Crain's Detroit Business, April 6, 2020 issue by Crain's Detroit Business

CRAIN’S MICHIGAN BUSINESS: THE FOOD ECONOMY

The Zingerman’s effect: How a small Jewish deli launched a unique network of food entrepreneurs PAGE 8

CRAINSDETROIT.COM I APRIL 6, 2020

COPING WITH COVID-19

NOT REMOTELY EASY DO’S AND DON’TS OF WORKING FROM HOME For many of you, the social distancing forced by the coronavirus emergency means it’s the first time you’ll be working at home for an extended period. Here are some tips to ease that transition. Start and end your day with a routine: Getting dressed, eating breakfast or taking a brisk walk before diving in can help you focus. An after-work routine (think coffee or glass of wine, or another walk outside) is a critical signal that the workday is over and homelife begins. Maintain a dedicated workspace: Establish a tangible boundary to maintain the separation between work time and home time, and so that you don’t waste energy getting physically set up every day. Use a VPN: Some employers have their own VPNs for remote use, but if yours doesn’t, VPN software is readily available and a good security precaution for both work and personal data.

Minimize online time: While social media is a great way to keep tabs on friends, family and colleagues, remember to carve out a small period to deliberately disconnect. Close the laptop. Turn off the phone. Studies show too much social media is bad for mental health, after all. Manage expectations: Understand that there will be a learning curve with new communication tools, virtual meetings, rethinking paths to access to information and the like. Be clear about what can be accomplished from home. Overcommunication is key. Finally, be candid about what works, what doesn’t and what you need to get the job done.

Learn teleconferencing etiquette: The mute button is your friend, especially in a house full of kids, a partner also working from home or noisy pets. Don’t fear the webcam; videoconferencing can offer visual clues as to how ideas are accepted, but do make sure there’s nothing in your camera’s view that you wouldn’t want to share with a colleague or customer.

NEWSPAPER

BY CHAD LIVENGOOD

The closure of public and private school buildings through June for 1.61 million Michigan schoolchildren will likely wreak continued havoc on workplaces and productivity as parents will be doing double duty as someone’s employee and their child’s teacher. And that’s only if they can perform their job remotely from home. The deadly coronavirus pandemic that’s forced Michigan workers with nonessential jobs like selling mort-

gages for Quicken Loans Inc. or doing accounting work for Little Caesars Pizza has upended the traditional corporate headquarters work setting. The specter of manufacturing employees being unable to return to work in May or June because of a lack of child care will make resuming production “a little more difficult,” said John Walsh, president and CEO of the Michigan Manufacturers Association. See SCHOOLS on Page 16

Pandemic leads to new moment for remote work Working from home goes mainstream BY NICK MANES

Call it the “Great Experiment.” For many burgeoning industries, especially in the startup technology space, work from home is nothing new. Employees text “WFH” to their boss and go about their day, working in pajamas and taking necessary meetings by conference call. But for many traditional companies, work from home ranges from the occasional exception to never allowed. Until now. The onset of coronavirus and the social distancing requirements that come with it have led companies to scatter their large workforces all

Take breaks; allow for personal time: Set an alarm or timer to remind you that it’s time to get up, stretch, grab a coffee, leave the house or head to the kitchen. Your eyes and your brain need those short moments away. If your job responsibilities allow, turn email notifications off overnight. Maintain relationships: At the office, you’d take a few minutes here or there to chat with your coworkers. Keep that going via social media, Slack or some other means of staying in touch.

With Michigan schools out, businesses grapple with productivity woes

DAVID KORDALSKI/CRAIN’S DETROIT BUSINESS

Show us your work-at-home space Does your new working-from-home reality mean a dedicated home office or just a laptop, your cat and your couch? Whatever it is, we want to see it. Please email photos of your setup, your name and a few words about your job and how remote work is working out to bvalone@crain.com. We’ll share the best in an upcoming feature.

around the region in recent weeks. With that change comes new challenges — from installing proprietary technology in people’s homes to maintaining long-developed corporate cultures to ramping up employee engagement initiatives at a time of great stress for all. Take, for instance, Pontiac-based mortgage loan-originator United Shore Financial Services LLC. Known for its sprawling headquarters on two sides of South Boulevard, the company now has two buildings soon to be conjoined by a 1,000-foot pedestrian bridge connecting the facilities. See REMOTE on Page 16

Organ transplants slow as COVID-19 heats up BY JAY GREENE

Patients, one by one, are getting calls from transplant center hospitals in Michigan and elsewhere telling them their organ transplants have been delayed, essentially called off except for life-threatening emergencies during the coronavirus crisis. The reasons are varied, but mostly, doctors say, it is to protect patients who are at a higher risk of infection from contracting the virus. Other rea-

sons include fewer live organ donations, shortages of blood, plasma, staff, supplies and equipment, including mechanical ventilators. Even before COVID-19 began infecting people in the U.S. in February, transplants of kidneys, liver, lung and heart, bone marrow and stem cells could easily get derailed. A donor backs off. A recipient is too ill. Or the body rejects the organ. See TRANSPLANTS on Page 15

NEED TO KNOW

POLITICS

THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT ` WHITMER DECLARES CORONAVIRUS A DISASTER THE NEWS: Gov. Gretchen Whitmer issued a “state of disaster” declaration on Wednesday, citing “widespread and severe” harm the pandemic has wreaked on Michigan’s population, economy and society. Whitmer’s order extends a state of emergency order by 70 days, underscoring the comments of public health experts that the coronavirus outbreak may last longer than state officials originally anticipated. On Thursday, Whitmer canceled the remainder of the school year for 1.61 million Michigan children, warning at the announcement that the peak of the outbreak could still be a month away. WHY IT MATTERS: The extension would grant Whitmer the power to enforce additional executive orders restricting economic activity, such as her March 23 stay-at-home order for nonessential workers. But Whitmer faces push-back in the Legislature. Senate Majority Leader Mike Shirkey said Wednesday he supports granting Whitmer extended emergency powers, but “a 70-day extension is too long,” and resisted a lengthy extension of the current stay-at-home order in particular. Several hundreds of Michigan residents had died from COVID-19 as of Friday and more than 300,000 filed unemployment claims March 21-28.

emerged as a COVID-19 hotspot, with over 3,500 confirmed positive cases and 116 deaths as of Friday, according to data provided by the city.

` DTE SUBMITS REVISED ENERGY PLAN

` HENRY FORD HEALTH TO LEAD CORONAVIRUS DRUG STUDY THE NEWS: Henry Ford Health System announced Thursday that it planned to launch what it calls the first largescale study in the country of a drug’s ability to prevent COVID-19. The study, of the drug hydroxychloroquine, is taking 3,000 volunteers who must be health care industry employees or first responders such as police officers or firefighters. WHY IT MATTERS: There are no FDA-approved drugs to prevent or treat COVID-19 as of now. Hydroxychloroquine is approved to treat malaria, as well as lupus and rheumatoid arthritis and has been in use for 75 years. The study comes as Detroit has

THE NEWS: DTE Energy Co. in Detroit has filed a revised energy plan that accepts all recommendations issued by the Michigan Public Service Commission to increase renewable energy production, create more solar power resources, and boost energy waste reduction goals. The revised plan increases DTE’s energy savings goals to 1.75 percent in 2020 and 2 percent in 2021, and brings the company’s waste reduction goals to 1.65 percent in 2020 and 1.75 percent in 2021. WHY IT MATTERS: DTE’s integrated resource plan will inform how the utility will meet electricity demand in its service area for the long-term, up to 15 years. The plan also must include evaluations of energy waste reduction, supply sufficiency, demand response and the impact of state and federal environmental regulations. On Feb. 20, the MPSC rejected DTE’s proposed IRP as submitted and recommended significant changes that addressed a lack of competitive bidding for such renewable energy projects as wind and solar and insufficient reasons to keep open one of its largest coal-fired power plants.

Biden says Whitmer is on his VP shortlist ` In an interview Tuesday night on MSNBC, Democratic presidential candidate Joe Biden said Gov. Gretchen Whitmer “made the list in my mind two months ago” as a potential running mate. Whitmer has repeatedly said she will not run with Biden, but as the woman governor of a must-win Midwest state that Donald Trump barely won by 10,704 votes in 2016, the variables line up in her favor.

Michigan Gov. Gretchen Whitmer joins former Vice President Joe Biden at his campaign rally in Detroit on March 8, along with U.S. Sen. Kamala Harris and U.S. Sen. Cory Booker. | ERIN KIRKLAND/BLOOMBERG

` MEDC OFFERS GRANTS TO MAKE HEALTH PRODUCTS THE NEWS: The Michigan Economic Development Corp. will use $1 million to offer grants to small Michigan manufacturers looking to retool in an effort to begin producing health and human service supplies critical to the fight against COVID-19, the agency announced Tuesday. WHY IT MATTERS: An increasing number

of manufacturers from around the state have been pivoting toward producing various medical supplies in an effort to help the cause and keep people working. The grants of between $10,000 and $150,000 will support the purchase of equipment, logistics and shipping costs, technology upgrades and other costs related to getting new product lines operational, and can be used to manufacture a wide range of needed products such as medical masks, face shields and ventilators.

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INFRASTRUCTURE

CANNABIS

Michigan one of few to deem construction nonessential BY KIRK PINHO

CEO Ankur Rungta checks cannabis plants almost ready for harvest at C3 Industries LLC’s cannabis grow operation in Webberville. | DALE G. YOUNG FOR CRAIN’S DETROIT BUSINESS

FIVE-STAR FLOWER

C3 Industries looks at quality over quantity in competitive market BY DUSTIN WALSH

To prevent the unintentional spread of infectious agents and toxins, employees must shower in and shower out, don prophylactic equipment and walk through a disinfectant foot bath before entering the facility. This is biosecurity in the age of COVID-19, but this is no health care laboratory. The standard protocol at C3 Industries LLC in Webberville is part of how the cannabis company is trying to differentiate itself from its competitors by upscaling the horticulture process. “We’re all about cleanliness, genetics and skill,” said Ankur Rungta, co-founder and CEO of the Ann

Arbor-based company. “There’s a reason you haven’t seen the inside of other facilities in Michigan, because it doesn’t look like this. There are volume players, but we’re in the quality category. The quality of the flower is something we’re most passionate about.” The Ann Arbor-based company invested millions to open its 35,000-square-foot marijuana grow operation last year. Workers inside the unmarked building in a nondescript industrial park in Webberville meticulously care for 4,500 cannabis plants. It began supplying its own retail store, High Profile in Ann Arbor, in early March and others around the state under the brand Cloud Cover about five

months after it began operating its grow operation.

Birthing a business C3’s Webberville grow operation is a labyrinth of bland, sterile halls and doors. Behind each one, a different stage of marijuana cultivation. In the mothering room, hundreds of cannabis plants of 70 varying strains serve as the sun that powers the whole organization, which itself is controlled from a master system that controls each individual rooms’ lighting, humidity, temperature and water for the plants. See CANNABIS on Page 18

Cannabis flowers are cleaned by hand at C3 Industries LLC. | DALE G. YOUNG FOR CRAIN’S DETROIT BUSINESS

Not one state Michigan shares a border with has halted its commercial construction even as coronavirus continues its devastation throughout the country. Yet Michigan, with a few exceptions, has. According to information compiled by ConstructConnect, Wisconsin, Illinois, Indiana and Ohio all list construction as an essential service within their borders that is allowed to continue as governors across the country enact stay-at-home and other measures to halt the spread of COVID-19. In fact, Michigan is just one of four states — along with others hard-hit like New York, Pennsylvania and Washington — across the country that deems construction as nonessential, thereby limiting the construction that can take place during mandatory shelter-in-place orders that are preventing people from going to work, says ConstructConnect, a Cincinnati-based firm that tracks construction-industry trends. All eight — Michigan, Ohio, Indiana, Illinois, Wisconsin, New York, Pennsylvania and Washington — have statewide stay-at-home orders, according to information compiled by the New York Times. The four bordering states don’t have the numbers of infections Michigan does, however, with the Great Lakes State’s infection rate per 100,000 residents being vastly higher than its neighbors. According to a CNN tally late last week, Illinois has 7,697 cases (61 per 100,000 residents); Indiana has 3,038 (45 per 100,000 residents); Ohio has 2,902 (25 per 100,000 residents); and Wisconsin has 1,748 (30 per 100,000 residents). Michigan, by contrast, had 10,791 cases, or 108 per 100,000 residents — 77 percent more than its next-highest neighbor, Indiana. See CONSTRUCTION on Page 18

EVERYDAY HEROES

Downtown Boxing Gym jabs back against coronavirus BY KURT NAGL

When the coronavirus outbreak blind-sided businesses and residents in Detroit, one nonprofit came out swinging. Downtown Boxing Gym has approached the pandemic as an opportunity to help other community service providers and practice a lesson it has taught students since forming in 2007. “This is part of our day-to-day regimen,” founder Khali Sweeney said. “We talk about this type of stuff every single day — community service. There’s 700,000 people in this city and you know we can’t serve 700,000 by

ourselves, so we’ve got to help each other. It’s a no-brainer.” The nonprofit — dedicated to helping youth in need — is diverting its resources, including 11 full-time staffers and eight vans, to food distribution to students in its programs and other nonprofits in the community, executive director Jessica Hauser said. For the time being, its east side base is empty of the 150 or so students who regularly gather for lessons that run life’s gamut, from health and exercise to empathy and education. Instead, it is being converted into a food and supplies distribution center to aid a vulnerable community in the throes of crisis.

“Everybody is working even harder than normal to try and create a sense of normalcy,” Hauser said. The Downtown Boxing Gym is no stranger to the spotlight. Its unique program has earned it much praise in nonprofit circles as well as attention from local and national media. In 2017, Sweeney was included in the Top 10 CNN Heroes list. While a couple of dozen part-time workers have been idled, a core group of employees is carrying on the mission. The students still check in daily via Zoom software for workouts and huddles, and regardless of what’s happening in their regular classrooms, the nonprofit is still as-

signing homework. As that happens, drivers are busy transporting food, health and hygiene supplies to families affiliated with the nonprofit. As part of the regular program, kids would receive a hot dinner every day. Once schools closed and companies closed their doors, the need became much greater. “So, when this transpired, we needed to make sure now the entire family has a meal and cleaning supplies and personal hygiene supplies,” Hauser said. “We immediately came up with a plan to drop off boxes to families once a week, and it will be food for a week.” See GYM on Page 16

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LinkedInâ&#x20AC;&#x2122;s Detroit office started operations in 2017 in WeWorkâ&#x20AC;&#x2122;s co-working space at 1001 Woodward Ave. The coronavirus pandemic may tip offices to use more space in the future. | CRYSTAL BRASWELL

Post-pandemic, will more office space be the future of workplaces? The coronavirus pandemic may play a role in reversing a decades-long trend of tighter office space usage. For years, companies have Kirk been cramming PINHO more employees into smaller spaces as changing work habits â&#x20AC;&#x201D; remember when WFH was accepted rather than mandated? â&#x20AC;&#x201D; and corporate philosophies have spread their tentacles into the commercial real estate sphere. Shared desks, fewer walls, more collaborative environments â&#x20AC;&#x201D; all are part of the modern office space design ethos but werenâ&#x20AC;&#x2122;t nearly as common a few decades ago. â&#x20AC;&#x153;Where this goes from here, I think weâ&#x20AC;&#x2122;re going to see setups that have increased physical distancing,â&#x20AC;? said Howard Davis of Farmington Hills-based Davis & Davis Interior Design. â&#x20AC;&#x153;I think itâ&#x20AC;&#x2122;s also going to trigger a big shift that really accelerates more people working remotely. We have many companies in the past two weeks that have successfully transitioned to remote work that have never tried it completely throughout their teams and have found it to be successful. I can even say that with our company.â&#x20AC;? That could have an impact on office landlords, but thatâ&#x20AC;&#x2122;s a discussion for another time (and brokers certainly have differing thoughts). Don Ricker, senior associate and strategy director in the Detroit office of international architecture and planning firm Gensler, predicts office space density will decrease as a result of the COVID-19 outbreak. â&#x20AC;&#x153;We saw per-person density reduce from about 275 square feet a decade ago to 180 square feet five years ago to many in the 115-150 range today,â&#x20AC;? Ricker said. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s very possible that this will kick off an evolution back in the other direction to some extent. The pendulum

will continue to swing back and forth, continuously rebalancing with the needs and expectations of the workforce.â&#x20AC;? Real estate brokers are being cautious in their predictions. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s too early to speculate on whatâ&#x20AC;&#x2122;s going to happen,â&#x20AC;? said Sam Munaco, a longtime Detroit commercial real estate broker focused on office tenant representation. He is president of Southfield-based brokerage firm Advocate Commercial Real Estate Advisors of Michi-

â&#x20AC;&#x153;I DO THINK THIS IS A PIVOTAL MOMENT FOR REAL ESTATE AND, DECADES FORWARD, WEâ&#x20AC;&#x2122;LL TALK ABOUT THIS SITUATION AND THE IMPACT THAT IT HAD ON HOW PEOPLE VIEW SPACE NEEDS AND HOW THEY OCCUPY AND UTILIZE SPACE, EVEN MORE DRAMATICALLY THAN ANY SCENARIO BEFORE.â&#x20AC;? â&#x20AC;&#x201D; AJ Weiner, managing director, Royal Oak office, JLL

gan LLC. â&#x20AC;&#x153;I think weâ&#x20AC;&#x2122;re on this what I call short-term euphoria,â&#x20AC;? Munaco said last week. â&#x20AC;&#x153;Hey, itâ&#x20AC;&#x2122;s convenient, itâ&#x20AC;&#x2122;s cost effective. Weâ&#x20AC;&#x2122;re using Zoom, Microsoft Teams, we can get a lot of stuff done at home. We got the convenience and we donâ&#x20AC;&#x2122;t have to drive to work and all that. Thatâ&#x20AC;&#x2122;s what Iâ&#x20AC;&#x2122;ve been hearing for the first week or two, that short-term euphoria. â&#x20AC;&#x153;But itâ&#x20AC;&#x2122;s starting to wane. I think people are getting frustrated with this. However wonderful technology is, itâ&#x20AC;&#x2122;s not perfect. I got some employees that are so antsy to get back into work.â&#x20AC;? The Wall Street Journal reported

a couple of weeks ago on companies realizing that tighter office confines and fewer barriers between employees create environments conducive to the spread of coronavirus. For contrast, as the 2018-19 JLL Occupancy Benchmarking Guide says: â&#x20AC;&#x153;Workplace planning was easier when knowledge workers spent most of their day at their own desk doing heads-down work, and headed to a conference room for a meeting or two.â&#x20AC;? The report continues: â&#x20AC;&#x153;Today, however, the average knowledge worker is at their desk only 40 percent of the time, according to the Gartner Group; and Intuit research indicates 80 percent of all work is collaborative. More people are also working elsewhere â&#x20AC;&#x201D; at home, cafes, coworking spaces and even decked out lounges within their own workplace.â&#x20AC;? The report says that 72 percent of corporate respondents to a survey say that their density is in the 150 to 225 square feet per employee range. Thatâ&#x20AC;&#x2122;s far less than 10 years ago. â&#x20AC;&#x153;I do think this is a pivotal moment for real estate and, decades forward, weâ&#x20AC;&#x2122;ll talk about this situation and the impact that it had on how people view space needs and how they occupy and utilize space, even more dramatically than any scenario before,â&#x20AC;? said AJ Weiner, managing director in the Royal Oak office of JLL, a Chicago-based brokerage house. He said he foresees the situation prompting companies to create â&#x20AC;&#x153;more welcoming environments for employees.â&#x20AC;? â&#x20AC;&#x153;They donâ&#x20AC;&#x2122;t want to feel like they have to be locked up in their homes. Is that the most productive way to run a company? I think that has real merit to it, as opposed to the idea of saying just everyone can work from home now, so we donâ&#x20AC;&#x2122;t need space anymore. I just donâ&#x20AC;&#x2122;t think thatâ&#x20AC;&#x2122;s reality.â&#x20AC;? Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

NONPROFITS

Impact Detroit Sewn hired nine employees last week to help fill orders for 300,000 face masks for health care customers and area nonprofits, many of which work with clients on a face-to-face basis and are seeking extra protection from the coronavirus. | DETROIT SEWN

Metro Detroit nonprofits that serve face-to-face work to get more masks BY SHERRI WELCH

Hundreds of area nonprofits and other organizations work closely with the people they serve, and like health care employees, they don’t have enough gear to protect against the coronavirus. The Skillman Foundation is working to secure more than 10,000 masks for nonprofits and others providing emergency and basic needs assistance without them, said Skillman President and CEO Tonya Allen. The list includes shelters that house the homeless in group settings, food providers for seniors and children, early child care centers and schools. Volunteers are also shying away from raising their hands amid concerns about coming in contact with people who might carry the virus. “We all know there are heroic people working in our hospitals, but we also know there are heroic people working outside our hospitals,” including nonprofits, Allen said. “They are doing essential work, serving the most vulnerable, and unfortunately, they are not as highly prioritized in terms of (personal protection equipment) ... it’s an ethical challenge,” she said. Skillman is working to ensure nonhealth care providers “are safe and that we protect them, as well,” she said. The Detroit-based foundation has made a $38,000 grant to nonprofit fiscal sponsor G1 Impact which, in turn, is purchasing the masks through Pontiac-based Detroit Sewn and the subcontractor supply chain it has put in place. Its initial order for 10,000 masks yielded roughly 100 masks last week, which Skillman immediately split between the Coalition on Temporary Shelter and Gleaners Community Food Bank for Southeastern Michigan. “But so many nonprofits need masks now, not in two weeks,” Allen said. While it waits for production to ramp up, Skillman is pursuing other avenues to get masks as soon as it can. It has made requests through the state of Michigan Emergency Operations Center, which coordinates state, local and federal agency response, and is working with other foundations, like the Max. M. and Marjorie S. Fisher Foundation and the McGregor Fund, Allen said.

Allen

Kochan

Mask production has increased significantly thanks to corporate partners General Motors Co., Ford Motor Co., Quicken Loans and DTE Energy Co., Allen said. “Everybody is putting their weight behind this.” If the mask shortages abate, Skillman will step back, she said. But if not, the foundation will continue its efforts.

Ramping up production Two weeks after agreeing to launch mask production for Trinity Health, Detroit Sewn has orders for 300,000 masks for health care customers and Skillman sponsor G1. It added a second shift last week by hiring nine new employees. It now has 25 people sewing masks that meet U.S. Centers for Disease Control guidelines. “Right now, we’re at a minimum of 2,000 units per day but … we’re in the process of ordering new machines … that will allow us to go faster yet,” said Detroit Sewn owner and CEO Karen Buscemi. She estimates that with new sewing machines — the first expected in two weeks — Detroit Sewn’s production will increase to 3,000-4,000 masks per day. G1 is purchasing the sewing machines and placing them in Detroit Sewn’s facility to help it ramp up mask production. Detroit Sewn will purchase the machines from G1 later. G1 also gave Detroit Sewn an advance to purchase materials so it can move orders more quickly, said Romy Kochan, chairwoman of G1 Impact and president and CEO of Auburn Hills-based Gingras Global Groups L3C, a third-party record-keeping and reporting and intermediary firm serving social enterprise and impact investing organizations. As a nonprofit fiscal sponsor, G1 “can incur expense for a for-profit ahead of time, giving them time to get on their feet if they are responding to a charitable purpose,” as Detroit Sewn is doing, Kochan said.

And G1 can also place orders with them for customers, she said. G1 launched an online campaign to raise money for those efforts. Contributors so far include Buscemi Detroit Area Honda Dealers, Dow Employees Credit Union, Mandell and Madeleine Berman Foundation, Charles J. Strosacker Foundation, Oakland University, Welding Concepts Training and Dominion Real Estate Advisors. It’s set a goal to raise $150,000 from individuals in the short term, and ultimately $1 million, as states are added and more small business manufacturers join the effort. G1 has “the capability to get donations … (helping us) to be able to ramp up more quickly and to be able to make more product so we can get these masks to the hospitals,” Buscemi said. Detroit Sewn is sending out daily shipments of masks to Trinity Health sites in Michigan and all over the country to fulfill its first order, Buscemi said. While it focuses on filling orders for hospitals and other health care customers, Detroit Sewn is subcontracting with seven other sewing companies to help make the masks. Subcontractors include Eissmann Group Automotive in Port Huron, Commonwealth Sewing Co. in Detroit and Tectonics in Auburn Hills. With the high-production sewing machines and assistance on nonhealth care orders from subcontractors, Detroit Sewn expects to be producing 50,000 masks a week by April 6. Foundations are allowed to make investments in for-profit organizations, but it has to have a charitable purpose, Allen said. Skillman is essentially doing that but making the grant to G1 rather than investing directly in Detroit Sewn, she said. By using G1, which is a nonprofit and has the capacity to support Detroit Sewn, “we get the best of both worlds,” she said. “We have a charitable organization that will focus on its charitable purpose and also provide support to Detroit Sewn, a for-profit.” Contact: swelch@crain.com; (313) 446-1694; @SherriWelch

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COMMENTARY

When Gov. Gretchen Whitmer ordered nonessential workers to stay home March 23, setting off a cataclysmic ripple of joblessness across Michigan, there were seven recorded deaths in the state from the novel coronavirus. Chad Two weeks later, the LIVENGOOD death count stands at nearly 500. And health officials warn we haven’t even seen the worst of it as scientific modeling shows the coronavirus outbreak in Michigan may not peak until late April at the e arliest — and mid-May at the latest. “We know that we are in for a tough three, four, five, six weeks here in front of us,” Whitmer said Thursday during a virtual town hall meeting that was broadcast on TV stations across both peninsulas. “We are far from out of the emergency that we find ourselves in.” Each day breaks the previous day’s record of the number of positive COVID-19 cases and the number of people dying in this pandemic. Last week, someone age 20 died from COVID-19 in Michigan, underscoring the pleading of public health experts that young people are not immune to this virus. Also last week, a person who was 107 years old died in Michigan, according to state data, DESPITE THE they were old EXTRAORDINARY meaning enough to have survived the Spanish Flu TIMES AND of 1918-1920 as a child. POTENTIAL The latest and fast-changing numDANGER, bers about the impact LEGISLATIVE of COVID-19 are staggering: LEADERS ARE `The 223 deaths in all NOT QUITE of Wayne County are than Norway READY TO LET GO more and Denmark have OF THE SACRED combined from COVID-19 infections. ACT OF VOTING Òakland County’s IN PERSON. death count of 136 is more deaths than Mexico and Japan have combined. Àfrican Americans are contracting and dying from COVID-19 at disproportionately higher levels than other racial groups. Statewide, African Americans make up 14 percent of the population and 35 percent of the deaths. Ìn Washtenaw County, African Americans make up 12 percent of the population, but account for 48 percent of the COVID-19 deaths. The mounting toll fuels mounting uncertainty in the ability of idled small businesses to hold onto enough cash to be able restart their restaurant, small machine shop or landscaping crews. Whitmer’s “stay home, stay safe” order is almost certainly going to be extended beyond April 13, likely until April 30. That’s the timeframe the Republican leaders of the Michigan Legislature want to give Whitmer in response to her request for a 70-day extension of extraordinary emergency powers to limit the human contact that can spread the virus.

Senate Majority Leader Mike Shirkey, R-Clarklake, said granting Whitmer 70 more days of emergency powers will signal that the state will remain in lockdown into the third week in June, even though that wouldn’t necessarily be the case. “No matter how you couch it, people are going to interpret it as, ‘Oh, sh$%, I’m going to be in my house for the next 70 days,’” Shirkey said. Despite the danger, leaders are not quite ready to let go of the sacred act of voting in person. And even though city councils are meeting on Zoom — like every trapped-at-home white-collar worker — the Legislature is unprepared to follow suit. Legislative leaders don’t think video conferencing voting would hold up in court (just another reason why we need a constitutional convention to update Michigan’s 1962-era governing document). The House and Senate plan to hold an in-person session Tuesday to consider an extension of Whitmer’s powers — a dubious choice after state Rep. Isaac Robinson of Detroit died a week ago from a suspected case of COVID-19. Both chambers are planning elaborate ways to limit the number of legislators on their respective floors at one time for taking attendance or voting. Senators will get their temperatures checked before entering the upper chamber. Shirkey promises it will be “safer than going to Walmart,” — not a ringing endorsement. Some legislators over age 65 at a higher risk of complications from COVID-19 or those from the coronavirus hotspots of Wayne and Oakland counties may be asked to not attend. “We do want to limit exposure and that’s one way to do it,” House Minority Leader Christine Greig, D-Farmington Hills, said. Only 20 of 38 senators and 55 of 109 representatives are needed to form a quorum. Greig has resisted going into session amid a worsening public health threat. “I’m the only member of (leadership) from Southeast Michigan and, honestly, I don’t think they get it,” Greig said. Shirkey, who represents a largely rural district in Jackson, Hillsdale and Branch counties, said he’s growing increasingly concerned about the “mental anguish” building up as people remain mostly relegated to their homes. It’s a brutally tough adjustment in the state that invented motorized freedom. But it’s a necessary sacrifice or the virus could linger around for months, as modeling from the University of Michigan shows. “We are learning a lifetime of new learnings every 24 hours,” Shirkey conceded. Let’s pray Michigan’s political leaders don’t have to learn a grave lesson from going to the Capitol on Tuesday. 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.

DANIEL SAAD

Legislature forges ahead with plan to vote in person

OTHER VOICES

Use this opportunity to sort out virtual schooling BY MICHAEL WARREN

The coronavirus has thrown our entire society in disarray, and no less poignant an example exists than our K-12 public schools. The closure of schools across the country has stopped the normal learning process dead in its tracks. In a valiant attempt to Michael Warren continue, many districts is an Oakland have sought to leverage County circuit long-distance learning. judge and Unfortunately, weaknessformer member of the State es in the law, technologiBoard of cal infrastructure and Education teacher preparation, as well as inequities among students, are barriers to success. For example, the Michigan Department of Education has announced that under the law, virtual learning will not count for funding purposes as “seat time.” This position has serious ramifications. In Michigan, seat time is what is funded. To receive full funding, a Michigan district must provide a minimum number of days and hours of school. If a district misses those targets, its funding is reduced proportionally. This archaic system does not fund learning or competency, just time served. The K-12 system is both feudal and industrial in design. With the exception of charter schools, school districts are defined by property boundaries. Further, with the limited exceptions of charter schools, schools of choice and vouchers (where they exist), students are literally tied to the soil — just like serfs. Moreover, although there have been some terrific advancements in the last few decades, most learning is still done in the industrial, assembly line fashion. Students come — at

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. 6 | CRAIN’S DETROIT BUSINESS | APRIL 6, 2020

the same exact time — to mammoth buildings; sit in desks and learn the same subjects at the same time; are grouped by age; and the teacher lectures cookie cutter instruction in specialty topics to students who possess a wide range of skills, experience and interests. Our students are awesome; teachers magnificent; board members and administrators fabulous. It is the system that is broken. Today’s crisis lays bare just how much. Our archaic system is stressed beyond measure today. The collapse of meaningful learning threatens our social fabric, the rule of law, and self-governance. A foundational reason justifying K-12 public education is to ensure that our students are well-equipped to be informed, participating citizens to preserve our freedoms and liberties. We cannot maintain our republic if we fail to understand its generating history, the Declaration of Independence and the Constitution. Even when schools are open, results are disheartening. Less than half of the people can name the three branches of government. As a then member of the state Board of Education, I led a task force on embracing the Information Age, which produced a groundbreaking report (michigan.gov/documents/ embracing_119435_7.pdf ). The report was released in 2001 — before the birth of today’s seniors. It advocated, among other things, teacher preparation and development adopting Information Age pedagogy; new Information Age-based standards; transcending the four walls of schools and the creation of virtual districts. There has been some movement, but the reality is that Michigan and the nation has fallen woefully short. If the report’s recommendations and its policies had been followed, the education field might be leading innovation — instead of just being another casualty of this crisis. Time to embrace the Information Age or suffer the dire consequences.

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

What businesses can do now, to thrive after the pandemic BY LAURA MARCERO

The magnitude of businesses impacted by COVID-19 continues to increase daily. Nearly every business is wondering, “When this will be over?” and “What Laura Marcero will business look is a managing like when we are director in the through this?” business Right now, advisory businesses practice at should be considHuron ering: Consulting  What will reveGroup. nue be over the next three to six months? Talk to your customers; ask them for realistic, conservative guidance for the next three to six months. Even with the guidance, you should strongly consider a further downside revenue scenario.  How can I conserve and maximize cash? This includes maximizing working capital, rightsizing the cost structure, potentially drawing on available financing, and/or seeking debt service moratoriums. Banks are working to be good partners to help their borrowers navigate the crisis. Some are still lending money and providing additional credit at incredibly attractive rates.  How stable is my supply chain? Talk to your suppliers and vendors to understand their ability to navigate COVID-19. If necessary, secure alternative sources for goods and services.  How can I help impacted employees? Communicate often on any changes and solicit feedback on what your employees need during this evolving crisis. Exhibit strength in leadership and continual compassion. This a unique opportunity for your organization and its leadership to build and grow bonds with your employees and your community. We will get through COVID-19 and life will resume under more normal circumstances. There will come a time where we will shift to recovery mode. While there is tremendous uncertainty as to when the economic recovery will begin, now is the time to reevaluate your business’s long-term strategic plan. Identify impacts to your industry. Consider the macro dynamics in your industry that may now be accelerated as a result of the COVID-19 pandemic. Determine how you can best position your business for these changes. For example:  In education, whether it is K-12 or college, learning as we know it is likely going to change and incorporate more of an online platform in the future. Every higher education institution should be evaluating their online capabilities or looking to acquire or align with an entity that has that capability. Furthermore, many small and mid-sized institutions have been struggling financially. Now is the time to consider strategic alliances that will strengthen the health of the institution.  In health care, telehealth is a concept most organizations and people are still getting comfortable with. The strain on the health care system, and the risk of in-person care to providers and patients, is likely to accelerate this trend into the mainstream. We may also experience a decline in nursing

home care as more individuals choose industry. We could see a move back to to stay at home. This will require a more regional supply and decreased change in the care delivery models, an reliance on China, especially given increase in in-home health care pro- the anticipated labor availability and affordability. viders and inManufacturing of home health care NOW IS THE TIME TO critical goods and equipment. equipment in the  In the automo- REEVALUATE YOUR United States tive and manumay be mandatfacturing world, BUSINESS’S LONG-TERM ed and provides the global supply STRATEGIC PLAN. new opportunichain and reliance on China may change. If the re- ties for diversifying production facilicent North American automotive ties. There are other ways to position shutdown had not occurred, the impact of the Chinese quarantine may your organization for recovery and have had a meaningful impact in late growth: March and April on the automotive  M&A: Activity has slowed as buyers

are concerned about the market and whether purchase prices are now too high. A slowing of deal closings and a downward adjustment to purchase price expectations are likely to continue, even post-COVID-19. Evaluate whether there is a unique opportunity to acquire new technology, an entity that provides a supply chain advantage, or a competitor that has customers or geographic reach that is advantageous to your business.  Capital structure: Evaluate whether your existing capital structure will be sufficient for the recovery and identify any opportunistic moves you may want to make. Interest rates will continue to be historically low and lend-

ers are open for business, particularly to well-positioned entities.  Employee recruitment: Nearly every company has faced a qualified labor shortage in recent years. Focus on strategically hiring key personnel who will be needed in the recovery. Hiring sends a strong message to current employees that you have a positive outlook on the future and are investing in the business. The one thing that uncertainty and economic turbulence provides is opportunity, and this crisis will be no different. The organizations that can get ahead of disruption during this volatile time will be best positioned for future growth.

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APRIL 6, 2020 | CRAIN’S DETROIT BUSINESS | 7

SHOPPING OPTIONS Michigan’s online grocery sector surges amid coronavirus pandemic

CRAIN’S MICHIGAN BUSINESS: THE FOOD ECONOMY

EMMA BOONSTRA

PAGE 10

Zingerman’s Delicatessen in Ann Arbor opened in 1982.

THE ZINGERMAN’S EFFECT How a small Jewish deli launched a unique network of food entrepreneurs

` How a small Jewish deli launched a unique network of food entrepreneurs. THIS PAGE

BY NINA IGNACZAK | SPECIAL TO CRAIN'S DETROIT BUSINESS

When Paul Saginaw and Ari Weinzweig opened Zingerman’s Delicatessen in Ann Arbor in 1982, they shared a common vision: Their business would never be replicated. Thirty-eight years later, the pair has built a network of 10 independent partner businesses with an annual revenue of $65 million in 2019, thousands of ZingTrain trainees and an extensive infomal alumni network — all of whom have experienced the Saginaw and Weinzweig way of doing business. And not a single one of them has replicated the original deli. The Zingerman’s Community of Businesses (or ZCoB) ranges from a training center (ZingTrain) to a gelato shop (Zingerman’s Creamery) to a Korean restaurant featuring Michigan produce (Miss Kim) to a globe-trotting food tourism business (Zingerman’s Food Tours). ZingTrain has shared Zingerman’s business philosophy with retailers, hospitals, local governments, law firms, social service nonprofits, even a funeral home. That philosophy begins with setting an intentional vision and includes open-book management and a path to partnership for every employee. Through a set of guiding principles and three “Bottom Lines” — Great Food; Great Service; and Great Finance — the company places a strong emphasis on employee development. The strategy was developed out of necessity. See ZINGERMAN’S on Page 11

8 | CRAIN’S DETROIT BUSINESS | APRIL 6, 2020

` Facing competition, homebrew supply shops offer something new. PAGE 9

` How homebrew shops are adapting to COVID-19. PAGE 9

Paul Saginaw

“OUR TRUSTED ADVISERS, THE BANKERS AND LAWYERS AND ACCOUNTANTS, ALL THOUGHT WE WERE CRAZY. BUT THAT’S WHAT WE WANTED TO DO. WE WANTED TO SHARE OWNERSHIP.” — Paul Saginaw, Zingerman’s cofounder

Ari Weinzweig

FOCUS | THE FOOD ECONOMY

REDEFINING RELATIONSHIP BANKING We are pleased to announce that as of January 1, 2020 Clarkston State Bank is now Waterford Bank, N.A. Backed by the experience of bankers you already know and trust, we’re eager to exceed your business banking needs throughout Southeast Michigan and beyond.

Andy Moore took ownership of Cap ‘N’ Cork Homebrew Supply in 2012. | CAP ‘N’ CORK

Homebrew supply shops become hubs for tasting, learning Tasting rooms, ‘nanobreweries’ offer something new amid stiff competition BY JEFF BURTKA | SPECIAL TO CRAIN’S DETROIT BUSINESS

Andy Moore has worked in the homebrewing industry since 2002, when he first began working at Cap ‘N’ Cork Homebrew Supply in Macomb, which was founded in 1985 and is one of the oldest homebrew supply stores in Michigan. When the opportunity to buy Cap ‘N’ Cork arose in 2012, Moore, an accomplished brewer who has served as a guest brewer at several local breweries, purchased the store. Moore expanded his operations by opening a tasting room at Cap ‘N’ Cork in September. The tasting room serves beer brewed in half-barrel batches with equipment similar to a mid-range homebrewing setup. Most microbreweries brew between three and 15 barrels per batch. The store sells prepackaged kits of ingredients for the beer and wine served in the tasting room, and Moore shares recipes for his beers with customers who want to brew from scratch. Moore wants his tasting room customers to taste the high-quality beer that they can brew at home and to learn about homebrewing from him and his staff as they sip their beers. In 2012, the local homebrewing market was good for brick-and-mortar supply shops like Cap ‘N’ Cork. Michiganders had few craft beer choices when shopping at stores, so beer connoisseurs often turned to homebrewing to make “clones” of beers they could not find on shelves. When he first purchased the store, Moore would sell 10 to 12 starter brewing equipment kits per month. Over time, online retailers chipped away at his equipment sales. Craft beers that were once hard to find began appearing on supermarket shelves. Now, Moore is lucky if he sells two starter equipment kits in one month, and his kits for clone brews are not as popular. See HOMEBREW on Page 10

CLARKSTON OFFICE:

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5800 S. Main St. Clarkston, MI 48346

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Gary Marshall (left) and Gordie Davingon co-own Cadillac Straits Brewing Co. in Madison Heights. | CADILLAC STRAITS BREWING CO

How homebrew shops are adapting to COVID-19 BY JEFF BURTKA | SPECIAL TO CRAIN’S DETROIT BUSINESS

Like many Michigan businesses, homebrew supply shops are struggling to survive the COVID-19 pandemic. When Governor Whitmer closed bars on March 16, Cap ‘N’ Cork, Cadillac Straits and UBrew closed their tasting rooms, but they were still able to sell beer to go in growlers or cans. But each shop saw an uptick in homebrew supply sales when their tasting rooms closed. “Homebrewers right now are maybe a little worried that they might be stuck at home for a few weeks, so everyone’s getting their homebrew stuff now,” Gary Marshall, co-owner of Cadillac Straits, said after the governor closed the bars. The governor’s Stay Home order has since closed nonessential businesses. Although UBrew’s grocer license qualifies it as an essential business, co-owner Chuck Green says he may have to

close his shop until the order is lifted if his sales go down. Andy Moore, Cap ‘N’ Cork’s owner, sold out nearly his entire inventory, but he had to close his store and lay off his employees, whom he hopes to hire back when the order is lifted. He is looking into loans to help his business survive. Moore considered staying open but erred on the side of caution. “While I realize it would be helpful to my customers and help my business, I don’t feel totally comfortable staying open and causing more possible issues with the virus,” he said. Gary Glass of the American Homebrewers Association says there may be hope for the homebrewing industry. “We’ve seen trends before where homebrewing tends to have a reverse relationship with the economy,” he said. “It’ll be interesting to see, now that it would seem we’re in a recession and there’s a whole lot of people out of work in a very short timeframe.” APRIL 6, 2020 | CRAIN’S DETROIT BUSINESS | 9

FOCUS | THE FOOD ECONOMY

HOMEBREW

Cap ‘N’ Cork is not the only shop in Michigan to take this approach. Gordie Davignon and Gary MarFrom Page 9 shall opened Cadillac Straits Brewing Moore said customers he has not Co. in Madison Heights as a homeseen in years tell him that they do not brew supply store in January 2019. In brew anymore because craft beer is so July, they opened a brewery and tapwidely available. He has longtime cus- room on site. By operating an adjointomers who continue to brew and ing taproom, Davignon and Marshall purchase malt, hops and yeast from could squeeze the margins in the rehim, but he does not see many people tail store and make up for that in the younger than 40 who are interested in taproom. Like Cap ‘N’ Cork, Cadillac Straits sells kits with ingredients for homebrewing in his shop. Moore’s experience matches na- the beers the taproom serves. The taproom also serves food and wine made tional trends. Gary Glass, director of the Ameri- exclusively from kits that customers can Homebrewers Association, said can purchase on site. “A lot of the brick-and-mortar preliminary findings from the association’s 2019 survey of homebrew sup- stores have seen declining growth ply stores show total revenue reported rates, but overall, the hobby is still by all shops nationally was down pretty healthy, and the competition about 7 percent. Brick-and-mortar — a lot of that comes from online restores in operation less than five years tailers,” Davignon said. ”We knew the margins in the performed slightly better, with only a 5 percent decrease. But Glass said not homebrew shop would be much all stores are suffering: 35 percent of thinner, and, in order to remain stores reported growth and 14 percent competitive, either we could raise reported double-digit growth in 2019. our prices, which would hurt us Overall, except for a 1.2 percent against the online retailers, or keep growth in revenue for all homebrew our prices in line with what online supply shops in 2018, they have seen retailers are selling for.” Aaron Spangler and Chuck Green annual declines in total revenue each opened UBrew in Traverse City as a year since 2015. homebrew sup“From around ply shop in Janu2006 to 2014 or “A LOT OF THE BRICK-ANDary 2017, fol2015, we saw very lowed by an rapid growth in MORTAR STORES HAVE onsite nanobrewhomebrewing,” SEEN DECLINING GROWTH ery, Fresh Coast Glass said. “There Beer Works, 10 were a lot of peo- RATES, BUT OVERALL, THE months later. ple getting into it HOBBY IS STILL PRETTY They opened the — a lot of interHEALTHY, AND THE homebrew supest.” ply shop because Now, he said COMPETITION — A LOT OF there is a strong membership is leveling off, and THAT COMES FROM ONLINE local homebrewing community, members are RETAILERS.” but options for brewing less fresupplies were quently and in — Gordie Davignon, Cadillac limited. smaller batches, Straits Brewing Co. “We also saw in part because of the abundance of craft beers available that the revenue stream for that kind to consumers. Glass said, “If people of business up here would be tight to are brewing in less volume and less keep afloat, so we said, ‘Let’s do a frequently, that’s really going to hit the brewery as well,’” Green said. “That way we can basically bring up the bothomebrew supply shops.” According to the AHA’s last count, tom line.” Green said that bulk grain has been 12 homebrew supply shops have the most successful part of the homeclosed in Michigan since Jan. 1, 2015. Moore opened his tasting room to brew supply store. Hops and yeast battle these market trends. He de- also sell well, but he said people tend scribes his tasting room as “an educa- to purchase brewing equipment ontional hub where everything is cen- line. Running a brewery in conjunctered around learning more about beer and learning more about wine.” tion with a homebrew supply shop Cap ‘N’ Cork holds wine- and can help the bottom line, but it also beer-making classes and food events, can give customers a greater appresuch as monthly pizza nights with lo- ciation and understanding of beer. “I would say homebrewing helps cal chef Cliff Skighwalker. A homebrew club and wine club also meet you dive into beer in a way that learnmonthly in the tasting room. Moore ing about beer just by drinking it wants people interested in home- doesn’t,” Marshall said. “You really dig into the nuances of brewing to feel comfortable asking questions. “We will sit down and all the different grains and hops and spend all day with them answering yeast, and you learn that there’s so every question they have about brew- much more to beer than you ever could have imagined.” ing,” he said. Cadillac Straits Brewing Co. sells kits for homebrewers to make the beers it serves in its tasting room. | CADILLAC STRAITS BREWING COMPANY

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

From

Nino Salvaggio decided to launch a delivery and curbside pickup service in mid-2018 after a decade of doing web orders. | NINO SALVAGGIO

Door to door

Michigan’s online grocery sector surges amid coronavirus pandemic BY NINA IGNACZAK | SPECIAL TO CRAIN’S DETROIT BUSINESS

Until very recently, Michiganders, like most Americans, were slow to embrace online grocery shopping. In 2019, only about 3 percent of U.S. sales took place online, according to a study of more than 8,000 grocery shoppers. In Europe and South Korea, that number was closer to 15 percent. Two main factors contribute to this lag, according to study author and market analyst Steve Caine of Bain & Company. First, shoppers have been reluctant to entrust their grocery selection to someone else. Second, they don’t like the idea of paying extra for the service. “Amazon has trained us not to pay for services. Even though we may pay a Prime membership, it feels like everything just comes for free,” said Caine. “So for someone to say it’s going to be a $7 or $10 delivery charge, that’s actually a pretty big deterrent.” Of course, that was before the coronavirus pandemic. In the past several weeks, grocers have struggled to maintain stocked shelves. Online shopping and delivery services have been stretched to capacity, forced to adapt to new ways of doing business. Instacart, the online shopping platform that facilitates ordering for more than 350 national, regional and local grocers including Aldi, Costco, Kroger, BJ’s Wholesale Club, Sam’s Club, Heartland Marketplace, Fresh Thyme Farmers Market and others across Michigan, has seen a surge in customer demand since the COVID-19 pandemic started, the company said. Daily downloads of the Instacart app on the Apple app store quadrupled, and average order size was up 20 percent year-over-year. The company saw more than a 40 percent increase in “gift” orders sent to others and a 25 percent uptake on its new “Leave at My Door” delivery service, which it launched on March 6. Insta-

cart plans to hire 300,000 shoppers over the next three months, which will more than double the size of its pool of independent shopping and delivery contractors. (Instacart workers also called for a nationwide strike last week over worker safety.) Smaller independent grocery delivery and produce companies have seen demand skyrocket as well. Grand Rapids-based Doorganics and

“WE ARE SEEING AN INTENSE SPIKE IN DEMAND FOR GROCERY DELIVERY DURING THE CORONAVIRUS EPIDEMIC, BUT BELIEVE IT WILL LIKELY TAPER BACK TO LEVELS SIMILAR TO THOSE PRIOR TO THE OUTBREAK ONCE THE ECONOMY FULLY OPENS BACK UP.” — Steve Caine, market analyst, Bain & Company

Baltimore, Md.-based Hungry Harvest, which entered the metro Detroit market in 2018, have temporarily suspended new subscriptions due to high demand. San Francisco-based Imperfect Foods, which entered the Metro Detroit market last summer, recently had to cancel or delay orders across its national network because of “a spike in demand combined with labor shortages,” according to its website. Nothing like a crisis to force new behaviors. But will it stick? “We are seeing an intense spike in demand for grocery delivery during the coronavirus epidemic, but believe it will likely taper back to levels similar to those prior to the outbreak once the economy fully opens back up,” Caine wrote in an email. “There may be a slight structural increase in adoption levels as new customers —

and new age cohorts — experiment with it for the first time. But most of the surge in demand is purely out of necessity and not choice. Once people can return to restaurants and are free to shop for themselves, I do think we’ll see a return to near pre-outbreak levels until the economics become more favorable for both customers and grocery retailers (through levers such as increased automation).” Caine adds that the strain on the system right now will undoubtedly lead to poor customer experiences, especially in terms of delivery times and order accuracy. “In the short term, these disappointments are better than the alternative. But under normal circumstances, customers may be anxious to return to their old ways of shopping if they haven’t been convinced of the long-term benefits of shopping online.” Still, the pandemic offers an opportunity for retailers to retain at least some of these new customers for the long term, Caine added. “The opportunity for retailers is to create ways to surprise and delight customers to strengthen the relationship, acknowledge mistakes and challenges, be open in communication, and invest to convert these new customers into permanent users by helping them rethink their shopping behavior in the future as things return to ‘normal.’”

Keeping promises to customers Back in 2011 when Doorganics first entered the market, they were “early,” according to founder Mike Hughes. “We didn’t have the answers yet at that time from a user experience perspective,” said Hughes. “Software was still hard and expensive for a small business. And so we proved the market — that there was huge interest in grocery delivery.” See DELIVERY on Page 14

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FOCUS | THE FOOD ECONOMY

ZINGERMAN’S

From Page 8

“There were no models out there for what we wanted,” Saginaw said. “Our trusted advisers, the bankers and lawyers and accountants, all thought we were crazy. But that’s what we wanted to do. We wanted to share ownership.” That desire culminated in 2014 with the rollout of a characteristically unique approach to employee ownership. Instead of issuing traditional shares or converting to a cooperative (difficult because Michigan has no legal structure to enable cooperatives), the owners fashioned a oneof-a-kind program for employees to buy into a holding company, Dancing Sandwiches Enterprises, that contains Zingerman’s intellectual property. Each of the company’s 700-plus employees across each of its businesses within the ZCoB have an opportunity to buy a share for $1,000, either up front or via payroll deductions. Dividends are linked to profitability. In 2018-19, the dividend was $235, and Zingerman’s buys back the share for $1,000 when the employee leaves. The structure is designed to ensure everyone has a voice and a role in how the ZCoB operates. Employee stock holders are eligible to elect three Staff Partners, each of which sit as full members of the ZCoB for two years, where they contribute to consensus-based decision making. “You could be a frontline staff and you can’t be outvoted. Because every voice is equal,” said Saginaw. “And we define consensus. If you’re 80 percent OK with the proposal, then you’re going to support it. If you can’t, then the burden is on you to come back to the group with a counterproposal and get everybody to buy in in a reasonable amount of time.”

Adapting to COVID-19 In recent weeks, Zingerman’s network has transformed itself into a source of mutual support as it navigates the COVID-19 crisis. The company is adapting to a new reality by relying on its existing structures and networks and finding new ways to stay open. On March 19, Saginaw and ZCoB Miss Kim owner Ji Hye Kim participated in a call of Michigan restaurant industry chefs and executives with Sen. Gary Peters to advise on relief efforts. Saginaw is hopeful that the stimulus bill will provide real relief to restaurants and their workers by forgiving payroll debt incurred during the crisis. Kim came to Zingerman’s for a sandwich more than a decade ago and was so inspired by the energy that she decided to try working for the deli for a year. That evolved into her embarking on the Zingerman’s path to partnership, a detailed and structured process whereby any Zingerman’s employee can learn the Zingerman’s way of doing business, complete a set of milestones, and develop and propose a business model. Successful path walkers eventually launch their own independent business within the ZCoB. “I did not jump at that opportunity, because my imagination was not wild enough to see a Jewish deli opening a Korean restaurant,” said Kim. But as she learned more, she

Zingerman’s serves up a business model ZingTrain, part of the Zingerman’s Community of Businesses, teaches the “Zingerman’s Model” to businesses of every size and sector. A partial list of ZingTrain clients includes food businesses as well as higher ed, financial advisors, government entities, movie theaters ... even a funeral home.

15 14

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3 11 12

SOURCE: ZINGTRAIN

decided to give it a try. “I got to try this out with a safety and a support network and not on my own,” she said. “And I knew if it did not work out, I’d walk away with so much learning. And I really felt like I had nothing to lose and so much to gain.” The path to partnership process, Kim says, forced her to ask herself questions that she would not have thought of on her own and to make a conscious decision to start her own business. Kim is also working to adapt Miss Kim to the new reality. She consolidated the menu and is pouring everything into take-out. Still, she has had to cut her 27-person staff to a skeleton crew of just a few. “Right now, we’re faced with impossible choices every day, and being part of Zingerman’s has been super helpful,” she said. “They’ve helped provide distilled information and guidance, but more than that for me personally, they’ve helped us focus on empathy and the human element rather than just the bottom line. We need to remember we’re working with real people.”

ZingTrainees skills put to new use That adaptive mentality is also guiding Jen Zeuner, a ZingTrain graduate and co-owner of Hot Tomato, a pizzeria in the small town of Fruita, Colo. The business does more than $2 million a year in pizza, salads, beer and wine in the town of just over 12,000 people. A key tenet of the Zingerman’s way of doing business is the concept of “servant leadership.” In a nutshell, leaders function to serve the organization they lead. “I was like ‘Wait, we do this, I didn’t know there was a name for this,’” said Zeuner. “As someone that has no business school under my belt, as a high school graduate, to be told ‘It’s OK to think out of the box’ was really an enlightening thing for me.” Zeuner, an ex-professional mountain bike racer, is accustomed to navigating new terrain. And as she learns to navigate the new landscape of COVID-19, she finds herself drawing on her ZingTrain experience as she adapts her business to a new reality. She’s found that having adopted Zingerman’s open-book management and finance model has been

important for marshaling resources as the business adapts to a steep decline in revenue. “The staff are reporting on this every Tuesday in a finance meeting. They’re taking it seriously and we’ve seen a huge shift in our profits and in our waste,” she said. Having staff be so aware of the finances makes them invaluable while working through the crisis, according to Zeuner. Right now, they are looking at the sales numbers and generating ideas for how to avoid laying off staff. Maggie Bayless, founder and managing partner of ZingTrain, and ZingTrain co-managing partner Katie Frank have found themselves putting those principles to work within their organization. Bayless and Frank have reduced

Business, City, State 1 The Motley Fool, Alexandria, VA 2 Cathcart Group, Charlottesville, VA 3 Morris-Baker Funeral Home, Johnson City, TN 4 Center for Financial Planning, Inc., Southfield, MI 5 University of Michigan Ross School of Business, Ann Arbor, MI 6 Jackson County Chamber of Commerce, Jackson, MI 7 Celebration Cinemas, Grand Rapids, MI 8 Torresen Marine Inc., Muskegon, MI 9 Donckers, Marquette, MI 10 Frontera, Chicago 11 Southern Foodways Alliance, University, MS 12 Wheatsville Coop, Austin, TX 13 SurveyGizmo, Boulder, CO 14 Hot Tomato, Fruita, CO 15 Silverado Farming, Napa, CA 16 Old Lahaina Luau, Lahaina, HI

Business type Finance Real estate Funeral home Finance Higher education Government Movie theatres Sailboat storage and services Food retail Restaurant Nonprofit Grocery Software Restaurant Agriculture Restaurant

their salaries by 50 percent and furloughed ZingTrain staff as they’ve been forced to cancel all trainings for the foreseeable future. Their hope is to sustain ZingTrain so that it can come back on the other side. “By being transparent and putting all the cards on the table, there’s just some humanity in it,” said Frank. ZingTrain is hoping to continue benefits payments for as long as it can. “Trying to take care of the staff as much as possible through what we know is a really challenging time for everyone.”

Servant leadership For Zingerman’s co-founder Weinzweig, the ethos he and Saginaw have built is something they are

relying on now more than ever. “We’ve spent all these years building a culture where people can operate under stress and still be supportive and respectful and caring and try to balance generosity,” said Weinzweig. “People know how to run a meeting, which is always helpful but under duress is even more helpful. Because we are an open book, most of the employees understand how business works; they all know how much or how little money there is.” The focus right now across the organization, according to Weinzweig, is helping keep people’s jobs, providing nutritious food for people and maintaining as much support for the environment as possible. The company has had to furlough approximately 40 to 50 percent of its employees. Most of the businesses are open in some limited capacity to maintain minimal employment and serve the community. As Zingerman’s adapts to this new world, Saginaw said it’s falling back on the foundation it’s built over the decades. “This is a time where we want to double down on providing really great service to people,” said Saginaw. That includes giving back to the community. He points out that in 1988, Zingerman’s founded and continues to substantially fund Michigan’s first food rescue operation, Food Gatherers, and has maintained a continuous presence on its board since its inception. The company also donates 10 percent of its profits to the private sector and 5 percent to a “Community Chest” set up to provide relief to its workers experiencing financial hardship. “That’s not something that we have ever waited for a crisis to do,” Saginaw said. “For us, that’s a part of the cost of doing business.”

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CRAIN'S LIST: MICHIG MICHIGAN'S AN'S LAR LARGE GES ST EMPL EMPLO OYER YERS S Ranked by full-time employees January 2020 Company name Location

Top executive

Michigan employees 2020/2019

General Motors Co.

Mary Barra chairman and CEO

48,484

Ford Motor Co.

Jim Hackett president and CEO

46,000

State of Michigan

Gretchen Whitmer governor

University of Michigan

5 6

Worldwide employees 2020/2019

Type of business

163,579 167,440

Automobile manufacturer

NA NA

Automobile manufacturer

45,602

NA NA

State government

Mark Schlissel president

37,101

52,488 51,203

FCA US LLC

Michael Manley CEO

36,815

90,000 92,722

U.S. government

29,103

Beaumont Health

John Fox president and CEO

26,936

Henry Ford Health System

Wright Lassiter III president and CEO

26,079

McLaren Health Care Corp.

Philip Incarnati president and CEO

23,500

Spectrum Health System

Tina Freese Decker president & CEO

22,939

Trinity Health

Mike Slubowski president and CEO Robert Casalou president and CEO, Mercy Health and Saint Joseph Mercy Health System

22,697

131,000 NA

Health care system

Ascension Michigan

Kenneth Berkovitz ministry market executive

20,491

20,491 21,190

Health care system

Rock Ventures

Dan Gilbert chairman and founder

18,096

29,916 30,008

Organization that connects and serves Dan Gilbert's portfolio of companies, investments and real estate

U.S. Postal Service

Karlett Gilbert district manager

18,000

500,000 500,000

Postal service

Michigan State University

Samuel Stanley Jr. president

11,850

11,893 11,893

Magna International of America Inc.

Jim Tobin CMO and president of Magna Asia

10,558

NA 174,000

Mobility technology

DTE Energy Co.

Jerry Norcia president and CEO

10,076

10,756 10,526

Energy company

City of Detroit

Mike Duggan mayor

9,408

9,408 9,457

City government

Detroit Medical Center

Audrey Gregory group CEO

9,398

NA 9,802

Health care system

Blue Cross Blue Shield of Michigan/Blue Care Network

Daniel Loepp president and CEO

9,395

10,699 10,177

Nonprofit mutual insurance company and subsidiary companies

CMS Energy Corp.

Patricia Poppe president, CEO and director

8,121

NA 8,625

Energy company

Bronson Healthcare Group Inc.

Bill Manns president and CEO

7,391

NA 9,133

Regional health system

Sparrow Health System

James Dover president and CEO

7,104

8,963 8,281

Health care system

Ilitch companies

Christopher Ilitch, president and CEO, Ilitch Holding, Inc.

7,000

25,000 24,776

Food, sports and entertainment and real estate development industries

Detroit Public Schools Community District

Nikolai Vitti superintendent

6,992

9 10 11

300 Renaissance Center, Detroit 48265 313-556-5000; www.gm.com 1 American Road, Dearborn 48126 313-322-3000; www.ford.com 3042 W. Grand Blvd., Cadillac Place, Suite 4-400, Detroit 48202 313-456-4400; www.michigan.gov Ann Arbor 48109 734-764-1817; umich.edu

1000 Chrysler Drive, Auburn Hills 48326-2766 248-576-5741; www.fcagroup.com 477 Michigan Ave., Detroit 48226 313-226-4910; www.usa.gov 26901 Beaumont Blvd., Southfield 48033 248-898-5000; www.beaumont.org 1 Ford Place, Detroit 48202 800-436-7936; www.henryford.com One McLaren Parkway, Grand Blanc 48439 810-342-1100; www.mclaren.org 100 Michigan St. NE, Grand Rapids 49503 616-391-1774; www.spectrumhealth.org 20555 Victor Parkway, Livonia 48152 734-343-1000; www.trinity-health.org

28000 Dequindre Road, Warren 48092 www.ascension.org/michigan 1050 Woodward Ave., Detroit 48226 800-251-9080; 1401 W. Fort St., Detroit 48233-9998 313-226-8678; www.usps.com 426 Auditorium Road, East Lansing 48824 517-355-1855; www.msu.edu 750 Tower Drive, Troy 48098 248-631-1100; www.magna.com

1 Energy Plaza, Detroit 48226 313-235-4000; www.dteenergy.com 2 Woodward Ave., Coleman A. Young Municipal Center, Detroit 48226 313-224-3700; www.detroitmi.gov 3990 John R, Detroit 48201 313-745-5146; www.dmc.org 600 E. Lafayette Blvd., Detroit 48226 313-225-9000; www.bcbsm.com

One Energy Plaza, Jackson 49201 517-788-0550; www.cmsenergy.com 301 John St., Kalamazoo 49007 269-341-6000; www.bronsonhealth.com 1215 E. Michigan Ave., Lansing 48912 517-364-1000; www.sparrow.org 2211 Woodward Ave., Detroit 48201 313-471-6600; www.ilitchcompanies.com 3011 W. Grand Blvd., Fisher Building, Detroit 48202 313-240-4377; www.detroitk12.org

52,027

46,000

45,093

36,148

36,835

29,244

27,587

26,079

22,613

22,282

24,304

21,190

17,887

17,500

11,850

10,716

9,998

9,457

9,802

8,845

8,121

7,511

6,841

6,955

6,056

Public university and health system

Automobile manufacturer

1,997,242 2,002,363

Federal government

27,172 27,591

Health care system

NA NA

Health care system

NA NA

Health care system

0 22,282

6,992 6,056

Health care system

Public university

Public school system

Want the full Excel version of this list â&#x20AC;&#x201D; and every list? Become a Data Member: CrainsDetroit.com/data

This list of Michigan employers encompasses companies with headquarters in the state. Number of full-time employees may include full-time equivalents. 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. NA = not available. 1 As of Jan. 1, 2019. 2 Includes approximately 15,000 in-state part-time employees. 3 As of July 2019. 4 Figures are FTE counts. 5 Employee counts are as of Oct. 1, 2019 and Oct. 1, 2018.. 6 Figures are FTE counts from the Center for Educational Performance and Information. LIST RESEARCHED BY SONYA D. HILL 12 | CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS | APRIL 6, 2020

To our CRNAs and Anesthesiologists working at Beaumont Health, Trinity Health, Garden City Hospital, and throughout the State of Michigan, we are grateful to you. To our frontline heroes, the doctors, and nurses treating COVID-19 patients, the support staff in our hospitals, and to our first responders, THANK YOU. To the truck drivers delivering goods and to those working to keep our grocery stores stocked and stores open, we give you our appreciation. While many of us are staying home, you wake up every day to face life’s greatest challenge and put yourself in harm’s way. We want you to know that we appreciate you every day and look up to you as our courageous heroes. To those currently suffering from COVID-19, know that our physicians and medical personnel are providing you with excellent high-quality patient care no matter what condition you are in or what the circumstances are. Finally, to the survivors, you give us hope and inspire us to take the necessary precautions to stay safe, persevere, and that we will get through this – as we work together. We are a world united in crisis, yet you have each shown us that we can treat each other with compassion, honor, and grace, no matter what conditions you are working in. Siromed is a proud partner to the physicians and CRNAs of A4. We cannot be more proud of you and for that we want to say, Thank You!

https://siromedhealth.com/|https://a4anesthesia.com/

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FOCUS | THE FOOD ECONOMY

DELIVERY

From Page 10

It wasn’t long until big players began to enter the marketplace. Instacart was founded by Amazon employee Apoorva Mehta in 2012 and began expanding across North America in 2016. Shipt was launched in 2014 by high school-dropout and serial entrepreneur Bill Smith, who was inspired to pivot his broad-based retail delivery service to groceries after a trip to the store with his wife and two screaming kids. The company was acquired by Target. Amazon Fresh launched in Seattle in 2007 and is now available in multiple markets across the country, though not yet in Michigan. Some Michigan markets can order through Amazon Whole Foods via Amazon’s Prime Now service. According to Hughes, maintaining a strong connection between producers and customers is Doorganics’ key differentiating factor. Doorganics focuses on local produce from small Michigan family farms and local pastured meats, with an emphasis on storytelling. “We like the niche that we play in, which is a highly curated experience focusing on local organic groceries, and many groceries that you can’t find in the grocery store,” said Hughes. “We can introduce you to the farmer so you can really understand their practices.” He sees plenty of opportunity in the marketplace. “I think there’s room for multiple grocery delivery services per household,” he said. “The service that’s going to deliver your paper towels or toilet paper doesn’t necessarily have to be the same service that delivers your local pastured meats. It will be a tailored solution based on individual households.” Doorganics was bought by San Francisco-based online grocery platform GrubMarket in 2019. The tech company positions itself as an online consolidator of farm-to-door online grocery delivery services, and has

Shopping options Local, regional and national grocery stores offer a variety of online ordering, curbside pickup and delivery options. National National National Regional National National Local Local National National National Regional

Store

Curbside

Delivery

Costco Sam’s Club Whole Foods Meijer Walmart Kroger Holiday Market Nino Salvaggio’s Fresh Thyme Aldi Target Gordon Food Service

No Yes No Yes Yes Yes Yes Yes No No No No

Instacart Instacart Amazon Instacart, Shipt Shipt Instacart No Independent third-party Instacart Instacart Instacart Instacart

SOURCE: CRAIN’S DETROIT BUSINESS REPORTING

grown largely through acquiring local upstarts like Doorganics. The acquisition enabled Doorganics to leverage the back-end business support while it focuses on building local relationships with farmers. Since the COVID-19 pandemic hit, Hughes said his business has more than tripled in sales, with some orders exceeding $1,000. Not only is his staff getting weary, he says, but his supply chains are stressed, especially the small artisan businesses that he typically sources from. But he says the crisis will also be a tipping point for the industry. “Where we find ourselves now is consistent year-over-year growth,” said Hughes. “As we get over the hump and start seeing COVID-19 cases decline, grocery delivery will still be at the forefront of people’s minds. I think many of these new customers will choose to keep grocery delivery as a part of their lives in the future.” Hungry Harvest founder Evan Lutz saw his business more than double before the company decided to suspend subscriptions. The company has started a waiting list and will add new customers as existing ones drop off. “It’s very tough to scale on that quick

of a turnaround,” said Lutz. “People need food, and they’re scared and worried, and we want to be a stable force in (people’s) lives by making sure we can deliver on our promise.” Both Hungry Harvest and Doorganics are hiring warehouse workers and drivers and have implemented extra sanitation protocols for their workforces, in accordance with guidance from the Centers for Disease Control.

Independent grocers get in the game Many small independent grocers have been slow to implement online grocery shopping, but Metro Detroit grocer Nino Salvaggio decided to launch a delivery and curbside pickup service in mid-2018 after a decade of doing web orders. “It was good to get ahead of the curve,” said Nino Salvaggio President Kirk Taylor. The company was seeing strong year-over-year growth before the pandemic hit. Once it came, demand quickly overwhelmed the system, and Nino’s had to shut down online orders for a week to restructure inventory. Nino’s re-launched online ordering on March 22.

Now, Taylor said, the company is focused on hiring to expand capacity. He thinks the ease and convenience will stick with customers. “A lot of people are new to online curbside and delivery,” said Taylor. “And they’ll find out that it’s convenient, and that they like it. So I believe we will see a significant increase because of that.” Kirk said the company intentionally decided to use Nino’s employees as shoppers, as opposed to contracting with a service like Instacart. “To me it just made so much more sense to do it that way,” said Taylor. “That’s the way I would want my groceries picked. Why would you want someone who’s not familiar with the store, not employed by the store, and not in the grocery industry to shop your order?” Nino’s contracts with WyGo, a local third-party delivery company that was able to meet a standard of service that Taylor felt comfortable with, including “shiny new vans with logos and uniformed delivery personnel.” Other food suppliers have managed to shift gears into new markets, almost overnight. Faced with certain layoff of its 35 employees after an abrupt decline of its restaurant orders, Atlas Wholesale Foods in Detroit made a quick pivot to online ordering, delivery and dropoff. John Kohl, the company’s CEO, said sales dropped by 80 percent in a few days, from an average of $122,000 in sales per day to $18,000 and declining. The 71-year-old company launched a new “Marketplace Direct” service on March 23. Orders more than $450 will be delivered directly to homes, while shoppers can pick up minimum orders of $100 or more at delivery spots across the region. Interest was immediate, with more than a thousand orders coming in over the first several days. Kohl said the company is building the proverbial plane as it flies as it adapts from fulfilling $4,000-plus orders to a few large retail customers to delivering $100 orders to thousands of

customers. But he’s grateful to have identified an opportunity to jump so quickly into a new business model. “This was driven by all our employees coming together and trying to reinvent ourselves so that we can keep the company moving forward,” he said.

Long road to profitability According to Caine, profitability remains a hurdle for online grocers. “These [online grocery] sales are broadly unprofitable because of the added cost of picking the order and delivering the order,” said Caine. “And so there’s a tremendous amount of experimentation going into various technologies and methods to reduce the cost of those two elements.” For example, Caine points to instore or store-adjacent mini-fulfillment centers in stores such as Amazon’s Whole Foods and Walmart. These facilities have dedicated staff and implement automation processes in an effort to drive down the cost of fulfillment. Others, like Instacart, are identifying creative ways to cover the added costs of fulfillment by implementing Amazon Prime-like subscription programs. As independents like Nino’s develop their systems, they will likely have to partner with technology companies and experiment with processes to attain profitability in the online grocery environment. But for the time being, Taylor says Nino’s is not charging extra for its service beyond the delivery fee and does not mark up online products any more than it does for in-store purchases. Right now, he’s more focused on service than profits. In addition to hiring more than 100 additional temporary employees in the past week, the company implemented a temporary $2 per hour raise for four weeks for all employees. “The people that are working in the store, they’re on the front lines,” said Taylor. “I am very proud of the effort that these people have put forth.”

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PEOPLE ON THE MOVE

TRANSPLANTS

this time without danger. It will put them into a little safer time.” Uberti also said there have been shortages in resources for COVID-19 patients, especially critical care beds, ventilators and blood and plasma shortages. “The biggest is blood supply. The Red Cross is predicting a shortage and over time it will become more apparent,” Uberti said. “Transplants require a lot of blood (four to five transfusions) and platelets, and getting donors is a problem.”

From Page 1

this crisis. At that point, our messaging was, ‘Let’s see how this week goes,’ ” said Kalkanis. But now that coronavirus is entering its fourth week of increasing numbers, Kalkanis said there is more fear and that requires constant communication between doctor and patient. “(Patients) are taking a lot of comfort knowing that their actual physicians, their transplant surgeons and their transplant, clinical leaders are actually calling them and updating them in real time,” he said. Kalkanis said the biggest concern of doctors is that the transplant population is one of the sickest groups of people. Many are immuno-compromised and “are at extreme risk for not only contracting the COVID virus, but getting very sick or even dying from it, given their state,” he said. Under the most realistic projection, Magee said the coronavirus crisis is expected to affect organ transplants for the rest of the year. “We have about 2,800 on the waiting list in Michigan and the vast majority are for kidneys,” Magee said. “We have 350 to 400 people waiting for transplant (at University Hospitals) and the numbers (waiting) will go up. The pandemic has decreased the number of donors and probably for the rest of this year.” While transplant recipients wait and wonder, Magee said he hasn’t heard of anyone who has died waiting for a transplant in Michigan because of coronavirus over the last several weeks. “Everyone who is waiting stands risk of dying,” he said. “We just hope we can get back to normal sooner rather than later.”

But because of the coronavirus outbreak, transplants at Michigan’s 12 centers have slowed by 60 to 70 percent the past month as hospitals recalibrate surgery safety and focus on the growing numbers of COVID-19 cases coming through the same advanced hospitals where transplants are performed, transplant surgeons told Crain’s. In Southeast Michigan, Henry Ford Hospital and Barbara Ann Karmanos Hospital, both in Detroit, and Michigan Waiting is the hardest part Medicine’s University Hospital in Ann Arbor have pushed back transplants Magee said transplant patients are that can be more safely performed in a used to waiting a day or two, but few weeks, doctors there say. when it comes to several weeks, it is Surgeons perform a transplant at University of Michigan University Hospital in Ann “We aren’t canceling. We are close- Arbor. The pace of transplants has slowed since the COVID-19 outbreak. | MICHIGAN MEDICINE more of a challenge. CRAIN S DETROIT USINESS ly evaluating each case” and postpon- March 23, 2020 “Some are’happy theyBdon’t have to ing many organ transplants that can gan transplants, especially in areas transplant team, said Karmanos isn’t come to the hospital now with coronawait for a safer period, said John Ma- impacted by the pandemic surge, full yet, but many transplant patients virus,” Magee said. “Some are worried. require ventilator support that is in What does this mean for me? If they are gee, M.D., director of the University of Magee said “If someone needs a heart trans- short supply. Michigan Transplant Center. at low risk of dying the next week, we “Staffing isn’t an issue now, but if try to reassure them. If they are at the Transplant teams are making diffi- plant, a lung transplant or something cult case-by-case decisions, taking that is time critical and they’re not the surge does come, we could run highest risk of dying,” they are scared. into consideration a patient’s risk of going to survive in a matter of hours into staff shortages,” he said. Uberti said delays in transplants Other factors have slowed trans- aren’t causing a big problem with redeath without a transplant to avoid or days without it, then we’re finding plants. They include organs that were cipients and families at Karmanos. coronavirus complications, said a way to get it done,” said Kalkanis. Henry Ford averaged about 10 going to be sent by commercial air They realize the average hospitalizaSteve Kalkanis, M.D., a neurosurgeon and CEO of the 1,200-member Henry transplants per week, but in the past carriers that were canceling flights tion at Karmanos for stem-cell transCRAIN’S DETROIT BUSINESS February 17, 2020 month those numbers have dropped because of coronavirus. The medical plants is 25 days and don’t want to be Ford Medical Group. centers were too distant to have am- in the hospital that long with “We are asking a very simple ques- to under five, Kalkanis said. CRAIN ’S DETROIT BUSINESS 2,reassure 2019 the public that bulances transport the organs. “I want to tion. ‘Will it harm the patient if we December COVID-19 around, he said. CRAIN DETROIT BUSINESSThey 16, 2020 we’re doing the right thing, but it’s delay this by a period of a few days or March “Above all,’Sthey understand. weeks?’” said Kalkanis, adding: “If through the lens of ‘Does this need to Karmanos stem-cell are fearful and worried. We give them cases need to be done, if they’re ab- be done today?’ ” he said. “We’re at a transplants slowing all the options and give them realistic expectations, but it is hard to predict” solutely life threatening and time situation where we have to be very, sensitive, we’re finding a way to make very careful about exposing these paUberti said Karmanos is 50 percent when it will end and transplants can tients who are coming into to an ICU or down in stem-cell transplants this resume as normal, Uberti said. it happen.” Kalkanis said some transplants Despite transplant surgeries being operating room setting and also mak- month and will be for the foreseeable deemed essential as opposed to many ing sure that we, in fact, have an ICU future. Karmanos performs about could be delayed at least a month, but the time could be longer or shortelective procedures that are banned, bed and ventilator capability for them.” 270 stem-cell transplants per year. Aside from the resource shortage Kalkanis said Henry Ford is evaluating “We are delaying for up to two er depending on the patient. all surgeries and procedures this way reasons for the transplant slowdown, months,” Uberti said. “Patients can “Everyone (patients) was extreme- Contact: jgreene@crain.com; to save resources for the increasing Magee gave two other reasons why go effectively without transplants for ly understanding at the beginning of (313) 446-0325; @jaybgreene the university is being more careful number of COVID-19 cases. Last Thursday, for example, Henry with transplant surgeries. First, there is a possibility of a Ford had admitted 623 positive coronavirus patients, 84 patients who are COVID-19 infection of the donor or Advertising Section awaiting results and several hundred recipient. 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Manearly full for coronavirus patients Write scalable &at testable codes & participate in review; scripting languages To place your listing, contact Suzanne Janik 313-446-0455 or email sjanik@crain.com because of the need for ventilators gee didn’t answer directly, but said the Space For Lease PERL, Python, BASH, SQL; design & implement REST API in webapp; & AWS following: “Around the country, I’ve and critical care beds and staff. www.crainsdetroit.com/classifi eds Corporation, Attn: HR, 600 Mountain services. Mail resume to Nokia of America up to 100,000 sq ft Magee said University Hospitals, heard instances where patients were Ave, 6D-401E, Murray Hill, NJ 07974. Must specify Job Code # in reply. EOE 313-712-1656 which performed 37 percent of the transplanted and later they turned posAsk for Jerome state’s 1,033 adult and child transplants itive (for COVID-19). 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CRAIN’S

COPING WITH COVID-19

SCHOOLS

From Page 1

Food gathered for delivery at the Detroit Boxing Gym. | DETROIT BOXING GYM

GYM

From Page 3

Additionally, the nonprofit is working with Focus: Hope to deliver food to seniors, coordinating with United Way for Southeastern Michigan to provide gap food delivery and is in discussions with the YMCA of Metropolitan Detroit to partner more formally on food distribution. “The goal is, as long as we can do it and people are safe and healthy, to maintain it as long as this shutdown is in place,” Hauser said. Adapting its operations to the crisis has been costly. The ramped-

REMOTE

From Page 1

The company also is known for a headquarters that offers nearly every possible amenity and a culture that insists on employees being present. In most cases, working from home was banned. But like most other companies, particularly those now deemed “nonessential” per a state stay-athome order, United Shore needed to change that quickly in mid-March. That required getting roughly 5,500 employees equipped to work in the exact opposite way they were used to. Monitors, PCs, cables and other necessary equipment had to be provided to workers who would then set up in their homes. “We don’t work from home,” said United Shore Chief People Officer Laura Lawson. “We were able to quickly and efficiently log those things and get people at home working. We were very high-touch with making sure that people were fully capable and operational and making sure that everyone could access the systems they needed.” In general, companies like United Shore and others said they felt they had contingency plans in place to allow them to quickly move workforces from large offices to remote working, albeit with some challenges along the way. Spencer Gracias, CEO of Brazilian 16 | CRAIN’S DETROIT BUSINESS | APRIL 6, 2020

up services are eating into the nonprofit’s $2.3 million yearly budget at a time of great need and uncertainty in the philanthropic community. Hauser Downtown Boxing Gym has secured thousands of dollars in supplemental donations to help fund the program. It has also received food donations, and purchased food at discounted prices, from places such as Supino Pizzeria, Standby and Forgotten Harvest. Kroger and Meijer technology consulting firm Stefanini North America Inc., with its headquarters in Southfield, notes that there are no shortage of companies for whom a shift to all-remote work creates massive problems. “People that were reluctant to move from on-premise to a cloudbased infrastructure, they’re the ones suffering the most right now,” said Gracias. The shift to work-from-home has meant big changes in demand for utilities and internet service providers like Philadelphia-based Comcast Corp., which released data last week on the shifts it’s seeing. The company noted that it’s seen “an unprecedented shift in network usage, but it’s within the capability of our network; and we continue to deliver the speeds and support the capacity our customers need while they’re working, learning, and connecting from home.” Nationwide the company said it’s seen a 32 percent increase in peak traffic and has experienced a 212 percent increase in broadband phone service and video conferencing use. The use of virtual private networks, or VPNs, is up 40 percent. While those numbers are nationwide, a Comcast spokeswoman confirmed the figures are consistent with use in Michigan. Similarly, a spokesman for Detroit-based utility company DTE Energy said the company has seen an uptick in residential usage, while commercial and industrial use have

have offered gift cards for groceries as well. After feeding those in need, the nonprofit’s priority will return to growing the program to 250 kids by the end of the year. With 1,300 kids on the waiting list, the demand is certainly there. However, with foundations being flooded with requests because of the pandemic and resources stretched thin, the dollars may not be. “Our fear is that this recession will actually create a dynamic where we’re not able to offer the same quality of support that we’ve been able to offer all these years, which is what parents really depend on,” Hauser said.

“It’s going to be a real challenge for any employer to be able to produce their products or services moving forward when part of their workforce is taking care of the children,” Walsh said. “There will be some adjustments internally because people want to accommodate their good employees. It’s going to be a process, and there’s just not an easy answer to it.” One of the unanswered questions is when businesses can resume normal operations. Whitmer’s stay-athome order remains in place until April 13, and she has signaled it will be extended because new scientific modeling shows Michigan’s COVID-19 outbreak may not peak until early May. For the past three weeks, the virus has forced most white-collar workers to do their jobs from their kitchen tables or a new makeshift basement office instead of an office cubicle. Gov. Gretchen Whitmer’s decision to keep school buildings closed for the rest of this school year will force companies to find ways to accommodate employees with kids at home, said Maureen Rouse-Ayoub, an employment attorney in Varnum Law’s Novi office. “Employers are going to have to be creative and proactive,” Rouse-Ayoub said. Companies may have to rearrange work schedules and job duties for employees who can work from home but are exempted from Family and Medical Leave Act benefits to take a partially paid leave of absence, Rouse-Ayoub said. “It’s going to be important during this time, especially after the stay-athome order is over, for businesses to get back to producing and being productive,” she said. “But we’re also go-

Emp

ing to take into account the employees’ needs because we don’t want to lose creative and talented resources because of work-from-home situations.” The Families First Coronavirus Response Act passed by Congress expanded FMLA, adding two weeks

“WE WERE VERY HIGH-TOUCH WITH MAKING SURE THAT PEOPLE WERE FULLY CAPABLE AND OPERATIONAL AND MAKING SURE THAT EVERYONE COULD ACCESS THE SYSTEMS THEY NEEDED.” — Laura Lawson, United Shore Chief People Officer

slid. Specific numbers were unavailable at the time this report went to press. About 29 percent of the U.S. workforce has the ability to work from home, according to figures from the U.S. Bureau of Labor Statistics.

Getting prepared Aside from minor hiccups in the first days, companies Crain’s spoke with said problems with technology were largely absent. Detroit-based Quicken Loans, another large mortgage company with around 17,000 employees, began preparing for its workforce to work remotely weeks ahead of its midMarch announcement, spending $4 million on technology equipment to enable the process. In an interview late last month, Quicken Loans CEO Jay Farner said that the company had a simple strategy as it moved workers remotely: overplan. “I think we started with over-communication,” Farner said. “So the rule of the road was, ‘Tell everybody everything we’re doing all the time.’

So there’s complete transparency, no vagueness, because that raises concern. So I think that’s how we avoided a lot of the issues.” Mike McGee, CEO of Detroit-based corporate law firm Miller Canfield Paddock and Stone PLC, noted that his international firm already had a pandemic plan in place, making the shift to remote working fairly smooth. The legal industry in general has been slower to adapt to evolving office trends over the last several years. Due to client confidentiality measures, most law firms still favor private offices. McGee said that need for confidentiality is one element that sets the legal profession apart from other professional services. Still, the need to go remote has worked out well for Miller Canfield, McGee said, noting that increased virtual meetings have yielded more regular direct contact with offices in places like Poland and China. One hurdle mentioned by McGee is a common one, however. Attorneys of a certain age tend to be more reluctant to embrace the technolo-

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computers, internet connections or even relocating company printers to their employees’ homes, RouseAyoub said. There also are worker safety and cybersecurity issues to consider, such as protecting the confidentiality of customer information and proprietary information in a home office setting, she said. “There’s a lot of things to think about so you can make sure this is a productive relationship,” RouseAyoub said. “Because obviously, there’s just going to be a concern about the loss of productivity and meeting deadlines.”

Uncertainty ahead

Empty classrooms mean full houses, and big headaches, for parents — and their employers. | LARRY PEPLIN FOR CRAIN’S DETROIT BUSINESS

emergency paid leave and 10 weeks of paid leave at two-thirds of an employee’s pay up to $200 daily and $2,000 each week, according to the U.S. Department of Labor. The expansion of FMLA is limited

to private employers with fewer than 500 employees and at least 30 employees. Those businesses will get federal income tax credits to offset the expanded FMLA costs, RouseAyoub said.

But the extended FMLA leave of absence benefit only covers employees who can’t perform their jobs at home, such as a CNC machinist at a manufacturer not deemed an essential business or the store manager of

a mall retailer that’s been shut down by the governor’s stay-at-home order. Companies with workers at home also may need to shift more technical resources to their employees’ new home offices, such as upgrading

“NOW WE’RE STARTING TO SEE QUESTIONS ABOUT WHEN DO WE GET BACK TO WORK AND WHAT DOES THAT LOOK LIKE? WHAT’S THE ECONOMIC IMPACT OF ALL THIS AND WILL WE RESPOND AS A COMPANY?” — Shawn Patterson, DTE VP of human resources

gies that enable the remote workforce, he said. “People are taking to it, they’re making it work. Even the people with a little bit of reluctance,” McGee said. “I’m probably not allowed to talk about anything with age, but let’s just say that certain lawyers may have been a little less comfortable with the technology. But even that group has said, ‘Wow, this really works.’”

Maintaining engagement and corporate culture Technology issues generally have resolved themselves with companies now several weeks into remote working. A common challenge for some, however, is to maintain employee engagement and long-built corporate culture. DTE Energy, for example, usually tracks employee engagement just a handful of times throughout the year, according to Shawn Patterson, vice president of human resources and organizational effectiveness at DTE. Now, the company is sending out

engagement surveys daily, both to its corporate and call center workforce working remotely, as well as to front-line workers who still have to work in the field. “At this time it’s more important than ever that we’re listening to what our employees have to say to us,” Patterson said. “Things are changing so quickly. It’s been interesting to see how the concerns of our employees have shifted,” he said. “In the beginning, it was how do we get reconnected virtually and do we have the technology? And now we’re starting to see questions about when do we get back to work and what does that look like? What’s the economic impact of all this and will we respond as a company?” Lawson with United Shore echoed the need to keep employees engaged and said the company still holds regular themed “spirit days” that are now done virtually. Lawson added that while mortgage volume is down during the coronavirus pandemic, the company is now spending more time on leadership training for its staff.

Under Whtimer’s order keeping school buildings closed for the next three months, public K-12 schools are still going to be required to deliver some form of distance or online learning through using broadband internet or telephonic connections. Detroit Public Schools Community District won’t have its distance learning model ready to launch until April 14, Superintendent Nikolai Vitti said. Complicating matters is access to online learning in urban, suburban and rural areas of the state won’t be equitable because “not every child has access to a device” or broadband internet connection, Whitmer said. Robert Shaner, superintendent of Rochester Community Schools, said working parents and their employers are going to need to be patient as it remains unclear how long the coronavirus pandemic will last. “This is going to play out over the long run,” Shaner said. “If we look at the Spanish flu pandemic of 1918 ... if we use that as a predictor, that doesn’t bode very well for us.” Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood

The end of offices? The temporary move to remote work during the coronavirus crisis begs the question of whether centralized offices will be relevant in the future, considering the availability of near-constant communication via text, Slack and Zoom. While Crain’s Detroit reported last week that the pandemic could lead to people being more spread out in offices, others believe it marks a watershed moment where large companies will begin to eschew centralized offices in favor of more work-from-home flexibility. “It’s going to change,” said Gracias, the tech executive with Stefanini in Southfield. “The corporate real estate guys are scratching their heads right now ... We’ve been forced to test a model ... and we know that it works.” McGee with Miller Canfield agreed. He said that while there will still be a need for office space, the demand is sure to decrease. It may be too early to predict exactly how office space use and design will shift once the pandemic is over. Lawson at United Shore said she doesn’t anticipate it will bring about a radical change for the mortgage giant and its growing campus in northern Oakland County. “I think it’s nice to prove that we can do it,” Lawson said of the shift to remote working. “Still, I think our magic is all being together.” Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes APRIL 6, 2020 | CRAIN’S DETROIT BUSINESS | 17

CANNABIS

Here, it’s summer. The air is humid and pungent. It’s also the last step before the plants are dried, cured, cut, tested and packaged for delivery. The plants filling these rooms will eventually produce upward of 250 pounds to 300 pounds of flower marijuana per month, which has an average retail value of about $1.5 million to $1.8 million as C3 charges a bit more for its product than the average grower.

From Page 3

Dozens of blue plasma and high-pressure sodium lights mimic summer for the power “mother” plants that sway gently in the faux wind generated by 11 fans. “The breeze creates a natural rigidity to the plants,” said Joel Ruggiero, chief horticultural officer and co-owner. “It makes them stronger for pruning, giving us better clones to begin the process.” Ruggiero, Ankur Rungta and his brother Vishal Rungta, president and CFO, were childhood friends. Each went their own way — Ruggiero to Colorado, eventually serving as head of cultivation marijuana company The Green Solution; Ankur as corporate attorney for Sullivan & Cromwell, then an investment banker at Moelis & Co. in New York; and Vishal as a business operation and strategy associate at Google in California. But the three reunited in 2018 with C3 and launched a 36,000-square-foot facility similar to the Webberville location in Portland, Ore. “What we’ve learned in Oregon is what we brought here,” Ankur said. “Despite being completely oversupplied, the market is still 40 percent to 45 percent flower and trades completely on quality. We’re obsessed with quality flower and believe the market in Michigan will reward high quality like it has in Oregon.” C3 is currently in the process of licensing and constructing recreational marijuana grow operations near Boston, Mass., and has applied for licensure in Missouri. It also has retail licenses for Grand Rapids and other locations throughout Michigan for its High Profile retail stores The operation is mostly funded via private equity, family offices and loans from friends and family, Ankur said.

Rooting and hardening The leaves pruned from the mother plants move to the cloning room, where they take root on their own. The room would be categorized as spring: humid, but cooler than the mothering room. Here three employees work to trim,

Diamonds and kitchens

Joel Ruggiero, chief horticultural officer at C3 Industries in Webberville, visits the drying room.

plant and prepare the clones for a life of their own. The plants spend 14 days rooting, then move off to the hardening room where they spend three and a half weeks gaining strength and budding from seedling to a vegetative state. Ruggiero has been working in Webberville since October, launching the operations and getting it to run smoothly. But he’s not throwing down roots. Sometime in the summer, Ruggiero will move on to Massachusetts, then Missouri, to continue C3’s expansion. “I went to Colorado to ski and grow weed,” Ruggiero said with a laugh. “I didn’t expect to be building operations like this from the ground up. But it’s the opportunity I wanted.”

Vegetative The plants spend the next four to five weeks in the vegetative room, where the air is only slightly tinged with the distinct slightly piney, slightly skunky smell of cannabis. Michigan’s marijuana industry is in its own vegetative state. In the week prior to the March 24 “stay-at-home” exec-

utive order from Gov. Gretchen Whitmer, recreational marijuana sales skyrocketed more than $1 million, churning a record weekly total of $5.8 million. Marijuana operations are considered an essential business and are allowed to remain open during the effective economic shutdown, but business is starting to slow. Adult-use recreational sales, before taxes, totaled $4.6 million between March 23-29, according to data provided to Crain’s from the Marijuana Regulatory Agency. Retailers may only sell marijuana in curbside transactions and via home delivery services. As of April 1, 45 of the state’s 72 licensed retailers are approved for home delivery, according to data provided by the MRA. Ankur said sales were relatively steady in the early days of the order and he expects the Massachusetts and Missouri expansions to continue. “The broader market conditions will make it harder to finance new projects, but our views of the cannabis market and the opportunities we want to pursue haven’t changed,” Ankur said.

CONSTRUCTION

From Page 3

“Gov. Whitmer was one of the first leaders across the country to take the unprecedented, yet necessary, action to limit all nonessential movements in the state through the ‘Stay Home, Stay Safe’ executive order. While these steps were necessary to mitigate the spread of COVID-19, there are exceptions to ensure that critical services are still available to Michiganders,” Bobby Leddy, her deputy press secretary, said in a statement. ConstructConnect has tallied $1.82 billion in projects that have been delayed across the state, ranging from sidewalks to libraries, manufacturing facilities to playgrounds. Developers like Thomas Guastello, founder and president of Birmingham-based Center Management, which is highly active in Macomb County development along Hall Road, said he wants to “err on the side of safety” but “there has to be a balance” between keeping people working and public health. “It’s being done in other states,” he said. He added that he’s hearing of skilled trades workers crossing state lines to work in neighboring states for work, adding to an already tight con18 | CRAIN’S DETROIT BUSINESS | APRIL 6, 2020

Work on Dan Gilbert’s $300 million-plus Book Tower redevelopment project in downtown Detroit was suspended along with all other construction projects deemed nonessential under Gov. Gretchen Whitmer’s stay-at-home executive order last month. | KIRK PINHO/CRAIN’S DETROIT BUSINESS

struction labor market. “There’s relatively minimal work that could be done, keeping personal space and everything else there that everyone’s aware of,” he said. Some in the commercial construction industry are perturbed by the restrictions and have been pushing for them to be relaxed for nearly two

weeks, to no avail. “(Associated General Contractors of America) and others worked with the governor’s office leading up to this to explain that construction work has built-in social distancing protections and workers utilize PPEs (personal protection equipment) on the job,” said Damian Hill, president of AGC of Mich-

| DALE G. YOUNG FOR CRAIN’S DETROIT BUSINESS

Andrew Livingston, director of economics and research for cannabis-specific law firm Vincente Sederberg LLP in Denver, said marijuana sales are likely to decrease in the COVID-19-driven recession. “The large question is how is someone’s purchasing choices for cannabis impacted by their pocketbook,” he said. “We have seen in the past alcohol continue to sell at a moderate pace without significant declines during a recession. Generally, I don’t think consumers shift to more budget beer or wine. If I were to lose my job, I wouldn’t immediately get some Bud Light. I might drink less beer, but would want to consume what I find enjoyable. I might just consume less. The same will likely hold up for cannabis connoisseurs.”

Flowering Once the plants begin to bud, they are transported to yet another room where the marijuana flower begins to bloom. The smell gets stronger here as the plants mature for up to 10 weeks in recycled planter pots. igan, a trade organization for builders in the state. “Our executive order was one of the first, so there were not a lot of others out there to use as guidance,” Hill said. “I have not reviewed every state’s stay-inplace or stay-at-home executive orders in detail, but I suspect that there are some states that have similar language to Michigan’s executive order but it is still being considered an exemption.” On the other side, the Michigan Infrastructure & Transportation Association wants Whitmer to declare all construction — whether it’s roads, bridges or real estate development — to be nonessential. “We’ve had mutinies on projects where employees are saying, ‘I don’t know why we’re on this project. I don’t see the critical or essential need of it. So why are we putting ourselves at risk?’” Mike Nystrom, executive vice president of MITA, told Crain’s last week. National builders like Lansing-based The Christman Co. say they are adapting to different restrictions from state to state in the age of coronavirus orders. “We certainly understand differences in regulatory requirements and see differences between federal, state and local jurisdictions for our office in Detroit and other markets,” said Ron Staley, senior vice president of Southeast Michigan operations in the Detroit of-

The plants are next hung to dry for seven days until moving to the cutting and sorting process. After months of very little human contact, the plants are now stemmed and the buds separated in a room of nearly a dozen workers. The workers don masks and more PPE to crimp, sort and shelve pounds of marijuana per day in large plastic tubs. The curing process then begins, where the buds rest in the tubs for a varying length of time — a process Ruggiero said is an extra step that separates high quality flower from the rest. Down the hall, C3 operates an actual laboratory run by an actual chemist, Kat Lawrence. There she transforms the buds under heat and pressure into “diamonds,” or essentially crystallized tetrahydrocannabinol, or THC, to be used in a dab rig or bong. It’s the only current deviation from flower marijuana C3 has done. However, on the second floor of the Webberville facility, the company is moving forward with a plan for a commercial kitchen to produce marijuana edibles, such as hard candies, Ankur said. C3 also plans to expand into an empty lot adjacent to its Webberville facility. Meanwhile, the product is being shipped to more than 200 retailers across the state. Currently, Cloud Cover weed retails for $425 per ounce, according to its website, or about $200 more per ounce than in Oregon. “Pricing is going to come down here in the near future, but we think our quality will maintain demand and, hopefully, our prices,” Ankur said. “We’ve remained competitive in Oregon and we plan on being competitive in Michigan.” Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh fice of Lansing-based general contractor The Christman Co. “Christman is focusing our efforts on keeping workers safe for any needed or required work, maintenance and operational issues we are asked to provide.” Some local units of government in other states — Boston and San Francisco, for example — have also halted most construction even though those orders aren’t statewide mandates. Whitmer’s executive order prompted some confusion among the building industry when it was first announced, and her office has been offering clarifications throughout. Leddy said exemptions exist to allow for some construction to continue. The state issued guidance on March 23, several hours after announcing the executive order that went into effect March 24, stating: “Some limited forms of construction are permissible, including construction to maintain and improve essential public works like roads, bridges, the telecommunications infrastructure, and public health infrastructure.” ConstructConnect says the only states with no restrictions statewide or at the local level are Wyoming, North Dakota, South Dakota, Nebraska, Iowa, Arkansas and South Carolina. Crain’s Senior Editor Chad Livengood contributed to this report

THE CONVERSATION

Regina Gaines has to ‘stay still’ as virus puts wine business on hold HOUSE OF PURE VIN: Regina Gaines is co-owner and co-founder of the wine shop that opened in downtown Detroit in 2015. The store at 1433 Woodward Ave. offers 700-800 brands, 20 percent of which are Michigan wines. Gaines is working to evolve House of Pure Vin into a destination not just for buying and tasting wine, but for sitting down casually and having a glass. However, the shop is forced to slow down and pivot to online sales as the coronavirus pandemic upends business and personal lives across the world. | BY ANNALISE FRANK ` Crain’s Detroit Business: These are obviously really uncertain times. Could you tell me a bit about what you and your staff and your business have been going through, these last couple of weeks? Gaines: Yeah. A sense of uncertainty. It’s almost at a point where you can’t plan. ... We were able to make some shifts in real time. But, however, I think the combination between order issues, my sommelier — the one that’s with me full time, she lives in Windsor, Canada, so every day we’re like, can she cross the border? — and I think health-wise, we had to kind of reevaluate, you know, the contact with people. So we went from getting our products online to sell, to expanding our wine club, to being in a position to do curbside delivery. To now, wondering if the drivers that are delivering the product to us, are they healthy enough? What hours should you keep? It’s a lot.

ship them out. But we’re not doing any curbside deliveries (or pickup at the store) until April 20 … So we shipped out about 70 boxes on Tuesday. We had about 25 customers that day, picking up, making last-minute purchases … When you think about the exchange of invoices, the exchange of checks, the exchange of boxes, just all the things you have to do to be able to protect your environment, it just wasn’t adding up … It became, now, a health issue.

`What’s it like for your business nowadays? Can you take me through a typical transaction, from what the staff has to do, to how you guys are currently dealing with the customers? We have a wine club. So recently, in the last couple weeks, we either have allowed you to take your orders online and we would either bring it to your car, or we’d ship it to you. Recently, for health purposes, we started really slowing our operations down. I know the governor has ruled us essential, but we’re not really essential for you to be here. And at some point you have to take responsibility of your employees and let them be at home and be safe. Including myself.

`Since the pandemic started affecting Michigan, what have your sales been like? So off the bat, we’re probably down 70 percent. I’m very fortunate to have a wine club that represents probably a good 30 percent of my revenue. And we had just completed an overhaul of our technical infrastructure … We’ll be doing a lot of things through our technology that we haven’t done before. So like, for instance, we’ve been using Zoom over these past couple weeks to be able to do online wine tasting classes with our sommelier. One of the things we’re going to talk about is mental health over a glass. We’re working with our creative person to actually start putting out menus up on our Instagram and emailing out to our mailing list of different menus and recipes that you can make and the wines that pair with them. At the end of the day, we still can do what we do great, and that is to teach people about wine and allow them to enjoy it and make recommendations.

` Do you think you’ll get to that point, where you just fully close down? So we did, effective as of this past Tuesday, we (partially) closed down. We’re planning to reopen again around April 20. Wine club members can pick up and we will honor online sales for shipment, but that’s kind of where we stop. Somebody will be in the store once a week to fulfill those orders and

` What is the role of wine in a time like this? Oh my god. I mean, people are anxious. And, you know, there’s a lot of health benefits to it … I think the anxiety level that citizens are facing, not being able to see a loved one, or the pressure of trying to adjust to working from home … I think that it’s another accessory people can have in order to bring some normalcy into their personal space.

demic, where do you want to go next with your business? I heard you guys were expanding in some capacity? We (were in the process of) changing our whole business model downtown. So we learned that in the last two years downtown is becoming more of an experience entertainment setting, versus the retail environment that we first opened up to be. So we started actually shifting our paradigm to do more experiences. We do things now called tasting on demand, where you can actually book a tasting with a charcuterie board. … We can come to your house … and we are looking to apply for a liquor license where we can actually expand our opportunities by the glass. ` So you’d be able to be a wine bar, basically? We have 31 different wines consumers can come up and just taste. They’d be able to do it themselves, so it’d be like, self-serve wine dispensers. We’d have 31 different kinds and consumers would be able to just pick and choose, and do flights, and have a good time.

` You mentioned the sort of atmosphere downtown, how that’s changing. Could you talk more about that? I think after Little Caesars (Arena) opened, you started seeing people frequently down there a little bit differently. I think people are coming downtown a little bit later in the afternoon, and they’re staying later at night. So in terms of the retail aspect of it, you’re more of a convenience to the people that live there, versus people who are coming down to socialize or for entertainment. We decided we had the opportunity to participate in both worlds … We were missing out when people were coming into our store and saying, “Hey, can I just sit there and have a glass?” So, what we just didn’t know how to do was how do we still be who we are as well as service this demand? And we took 2019 to really think about it. Regina Gaines is co-founder and co-owner of House of Pure Vin | MARIA ESQUINCA

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Pistons’ Arn Tellem talks impact, community aid amid pandemic The NBA was the first major sports league in the U.S. to suspend its season because of the coronavirus outbreak. Pistons Vice Chairman Arn Tellem says he hopes it will be the first to start back up. But for an organization hit hard by the deadly respiratory disease — a player and several staff members were diagnosed with it — it’s far from business as usual. Tellem said in his more than 30 years as a sports agent and five years in the Pistons front office, he has never faced a tougher challenge. “I’ve experienced long lockouts as an agent,” he said. “I’ve experienced the economic downturns. That defi-

Tellem

nitely had an impact on our business. We went through the tragedy of 9/11, which had an impact. But nothing like this.” On March 11, the NBA suspended its season after Utah Jazz player Rudy Gobert, who had played in Detroit a

few days earlier, tested positive for the virus. On March 15, the Pistons announced one of its players tested positive and the team was quarantined. Since then, the team and league have joined the rest of the sports world in trying to assess the far-reaching effects of the pandemic. The most damaging business impact is that the health crisis has left the Pistons without a product, idling the engine that generates revenue. In stride with league protocol, Tellem declined to discuss financial impact, though it’s immense. For the time being, basketball is no longer the team’s primary public concern. “We’re trying to get ahead of the

game as best we can,” Tellem said. “As part of that, it’s changing our whole public face. Usually we’re talking about upcoming games, the draft, free agency, all those things in our advertising and content online, and obviously we’re now changing that content.” Tellem said the team has also offered its headquarters to be used as an emergency hospital or to house health care workers. The U.S. Army Corps of Engineers has toured the site. “Hopefully they won’t need it because that’ll be a sign that we’re at least controlling the escalation,” he said.

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.

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

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