diving hotel usage in Metro Detroit is not expected to have ramifications for the authority that oversees TCF Center’s ability to pay back bonds issued for its nearly $280 million renovation that finished five years ago. As hotel occupancies continue their downward trajectory with the spread of the coronavirus crippling the tourism and convention industry, revenue from the tax on hotel stays in the city of Detroit, and Wayne, Oakland and Macomb counties, will take a similar plunge. But because that hotel tax is just one of three revenue streams that funnel into the state’s Convention Facility Development Fund — along with a 4-percent excise tax on liquor and $15 million a year in cigarette tax money — TCF Center and the Detroit Regional Convention Facility Authority expect no dif6 | CRAIN’S DETROIT BUSINESS | MARCH 30, 2020

TCF Center in Detroit | CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

ficulty servicing debt. Patrick Bero, CEO and CFO of the Detroit Regional Convention Facility Authority, said the Convention Facility Development Fund in fiscal 2018 collected more than $100 million, with 58 percent coming from the liquor tax, 28

percent from the hotel tax and the remaining 14 percent coming from the tobacco tax fund, known as the Health and Safety Fund. “Certainly we need the hotel tax contribution to maintain the strength of this (Convention Facility Development

Fund),” Bero said. “But in the short term, like over the next 90 days, if the hotels went down into single digits occupancy or even get a little worse; or, like the Westin Book Cadillac shuts down for 90 days, the convention fund is secure because there’s more than enough money for the debt service.” There is no principal payment this year, Bero said, because bond debt is being paid off early, so the debt payment this year is projected to be only $9.3 million. In just two weeks, March 1-7 to March 15-21, hotels have reported occupancies falling from 62.2 percent to just 31.6 percent, with expectations that they will fall much lower than that. The picture looks even more bleak as average daily rates — which also impact tax revenue going into the Convention Facility Development Fund — have fallen from $99.18 to just $72.51 during that time period, according to STR, a ho-

tel-industry analytics firm. Room revenue plunged from $19.39 million the week of March 1-7 to $7.19 million the week of March 15-21, according to STR. Rented room nights fell from 195,519 to 99,213, out of 314,160 possible (44,880 total rooms). Larry Alexander, chairman of the convention facility authority and president of the Detroit Metro Convention & Visitors Bureau, said $712,000 in TCF Center revenue has been lost to coronavirus; Bero said that’s across 12 events. “The liquor tax was always put in place as a stopgap measure to ensure that if there weren’t sufficient funds from the hotel tax that the liquor tax was there to cover any debt payments, and that hasn’t been needed,” Alexander said. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

CARING FOR KIDS SPONSORED CONTENT

Advocating for the health and wellness of children and families Host Larry Burns, President and CEO The Children’s Foundation About this report: On his monthly radio program, The Children’s Foundation President and CEO Larry Burns talks to community, government and business leaders about issues related to children’s health and wellness. The hourlong show typically airs at 7 p.m. the fourth Tuesday of each month on WJR 760AM. Here’s a summary of the show that aired March 24th; listen to the entire episode, and archived episodes, at yourchildrensfoundation.org/caring-for-kids.

Advocating for the health & wellness of children and families

Libby Rapin, Founder, Something Beautiful and Co-Founder, Oh Inﬁnite Love

Larry Burns: Tell us about your journey. Libby Rapin: My journey to well-being started because of my illness. Along the way I learned about the mindbody connection and how my mindset—things like my perfectionist qualities, the conditioning to go-go-go all the time and the need to meet other people’s expectations— was leading to anxiety and dissatisfaction in my life. About eight years ago, I started with diet and exercise changes, but at the end of the day it wasn’t enough. I was getting healthier physically, but I was still feeling sad and unfulfilled. I decided to treat myself through holistic health methods, which led me to health care practitioners who encouraged me to make other lifestyle changes. I was advised to say no to commitments, get more rest and sleep. I needed to get a handle on my constantly racing mind. I started with therapy and when I realized this mindbody connection through those sessions, it was a game changer. I learned about how our mental and emotional state impacts our physical health. This is what led me to practices like mindfulness. I started meditating. I learned how to set boundaries. I began a regular gratitude practice. I learned to love myself. I began to let out my child-like wonder

and curiosity by adding play to my life, slowing down and getting out in nature more often. Burns: Tell us about establishing Something Beautiful. Rapin: I have spent about ten years in the corporate world leading HR initiatives and working for high growth startups, mostly in the technology space. My primary focus has been on building organizational wellbeing programs that teach leaders how to cultivate high performing habits through mindfulness and positive psychology. In addition, I am the cofounder of an organization called Something Beautiful that started as a YouTube channel to share positive messages. My partner and I knew that not everyone could afford to participate in the workshops and utilize the other resources we were providing, so we decided to put some free content online that everyone could use. As we got into it, we realized that there was huge potential to turn this into something more. Our mission now is wellbeing for all, primarily focusing on workplace programming. Every time we partner with an organization we give back to the community, like a buy-one-give-one model. This is in order to get these simple yet very effective tools into the hands of people from all socioeconomic levels, ages, races and professional backgrounds. Burns: What’s the best way to contact you about workplace needs? Rapin: Email us at ohinfinitelove@gmail.com.

Bob Bury, President and CEO, The Fair Lane and Board President, Grosse Pointe Foundation for Public Education and Keith Howell, Director of Elementary Instruction, Grosse Pointe Public Schools

Burns: Tell us about the Grosse Pointe Foundation for Public Education. Bob Bury: We’re independent, a nonprofit organization that supports programs we feel can make a big impact. The Leader in Me is a program for kids patterned after Stephen Covey’s The 7 Habits of Highly Effective People. We did some research and found that emotional intelligence is a better predictor of academic and life success than most things. Burns: What were some key things to implement the program in Grosse Pointe? Keith Howell: It started about ten years ago through a grassroots effort where groups and cohorts of teachers implemented the strategies of The Leader in Me. Once we started integrating some of these skills and the learning that took place, we knew that we wanted to connect with the Covey Foundation and The Leader in Me to start professional development within our own school district. We started looking at grants. We reached out to the Grosse Pointe Foundation for Public Education and they’ve been an amazing support to our school district. Burns: What age groups are we talking about? Bury: We start with our

Young Fives program and kindergarten up to our fifth grade students. It’s a great opportunity to have an impact on the culture at the real base level. The nice thing about the program is it works on those soft skills, taking a look at character and career building, and what skills do we need to be successful in an everchanging lifestyle and to really manage the challenges that come with every single day. Howell: We’re seeing a lot of the skills transfer to the home as well. We have parents coming back to us on a regular basis letting us know that their kids are teaching them the seven habits. Burns: What other trends are you seeing in kids today? Howell: The continued focus on social-emotional learning is extremely important to us. We need soft skills to support and build resilience in kids. Students need to feel safe at school, they need to feel loved. Most importantly, they need to feel those things outside of school as well. With social media and technology students are connected 24/7, so giving them the tools to build resilience to support and guide them through challenges they might face as a result is important.

Matt Bell, President and CEO, Midwest Recovery Center

Larry Burns: Tell us about your journey. Matt Bell: I was raised in Toledo. I was a good kid until I got to high school and everything changed because of peer pressure. I always tell people that my first addiction was approval. I started to do dumb things that led to more dumb things. There were never any consequences for anything that I did; I got away with everything. I went to college on a full athletic scholarship. I hurt my shoulder sophomore year and was prescribed Percocet. I quickly became physically dependent on those medications. I dropped out of college, pills became very expensive, so I switched to heroin and the next nine years of my life was homelessness, jails, institutions, treatment centers and overdoses – I turned into somebody that I never thought that I would be. Burns: Somehow you had the resilience to get well. Bell: I called the police on myself. I didn’t think that I could get clean so I wanted to go to prison. I had three felony warrants in three states. The police showed up and got me into treatment instead. I had never been that miserable. It wasn’t about the overdoses or the arrests, it was about the fact that I didn’t have anybody in my

life anymore who wanted to have anything to do with me. Everybody around me had gone to Al-Anon to learn about the disease process and what is the best thing for somebody that was in my situation. That hurt. Burns: What kind of message do you hope to convey? Bell: We have about 300 patients seeking treatment for a lot of different substances, but primarily opioids. If you were to ask them how they got started in this, it didn’t start with opioids, it started with other substances first. The individuals in my treatment center right now for opioid use, 80 percent of them started with a legitimate opioid prescription and ended up on heroin. We’re not dealing with a heroin problem here, we’re dealing with a prescription pain pill problem. I think communication is key. Ask questions, there are so many different alternatives for pain tolerance out there. Burns: What are you most proud of about The Midwest Recovery Center? Bell: I’m very proud of the fact that we can accept Medicaid and commercial insurances. I was one of those people who didn’t have the resources, so I know what that feels like and I don’t want other people to feel like that. Burns: What advice can you give? Bell: Don’t let the stigma stop you from reaching out for help. Understand that this is a disease. You need to be diagnosed and given a treatment plan. There’s a solution; that’s what you need to be focused on.

COMMENTARY

EDITORIAL

Coronavirus outbreak could upend state budget

| DALE G. YOUNG

More data is weapon against COVID-19

very day, we brace for the next update. That’s when the Michigan Department of Health and Human Services publishes the latest data as of 10 a.m. that day on the number of positive tests for COVID-19 in the state. There were 561 new confirmed cases on Thursday, bringing the total to 2,856 positive tests and 60 deaths before press time. Six days before that, there were 549 total confirmed cases. As Gov. Gretchen Whitmer and public health experts have warned, the more testing Michigan’s hospitals do, the more we learn that a lot of people have been carrying around this virus for weeks — and spreading it at work and businesses before they were shut down. The surge in testing THE STATE STILL over the last week was made possible by inISN’T TELLING house testing by the THE PUBLIC THE University of Michigan Hospitals, BeauAGE RANGE OF mont Health, Henry Ford Health System, PEOPLE WHO Spectrum Health and HAVE TESTED Trinity Health. But the public has NEGATIVE OR been only getting a WHICH OF small part of the story. The state stopped MICHIGAN’S 83 publishing the negaCOUNTIES THEY tive test results on March 17, citing conRESIDE IN. cerns about double-counting of individuals who have been tested more than once. In this age of big data, that seems nonsensical. There are any number of companies in Michigan that could help the state sort out this problem. And if it’s not solvable, even data with duplicates is better than what we’ve been getting. On Thursday, after a week of facing questions from Crain’s and other news outlets, the state resumed publishing data on the total number of negative and positive specimens. This is not the same as the total people tested. State officials have been apprehensive about publishing this information. Whitmer has said didn’t want the public to read a high percentage of negative test results as a sign of comfort that the threat of COVID-19 had been abated.

But after the death count climbed from one to 60 in a little more than a week’s time while large swaths of the economy are shut down, most reasonable people understand the gravity of the threat by now. Joneigh Khaldun, M.D., the chief medical executive at DHHS, said March 18 that state health officials were more focused on “who’s getting tested in the first place.” So are we and an increasingly strained health care system that must care for those stricken by this virus. But the state still isn’t telling the public the age range of people who have tested negative or which of Michigan’s 83 counties they reside in. Thirty-two counties still have no confirmed cases of COVID-19. But we have no idea how extensive the testing has been in these counties. There also is no data on the number of individuals with COVID-19 who have been hospitalized, how many are receiving modest treatment and how many are on ventilators, which are in scarce supply. For a couple of days the week of March 15, the state health department was publishing known hospitalization rates. But then that abruptly stopped without explanation. Aside from voluntary public disclosures by Henry Ford and Beaumont, there also is no telling how many people are pushing hospitals to capacity limits each day awaiting test results for suspected cases of coronavirus. State lawmakers are going to need this data in the coming weeks as they wrestle with increasing state aid for hospitals to keep them going under while they’re inundated with COVID-19 patients and not performing bottom line-boosting elective procedures. Health care professionals are flying blind in this crisis without readily available data on the full extent of COVID-19 testing, which they’re carrying out on the front lines of this pandemic. Resuming publication of the negative specimen data was a good start. But the state must go further, consider partnering with the private sector on the best ways to collect, analyze and process more COVID-19 data from hospitals and labs — and then get that information to the public as quickly as possible.

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 | MARCH 30, 2020

Chad

LIVENGOOD

munities. “I have six hospitals within the 36th Senate District and most of them are rural and normally on a day-by-day basis struggling, let alone incurring this,” Stamas said. Stamas warned that $600 million could go quickly and the state may need to spend more to sustain operations at hospitals. “Certainly $600 million to you and I as individuals is a lot of money, but when you go to spread that around a population of 10 million and the facilities that it takes, it’s a start,” he said. The first priority has to be ensuring hospitals have the money needed to sustain operations during the virus outbreak, Stamas said. “And then secondary will be how do we make sure that they don’t close their doors once this is over,” Stamas said. “We’re two weeks into something, and the variables have been changing day-by-day.” State legislators usually gather in early May each year to hash out a consensus on tax revenues for the following fiscal year that begins Oct. 1. The coronavirus disruption may cloud the revenue picture for both the 2021 fiscal year and the current fiscal year. State leaders may need to convene a third revenue conference later in the summer before the Legislature and governor move forward on a 2021 budget plan, Stamas said. “I think May is going to be too early to have any idea,” Stamas said. “It’s going to be moderately speculative.” The uncertainty of just how long the coronavirus outbreak will keep the state’s economy ground to a halt is what worries the top budget writers in the Legislature. “How quickly do people bounce back into their routines?” Hernandez said. “We won’t be sure of that for a while.” Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood

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.

GETTY IMAGES/ISTOCKPHOTO

The Michigan Department of Health and Human Services’ Bureau of Laboratories testing lab in Lansing.

The coronavirus outbreak and ensuing economic upheaval from six-figure job losses, businesses temporarily shuttered and consumer purchases of new vehicles and appliances being curtailed has the potential to wreak havoc on the state budget in the coming months. Michigan budget officials don’t have any firm numbers on the damage a three-week shutdown of nonessential businesses is going to do to state tax revenues. But it’s almost assuredly going to trigger the first major budget crisis in Lansing since the Great Recession and test the leadership cooperation between Democratic Gov. Gretchen Whitmer and the Republican-controlled Legislature that she was sparring with over budgetary matters not three months ago. House Appropriations Chairman Shane Hernandez said Friday it’s too early to tell just how extensive the economic impact from the coronavirus outbreak will be on tax revenues. “Not only is it too early, we don’t know if this goes on two more weeks, three more weeks, two months,” said Hernandez, R-Port Huron. Hernandez said the losses of jobs and closure of most consumer retail businesses beyond groceries stores will likely cause declines in sales and income tax, the primary source of revenue for the $11 billion general fund and $14 billion school aid fund. Though the summer travel season is still two months away, last week’s nearly dead halt of normal traffic also could put a crimp on fuel tax revenue that fund road construction. “When people aren’t traveling, there’s going to be concerns about road funding too,” Hernandez said. “A lot of it is generated at the pump.” State officials are still assessing the impact of the federal stimulus bills and how that money could soften the tax revenue blow to the state’s general and school aid funds. The initial stimulus bill contained $600 million for Michigan’s Medicaid program, which could be used to backfill General Fund support for Medicaid programs, state budget office spokesman Kurt Weiss said. Senate Appropriations Chairman Jim Stamas, R-Midland, said some portion of that $600 million will need to be distributed to hospitals to shore up their finances during the coronavirus crisis. Under orders from Whitmer, hospitals have stopped bottom-line-boosting elective procedures to focus all resources on treating individuals with COVID-19. In Stamas’ northeast Lower Peninsula district, hospitals in Alpena, Gaylord, Gladwin and East Tawas are the No. 1 employer in those com-

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.

OTHER VOICES

It's not time to live in the future, but to act in the present BY JAMES MCTEVIA

One of the many things I have learned over my 60-year career as an adviser to financially troubled companies is that humans are unique and James McTevia strange creais managing tures. member of Unlike aniMcTevia & Associates, LLC, mals, which can only live in the an adviser to present, only Michigan human beings companies in are capable of transition since living in the futhe 1960s. ture. Many of us seem only focused on thinking beyond today. I have observed my clients trying to predict tomorrow’s problems, which may never arrive, based on today’s circumstances. It is a most stressful and unpleasant way to live. Guiding the principals of businesses and their families through serious financial problems, my perspective on solving problems has remained consistent: time. With time, most of our problems can be mitigated or, in fact, resolved, because with time, circumstances and events not available or that do not exist in the present become available, and the problems we face today are usually not the problems we face tomorrow. This message applies to everyone regardless of whether yours is a financial, personal, health or any other problem such as the coronavirus epidemic that is spreading throughout our nation and the

CRAIN’S AWARDS

Nominate an overachiever for Crain’s 40 Under 40 Know someone who does too much? Someone who’s almost too accomplished? That person who everyone knows they’ll be working for one day — if they’re not already? Tell us about them: We’re seeking nominations for Crain’s 40 Under 40. Past winners have started (and sold) companies, precociously climbed executive ranks and made a lasting difference in their communities. The deadline to nominate a candidate for the 2020 class of 40 under 40 is Monday, May 4. To nominate a candidate, go to crainsdetroit.com/ nominate. For questions, contact Special Projects Editor Amy Bragg: abragg@ crain.com.

THE DEADLINE TO NOMINATE A CANDIDATE FOR THE 2020 CLASS OF 40 UNDER 40 IS MONDAY, MAY 4.

world. I have guided our clients ed, they were, in fact, resolved over and their companies through sev- time, because with time the proberal serious recessions, dou- lem passed into history and others took its place. ble-digit interRest assured, est rates in the our society, that 1970s and early REST ASSURED, OUR has faced many 1980s, stock SOCIETY, THAT HAS FACED seemingly unmarket crashes, armed conflicts MANY SEEMINGLY solvable proband our nation’s UNSOLVABLE PROBLEMS lems through9/11 tragedy. out its history, Like corona- THROUGHOUT ITS will overcome this event. But virus, they were HISTORY, WILL OVERCOME only with time not created or as the future ungoverned by my THIS EVENT. folds. There will clients and seemingly could not be resolved at be no “quick fix.” My advice to businesspeople the time. But as the future unfold-

now is, while waiting for time to pass, work what you know now, in the present. Make decisions, even very difficult decisions, based on what you know today, not on what you think the future may bring. There is basic, fundamental business financial problem-solving advice that you can think about now, including: ` Reduce expenses to the bare minimum. ` Increase revenues, however possible. ` Conserve cash to cover only what is necessary. ` Avoid increasing debt to support losses.

Those are some of the first things I seek to do when I walk into a company facing financial challenges. But there’s another important factor I also consider: the current culture of a company. Before I even learn where to find the restroom, I can almost smell the trouble, which is often established via the set tone from the top of the organization. That is why now, maybe more than ever, it is imperative not to live in the future, but to act in the present. Do what needs to be done now, to buy yourself the time to get to the other side of this crisis that is affecting every business.

Take Heart, Michigan.

When “Financial security from generation to generation,” is your tagline, you tend to take a long-term view of market performance. You also tend to be optimistic, given that historical market data overwhelmingly favors that long-term mindset—even in the throes of a worrisome crisis like COVID-19. A profound sense of gratitude helps. Gratitude to the many who are visibly fighting the virus day and night at great peril to their health. And gratitude to the equal number of good people who, behind the scenes, are providing products, services and aid to our nation. As author Mary Anne Radmacher once said, “Courage doesn’t always roar. Sometimes it’s the quiet voice at the end of the day saying, ‘I will try again tomorrow.’” With you, and in every measure thanks to you, we will prevail.

Kalamazoo Grand Rapids Birmingham Traverse City Bay Harbor | 800.416.4555 greenleaftrust.com

MARCH 30, 2020 | CRAIN’S DETROIT BUSINESS | 9

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FAMILY-OWNED BUSINESSES

GROWING UP Clockwise from top: Chelsea Milling Co. in Chelsea, Bronner’s Christmas Wonderland in Frankenmuth and Famous Hamburger, formerly based in Lebanon and now based in Dearborn | SUBMITTED PHOTOS

How three family-led companies scaled their businesses BY RACHELLE DAMICO | SPECIAL TO CRAIN'S DETROIT BUSINESS

Family businesses have a significant advantage over nonfamily businesses: they’re actually more successful in the long run. Boston Consulting Group, a global management consulting firm based in Boston, studied 149 family-controlled, publicly traded companies with sales of more than $1 billion and found that their long-term financial performance was higher across business cycles between 1997-2009. The study also found that family businesses play an important role in the economy, accounting for more than 30 percent of all companies with sales in excess of $1 billion. Rejeana Heinrich, associate director at the Stevens Center for Family Business at Saginaw Valley State University, said the reason for this long-term success is that family-controlled businesses take the long view rather than having to appeal to shareholders who are often forced to look at short-term metrics.

10 | CRAIN’S DETROIT BUSINESS | MARCH 30, 2020

 How three family-led companies scaled their businesses. THIS PAGE  Don’t let disagreements keep a company from growing. PAGE

 Expansions, online and catalog sales fuel Christmas empire’s growth. PAGE 11  Jiffy mix maker president and CEO doubled company’s revenue . PAGE 12  Third-generation owner refreshes restaurant business with visual appeal, simpler menu. PAGE 12

“IF YOU’RE NOT CHANGING, THEN YOU’RE FALLING BEHIND.” — Rejeana Heinrich, associate director at the Stevens Center for Family Business at Saginaw Valley State University

“The policies and the strategies that they put in place are designed to not just capture the next quarter’s success or financial gains, but to stand the company in good stead for years and generations to come,” Heinrich said. “That’s an overriding advantage that family businesses have versus non-family businesses.” Having policies and decision-making strategies in place is key for family companies who want to scale while still respecting the company’s core values. Wayne Bronner, second-generation owner of Bronner’s Christmas Wonderland in Frankenmuth, said the family members meet weekly to discuss issues or bring new ideas to the table. “We talk about all of our actions with the family,” Bronner said. “Everybody has the chance to bring something up.” Besides having a governance structure, family companies should identify both family and

non-family talent. “It really boils down to the qualification aspect,” Howdy Holmes, president and CEO of Chelsea-based Chelsea Milling Company, said. “Because somebody is born into a family — does that really mean that they are qualified to run a business? No, I don’t think so.” Family companies must also be aware that they don’t get so bogged down by tradition that they become resistant to change and avoid being innovative. “If you’re not changing, then you’re falling behind,” Heinrich said. “That’s never so true as it is now in a rapidly changing world, whether it’s technology or competition, or whatever the challenge is.” Crain’s talked to three family business owners about the changes they made that helped grow and scale their companies, and the steps they took to get there.

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FOCUS | FAMILY-OWNED BUSINESSES

Don’t let family disagreements keep company from growing

Meeting customers where they are

Rejeana Heinrich, associate director at the Stevens Center for Family Business at Saginaw Valley State University, said a trend she sees with successful family businesses is that they have solid relationships among the family members. “It’s all about the family dynamics in the family relationship,” Heinrich said. “If those are strong, healthy and sound, the company will follow suit. If the family is dysfunctional, the business will be dysfunctional.” Heinrich said that doesn’t necessarily mean without conflict, which is inevitable. It’s a matter of how that conflict is managed. “Put in place policies and decision making strategies so that when you’re confronted with a challenge or quandary, over which there may be differing opinions, that you have guidelines by which to structure how you’re going to go forward,” Heinrich said. “Being proactive and somewhat preventive is really a very important aspect and a best practice that is strongly recommended.” Beyond that, it’s crucial to put several layers of governance struc-

Bronner’s Christmas Wonderland, the famous retail empire located in Frankenmuth, has seen an increase in sales and customers from store expansions and adding online and catalog sales. The 75-year-old company was started by the late Wally Bronner, who transformed the Christmas store into one of Michigan’s most popular tourist destinations. The company has about 120 fulltime workers, 230 part-time workers and 400 part-time seasonal workers. The store offers 50,000 items and is visited by 2 million people annually. Bronner’s is a third-generation family company and on its second generation of family leadership. Wally’s son, Wayne Bronner, was named president and chief executive officer of Bronner’s in 1998, and daughters Carla Spletzer and Maria Sutorik were named vice presidents. “We’ve always been very successful and stable,” said Wayne Bronner. “When I came on, I was pretty much just following the course of events.”

“IT’S ALL ABOUT THE FAMILY DYNAMICS IN THE FAMILY RELATIONSHIP.” — Rejeana Heinrich

ture in place, Heinrich said. “Things such as family council meetings keep the relationships and the communication robust on an ongoing basis so that small differences of opinion can be dealt with early on and things aren’t allowed to fester and ultimately explode,” Heinrich said. — Rachelle Damico

Expansions, online and catalog sales fuel Christmas empire’s growth BY RACHELLE DAMICO | SPECIAL TO CRAIN'S DETROIT BUSINESS

See BRONNER’S on Page 14

Bronner’s Christmas Wonderland, located in Frankenmuth, has seen an increase in sales and customers from store expansions and adding online and catalog sales. | BRONNER’S

When you win, we win—

Our primary goal is to help our clients succeed.

#StronglyHeldBeliefs

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MARCH 30, 2020 | CRAIN’S DETROIT BUSINESS | 11

FOCUS | FAMILY-OWNED BUSINESSES

Former race car driver revs up baking mix firm Jiffy maker president and CEO doubled company’s revenue BY RACHELLE DAMICO | SPECIAL TO CRAIN'S DETROIT BUSINESS

When Howdy Holmes took the reins as president and CEO of Chelsea Milling Company, he implemented a multitude of changes that fueled growth and doubled the company’s revenue. The Chelsea-based company, which is located just west of Ann Arbor, is the manufacturer of Jiffy brand baking mixes. Its dry baking mixes for cakes, pies, muffins, brownies, biscuits and more come in iconic blue boxes. Chelsea Milling Company was founded by Holmes’ great-grandfather, Harmon, in 1887. Holmes’ grandmother, Mabel, invented the baking mixes and started the Jiffy brand in 1930. Last year, Chelsea Milling Company generated $135 million in revenue. The company, which is on its fourth generation of family leadership, has 311 full-time employees and 55 temporary seasonal workers. Holmes started working at Chelsea Milling Company in 1963, learning the company from the ground up during his high school and college summer breaks. He left the company in 1968 to pursue a 20-year career in race car

“I WAS ALL ABOUT CHANGE. IT WAS THAT RESISTANCE TO CHANGE WHICH WAS A REAL STRUGGLE.” — Howdy Holmes, president and CEO, Chelsea Milling Company

driving, participating in six Indy 500 races; he was crowned “Rookie of the Year” at the Indy 500 in 1979. After retiring from his racing career, Holmes rejoined the family business in 1987.

Holmes has worked in both advertising and business marketing, but he said his racing career actually brought an advantage to the manufacturing business. “The relationships between racing teams and manufacturing are kind of twin sisters in the sense that you’re always trying to improve something with the mechanical equipment,” he said. However, when Holmes returned to the family company, he said many saw him as “just a race car driver” and not necessarily someone who should be making major decisions for the company. “My presence was met with a great deal of resistance,” Holmes said. “I was all about change. It was that resistance to change which was a real struggle.” Holmes made a significant change to the company in 1988 when he began updating the company’s manufacturing equipment and made sure it was put on a preventative maintenance schedule. The updated equipment made it possible to weigh, measure and mix ingredients more efficiently. “The equipment was dated, and we had frankly lost touch with improvements and innovation,” Holmes said. “It’s all about knowing the

equipment, its performance and preventative maintenance.” The company makes those equipment parts in-house, which Holmes said saves the company about $3 million a year. By 2022, Chelsea Milling Company plans to replace all of its current retail equipment. Another change that was important to Holmes was to put outside members into key positions. Holmes established a board of directors in 1991 that included both family and nonfamily members. “It was important to me that we had positions that were occupied by qualified people, as opposed to just whoever had the most seniority,” Holmes said. “There was a significant amount of nepotism, which is great, as long as qualifications are part of that formula.” At the first board meeting, Holmes proposed that Chelsea Milling Company hire an outside chief financial officer to manage the company’s funds. “My father is a very patient man and I love him dearly,” Holmes said. “But he stood up at this board meeting and said, ‘That’s the most preposterous thing I’ve ever heard in my life. What would they do all day?” Nevertheless, Holmes persisted

The Jiffy plant in Chelsea | CHELSEA MILLING COMPANY

Updating the family burger brand for a new era Third-generation owner refreshes restaurant business with visual appeal, simpler menu BY RACHELLE DAMICO | SPECIAL TO CRAIN'S DETROIT BUSINESS

Moe Hider, third-generation family owner of Dearborn-based Famous Hamburger, grew his family’s restaurant business into a franchise and is paving a path for expansion. The franchise has about 70-80 employees across its four restaurant locations. Last year, Famous Hamburger generated about $2 million to $3 million in revenue. Famous Hamburger’s story begins in 1968 when Hider’s grandfather, Hussein, and Hider’s father, Phillip, opened a small burger restaurant in Beirut, Lebanon. The restaurant, which was originally named “Little White Castle,” served American classics such as burgers, shakes and fries. “They opened a typical American burger joint in Lebanon, where burgers weren’t such a big thing,” Hider said. “As time went by, people started knowing them for an amazing burger.” Locals loved the restaurant so much they would drive by and honk at Phillip and Hussein in traffic, thus making the pair “famous” in their neighborhood. In 1970, the restaurant changed its name to “Famous Hamburger.” Hider said business was booming back then, but a civil war in Lebanon caused Phillip and Hussein to shut down and reopen multiple times. Eventually, they were forced to shut down the restaurant for good. See BURGER on Page 14 12 | CRAIN’S DETROIT BUSINESS | MARCH 30, 2020

Moe Hider, third-generation family owner of Dearborn-based Famous Hamburger, grew his family’s restaurant business into a franchise. | FAMOUS HAMBURGER

Phillip (left) and Hussein Hider at Little White Castle Hamburger in Lebanon in the late 1960s | FAMOUS HAMBURGER

FOCUS | FAMILY-OWNED BUSINESSES and hired a nonfamily CFO in 1991. While the company was going through these transitions, they hired a business psychologist to help mitigate conflict among the family members and ensure they were all on the same page. “One of the very difficult things in a business family is talking objectively with biological connections,” Holmes said. “At the family level, there was disagreement amongst some. The only way that was going to get resolved and move forward was to get the subject matter on the table.” Holmes also met with the company’s employees to inform them of the changes being made and allowed them the opportunity to discuss any thoughts. “I had to prove my worth, and I had to find ways to get our personnel to trust me and for me to trust them,” Holmes said. “If you include others, you get the chance to exchange ideas with other people and presumably end up with a better solution when there’s collaboration.” Holmes’ efforts paid off. He officially became president and CEO of Chelsea Milling Company in 1995. Under his leadership, the company doubled its revenue organically — from $67 million in 1995 to $135 million last year. That revenue growth was also achieved in a declining market. Holmes said the market segment for home baking mixes hasn’t grown since 1991, dropping 60 percent in volume.

The company’s signature blue box has remained relatively unchanged since 1930. | CHELSEA MILLING COMPANY

With that data in mind, the company came up with a new plan for growth. In 2007, the company started selling to prisons under the entity name CMC Mixes in order to diversify its business. “Eating at home was something that was kind of going south,” Holmes said. “We had to figure out something that could sustain and grow our business for the next 50 years.”

To test the waters, the company entered the prison market by using a 25-50 pound bagging machine, selling to just two prisons to start. “We stuck our toe in the water and lo and behold, within five years, we were able to capture 40 percent of the market,” Holmes said. As a result, the company invested $25 million in a 2016 expansion that included a new mixing tower, packaging plant and support building for the food service business. “It’ll take a while to get traction, but I think the food service business is going to dwarf the retail business,” Holmes said. Although Holmes said there wasn’t much he didn’t change about the longstanding company, it’s important to note what stayed the same. The company’s signature blue box has remained relatively unchanged since 1930. Since the retro box remains well-known, the company spends no money on advertising dollars, which Holmes says allows the company to keep their product cost low. “That’s what people recognize,” Holmes said. “You’d be out of your mind to try and change that.” With Holmes at the wheel of the company’s innovation, he expects Chelsea Milling Company to remain profitable for years to come. “Change is necessary to survive,” Holmes said. “Our mission has always been to feed working class America. We’re going to continue to be that provider.”

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ate MARCH 30, 2020 | CRAIN’S DETROIT BUSINESS | 13

FOCUS | FAMILY-OWNED BUSINESSES

BRONNER’S

From Page 11

Even though the business has always been profitable, Wayne Bronner had an idea that helped grow the Christmas empire. During a family meeting in the early ’90s, he proposed to the family members that Bronner’s sell merchandise via catalog. “The family has to work together and provide the needs of the customers,” Wayne Bronner said. “If people in Ohio, Illinois and Michigan would enjoy Christmas decorations — why wouldn’t they enjoy Christmas decorations in Maine, Florida and California?” Catalog sales were profitable and Bronner’s began selling merchandise

“(EXPANSION) INCREASED OUR BUSINESS AND SALES CONSIDERABLY, BECAUSE WE COULD ACCOMMODATE MORE PEOPLE.” — Wayne Bronner, president and CEO, Bronner’s

online a few years later. Although the company does not share financial information, Bronner said online and catalog sales have grown the company by about 20 percent. Today, the company distributes 3 million catalogs across the U.S., selling 800 items in its 68-page catalog. Bronner’s also sells 5,000 items online. About 150 employees were hired to

fill online and catalog orders. “We hired considerably for the people who work in that department,” Wayne Bronner said. “There are days that they ship out 4,000-5,000 packages.” Bronner’s also expanded several times from 1991-2002, including in their shipping department where online and catalog orders are processed. During that time period, the company expanded from a 120,000-square-foot building to a 320,000-square-foot building, bringing the building’s size to the equivalent of more than five football fields. “It increased our business and sales considerably, because we could accommodate more people,” Wayne Bronner said. “(Business) has been very profitable.”

BURGER

From Page 12

Wayne Bronner

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Phillip brought his family to the U.S. in the 1980s to provide a better life for his family. After working a variety of jobs in the U.S., he returned to the restaurant business. The first Famous Hamburger opened in 1997 on Michigan Avenue and Wyoming in Detroit. The 500-square-foot restaurant seated about 12 people and served burgers, fries and shakes. About seven years later, the restaurant moved to a 4,000-square-foot space in Dearborn to accommodate its growing customer base. The Dearborn restaurant relocated in 2014 to a 3,100-square-foot building on Michigan Avenue and Howard in downtown Dearborn. President and franchisor Moe Hider grew up working at the family restaurant. Under his direction, Famous Hamburger opened its first franchise location in Canton in 2013. He took over his father’s restaurant a year later and began efforts to expand the company. One of the first decisions Hider made was to update the company’s logo, which was made in the 1970s. “I sat down with my dad and said, ‘Dad, here’s the new logo,” Hider said. “He said, ‘Absolutely not. We’re sticking with the old one.’” Hider and his father compromised. The current logo is a modernized version of the original one. “We modernized the bun to look like a bun and the word Famous Hamburger is now stacked like a burger with toppings,” Hider said. “He loved it.” Next, Hider consolidated the restaurant’s menu. Over the years, Famous Hamburger’s menu had evolved into eight pages of items that included pizza and pasta. That was an issue for Hider. The inventory was becoming too much to keep up with, and he wanted the restaurant to focus instead on what made it well-known in the first place: burgers. The one-page menu now includes a variety of burgers, fries, shakes, salads and wraps. “We want people to know us for what we do best,” Hider said. In an age where everyone posts their food on social media, Hider wanted to stand out. Hider had each hamburger bun stamped with the Famous Hamburger logo. Many of the restaurant’s shakes are also exorbitantly decorated; some come with an entire cupcake on top. “People eat with their eyes first,” Hider said. “You want to give them that ‘wow’ the minute it hits the table.” Famous Hamburger added online ordering and delivery in 2014. Hider said it has increased sales by about 35 percent. The business has seen significant growth. Since the company rebranded six years ago, Hider said the company has experienced a 40 percent increase in sales and customers. “People notice the small things more than big things now,” Hider said. “You have to care about your brand and care about every little thing.” Now, Famous Hamburger is on a path of expansion. Last year, the company added three restaurant locations in Canton Township, Dearborn and Great Lakes Crossing Mall in Auburn Hills. Hider said the company plans to have a total of 10 Famous Hamburger restaurant locations in the next 5 years. “I want my dad to know that he has a legacy that he’s left with us,” Hider said. “We hope to keep the brand going for generations to come.”

CRAIN'S LIST: MICHIG MICHIGAN AN F FAMIL AMILY Y-O -OWNED WNED BU BUSINE SINES SSE SES S Ranked by 2019 revenue

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Company name Location Contact info

Revenue ($000,000) 2019/2018

Meijer Inc.

$19,000.0

Amway

Percent change

Percent of business Other family members in management with relation to the familyfirst-generation owner owned Type of business

Year founded Firstgeneration owner

-1.3%

1934 Hendrik Meijer

Hank Meijer, executive chairman, grandson; Doug Meijer, director, grandson

Supercenters and grocery stores

8,400.0

-4.5

1959 Jay Van Andel and Rich DeVos

Steve Van Andel, co-chair of the board, son of co-founder Jay Van Andel; Doug DeVos, co-chair of the board, son of co-founder Rich DeVos

100

Direct selling business

Ilitch companies

3,900.0

2.6

1959 Mike and Marian Ilitch

Christopher Ilitch, president and CEO, Ilitch Holdings Inc., son

100

Food, sports and entertainment and real estate development industries

United Shore Financial Services LLC

3,200.0

138.8

1986 Jeffrey Ishbia

Mat Ishbia, president and CEO, son

100

Mortgage lender

Plastipak Holdings Inc.

3,109.1

-1.1

1967 William P. and Mary Young

William C. Young, president and CEO, son

Manufacturer of rigid plastic containers and recycled plastic material for the consumer products industry

Moroun family holdings

2,867.5

2.7

1937 T.J. Moroun

Manuel Moroun, son, and Matthew Moroun, grandson, both hold several executive positions

Ambassador Bridge and various trucking and logistics companies

The Suburban Collection

2,792.3

6.6

1948 Richard Fischer

David Fischer Jr., president and COO, grandson

100

Automobile dealerships

H.W. Kaufman Group Inc./Burns & Wilcox Ltd.

2,400.0

6.7

1969 Herbert W. Kaufman

Alan Jay Kaufman, chairman, president and CEO, son; Daniel Kaufman, executive vice president, COO, grandson; Jodie Kaufman Davis, corporate senior vice president, granddaughter

100

Provides insurance services including distribution, brokerage, underwriting, reinsurance, real estate, financing, inspections, audits, risk management and third-party claims administration

Haworth Inc.

2,250.0

5.1

1948 G.W. Haworth

Dick Haworth, chairman emeritus, son; Matthew Haworth, chairman, grandson

100

Furniture, interior architecture and technology solutions

Serra Automotive Inc.

2,039.9

14.2

1973 Albert M. Serra

Joseph Serra, president, son

100

Auto dealerships

Barton Malow Holdings

1,900.0

0.0

1924 Ben Maibach Jr.

Ryan Maibach, president, CEO and chairman, grandson; Doug Maibach, executive vice chairman, son; Ben Maibach III, chief community officer, son

General contracting, construction management, design/build, engineerprocure-construct, integrated project delivery, self-perform services: civil, concrete, rigging and interiors

Walbridge

1,810.0

35.1

1916 John Rakolta Sr.

John Rakolta III, EVP, CAO, and member of the board of directors, grandson; Lauren Rakolta, president of DFM Solutions and member of the board of directors, granddaughter

Construction: general contracting, design build, construction management, engineer/procure/construct, virtual design, digital mapping

Soave Enterprises LLC

1,672.8

-18.5

1961 Anthony Soave

Angelique Soave, vice president, daughter; Andrea Soave Provenzano, vice president, daughter; Christopher Provenzano, project manager, son-in-law

100

Diversified management holding company

Garber Management Group Inc.

1,363.0

9.5

1907 Guy S. Garber

Richard Garber, president, grandson

Auto dealerships and related companies

Wolverine Packing Co.

1,324.0

4.7

1937 Alfred Bonahoom

Jim Bonahoom, president, son; Roger Bonahoom, vice president, son; Jay Bonahoom, vice president, grandson

100

Wholesale meat packer and processor; wholesale meat, poultry and seafood distributor

Zeigler Auto Group

1,278.7

5.3

1975 Harold Zeigler

Aaron Zeigler, president, son

100

Auto dealer

LaFontaine Automotive Group

1,156.6

13.2

1980 Michael T. LaFontaine

Ryan LaFontaine, COO/dealer, son; Kelley LaFontaine, CEO/ dealer, daughter

100

Automobile dealerships

General RV Center Inc.

1,033.0

8.1

1964 Abe Baidas

Robert Baidas, CEO and chairman, son; Loren Baidas, president and chairman, grandson; Wade Stuff, vice president of operations, grandson-in-law

100

Recreational vehicle dealership

Kenwal Steel Corp.

930.0

-12.0

1947 Sol Eisenberg

Kenneth Eisenberg, chairman and CEO, son; Stephen Eisenberg, president, Burns Harbor, Ind. plant, grandson

100

Steel service center

Orleans International Inc.

566.0

15.5

1937 Max Tushman

Earl Tushman, president/CEO, grandson; Larry Tushman, vice president/secretary, grandson; Reed Tushman, vice president/ director of operations, great-grandson; Marc Tushman, vice president/director of logistics, great-grandson

100

Meat importer

2929 Walker Ave. NW, Grand Rapids 49544 616-453-6711 www.meijer.com 7575 Fulton St. E., Ada 49355 616-787-1000 www.amwayglobal.com 2211 Woodward Ave., Detroit 48201 313-471-6600 www.ilitchcompanies.com 585 South Blvd. E, Pontiac 48341 800-981-8898 unitedshore.com

41605 Ann Arbor Road, Plymouth 48170 734-455-3600 www.plastipak.com 12225 Stephans Road, Warren 48089 586-939-7000

1795 Maplelawn Drive, Troy 48084 877-471-7100 www.SuburbanCollection.com 30833 Northwestern Highway, Farmington Hills 48334 248-932-9000 www.hwkaufman.com

1 Haworth Center, Holland 49423 616-393-3000 www.haworth.com 102 W. Silver Lake Road, Fenton 48430 810-936-2730 www.serrausa.com 26500 American Drive, Southfield 48034 248-436-5000 www.bartonmalow.com

777 Woodward Ave., Suite 300, Detroit 48226 313-963-8000 www.walbridge.com 3400 E. Lafayette, Detroit 48207 313-567-7000 www.soave.com 999 S. Washington Ave., Saginaw 48601 989-790-9090 www.garberauto.com 2535 Rivard, Detroit 48207 313-259-7500 www.wolverinepacking.com 4201 Stadium Drive, Kalamazoo 49008 269-375-4500 www.zeigler.com 4000 W. Highland Road, Highland Township 48357 (248) 887-4747 www.thefamilydeal.com 25000 Assembly Drive, Wixom 48393 (248) 349-0900 www.generalrv.com 8223 W. Warren Ave., Dearborn 48126 (313) 739-1000 www.kenwal.com 30600 Northwestern Highway, Suite 300, Farmington Hills 48334 (248) 855-5556 www.orleansintl.com

$19,250.0

8,800.0

3,800.0

1,340.0

3,143.1

2,792.6

2,619.7

2,250.0

2,140.0

1,786.0

1,900.0

1,340.0

2,051.9

1,244.4

1,265.0

1,214.5

1,021.9

955.6

1,057.0

490.0

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This list of family-owned businesses is an approximate compilation of the largest such businesses in Michigan. It is not a complete listing but the most comprehensive available. Crain's estimates are based on industry analyses and benchmarks, news reports and a wide range of other sources. Unless otherwise noted, information was provided by the companies. For some companies, the founders were later bought out by another family. The Diez Group which was No. 14, Carhartt Inc. which was No. 21 and RKA Petroleum which was No. 25 on last year's list all declined to participate. 1 Crain's estimate. 2 Supermarket News Top 75 estimate. 3 From MiBiz 4 Automotive News. 5 Founded in 1924 as C.O. Barton Co. by Carl Osborn Barton. The Maibach family acquired majority control in 1961. 6 George B. Walbridge and Albert H. Aldinger founded the company in 1916. John Rakolta Sr. bought the company in 1963 with business partner Robert Robillard.

MARCH 30, 2020 | CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS | 15

COMMERCE

Is Michigan headed for gas prices below $1 a gallon?

Decline at pump tied to spread of coronavirus, price dispute between Russia, Saudi Arabia BY NICK MANES

Michigan residents are sure to be traveling less in the coming weeks with a stay-at-home order from Gov. Gretchen Whitmer. But those who do venture out will be paying some of the lowest gas prices in decades. The average gas price in the state last week stood at $1.86, or 62 cents less than the same time a month earlier, and 87 cents less than the same time last year. It’s the lowest average price since March of 2016, according to AAA. The decline is tied partially to the spreading coronavirus, as well as an ongoing price dispute between two major oil-producing nations. “Pump prices continue to decline as oil prices have decreased significantly in response to the increasing public health and economic impact of COVID-19 and the crude price war between Russia and Saudi Arabia,” said Adrienne Woodland, spokesperson for AAA of Michigan. Patrick DeHaan, a Chicago-based petroleum analyst for consumer site GasBuddy, tweeted that he expects gas prices around the country to continue falling sharply and that the country is on course for the lowest prices since 2002. In a call with Crain’s, DeHaan said he anticipates a better than 50 percent chance that prices in nearly every major city in Michigan could fall to around $1 per gallon by April 1. Demand for gas has fallen 16 percent compared with normal times, he said. “What we’re seeing with wholesale gasoline prices plummeting, it’s not a shock,” said DeHaan. “With 100 million people plus being told to stay home, we’re talking about a just mind-boggling drop in gasoline demand. Something that has no equal in past history.” London, Kentucky, has become the first U.S. city to see pump prices fall below $1 a gallon as coronavirus-related lockdowns halt transit across the country. While cheap fuel usually spurs

A Speedway gas station in downtown Detroit last week with gas prices below the state average, according to figures from AAA-Michigan | NICK MANES/CRAIN’S DETROIT

gas-guzzling Americans to hit the highways, the latest downturn in prices portends dark times ahead. “You almost can’t even give it away,” said Paul Bingham, head transportation economist at IHS Markit Ltd. “The price elasticity has totally changed. It’s full-on demand destruction.” Nationwide, pump prices are headed for depths not seen since the Great Recession. Gas stations in Ohio and Wisconsin could also see sub-$1 fuel if prices keeps falling, DeHaan said. The downturn comes as large swaths of the country are under con-

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PEOPLE ON THE MOVE 16 | CRAIN’S DETROIT BUSINESS | MARCH 30, 2020

tainment orders in an effort to curb the virus that’s killed more than 15,000 people globally. U.S. unemployment is set to rise to 30 percent this quarter while the GDP may drop by 50 percent. In that environment, low gasoline prices won’t induce consumption in the way they typically do, and may instead be yet another indicator of a struggling economy. Pump prices are chasing gasoline futures lower. Futures in New York plunged 63 percent in March alone as coronavirus containment measures grip major U.S. cities, bringing the nation to an economic standstill. On average, about 28 cents in taxes

and fees are added to the price of gasoline paid at the pump, according to RJO Futures, with the retail price typically lagging futures by about a week. Prices would fall even further if it weren’t for the food-delivery drivers and long-haul truckers who are in high demand now that more Americans are self-isolating. The last time an individual gas station sold fuel for less than $1 was in 2016 in Iowa, according to GasBuddy. That was a blip that corrected itself quickly. This time around, cheap pump prices will persist for longer. While $1 gasoline isn’t typical, “we

could see sustained low retail pricing into August,” said Andy Lipow, president of Lipow Oil Associates in Houston. “We’re in uncharted territory,” Bingham said. “It’s not just commuting patterns like going to work — it’s other indicators that go hand in hand with the economy and gasoline consumption. That shock is going to exceed what we saw in the Great Recession.” Bloomberg News contributed to this report. Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

EDUCATION

Wayne State University wins lawsuit filed over controversial quorum issue BY JAY GREENE

Michigan Court of Claims Judge Cynthia Diane Stephens again ruled against four board members of Wayne State University who asked the court to toss out two controversial votes the other four members took last June. Stephens said in her March 25 decision that the four board members’ arguments “are meritless” and ruled in favor of Wayne State. Led by Sandra Hughes O’Brien and Michael Busuito, M.D., the four objecting board members contended in court documents that by allowing M. Roy Wilson, M.D., university president and ex officio board member, to be counted toward a quorum that the university had violated the state Constitution by improperly adding an ninth

board member. The other two members objecting are Dana Thompson and Anil Kumar, M.D. “The plain language of these authorities (state statutes) demands Wilson that there is to be an eight-member board, as well as a president, who serves as a separate, ex officio member of the board,” Stephens wrote in her eight-page opinion. Stephens said allowing Wilson to be counted as a member to constitute a quorum, which allowed the vote, does not add a ninth member to the board. “All the court’s opinion does is ex-

plore the meaning of ex officio board membership for purposes of establishing a quorum,” Stephens wrote. The dispute arose in a June 21 meeting that half the board skipped in an effort to block a vote to sublease 400 W. Mack Ave. for Wayne Pediatrics, the university medical school’s new clinical group. The other half of the board met anyway, counted Wilson as a member to get quorum, and then approved the sublease and tuition hike. Sandra Hughes O’Brien, one of the four objecting WSU board members, said she is disappointed in Stephens’ legal analysis. “I think it’s flawed, and we’ll be appealing,” she said in an email to Crain’s. Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene

STRUGGLE

From Page 3

Large health care systems, including Beaumont Health, Henry Ford Health System, Trinity Health Michigan and Spectrum Health, also eliminated such elective procedures as cosmetic, bariatric and hip and knee replacement surgeries and have dropped hundreds of millions of dollars each month, executives said. Beaumont CEO John Fox, in a recent op-ed in Crain’s, said that as Beaumont’s eight hospitals shift from high-revenue surgical and related procedures to much lower-revenue medical inpatients with all the acute complications associated with COVID-19, the eight-hospital health system with $5 billion in annual revenue projects to lose $1 billion-$2 billion in revenue this year. Rob Casalou, president and CEO for Livonia-based Trinity Health’s Michigan region, said the 11-hospital system lost more than half of its revenue in the last two weeks as it cut back on elective procedures and had spikes in unplanned expenses. Casalou said management is taking steps to mitigate revenue loss, but mostly focusing on preparing for an increase of patients expected to need hospitalization for coronavirus. Last week, Rep. Haley Stevens tweeted a Michigan health system executive expressed concern over how the coronavirus pandemic is affecting hospital operations. She did not name the system. “Spoke to hospital exec. They have lost $39M in a month. Some in their group have one to two months before they will close doors,” Stevens tweeted. “We shouldn’t get to the point of hospital shutdowns to compel the federal government to secure the medical and fiscal solvency of this nation.” Last week, Congress approved a $2.2 trillion stimulus package that includes $100 billion for hospitals and another $30 million for other components of the health care system, including physicians, nursing homes and health centers. But will it be enough to prevent small and rural hospitals from closing, or large systems from experiencing massive setbacks? Most say another massive stimulus will be needed later, especially if COVID-19 returns in the fall before a vaccine and antivirals can be created for the novel disease. “Hospitals are our country’s front line of defense to the pandemic and this funding will, over time, alleviate many of our hospitals’ cash and financial burdens,” said Brian Peters, CEO of the Michigan Health & Hospital Association, in a statement. “This is a step in the right direction by our federal government, but more work remains in securing more equipment and supplies to appropriately test and protect our health care workers and patients.” Laura Appel, the MHA’s senior vice president and chief innovation officer, said normal operations at hospitals ended three days before Whitmer’s emergency order on banning elective surgeries on March 20. “(Hospitals) were already trying to empty out hospitals to preserve space and personal protective equipment in the pandemic situation we are in,” Appel said. “(Estimates are) hospitals have reduced capacity 30 to 40 percent.” But rural hospitals have patients dominated by older populations with higher risks for severe impact with a higher death rate, she said. “Hospitals are acting as trauma centers as a defense against COVID,” Appel said.

Appel

Bescoe

Smaller hospitals, centers Jawad Shah, M.D., president of Insight Institute of Neurosurgery and Neuroscience in Flint and Insight Surgery Hospital in Warren, said the coronavirus outbreak has radically impacted Insight’s operations. He said fellow neurosurgeons are still taking emerFebruary 17, 2020 hospitals, but outgency calls at nearby patient volume has plummeted. December 2, 2019 “We are very concerned to see how March 23, 2020 we can help the situation from a neuroMarch 16, 2020 surgery standpoint and help the community,” Shah said. “We can we do? We’d like to be able to add ventilator capacity. We need a certificate of need. So many things get in the way. We have March 30, 2020 physical space to grow, but not the regulatory ability.” Shah said the Warren surgical hospiMarch 2020 by 60 percent to 80 tal has 23, contracted percent because of the elective surgery ban. He said some staff have left for duties at other sites and hospitals. “We contacted McLaren, and they reached out to us to see what we can do together,” said Shah, adding that the two nearby health organizations are discussing renting four or more beds at its surgery hospital. For surgery centers, Gwinnell said the compliance rate among surgery centers with Whitmer’s order to stop nonessential elective procedures has been “extremely high.” “Some are doing urgent elective cases, primarily those that are affiliated with a hospital. It takes the strain off hospitals, and where it would be a safer environment (away from potential COVID-19 patients).” Gwinnell said many independent surgery centers are small businesses and are struggling financially. “Everybody is struggling, all industries. We understand our role and are evaluating how we can help,” Gwinnell said. “We had a conversation with the state and offered to help in any way and not get in the way.”

Pontiac General CEO Sanyam Sharma at the 94-bed for-profit hospital said the facility’s psychiatric unit and urgent care center are still operational, but many staff have been sent home. “They are still on payroll, but we don’t know for how long. We have virtually closed (acute-care operations), but still have capability on staff for emergency surgery,” Sharma said. “We anticipate a very small volume. It has decreased by 70 to 80 percent. We did a lot of electives.” Sharma said he is negotiating an arrangement with Oakland County to help quarantine community residential residents who have shown coronavirus symptoms. The hospital has a medical office building it is turning into a 15- to 30-bed quarantine unit. BUSINESS OPPORTUNITIES “Our urgent care center had a twoBusiness thirds dropoffBooks in visits.Header People don’t want to leave their house unless they feel they have coronavirus and want to be tested,” Sharma said. “We are following all testing protocols, swabbing them and sending samples to the state lab.”

Surgeons Choice Medical MISCELLANEOUS

CEO Steven Craig said the physi110104254-01 cian-owned 34-bed surgical hospital

began postponing all elective surgeries three weeks ago in its six ORs and last week eliminated the remaining categories, per Whitmer’s order. Craig said the hospital closed five ORs, and dropped from 500 monthly cases to about 200. He said Surgeons Choice also temporarily closed its surgery center in Warren. About 50 employees are working for the company, compared with 240 earlier this month, he said. “This allows our staff to be available to other hospital systems and is much less drain on resources,” Craig said. Elective procedures halted include bariatric surgery, some LASIK eye surgeries, carpal tunnel surgeries, knee replacements or plastic surgeries unless in a car accident or emergency intervention is required. “The other thing we did was create separate channels for people to enter,” Craig said. “For (emergency or urgent surgeries) we have one pathway and the other patients come in the other door.” Craig said all patients and employees are screened for temperatures, and some aren’t allowed in if they are above 100 degrees. In 2018, Surgeons Choice, which is adjacent to Ascension Health’s Providence Hospital, changed its name from Oakland Regional Hospital as it added

at least 13 additional physician investors and began to turn around its operations. It originally was founded in 1980 as Great Lakes Rehabilitation Hospital.

mer’s stop elective order was the right one. “We are just trying to figure out how we can help. By donating supplies we have and having our employees help out elsewhere,” he said. “It is a shame to see what some vendors are doing with markups. I am going to report that.”

Straith Hospital CFO Bradley Bescoe said Straith has curtailed elective surgeries and procedures to save resources and allow staff to perform other duties. “Significant changes have happened” in the past two weeks, Bescoe said. “Last Friday (March 20) from my perspective was the worst day of work in my career. We had to make tough decisions.” Bescoe said monthly revenue dropped from about $1.2 million to about $30,000, more than a 90 percent drop. CRAIN’S DETROIT BUSINESS “We put a plan in place to put people CRAIN’S Dleave ETROITofBabsence, USINESS ” he on a temporary RAIN130 ’ SD ETROIT Band USINESS said. OfC the full-time part-time CRAIN’S DETROIT BUSINESS employees normally working each day, Bescoe said Straith is down to about 30. Only urgent and emergent procedures are available at Straith, including retina C detachment and Bretina surgery RAIN’S DETROIT USINESS where eyesight could be lost. “We did a couple cases last week. We had been doing 270 to 300 eye cases per month,” he said.CRAIN’S DETROIT BUSINESS Bescoe said despite the drop in revenue and impact on employees, Whit-

Insight Neurological At Insight’s corporate headquarters, located at the old GM tank plant in Flint, Shah said some businesses, such as the health club, have ceased operations due to the stay-at-home and non-essential business closure orders by Whitmer. “We are down in volume because we stopped doing all elective cases and only are doing emergency cases,” Shah said. “We do urgent cases like carpal tunnel procedures where there is a progressive deficit (and a patient) can’t use an or arm or there is a psychological problem.” “We have skeleton staffs in our neuro practice. We are seeing patients with the telehealth option,” said Shah, adding that now the practice sees patients 70 percent online, 30 percent in the office. Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene

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MARCH 30, 2020 | CRAIN’S DETROIT BUSINESS | 17

RELIEF

Warren-based Art Van Furniture Inc. halted store sales March 19 and expedited mass layoffs as coronavirus began to grip the region. | ANNALISE FRANK/CRAIN’S DETROIT BUSINESS

ART VAN

From Page 1

It’s not clear what Van Elslander might intend to do with the brand name, or if he is bidding to stave off attempts to keep the brand alive by someone else. Defunct retailers’ brands are sometimes bought by companies that seek to keep them alive through online sales. These are sometimes called “zombie brands.” The offer does not include the business, whose remaining assets, including inventory, are being liquidated to pay back creditors, the sources said. The company now owns little to none of its real estate, as Thomas H. Lee’s deal to acquire the company involved a mass sell off of the buildings Art Van owned. “Personally, I would love it for the family and community’s sake,” Diane Charles, Art Van Furniture's vice president of communications, said of the purchase offer. Charles declined to provide de-

EROSION

From Page 3

Materials a ‘pinch point’ in race to save property Adding boulders and steel pilings along the shoreline isn’t cheap — and it’s not typically covered by homeowners insurance policies. A 100-foot-wide lakefront property can cost $35,000 for the riprap boulders and upward of $90,000 to add steel pilings behind the rock wall, said Christopher Grobbel, owner of Grobbel Environmental & Planning Associates in Lake Leelanau. “If you have 200 feet (of beach), you double it,” Grobbel said. “So it gets very expensive.” Grobbel does wetland and shoreline engineering work from Frankfort to Charlevoix and said his normal sixmonth client load for this type of work has quintupled from a dozen to 60. “I have a couple of clients in Suttons Bay and near Frankfort where literally the waves are within a few feet of their front doors,” Grobbel said. “It’s that dramatic. They’ve seen that much loss.” The demand for riprap angular boulders cut from limestone formations and manufactured steel pilings has driven up the cost of shoreline construction projects as supplies dwindle, Grobbel said. “The steel mills that we’re buying steel from are being taxed with short supplies,” Walton said. “The inventory of steel has been depleted dramatically in the last year.” If Lakes Michigan and Huron con-

tails, and the Van Elslander family could not be reached for comment. Lawyers at Detroit-based Dykema Gossett LLC and Bodman PLC, listed in bankruptcy filings as representing Gary Van Elslander, declined to offer details. Led by Gary Van Elslander, the family at one time had been in discussions to buy back the company in a stalking-horse bid in the Chapter 11 reorganization, but a deal never materialized. The Warren-based company is now facing several lawsuits, including a breach of contract complaint by a New York-based landlord, and a new class-action lawsuit filed March 23, alleging a violation of the state’s WARN notice act, which requires advance notice of mass layoffs. The complaint says 700 employees were given improper notice of layoffs and is seeking “unpaid wages, salaries, commissions, bonuses, accrued holiday pay, accrued vacation pay, pension and 401(k) contributions and other ERISA benefits, for up to 60 days, that would have

been covered and paid under the then applicable employee benefit plans had that coverage continued for that period all determined in accordance with the federal WARN Act.” Art Van Furniture issued a WARN notice March 4 when it “had in good faith projected that the employment terminations would occur on May 5, 2020 or on a date within 14 days thereafter,” according to the company. It issued a revised WARN notice March 21, stating that around 979 employees would be permanently laid off by March 22. Most corporate employees have already been terminated, but around 127 will be terminated over the next two months, it said in the filing. “Since initial notice, the Company has been impacted by the novel COVID-19 virus and the resulting, and sudden, negative economic impact. Due to these unforeseen events, the Company can no longer support the wind-down of its retail operations through the originally projected termination date,” it said.

tinue rising this spring and summer as expected, that will add more strain to the supply chain, Grobbel said. “That’s the pinch point,” he said.

sand bags on an emergency basis is allowed without a permit,” Grobbel said. “That was never the case prior.” Clark said the agency hasn’t thrown out its regulations book. But they’ve become more nimble as dunes make more dramatic shifts after big storms, sometimes leaving cottages on the verge of tumbling over Lake Michigan bluffs, she said. Clark and some professionals in the shoreline construction engineering industry are pushing back on a legislative effort to suspend the permit process during periods of high water on the Great Lakes. Vanquishing the permitting process during periods of high water could lead to myriad legal disputes between lakeshore neighbors, said Mark Hurley, director of engineering for Gosling Czubak Engineering Sciences Inc. in Traverse City. “Nothing’s standardized then, so there’s really no review process to go along with what’s my neighbor doing and how could that affect me,” Hurley said. “That would be a difficult one to get on board with.” The permit process is not nearly as challenging as the logistics of excavating alongside highly developed shorelines with limited access points for heavy equipment to navigate around landscaping and existing retaining walls, Walton said. Grobbel said suspending the permitting process during periods of high water is “a recipe for disaster.” “Stuff will get built that shouldn’t be built,” he said.

“WE’RE WORKING TO MAKE SURE WE’RE TURNING THOSE SUCKERS AROUND AS FAST AS POSSIBLE.” — Liesl Eichler Clark, EGLE Director

Permit speed Contractors are reporting faster-than-normal processing of permits from the EGLE and the U.S. Army Corps of Engineers for shoreline excavation and construction of rock-andsteel structures to protect homes and marine property. The state environmental agency is typically issuing permits within 14 days and within two days for “really critical” requests, EGLE Director Liesl Eichler Clark said. “We’re working to make sure we’re turning those suckers around as fast as possible,” Clark told Crain’s. Grobbel, who worked for the state environmental agency earlier in his career, said he’s witnessed a different approach to processing permit applications, which he handles for clients. “It used to take six months to get a permit,” Grobbel said. “They’re speeding things up dramatically.” State regulators also have been triaging at times, Clark said. “Every week I’m hearing a different tweak to the policy where now (using)

18 | CRAIN’S DETROIT BUSINESS | MARCH 30, 2020

Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood

From Page 3 “I’m afraid that businesses ... are going to get missed, and it’s going to change the overall character of what the marketplace looks like,” said Brian Calley, president of the Small Business Association of Michigan. “When it comes back, it won’t look like it did before. And the part — and we’re trying to make that not the case — that might look different is fewer small businesses. That’s job number one for us.” The good news: Small companies will have plenty of programs to tap into. Most of the new resources available to business owners can be used for typical costs of doing business, such as rent, payroll and utilities.

Statewide effort The Michigan Economic Development Corp., the state’s top business attraction and marketing agency, is in the midst of launching the Michigan Small Business Relief Program. The program has two components: a $10 million fund for loans and a $10 million fund for grants. The grants of up to $10,000 would be for companies with 50 employees or fewer; and the loans of up to $200,000 would be reserved for companies of fewer than 100 employees. The program aims to boost up 1,100 businesses, particularly “Main Street businesses” in both urban and rural areas of the state, said Josh Hundt, executive vice president of business development at the MEDC. The economic development organization plans to begin deploying funds by April 1. “What we see is this program being a tool to support 1,100 of the hardest hit companies across the state,” Hundt said.

Oakland County Leaders in Michigan’s second-largest county announced a $3 million small-business stabilization fund late last week with $1.15 million in seed funding from the MEDC. Applications for funds begin this week and will target a variety of small businesses, particularly those that have been deemed “nonessential” by Whitmer’s order and forced to close. “It’s all of those companies that have been identified in executive orders that are not part of the critical infrastructure that we’re looking to provide for,” said Sean Carlson, deputy county executive for Oakland County. Additionally, the county plans to use $700,000 of the fund “to encourage companies to shift their manufacturing capabilities to the manufacture of personal protective equipment for hospitals and health care workers such as face masks, gowns and other needed items.” Companies can apply at Oakland County’s COVID-19 website.

Wayne County The state’s most populous county has partnered with Detroit-based TCF Financial Corp. on a $6 million low-interest loan fund. Businesses can receive between $5,000 and $50,000 to be used on things such as payroll, rent and utilities. Interested companies can apply on TCF Bank’s website.

Macomb County Similar to metro Detroit’s two other major counties, Macomb County announced last week that it would part-

Calley

Torgow

ner with St. Clair Shores-based First State Bank to provide business relief to companies disrupted by COVID-19. The county will use $800,000 in MEDC grants and up to $100,000 in matching funds from the bank.

Washtenaw County A conglomeration of partners in Washtenaw County has joined forces to provide relief for small businesses. Ann Arbor Spark, the Greater Washtenaw Region Small Business Development Center, Washtenaw County Office of Community and Economic Development and the Entrepreneurship Center at Washtenaw Community College have collaborated to create the Washtenaw Small Business Resiliency Fund. The fund will provide working capital grants of up $2,500 to small businesses. Spark said it would be working with the MEDC to secure additional funding to lend support.

TechTown Detroit TechTown Detroit, a business incubator program located in the New Center neighborhood spent last week gathering about 400 applications for its Detroit Small Business Stabilization Fund. The first round of applications closed last Friday afternoon and TechTown President and CEO Ned Staebler said the organization was teeing up about $600,000 to begin sending out to small Detroit neighborhood businesses by either last Friday or as late as April 6, depending on banking issues. “We are trying to make things as seamless and easy so businesses know where to go,” Staebler told Crain’s last week.

Federal initiative The “big kahuna” for small businesses, according to Calley with SBAM, is likely to be the more than $2 trillion federal response that made its way through Congress on Friday as this report went to press. The legislation contains significant money for large businesses like airlines and automakers, but also $377 billion that would provide eight weeks of cash flow assistance and help for small-business owners to maintain their payrolls. Those who are approved and do maintain their payrolls can use that portion of their Small Business Administration loans to pay rent, mortgage and utilities and have that portion of the loan forgiven, retroactive to Feb. 15, according to a memo from the office of U.S. Sen. Marco Rubio, a proponent of the provision. Once signed into law, as is expected, the federal Small Business Administration and SBA-approved lending institutions could begin approving loans within a matter of days and have funds to small businesses within about 30 days, according to Romualdo Ancog, the Michigan district manager for the SBA. “This is pretty fast,” Ancog said on a conference call last week. Crain’s Detroit Business Senior Editor Chad Livengood contributed.

SPONSORED CONTENT

NO GREATER CURRENCY

THAN KINDNESS

WHAT A FAMILY COMPANY LOOKS LIKE IN 2020

When you think of family, and more specifically, what family means, what comes to mind? It’s probably the people in your life who care about you the most. Those who are there when you need them. Those you can laugh and cry with, sharing good times and bad. To have these people in your life is special. To find them at work is rare. A lot of companies like to advertise a family environment, but how many of them actually embody it? There is one such company in Pontiac—United Shore, a family-owned business for more than 30 years. United Shore has a culture that wraps its arms around all 5,500+ of its team members. Even as the company has experienced rapid growth, United Shore has found a way to maintain a close-knit family feel. How has United Shore done this? The company’s family-friendly atmosphere starts with how it brings new team members into the United Shore family: recruiting based on culture fit and putting things like character, positive attitude and work ethic above previous experience in the mortgage business. About 65 percent of United Shore’s new hires are referred by team members. President and CEO Mat Ishbia has said he doesn’t care what your

resume says or where you went to college. He wants to know what’s in your heart. That’s what tells him if you’re the right fit for United Shore. People with a good heart do the right thing – like holding the door for a team member or helping them clean snow off their car. But it’s the little things like this that can make a big difference, cultivating an environment where team members can feel proud of where they work and just as importantly, who they work with.

featuring car giveaways and musical acts like The Chainsmokers to a private carnival for team members and their families on its campus, United Shore is always celebrating and bringing its people together – like any family does. Beyond the bashes and carnival rides, another thing that makes United Shore a truly special place is how team members take care of each other during times of adversity. At a time when many Michiganders are losing their jobs due

“I DON’T CARE WHAT YOUR RESUME SAYS OR WHERE YOU WENT TO COLLEGE. I WANT TO KNOW WHAT’S

IN YOUR HEART.” MAT ISHBIA, PRESIDENT/CEO

United Shore has six company pillars, and it’s no coincidence that the first one is “Our People are Our Greatest Asset.” The company goes above and beyond to make sure its team members feel appreciated and taken care of. The company has a Chief People Officer and an Engagement team, which is responsible for continuously enhancing team members’ experience. From over-the-top holiday parties

to the fallout from the Coronavirus pandemic, United Shore has committed to not laying off any of its team members. There are many individual stories that reveal the strength of United Shore’s moral compass. One team member recently lost his wife and was left to pick up the pieces for his son. On top of that, his car broke down and he had to take the

bus to work. What did his fellow team members do? They came together and bought him a car. When he found out, he was understandably brought to tears. Another team member was battling breast cancer and couldn’t sleep because she had to sit upright. Within a few hours of learning this news, United Shore had a recliner sent to her home, personally delivered by another team member. There was also the team leader who spent her lunch hour teaching one of her team members how to drive. And team members across the company who “adopt” families dealing with hardships for the holidays. In all of these situations, the company and its team members show that there is no greater currency than kindness. When you surround yourself with people who want to do the right thing, kindness becomes commonplace and family bonds only grow stronger. Interested in becoming a part of this one-of-a-kind family? Learn more about United Shore and explore current job openings at unitedshore.com.

THE COVID-19 CRISIS

FUNDRAISERS

From Page 1

Fundraising events set for April and May have been canceled or tabled while the region works to rid itself of an unwanted intruder. Many nonprofits are now also canceling June events over concerns that there could still be limits on large crowds, Ragan said. Or they are “on the bubble” about events that month. But there appears to be one exception so far: golf outings. “You could have a golf outing without a lot of people gathering,” Ragan said. “Right now, courses don’t want (nonprofits) to cancel because they know if we do, we won’t be able to reschedule this season.”

A message from the publisher Nonprofits are stepping up to meet critical needs in Southeast Michigan at the same time many are reeling from the drop in planned revenue from canceled or postponed fundraising events. In response, Crain’s will host a webcast the week of April 6, talking to nonprofit leaders about new strategies. This will be promoted in advance on our website and through our weekly nonprofit newsletter and daily news reports. Crain’s is also creating a spring version of its annual fall Giving Guide for its June 8 edition. Content will include stories about such topics as the everyday heroes meeting basic human needs in this crisis and creative ways nonprofits are finding new revenue to support their missions. The guide is also a chance for nonprofits to promote themselves and for companies to promote the nonprofits they support. For information about the Guide, contact Kristin Bull, kbull@crain.com. — Mary Kramer, Group Publisher

continue to experience in the coming months.” Compounding that lost revenue is the additional loss of about $120,000 in contract service revenue paid to Living Arts to teach arts in area schools and Head Start centers that are now closed. The canceled event and contract revenue adds up to about a fifth of Living Arts’ annual budget, or $200,000. To close the funding gap, Living Arts has launched a $200,000 crowdfunding campaign. It’s designating the first $20,000 raised to help offset the loss of income its freelance teaching artists will experience through April 5 as a result of school closures, if that’s not covered by the federal

stimulus package, Novoselick said. The campaign has received some early donations and is being seeded by people who had already purchased tickets Ragan to the April fundraiser and donated their purchase to the campaign rather than receiving a refund. “We anticipate that many of the event sponsors we had lined up will also allow us to redirect their sponsorships as a donation to the campaign,” Novoselick said. MOCAD canceled its “Interchange Art + Dinner” series of ticketed, summer dinners hosted by the owners of interesting homes across the Detroit area. The series typically raises between $80,000 and $185,000 toward its $1.8 million annual budget. Events ranged from intimate gatherings for 11 to large events of 200 people. “Obviously, people are not ready to celebrate and don’t want closeness. (So) we made the decision to

The state of Michigan’s Emergency Operations Center is helping connect Michigan’s manufacturing companies with the state’s hospitals and community health departments to manage the need. The Michigan Economic Development Corp.’s Pure Michigan Business Connect platform has been used for years to connect Michigan companies to contracts at major companies like Boeing, GE and even Ford and General Motors. It’s now being used to help connect potential medical device parts manufacturers. “We’re still early in the process, but what we’ve seen is a testament to the resiliency and tireless work ethic of Michiganders,” said Josh Hundt, executive vice president and chief business development officer for the MEDC. “From Petoskey Plastics manufacturing 10,000 isolation gowns for McLaren to the work Ford, GM and FCA are doing. This is really happening in companies of all sizes and all corners of the state.” FCA said a plant in Asia would be converted to produce face masks for health care workers and quickly reach a target of 1 million masks per month. GM is coordinating with ventilator manufacturer Ventec Life Systems to aid in the production of upwards of 200,000 ventilators. GM supplier Plymouth-based Meridian Lightweight Technologies Inc. secured the production of six ventilator compressor parts made of magnesium, first reported by Crain’s on March 22. Minneapolis-based Twin City Die

Casting and Spartan Light Metal Products near St. Louis were tapped to produce those parts. GM is also considering its 2.6 million-square-foot Kokomo, Ind., factory to manufacture at least a portion of those ventilators, though debate about how many it can produce and who will pay for them is leading to delays, The New York Times reported. President Donald Trump tweeted Friday that GM wanted “top dollar” for ventilators and could only deliver 6,000 by late April. Later Friday, Trump later Friday signed an order requiring GM to produce ventilators under the Defense Production Act. GM responded to the tweet, saying 1,000 workers would follow through with making ventilators at its Kokomo and Marion, Ohio, plants as an overall goal of making the 200,000 ventilators and will begin deliveries next month. ”GM is in the position to help build more ventilators because of the remarkable performance of GM and Ventec’s global supply base,” CEO Mary Barra said in a statement. “Our joint teams have moved mountains to find real solutions to save lives and fight the pandemic.” The automaker will also produce 50,000 surgical masks per day from its Warren plant in the next two weeks with plans to potentially increase to 100,000 per day, the automaker said in a statement. Payment, however, is a critical component as auto sales dry up and balance sheets start constraining op-

Lost events Living Arts, which provides arts lessons to Detroit children, had no choice but to cancel its only major fundraiser of the year, Executive Director Alissa Novoselick said. “Framing the Future: An Evening for Living Arts” was set for April 23. The event showcases the work of Living Arts’ young artists and Living Arts’ work with them in area schools and community centers. It was forecast to bring in about $75,000, or 7-8 percent of the nonprofit’s $1 million budget. Rescheduling the event isn’t an option, she said, because it showcases work young artists perfected throughout the fall and spring. “This is the absolute worst time in the year for us to have had this happen,” Novoselick said. “An event in the second half of the year does not work within our annual instructional schedule, and it will be difficult to make up for lost time given the upheaval that our youth are currently experiencing and will likely

ARSENAL

From Page 1 The medical manufacturing also provides a stop gap for at least some of the auto industry’s labor force from being laid off. And, if and when the virus’ death grip on Michigan, its citizens and economy, many of these companies could continue to thrive in the manufacturing of medical gear, according to experts and executives.

Mobilizing the ‘Arsenal of Health’ Ford Motor Co. approached RCO early last week about making face shields, as the automaker parceled together a supply chain for respirators, masks, shields and ventilators, said Jeff Simek, general manager of RCO Engineering and RCO Aerospace. Ford picked up an open source face shield design posted online last week by Lennon Rodgers, director of the Engineering Design Innovation Lab at University of Wisconsin-Madison and sent it around to suppliers. Ford’s wholly owned subsidiary Troy Design and Manufacturing in Plymouth intended to produce 75,000 masks last week for local hospitals. RCO is directly contracting with McLaren Macomb Hospital. “We’ve been collaborating with McLaren up front,” Simek said. “We believe we have a solid product for the market. The demand is so high right now.” 20 | CRAIN’S DETROIT BUSINESS | MARCH 30, 2020

Coulter

Novoselick

Living Arts has launched a $200,000 crowdfunding campaign to offset the loss of contract service revenue from its contracts to teach arts in area schools. | JULIANNE LINDSEY

cancel,” said Executive Director Elysia Borowy-Reeder. “I don’t think we can postpone it. It really was something we would do in the summer … with summer dining.” At the same time, MOCAD is losing event rental revenue, Borowy-Reeder said. Most of the weddings and group training sessions have rescheduled. But “that becomes a cash flow issue at a certain point,” she said. To offset the revenue losses, Borowy-Reeder said MOCAD will do two exhibition seasons this year rather than three, saving $150,000 in installation costs. “We have to adjust to this whole

new reality,” she said. Upcoming shows, which include artist Peter Williams and his pieces on the African-American experience, “are amazing.” “I wanted to make sure that audiences had time to see them.”

Postponing fundraisers and programs Other nonprofits are pushing their events to the second half of the year. Forgotten Harvest’s annual comedy night is its largest single fundraiser, typically raising about $500,000 toward the organization’s $9 million

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Workers at a Magna plant in Mexico sew medical masks instead of seat covers. The supplier has shifted its global supply chain to COVID-19 response. | MAGNA INTERNATIONAL

erations. Global auto sales are forecast to plummet 14 million units, or 15 percent, in 2020 due to the outbreak, according to LMC Automotive. For context, global sales only fell 6 million units during the entire Great Recession between 2007-2009. Most suppliers stepping up don’t know who is going to pay them, but most don’t care. Macomb Township-based PTI Engineered Plastics’ business is already 65 percent medical, with over 280 customers. But it’s also exploring manufacturing airflow assemblies for GM’s ventilator program, at the invite of the automaker. “We just started making the tools (needed to make the parts), said Mark Rathbone, CEO of PTI. “Tools are scattered all over the world, mostly in China, so we’re all trying to

go from nothing. Deadlines are measured in days, not weeks anymore.” Rathbone said he doesn’t know where payment will come from if it starts producing the ventilator parts. “We don’t know yet who is going to pay what,” he said. “We don’t know if GM is going to get paid by the government or not. We’re doing things like we used to — a handshake and let’s go. Or an elbow bump and let’s go in this case.” Oakland County dedicated $700,000 of its $3 million stabilization fund to encourage companies to shift manufacturing capabilities to PPE. The auto supply sector globally is coordinating to get existing PPE to U.S. hospitals as quickly as possible. Canada’s Magna International Inc., which operates a technical center in Troy, is transitioning its three

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THE COVID-19 CRISIS

budget, said Christopher Ivey, director of marketing and communications for the nonprofit. Well-known comedian Jay Leno was to perform at the April 23 event, which was postponed. He and his team have been really great to work with, and he is looking forward to performing here, Ivey said. They’ve already provided three makeup dates for late summer or into the fall, he said, but a new date has yet to be set. Matrix Human Services postponed its annual breakfast and its “Champagne Dreams” event, geared to millennials, scheduling them for July and October. Fundraising of unrestricted dol-

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Detroit Denim pivoted from sewing denim jeans to producing protective face masks last week in response to calls from first responders and medical professionals experiencing shortages. | BRENNA LANE

automotive seat sewing plants in Mexico to produce cotton masks that can extend the life of critical N95 masks. The supplier is also pro-

lars helps fill the administrative gaps that federal and grant funding don’t cover, President and CEO Brad Coulter said. “The shutdown and the associated economic uncertainty have made it difficult to solicit new donors and corporate partners because of events being postponed to the second half of 2020,” Coulter said. “We are asking our existing sponsors and individual donors to consider maintaining their level of support for when these events take place.” Sponsors have not indicated they are pulling out of Matrix fundraisers as of now, said Kerrie Mitchell, vice president of marketing and development. “Many have asked whether we are OK and how they can help. United Way, Ford Fund, Chemical Bank, Fifth Third and Kerr Russell have all been in constant communication with me.” The difficulty, Mitchell said, lies with attracting new donors and corporate sponsorships. “Normally, we would be using this time to find new money to introduce to Matrix Human Services and the work that we do.” Collectively, Matrix events generate about $600,000 annually toward its $40 million budget, Coulter said. During the shutdown, the nonprofit continues to provide a long list of services, from lesson plans for children age birth to 5 years and virtual learning experiences for youth and teenagers to credit counseling and support for clients, workforce development, free rides for seniors, food distributions and behavior health services to clients living with HIV. “What nonprofits really need is unrestricted grant funding from the philanthropic foundations to help cover for the possible loss in fundraising revenue,” he said, and reducing 51,000 per day of these masks for Europe at five plants there and plans to reach 51,000 per day for the North American market out of its Mexico plants in the few weeks, said Jim Tobin, executive vice president of marketing and president of Magna Asia. “Every day we’re comparing notes with the car companies and are on the phone with Business Leaders for Michigan, Congresswoman (Elissa) Slotkin and Gov. Whitmer’s office,” Tobin said. “All we’re thinking about is how we can increase the supply to the medical community.” Magna is delivering 510,000 K95 masks, a similar respirator mask than the N95, from its Asia operations this week. Whitmer’s office said the state needs 400,000 daily for the next several weeks. As many of its workers are forced to work from home, they are being asked to sew cotton mask covers designed by Ashley Harris, a product engineer in Magna’s trim division and 2019 Hour Detroit Dressmaker of the Year. “It’s not that different from what we do at Magna every day,” Harris said. “We figure out the shape and fit the foam the seat. Here we’re figuring out how to fix the N95 masks. It’s just creating a pattern and figuring out a sewing sequence.” Magna sent Harris’ design and video tutorial to employees with a call to action. Harris alone is sewing 40 mask covers a day, Tobin said.

laxed restrictions on current foundation and federal government grants.

Getting creative Rising need for things like food and shelter is vying for donors’ attention, Ragan said. But he doesn’t believe nonprofits should distance themselves from donors because of it. “Organizations have to double down on staying in touch with their donors. ... they want to know how this is impacting you and how you are responding.” He’s also advising nonprofits to “get creative” through virtual fundraisers, crowdfunding, direct outreach to donors and other approaches. A few are already doing those things: ` Crowdfunding efforts are beginning to pop to benefit nonprofits like Living Arts and Lighthouse. ` Brighton-based Make-A-Wish Michigan had a fundraising walk scheduled for May 2. Now it’s a virtual walk. ` Alternatives for Girls is hosting a Virtual Role Model Recognition Event and Auction weekend April 23-26, with its 2020 Role Model honorees: Laura Chavez-Wazeerud-Din, branch manager for Flagstar Bank in Downtown Detroit; Denise Ilitch, president, Ilitch Enterprises LLC; and Palencia Mobley, deputy director and chief engineer at Detroit Water and Sewerage Department. “A lot of people are talking about virtual fundraisers, but surprisingly, I haven’t seen a lot announced yet,” Ragan said. “My assumption is that at least right now, for these first few weeks, people are still figuring out how to adjust to the new normal.” Contact: swelch@crain.com; (313) 446-1694; @SherriWelch

Medical device diversification? The transition to medical devices has been a salve to the ongoing employment bloodletting. Between March 15-21, nearly 3.3 million Americans filed for unemployment, quadruple the previous record. More than 128,000 Michiganders filed unemployment that week with filings expected to have climbed far further last week. Whitmer’s three-week stay-athome period for nonessential businesses to mitigate spread of the coronavirus prompted some Michigan businesses to enter the medical field to become essential. The Ironwood cut-and-sew manufacturer Ironwood-based Jacquart Fabric Products pivoted from sewing its iconic Stormy Kromer wool caps to face masks and hospital gowns. That put one-third of Jacquart Fabric Products’ 100-employee workforce back to work midweek after the governor’s shutdown order, which labeled clothing manufacturers non-essential during the pandemic. “Unfortunately, Stormy Kromer hats would be considered nonessential,” said Gina Thorsen, president of the Stormy Kromer division of her family’s business. PTI laid off 52 employees, or 22 percent of its workforce, last week, primarily those in its automotive and consumer electronics division, but would have laid off more without the

EVERYDAY HEROES

From a desk job to the front lines BY CRAIN'S DETROIT BUSINESS

Heroes take many shapes. And in the crisis caused by the coronavirus, they are everywhere, in ways big and small. We want to introduce you to some of them in the coming weeks. Our first is someone steeped in the arcane rules of medical compliance, deep in the weeds of billing codes and Medicare regulations, making sure all the details check out as an auditor for Henry Ford Health System. Now, he’s doing a different kind of compliance. Jacob Sierocki, 26, is now wearing a mask and gloves and bearing a thermometer at an entrance of Henry Ford Hospital, making sure patients who need treatment get into the hospital and keeping them safe by screening out those with fevers, coughs or other symptoms. He also has to enforce the strict visitor rules that hospitals everywhere have enacted to help stem the spread of the virus. How did he wind up going from his desk to the front lines? He raised his hand. On Monday, March 16, a coworker asked him a question. “I was asked, ‘Hey we need some help. Would you be interested in working at the door?” he said. “Of course I said yes,” he says, as if it were the perfectly obvious answer to a question many of us would think twice about. Sierocki, who previously worked in a coordinating role in an emergency medical device work, Rathbone said. “We are, as we speak, bringing some of them back,” Rathbone said. PTI is also working with a customer that is fast-tracked by the FDA to produce COVID-19 test kits that produce results in minutes. RCO also laid off workers. “We are an essential services provider in aerospace, defense and energy,” Simek said. “But the business was going down, absolutely. But we came up with a plan B. Employing folks is critical for us.” Plan B may become part of the region’s diversification efforts if and when the ramifications from the deadly virus subside, said Hundt. “At the MEDC and across state government, we’re looking down the line at what we need to help Michigan come back stronger from this and to lead the nation out of this unprecedented crisis,” Hundt said. “We are enabling more medical devices through our engineering, and more specifically, our manufacturing prowess. This unprecedented situation can absolutely help lead our companies to future opportunities.” Simek said RCO plans to stay in the sector and that he expects many other automotive companies to join him as the industry faces continued disruption from autonomous vehicle and electrification progress. “The electric vehicle requires at lot fewer parts than a combustion-engine vehicle,” Simek said. “Any making castings, forgings or exhaust systems

room at a Saginaw hospital, sees the risk as just part of working in health care — even if he is normally far from patients. In the process, he’s been exSierocki posed to several patients with the coronavirus — with protective gear. But he’s seen much more than that. Patients and families come and go continually in any hospital, and those rhythms continue regardless of whether there is a pandemic on. Working the door, Sierocki has gotten to be part of celebrations when patients finish their treatments, and taken on the hard role of gatekeeper, telling families that they can’t visit their loved ones because of the need to keep other people in the hospital safe from potential infection. Sierocki is hardly unique, and he knows it. He doesn’t consider himself a hero and doesn’t want people to think he’s special. He simply saw overwhelmed doctors and nurses and other clinical staff, and filled a need. But he is is emblematic of thousands of workers in the sprawling health care industry who are doing very different work than they were even a month ago. All have vital roles to play. We’ll see many, many people raising their hands to fill needs in the coming weeks. And it’s that kind of teamwork that will beat this disease. is ultimately going to need something else to do in the next 10 years. They need to diversity and I suspect many will pick up on medical.” Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research in Ann Arbor, predicts governments will offer domestic incentives to build up medical supply stockpiles when the nation recovers from the outbreak. “I think it’s only a short-term surge that’ll maybe last a few years,” Dziczek said. “The policy levers will turn to incentivize this sort of production, but I don’t think it’ll be around 10 years from now. So there’s an opportunity to stay in, but it’s probably limited.” Simek isn’t so sure it’ll be short term as the auto industry may have the ability to outcompete the traditional medical supply sector. “Nowhere else does this type of horsepower exist than in Michigan and Detroit,” he said. “Right now, we have all these engineers navigating the path through FDA regulations and commercialization. They are quickly learning what it takes to get these devices to market. I don’t see them stopping. The war on COVID-19 may boost Southeast Michigan’s medical cluster just like World War II did for manufacturing back then.” Crain’s Senior Editor Chad Livengood contributed to this report. Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh MARCH 30, 2020 | CRAIN’S DETROIT BUSINESS | 21

THE CONVERSATION

ER doctor Robert Takla has never seen anything like coronavirus

crainsdetroit.com

St. John Hospital and Medical Center: Robert Takla, chief of emergency medicine at St. John in Detroit, works every day on the front lines of the COVID-19 pandemic with fellow ER doctors, nurses and support health care workers. Over the past two weeks, he has seen a growing number of people enter the ER with respiratory symptoms and those with coronavirus requiring ventilators and extreme measures to stay alive. He is alarmed by all sickness and injury, but the increasing number of younger people dismays him, as many have no underlying chronic disease. As fellow doctors and health care workers become sick or tired, he has called out for volunteers from outside the ER and is heartened that so many have stepped up and put their own lives and bodies on the line to help stem the tide. He spoke with Crain’s on March 26. | BY JAY GREENE ` Why did you choose to be an ER doctor? I’m not sure that I chose ER, or ER chose me. I really think it’s personalities more than anything else. We’re a little bit adrenaline junkies. We want to be on the front line, like in a battlefield, and try to take chaos and create a symphony out of it. That’s always appealed to me. ` Where are you from and where did you train? I was born and raised in Michigan. I graduated from the University of Michigan. After spending a year at the University of California in San Francisco doing research, I returned to Ann Arbor for medical school, followed by residency in emergency medicine at Detroit Receiving Hospital. I joined the staff at St. John Hospital in 1996. ` What has it been like at the hospital since the COVID outbreak began in late January? To be very honest, we are taking our current level of preparedness and ramping it up. We have constant changes in guidance from the CDC (Centers for Disease Control and Prevention) and the state (Department of Health and Human Services). In short, it’s kind of like trying to take a sip of water from a fire hose. ` What has been the patient condition mix and sickness level since early March? What has happened recently is a significant increase and surge in patients that are presenting needing to be on a ventilator. Everything is evolving very quickly. ... People are starting to get the message. If you aren’t sick, don’t come. ... We have had really, really sick people come in. For their own safety, so that they’re not in an area that’s highly contagious and

infectious, we are keeping them away from others in the emergency centers so that we can focus our attention on people who need the most help. ` You’ve been a practicing doctor for 24 years. You’ve dealt with SARS and Ebola, and you regularly deal with seasonal flu. Have you ever in your career experienced anything like this? Not of this magnitude. I don’t have anything to compare this with, nor would I have ever imagined that we would be dealing with something like this. ` How is this different? My take is it is more contagious than regular flu. We’re seeing younger people have more high acuity. It’s my own personal experience. Certainly the older patients with comorbidities like COPD, diabetes, we are seeing those vulnerable. But we’re also seeing a decent percentage of patients that are younger (ages 20-40) and once in good health that are requiring life support and being put on a ventilator. That honestly is the more scary part. ` How are the younger people presenting? We are seeing 30- and 40-year-old people needing resuscitative efforts and being put on a ventilator. There’s no doubt about that. No age group is completely immune. ` Are you running low on personal protective equipment (PPE)? We are trying to preserve ours and balance it out. We are low in supplies and are worried that we’re going to run out. They are on back order, but we need more. ` Health care workers are being exposed to COVID at a much higher

rate (50 percent) than other professions. How risky is it? We are all concerned, but we all have chosen this profession and taken an oath to take care of our patients. In times of adversity, your character is revealed, or exposed. I am very proud of my people. Are we scared? Of course we are scared. We are proud to do this. We need more PPEs. We need donations. Our biggest concern is we continue to have enough health care providers who are healthy to do the job. ` Some people say hospitals and the public health care system was unprepared for coronavirus, even with early warning signs in December from Wuhan, China. Were hospitals here prepared? The answer is yes and no. We’re prepared and we’re becoming more and more prepared. I don’t think anyone ever anticipated a pandemic of this proportion. A speedboat turns a lot faster than a battleship. Our ability to be constantly prepared and be able to mitigate or minimize, really contain these things is critical. Everyone talks about the curve and the peak of the curve. We needed to contain this thing sooner to minimize the spread. We will get out of it. One good thing that will come out of this is people will practice better hygiene habits, social distancing, when they’re ill.

strongest of the species that survives; it’s the ones who are best able to adapt to change who survives.” That is what an ER physician does. We adapt to the changing and challenging situations, constantly.

Robert Takla, M.D., chief of emergency medicine at St. John Hospital and Medical Center

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` Final thoughts? I have a quote that often is attributed to Darwin, but it’s probably from someone else. “It’s not the

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RUMBLINGS

Livestream music festival aims to help artists A LOCAL MARKETING FIRM run by a music-loving couple is staging virtual concerts to help artists around the world who are out of work because of the coronavirus. Thomas and Lindsey Rudy, co-owners of Detroit-based Ten Twenty Seven LLC, plan to host a livestreamed concert through their website Audio Assemble, which provides product recommendations and resources for aspiring artists. As the coronavirus became a life-altering pandemic, the couple saw the impact it was having on musicians. On March 19, they published a resource guide for struggling artists on their site. Before long, many of the relief funds referenced in the guide were overwhelmed with donations.

Lindsey and Thomas Rudy

“It was kind of making us feel that, wow, we have the people in-house to get this thing out there and give people something to look forward to,” Lindsey said. So, they announced they would set up their own livestreamed show, scheduled for April 8-10 and aimed at raising funds for participating artists. By March 23, the concert page on Au-

22 | CRAIN’S DETROIT BUSINESS | MARCH 30, 2020

dio Assemble went live. Within a few days, more than 450 artists from around the country, and from the Philippines to Germany, applied to perform. “We decided it would be a pretty good idea to provide our own relief fund but do it in a way where musicians are also actively using their talents instead of just asking for funds,” Thomas said. (Disclosure: Thomas Rudy is the son of Lisa Rudy, associate publisher of Crain’s Detroit Business, who had no role in this story.) The couple expects close to 1,000 applications by the time they close March 30. They have the capacity to host 12 artists. The couple, along with a few other

employees dedicated to Audio Assemble, set up a system to whittle down applicants. Applicants are judged on talent, live performance chops, social media reach and need. Then, the team went to work developing a system to raise funds. The company started a GoFundMe campaign and kicked in an initial $3,000 with a goal of raising $7,500. Each performing artist will receive $200 for their 20-30-minute sets. They can collect more money depending on how many votes they receive. “Our goal right now is to try to get each artist up to $600, so essentially a week’s pay for most live performing artists,” Lindsey said, adding that all the funds will go to musicians.

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 third week 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.

THANK YOU T

o everyone at the frontlines of the pandemic, from health care employees to food services, words cannot begin to express our gratitude.

You selflessly take care of others, putting their needs ahead of your own. In times like these, your strength and resiliency are an inspiration to all.

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