Crain's Detroit Business, April 20, 2020 by Crain's Detroit Business

THE CONVERSATION Co-founder and CEO of Detroit City FC Sean Mann is good with neighbors and committed to kicking a ball this year.

Nonprofits: Need for PPE has jump-started a sewn goods training hub. PAGE 3

PAGE 22

CRAINSDETROIT.COM I APRIL 20, 2020

COPING WITH COVID-19

HOW CORONAVIRUS CHOPPED THE FOOD CHAIN Comerica Bank faces backlash over PPP Bank never got ‘portal’ off the ground before money ran out BY NICK MANES

even with non-regulars. “I offer more than just product,” said Brancato of Washington Township. “I offer service and an old way of doing things ...” With backlogs for mainstream grocery delivery and curbside operations like Instacart and Kroger Pickup, local companies like Brancato’s are helping pick up slack for households across the region. But they generally don’t have the resources to meet demand, either.

While the meat cases at many local grocers are barren, a glut of bacon is piling up in refrigerated storage across warehouses in the U.S. Dairy farmers are dumping milk from their silos, cattle auctions are shut down and crop farmers don’t know if fruit and vegetables will be picked this year. People aren’t consuming fewer calories — some of us are consuming more — but where those calories are being consumed is creating challenges. More than 50 percent of food purchases occurred outside the home prior to the COVID-19 outbreak at restaurants, schools and sports arenas, according to U.S. Department of Agriculture data. With those outlets closed down, America’s complex food system is scrambling to adjust.

Trouble getting loans processed for the federal Paycheck Protection Program has Southeast Michigan business owners furious at a long-standing financial partner and looking to take their banking business elsewhere. Batch Brewing Co. founder and co-owner Stephen Rogison has had a generally positive working relationship with Comerica Inc., the Dallas-based bank and Michigan’s second-largest financial institution. Rogison opened his Detroit brewery in Corktown in 2015 with the help of a Small Business Administration 7(a) loan done by Comerica Bank. His business won the bank’s Hatch Detroit small-business pitch competition two years earlier. Rogison even served on the board of the Hatch Detroit program before resigning Friday. “I’ve long been an advocate for Comerica and their commitment to small business in Detroit,” Rogison said on Friday. That’s all changed. Like many other small business owners Crain’s spoke with, Rogison said he feels that the bank has left its customers out in the cold due to an inability to get a promised automated portal off the ground to process the groundswell of Paycheck Protection Program applications for potentially forgivable loans for struggling small businesses.

See SPECIALTY on Page 21

See FOOD CHAIN on Page 20

See PPP on Page 18

The beef industry has shifted to more versatile cuts and the supply chain has shrunk due to worker constraints caused by COVID-19. | FARM NEW MEDIA

Getting the right food to the right place a complex problem

The milkman now has more business than he can handle BY ANNALISE FRANK

As time slots fill up fast for mainstream grocery delivery and pickup, more households are turning to long-standing local sources for food essentials during the coronavirus outbreak. Take, for instance, the milkman. Steve Brancato of Old Fashioned Country Dairy, a one-man operation that still delivers milk in reusable glass bottles, calls himself a bit of a “dinosaur.” But his 43-year-old business is in high demand now,

NEWSPAPER

BY DUSTIN WALSH

FOCUS | MACOMB COUNTY REAL ESTATE  New retail reality: Hall Road and other shopping centers face a changing landscape amid COVID-19. PAGE 10 Industrial resurgence: An uptick in demand for industrial space may signal the sector is poised for a rebound. PAGE 11

NEED TO KNOW

ENVIRONMENT

THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT ` MICHIGAN JOINS MIDWEST COALITION ON ECONOMIC REOPENING THE NEWS: Michigan is joining a seven-state Midwest coalition to closely coordinate the reopening of the regional economy when the threat of the coronavirus subsides. Gov. Gretchen Whitmer announced Thursday that she’s partnering on a regional strategy for resuming economic activity with Ohio Gov. Mike DeWine, Wisconsin Gov. Tony Evers, Minnesota Gov. Tim Walz, Illinois Gov. J.B. Pritzker, Indiana Gov. Eric Holcomb and Kentucky Gov. Andy Beshear. WHY IT MATTERS: The seven governors will collaborate as they work to loosen stay-at-home orders and take other steps to return to normalcy, while sharing intelligence and developing readiness critera such as hospital system capacity, sustained leveling-off of new infections and hospitalizations, and improved testing and tracing capacity for COVID-19 infections. But Whitmer warned that a one-size-fits-all solution for every state in the partnership was not in the cards. Though she hopes to relax some aspects of the stay-at-home order on May 1, Whitmer said Michigan’s more than 2,000 COVID-19 death count and number of infections — the third highest in the country — has created a “unique crisis” that warrants “a unique solution.”

WHY IT MATTERS: The rescheduled event may be a peek into the nearterm future of live sports events without spectators. The tournament’s successful debut last year may have saved it from being scrapped, but second-year plans were to expand the event and increase sponsor support. It is unclear what impact the reshuffled tournament plans will have on multi-year sponsorship deals; tournament organizers said they would examine new fundraising models that have not yet been seen on the tour.

` RESCHEDULED ROCKET MORTGAGE CLASSIC TO BE PLAYED WITHOUT FANS THE NEWS: The Rocket Mortgage Classic has officially been rescheduled, but will go on as a TV-only event with no spectators, according to organizers. The event, in its second year, was scheduled for May 25-31 before the coronavirus outbreak threw a wrench in the PGA Tour’s schedule. It is now scheduled for July 2-5 at the Detroit Golf Club, the PGA Tour announced Thursday. The PGA said there will be no fans at its first four events on its new schedule, which includes the Detroit tournament, but it will continue to monitor advice from health authorities to determine “most appropriate on-site access in each market.”

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Detroit Riverwalk extension planned with cleanup project ` A new $2.9 million cleanup project along the Detroit River planned for this summer would pave the way for a riverwalk extension to Belle Isle. The U.S. Environmental Protection Agency and Detroit Riverfront Conservancy entered a cost-sharing partnership to clean up 13,000 cubic yards of contaminated sediment just downstream from the MacArthur Bridge. Construction on the riverwalk is expected to start in the fall and be completed by late 2021 or early 2022.

` $1 MILLION FUND TO SUPPORT ARTS AND CULTURE GROUPS LAUNCHES THE NEWS: A new fund to support immediate needs for Southeastern Michigan arts and cultural organizations in the near-term and operational innovation longterm was set to launch Friday. Housed at the Community Foundation for Southeast Michigan, the COVID-19 Arts and Creative Community Assistance Fund has attracted nearly $1 million. Regional arts association CultureSource led development of the grant applications and will take a lead role in promoting the fund. Initial “relief and resiliency” grants will be about $10,000 each and are designed to provide immediate support for things such as payroll, artist or contractor fees, operating expenses and

A contaminated 1.2-acre site near the MacArthur Bridge at Belle Isle is being targeted for cleanup and use as public recreation. | EPA.GOV

unexpected COVID-19.

costs

WHY IT MATTERS: The region’s arts and cultural organizations have been hammered as the coronavirus crisis closed public spaces such as art galleries and shut off revenue streams from live performances and fundraising events. Organizations will

have to account for the instability of events in their financial planning going forward, CultureSource Executive Director Omari Rush told Crain’s, which will challenge arts and culture groups to be thoughtful about whether they stick with tried and true programs or launch new, but risky ones. “Where there’s crisis, there’s great opportunity,” Rush said.

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2 | CRAIN’S DETROIT BUSINESS | APRIL 20, 2020

COVID-19

Traverse City’s canceled cherry festival brings relief to its hospital BY CHAD LIVENGOOD

The cancellation of Traverse City’s storied National Cherry Festival last week due to concerns about a summer-long lingering spread of the deadly coronavirus brought sighs of relief at the northern Michigan tourism mecca’s local hospital. Medical professionals were already worried about how to prepare for the nearly 500,000 visitors the cherry festival attracts annually over the first two weeks of July with just 29 adult ventilators at the 442-bed Munson Medical Center in Traverse City. “That’s going to make a huge difference” in not overwhelming the hospi-

tal, said Dianne Michalek, vice president of marketing and corporate communications for Munson Healthcare. “That’s typically when we see our surge would be cherry fest. It’s the busiest time of the year for us.” The public clamoring for Gov. Gretchen Whitmer to lift some restrictions on work, pleasure activities and travel on May 1 comes with consternation from health care professionals about a continued lack of widespread testing for COVID-19 and the preparedness of Up North hospitals to handle the influx of seasonal residents coming from coronavirus hotspots in metro Detroit, Chicago, Florida and East Coast cities.

“Lifting the stay-at-home order would put other areas of the state at risk because they wouldn’t have, like we do, a 12- to 24-hour turnover in testing capability,” said Betty Chu, M.D., associate chief clinical officer and chief quality officer for the Detroit-based Henry Ford Health System. “And then you end up having exposure of folks who don’t know they’re COVID positive.” The 19 counties that make up Michigan’s summertime haven along the top of the Lower Peninsula had just 101 mechanical ventilators across 11 hospitals as of Friday and 17 were in use, according to hospital data reported to the state. See RELIEF on Page 17

The 442-bed Munson Medical Center in Traverse City is typically at capacity during the first two weeks in July during the National Cherry Festival, which has been canceled this year due to the coronavirus pandemic. | MUNSON HEALTHCARE

NONPROFITS

HEALTH CARE

Hospitals use in-house labs to help with treatment Measures possibly improve outcomes BY JAY GREENE

Industrial Sewing and Innovation Center gown production at Empowerment Plan. | INDUSTRIAL SEWING AND INNOVATION CENTER

PRODUCING PPE

ISAIC jump-starts plan to create sewn goods hub in Detroit BY SHERRI WELCH

The pandemic and resulting need for personal protection equipment has jump-started a yearlong effort to establish a sewn goods training and production hub in Detroit to attract reshored and other production for apparel manufacturers. The fledgling Industrial Sewing and Innovation Center will begin sewing isolation gowns this week from a 12,000-square-foot factory on the third floor of work apparel outfitter Carhartt Inc.’s Midtown Detroit building, rather than the T-shirts and other apparel initially

planned to launch at the site. The gowns nonprofit ISAIC will produce and others sewn by subcontractors including the Empowerment Plan — known for its sleeping bags for the homeless — will help to fill orders for a combined 99,000 isolation gowns and contracts totaling $600,000 from the Michigan Economic Development Corp. and Detroit Medical Center. For the most part, isolation gowns are produced in countries like China and Mexico, ISAIC CEO Jen Guarino said. See ISAIC on Page 17

Jen Guarino, CEO of the Industrial Sewing and Innovation Center, says the center plans to help fill orders for 99,000 isolation gowns. | INDUSTRIAL SEWING AND INNOVATION CENTER

It may be weeks before doctors know whether the measures they are taking now to treat thousands of COVID-19 patients are working. Most doctors in metro Detroit say they believe a good number of patients are being helped to overcome the deadly disease. Over the past week in Southeast Michigan, dozens of patients with moderate or severe cases of COVID-19 have been taken off mechanical ventilators or discharged from hospitals that include Beaumont Health, Henry Ford Health System and University of Michigan. Is this the result of early diagnosis because of in-house lab testing by the hospitals, experimental drug treatments, or the use of blood plasma of recovered patients that contain COVID-19 antibodies? Or is it simply buying time for patients’ own immune systems to kick in and beat back the novel COVID-19 infection that still has no vaccine or antiviral medicine? Time is of the essence for a cure or a better method to halt the spread because Michigan has recorded more than 2,000 deaths and more than 31,000 positive COVID-19 cases. Worldwide, the coronavirus outbreak has claimed more than 145,000 lives. But in the meantime, doctors and nurses are doing what they can in hospital settings to care for very sick patients who continue to appear through hospital ER doors in various stages of respiratory distress. Much attention has been paid to the experimental drugs hydroxychloroquine, an anti-malarial drug, and remdesivir, an antiviral medication developed for Ebola virus patients and used on other coronaviruses. And local hospitals are involved in trials of those drugs. See LABS on Page 18 APRIL 20, 2020 | CRAIN’S DETROIT BUSINESS | 3

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Believe it or not, there is still non-coronavirus news happening out there. The Michigan Strategic Fund has approved an amendment to a Kirk Michigan BusiPINHO ness Tax brownfield incentive reflecting that what had been planned to be a 25-story hotel and condominium tower is now what the developer says is a 22-story building with hotel and seven floors of some form of residential building above the hotel's 15 stories. I reported in January that the condominium component of the planned high-rise had been scrapped, although the representatives for the project declined to say specifically why. Other high-end condo projects have been scrapped, however, as construction costs spiraled out of control due to a shortage in the skilled labor market, eating away at developer profit. The tower is expected to cost $164.1 million, according to a Michigan Strategic Fund memo. Last week I also reported that the building would top out at 15 stories based on that memo, but The Mid's representatives say that it's actually expected to be 22. In July, the MSF board approved $58.3 million in brownfield financing for the $377 million project, which at the time was to include the 25-story hotel/condo tower as well as a 27-story residential tower with 180 units. When the project was first announced in March 2019, it was to have a 30-story, 250-unit residential tower. Also included in the planned second phase is a 12-story building with about 198 co-living units. Approximately 750 parking spaces are also part of the project mix, with 325 in a one-level underground garage and 419 spaces in a five-level deck above ground. Between 75,000 and 100,000 square feet of Woodward-facing and other interior retail is planned for things such

as smaller neighborhood retail to grocery space. The community benefits agreement says 12,000 square feet of retail space is to be set aside for local small businesses. An entity registered to Ciena Healthcare CEO Mohammad Qazi, 3750 Woodward Ave LLC, paid $15 million for the land in September 2018 after Wayne State University Physicians Group scrapped a plan to build a $68 million medical office building and parking deck on the site. We also got a little heretofore unknown tidbit, which is that Qazi is an investor in the Foundation Hotel downtown in an old Detroit Fire Department building at 250 W. Larned St.

Rent collections for apartments fell 14.2 percentage points YOY There is some new data from the National Multifamily Housing Council and others about rent payments in the Detroit area. The Washington, D.C.-based

â&#x20AC;&#x153;THE COVID-19 OUTBREAK HAS RESULTED IN SIGNIFICANT HEALTH AND FINANCIAL CHALLENGES FOR APARTMENT RESIDENTS AND MULTIFAMILY OWNERS, OPERATORS AND EMPLOYEES IN COMMUNITIES ACROSS THE COUNTRY.â&#x20AC;? â&#x20AC;&#x201D; Doug Bibby, president, National Multifamily Housing Council

NMHC says there was a 14.2 percentage point drop in the number of renters in the Detroit-Warren-Livonia metropolitan statistical area who had paid rent by April 5. In April 2019, it was 86 percent, while this year

through April 5 it was 71.8 percent. Nationally, there was a 12 percentage point drop, from 81 percent in March to 69 percent in April. The information is based on data from 13.4 million apartments nationwide, the council says. â&#x20AC;&#x153;The COVID-19 outbreak has resulted in significant health and financial challenges for apartment residents and multifamily owners, operators and employees in communities across the country,â&#x20AC;? Doug Bibby, president of the NMHC, said in a press release. â&#x20AC;&#x153;However, it is important to note that a large number of residents met their obligations despite unparalleled circumstances, and we will see that figure increase over the coming weeks. That is a testament to the quick, proactive actions taken by NMHC members who put forward bold solutions.â&#x20AC;?

Hotels continue slide This should come as no surprise, but the areaâ&#x20AC;&#x2122;s hotels slid even further as the coronavirus pandemic continued to take its toll. STR, a hotel-industry analysis firm, reported last week that the regionâ&#x20AC;&#x2122;s 44,000-plus hotel rooms were just 22.4 percent occupied commanding an average daily rate of just $65.48. Revenue per available room night was $14.67. â&#x20AC;&#x153;Data worsened a bit from last week, and certain patterns were extended around occupancy,â&#x20AC;? said Jan Freitag, STRâ&#x20AC;&#x2122;s senior VP of lodging insights. â&#x20AC;&#x153;Economy hotels continued to run the highest occupancy, while interstate and suburban properties once again posted the top occupancy rates among location types. This shows there are still pockets of demand while more than 75 percent of the rooms around the country are empty. We donâ&#x20AC;&#x2122;t expect any material change in the magnitude of RevPAR declines for the time being.â&#x20AC;? Nationwide, occupancy was 21.6 percent, while daily rates were $76.51 and RevPAR was $16.50. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

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NONPROFITS

Nonprofits ramping up advocacy to access CARES Act funding Getting loans through programs ‘dicey’ as organizations find confusion on part of lenders BY SHERRI WELCH

CARES Act support for 501(c)(3) nonprofits

When the Coronavirus Aid, Relief and Economic Security Act was passed a little more than three weeks ago, providing $2.2 trillion in COVID-19 relief, there was a collective sigh of relief from the nonprofit sector. Like other organizations, nonprofits were being offered lifelines. But the funding has been out of reach for many nonprofits, and the pool of available funding is drying up. Nonprofit leaders are ramping up advocacy efforts to ensure the sector can tap new dollars, while a measure to increase the CARES Act SBA loan funding and a separate bill to carve out $60 billion to help nonprofits play out. Getting loans through the three loan programs in the CARES Act has been “dicey” for nonprofits — even before the Paycheck Protection Program ran out of money, said Omari Rush, executive director of arts and culture association CultureSource, and chairman of the Michigan Council for Arts and Cultural Affairs. “Everyone is waiting with paperwork filled out ... to see if banks are actually processing loans because either they’re overwhelmed or have hit some capacity they have internally,” he said. That, coupled with what appears be the ability for banks to choose who they lend to, is making nonprofits anxious, Rush said. “When people heard the CARES Act was passed, they got excited about that relief,” he said. “Now, people are

Three loan programs (also open to small businesses): Paycheck Protection Program ` Open to 501(c)(3) nonprofits, including religious organizations, with less than 500 employees Bell

Caldwell

feeling a little disheartened, wondering if funds will still be available when they do get to them in the queue and whether they will get the relief in time.” The speed behind efforts to deploy the new funding and the fact that the regulations on distribution have been written in real time has led to lot of confusion on the part of lenders, said Kyle Caldwell, president and CEO of the Council of Michigan Foundations. Compounding matters is the fact that most small and midsize nonprofits don’t have lines of credit. So it’s a new experience for them to apply for loans and for banks attempting to work with them, he said. And the technical and resources issues banks are having in processing the wave of applications exacerbated issues even more. The first $349 billion of Paycheck Protection Plan money ran out last Thursday, and Congress was still negotiating an expansion at press time. But the program was plagued with difficulties even before that. On April 8, Huntington Bank, the state’s largest U.S. Small Business Association lender, temporarily halted

Gustafson

Rush

its intake of new loan applications amid overwhelming demand. The next day, Comerica Bank, the state’s second largest bank, said technology issues were hampering processing of Paycheck Protection Program applications, problems that it still hadn’t solved by the end of last week. “It’s a trifecta — everybody is trying to move this funding, but for those ... reasons, it’s led to a great amount of confusion and delay,” Caldwell said. But the bigger concern beyond access to funding is that demand outpaced available funding, he said. “We are all trying to figure this out so that if more funding is infused in the system, nonprofits are ready and eligible to apply,” Caldwell said.

Expanding funding To bolster stimulus funding for nonprofits, U.S. Reps. Seth Moulton, D-Massachusetts, and Brian Fitzpatrick, R-Pennsylvania, introduced the Save Organizations that Serve America Act on March 27, the same day President Donald Trump signed the CARES Act into law.

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` Loans forgiven if you keep employees on payroll for at least eight weeks; 75 percent or more must be used for payroll. No more than 25 percent can go to employer’s rent, mortgage interest and utilities ` Nonprofits can apply for 2.5 times monthly payroll ` Loan has a maturity of two years and a 1-percent interest rate ` Program now out of money, awaiting an expansion or extension still being negotiated in Congress Emergency Economic Injury Loan (EIDL) Program ` Open to 501(c)(3) nonprofits, including religious organizations ` “Normal” loans of up to $25,000, based on owners’ credit scores, but personal guarantee waived for loans up to $200,000. Non-forgivable loan with 2.7 percent interest rate. ` Emergency grants of $10,000; completely forgiven. Can help cover immediate operating costs. Mid-Size Business Loan Program

crewdetroit.org

6 | CRAIN’S DETROIT BUSINESS | APRIL 20, 2020

` Designed to retain staff. ` Loan, with interest capped at 2 percent and no principle or interest paid for six months. Also in the CARES Act ` Dedicated funding for arts and culture nonprofits ` $75 million to the National Endowment for the Arts. The Washington, D.C.-based agency will split 60 percent of that among applicant grantees from the past four years. The Michigan Council for Arts and Cultural Affairs will distribute Michigan’s state allocation. ` $75 million to the National Endowment for the Humanities, which last week signaled its intent to simplify the application process for funding that will be distributed by Michigan Humanities and other councils around the country. ` Funding for education and health care ` Universal charitable “above the line” tax deduction of up to $300 ` Enables donors to deduct up to 100 percent of adjusted gross income for gifts made in, 2020 and increases limit on corporate gift deductions to 25 percent of taxable income from 10 percent, for cash gifts only made to public charities and certain foundations but not donor-advised funds. SOURCES: MICHIGAN NONPROFIT ASSOCIATION,

` Still being defined

NATIONAL COUNCIL OF NONPROFITS, CULTURESOURCE

` Aimed at nonprofits and businesses

AND CRAIN’S DETROIT BUSINESS RESEARCH

The legislation would provide another $60 billion in emergency funding for nonprofits, allow nonprofits of any size to qualify for expanded SBA loans and create a universal charitable deduction for the 2019, 2020 an 2021 tax years. Michigan Democratic Rep. Elissa Slotkin is among the bill’s co-sponsors. The SOS America Act would be “a good thing long term and help to deal with some of the potential issues and concerns ... around the charitable sector being able to access some of these loan programs and making sure the sector is shored up during a time of crisis at a time when we know families are relying on them most right now,” said Regina Bell, director of government relations and public policy for the Council of Michigan Foundations. To bolster the Paycheck Protection Program loan funds available, Senate Majority Leader Mitch McConnell, R-Kentucky, on April 9 introduced a measure to add another $250 billion to the $350 billion already allocated for the loans in the CARES Act. Senate Democrats blocked the measure amid demands that it include broader funding and other stipulations, including protections for under-served communities, Newsweek reported.

make changes that will increase nonprofit access to current and new stimulus funding and to expand the universal, above-the-line charitable deduction included in the CARES Act. “Like many of you in the last week, Independent Sector had to gather our documents and contact our own banking institution to apply for relief funds provided through the CARES Act. We found it to be a cumbersome and unclear process,” said Independent Sector President and CEO Dan Cardinali in a recent letter posted on the organization’s website. “We heard from many of you with similar tales of unanswered phone calls and unclear websites,” he said. “In our bank’s application, we were forced to put down an ‘owner’ of our organization, depicting how nonprofits are seen as extensions of the business community, rather than distinct and vital resources that need preferential treatment during this time.” Michigan Nonprofit Association President Donna Murray-Brown has been working with her former colleagues in the banking industry to let them know the loan application forms were not specifically designed for nonprofits, so adjustments have to be made, said Joan Gustafson, external affairs officer for the Lansing-based association. The SBA is working on answers of what to do with those types of boxes, she said. “We’re advising (nonprofits) right now to put in nonprofit or write in n/a.”

Ramping up advocacy

JOIN US

with 500-10,000 employees.

Nonprofit leaders are ramping up advocacy efforts to make sure nonprofits can access the COVID-19 relief loans/grants. Washington, D.C.-based Independent Sector and the National Council on Nonprofits last week called on the financial industry and legislators to

Contact: swelch@crain.com; (313) 446-1694; @SherriWelch

COVID-19 HEROES

The essential workers keeping buildings clean find new set of challenges BY KIRK PINHO

Charmaine Jones wakes at 5 a.m. every day in her west side Detroit home. Jones, a 28-year-old lifelong city resident and mother of two young girls, is just one of the many building maintenance and cleaning crew workers that are considered essential employees by the state. As untold numbers of office workers around Michigan are working from home under Gov. Gretchen Whitmer’s stay-at-home order, Jones and the 90 other Bedrock LLC day porters and those employed by other real estate companies to keep office buildings up and running don’t have the same flexibility. Although sparser crowds pass through office buildings these days, they must be maintained for the few still working in them. For Jones, who started at Dan Gilbert’s Detroit-based real estate company in October 2016, each day brings a new set of challenges with schools shuttered for the remainder of the academic year. She has to arrange for family to watch her two girls, ages 3 and 5, during her work day, which runs from around 9 a.m. to 5:30 p.m. “Sometimes it’s a struggle, sometimes it’s not,” Jones said. And although Bedrock is provid-

Jones

Raese

COVID-19 Heroes In the world-changing fight against the coronavirus, heroes take many shapes. Crain’s wants to recognize some of the people who are stepping up, in ways big and small. If you know a COVID-19 Hero, email crainsdetroit@crain.com and tell us their story.

ing Lyft ride-sharing service vouchers to its workers who have to be on-site daily, sometimes drivers aren’t available when she needs to leave in the morning, leaving her daily commute in flux. In spite of the difficulties — which also include making ends meet as a single mother — Jones says she enjoys what she does and is thankful for her coworkers. “People may feel like they’re not appreciated, but I appreciate them,” she said. Bill Raese, supervisor of day porters and general maintenance for

Southfield-based Continuum Services LLC, a subsidiary of Southfield-based developer and landlord Redico LLC, said that he and his 17 workers have been cleaning in largely empty buildings. “In some cases, there’s maybe one or two tenants in a 10-floor office building or even a 20-floor office building, down to one or two tenants,” he said. “We’ve evolved to the point where we’re doing a little different type of work but we are doing a lot more work in regards to disinfecting. Three times a day, we go through and disinfect door handles, elevator buttons, elevator walls, handrails, restrooms.” And for Pamela Owens-Moore, a janitor of 32 years who currently works in the Millender Center downtown and is executive board member of the SEIU Local 1 union, things have changed the last several weeks. “It’s different being there,” she said. “It feels different, it feels scary ... I don’t think people think our lives matter. When I come out of that building, I’m a mother, a grandmother, an aunt. A lot of janitors take the bus to work and they are fearful.” Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

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FINANCE

ID Ventures, MEDC launch new relief fund for Michigan tech startups BY NICK MANES

Michigan’s early stage technology startups have another support route they can take as many face financial struggles due to COVID19’s economic impact. The Michigan Economic Development Corp. and Detroit-based ID Ventures on Thursday announced the $3 million Tech Startup Stabilization Fund. The new fund, administered by Detroit-based seed capital fund ID Ventures, will provide direct investments or loans of between $20,000 and $100,000 that can then be converted into equity. In some cases the fund may offer larger amounts, according to a statement, and early-stage startups beyond the ideation phase that have already raised venture capital or angel funding will be prioritized. In a statement, the organizations said the fund will prioritize investments and loans for early stage companies that demonstrate the following criteria: ` Technology-based companies headquartered in Michigan with the majority of employees in the state ` Early stage technology and innovation-based businesses with fewer than 50 employees ` Strong team that has proven execution capability ` Prior investment from angel or venture capital sources, with

PROUD TO ANNOUNCE

“JUST AS IMPORTANT AS SUPPORTING MAIN STREET BUSINESSES, WE NEED TO ENSURE WE ARE PROTECTING THE ECONOMIC DIVERSITY OF OUR ECONOMY BY SHORING UP OUR HIGH-TECH COMMUNITY. ”

%1/+0) 61 &1906190 .#05+0)

— Patti Glaza, managing director of ID Ventures and executive vice president of Invest Detroit.

matching angel and/or venture capital funds encouraged ` Pre-COVID-19, was on path for next round of funding, with favorable relationships in place ` Strong customer value proposition ` Conveys that company can survive and thrive post-crisis “ID Ventures is an investor in many early stage tech startups across Michigan and deeply embedded in the state’s startup ecosystem. We are already seeing firsthand how the pandemic is negatively affecting promising companies with a high potential for job creation,” said Patti Glaza, managing director of ID Ventures and executive vice president of Invest Detroit. “Just as important as supporting main street businesses, we need to ensure we are protecting the economic diversity of our economy by shoring up our high-tech community. We are grateful to the MEDC for this critical assistance and eager to get this investment to the com-

panies that need it.” The MEDC has a host of initiatives aimed at helping businesses negatively impacted by the COVID-19 pandemic. Earlier this month the state approved changes to its Business Accelerator Fund, which expands tech startups’ ability to tap into grant funding. “In the face of this public health crisis and the economic uncertainty it is creating, it is more important than ever to encourage and support high-tech companies in the state in bringing their innovations to life,” Fred Molnar, vice president of the entrepreneurship and innovation initiative at the MEDC, said in a statement. “Through the creation of this (Tech Startup Stabilization Fund), we are hoping to provide a critical source of capital for early-stage tech companies in Michigan that will allow them to survive and succeed once this crisis is over.” Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

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APRIL 20, 2020 | CRAIN’S DETROIT BUSINESS | 7

COMMENTARY

Clear, consistent plan key to reopening economy safely

DANIEL SAAD

BY RICH STUDLEY AND JOE LEHMAN

COMMENTARY

Stay course on stay-at-home order to save lives BY EMILY HURST, D.O.

As a critical care physician on the front lines of the COVID-19 pandemic, I can tell you the very future of Michigan is at stake. This disease knows no boundaries, and is ravaging individuals and families in every corner of our state. Emily Hurst, Gov. Gretchen WhitD.O., is a critical mer’s “Stay Home, Stay care physician Safe” order has put in for Henry Ford place unprecedented soHealth Care System. cial distancing and stay-athome requirements that are keeping Michiganders safe — and alive. As someone dealing with infected patients day in, day out, I truly appreciate Gov. Whitmer’s strong and decisive leadership that is saving countless lives every day. The fight against COVID-19 is long from over, and the governor’s plan is requiring temMICHIGAN porary sacrifices for CANNOT long-term gain as we look ahead to restartFLATTEN THE our economy and CURVE AND STOP ing normalcy in our personal lives. LOSS OF LIFE It can be incredibly UNTIL PEOPLE hard to stay home and apart from loved ones CONSISTENTLY and routine activities, STAY HOME. but the simple act of staying home is saving lives and allowing our front line health care workers the ability to provide the most comprehensive care possible for all of our patients. Health care providers like myself have committed our lives to saving those of others, but many of us are also falling ill due to COVID-19.

We are running on fumes to keep things going. Another surge of patients would be disastrous. Gov. Whitmer’s order ensures we reduce further spread and avoid overwhelming our health care system — and both are needed. We’re hearing more calls every day to end the stay-at-home order and resume life as normal. I can’t be more clear: If we change course now, the number of infections and deaths will almost certainly spike again. Many doctors are also small business owners and employers who are struggling during this unprecedented crisis. I have heard stories from colleagues and friends about layoffs and closures. Doctors also want to see the economy reopen, but to do this prematurely before we are ready and before we have a plan will undermine the progress we have made, and make our bad economic situation even worse. Michigan cannot flatten the curve and stop loss of life until people consistently stay home. People — including front line health care workers — continue to die in our state and a key part of stopping these tragedies is keeping nonessential workers home, period. There is no question the governor’s order and response by Michiganders has begun to slow the spread of COVID-19, allowing hospitals like ours the ability to maintain much-needed capacity to care for sick patients. We must continue to follow the advice and guidance of our health care professionals and scientists tracking the spread of this disease. It is imperative we stay the course with Gov. Whitmer’s plan. If you don’t do it for yourself, do it for your parent in the nursing home, your sibling with a preexisting illness and at greater risk, or your children who represent Michigan’s future. Or, do it for health care workers like my colleagues risking their lives on the front lines every day to save as many lives as possible. Together, we will get through this crisis. For now, please: Stay home, and stay safe.

A month into the longest declared emergency in state history, and Michiganders are still concerned for their health, worried about their jobs and income and, of course, wondering when all this will end. While everyone has been impactRich Studley is ed in some way by this executive coronavirus outbreak, director of the there’s no doubt the brunt Michigan of the burden landed on Chamber of Detroit and Southeast Commerce. Michigan. No one knows better than Detroiters that we need to make plans to safely reopen the economy as quickly as possible. Public health and safety should always come first, of course. But those who think protecting public health and restoring the economy are competing goals are forgetting that Joe Lehman is the resources needed to president of the assure public health are Mackinac Center for Public produced only by a strong economy. We must also Policy. take into consideration the fact that long economic recessions also impact public health. The good news is we do not have to choose one or the other: we can both protect the public health and safely restart the economy at the same time. That should be the focus of policymakers as we transition out of this emergency state. That’s why our two organizations partnered to create guidelines to help policymakers set the state on a course for a fast and full recovery. While we recognize the important and distinct role government must play in times of crises, Michigan’s private sector has been and will continue to do its part. Large employers, such as Ford and Mahindra, have made headlines by shifting some manufacturing to medical devices and others have as well for donating materials to hospitals. But small businesses are helping too, making masks and finding innovative ways to serve customers remotely. Firms of all types are also making significant accommodations to protect the health of their employees. While Gov. Gretchen Whitmer has extended powers during this emergency, our guidelines recommend to policymakers to stay in their lane and recognize their limited role as the state moves into economic recovery. Nothing has the potential to set the recovery back more than needlessly interfering public policies. Although this is an unprecedented time, economic laws and good fiscal principles have not changed. These suggest that policies related to the recovery should be broad-based and impose minimal compliance costs. Policies should be clear and consistent, for both the remainder of the emergency and the recovery period. Gov. Whitmer’s current orders

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited for length or clarity. Send letters to Crain’s Detroit Business, 1155 Gratiot Ave, Detroit, MI 48207, or email crainsdetroit@crain.com. Please include your complete name, city from which you are writing and a phone number for fact-checking purposes. 8 | CRAIN’S DETROIT BUSINESS | APRIL 20, 2020

lack this, as evidenced by the state’s need to write over 500 answers to “frequently asked questions.” Rule by FAQ is neither efficient nor effective, as businesses are perpetually unsure if they are in compliance. Better policies would create clear guidance that firms can understand without consulting an attorney. Perhaps more than ever, policymakers should aim to grow the private sector’s trust. The response to this outbreak is stretching countless firms thin and many may be forced to close. Recent protests demonstrate a growing unease among the public. An important way to build this trust is to be more transparent about how decisions are being made, both during the rest of this emergency and into the recovery. This is one reason why Gov. Whitmer’s extended stay-at-home order was troublesome to many: It failed at explaining why these stricter measures were necessary. The longer firms are shuttered and restricted, the deeper the economic recession. Getting as many firms back in business and fully operational should be the immediate focus. The THE LONGER most sensible way of determining this is to FIRMS ARE set safety standards SHUTTERED AND and give firms the opportunity to meet RESTRICTED, them. Businesses THE DEEPER THE maintaining these standards should be ECONOMIC allowed to reopen im- RECESSION. mediately. This would enable the state to offer a more predictable and consistent approach, better than the current effort to categorize everything as either “essential” or “nonessential.” The coronavirus has shaken the entire global economy, and its full effects are still not yet known. For this reason, Michigan should focus on our economic fundamentals during the recovery. Instead of trying to assess which economic sector or concern is the most vital — an inherently subjective decision — policymakers should make it easier for all Michigan employers to create jobs and for any entrepreneur to start a new endeavor. The aim should not be to piece the economy back together, but to clear a path for it to grow again. It’s clear that we have a long road ahead of us. But Michigan businesses are resilient and will be so again. This challenge is no match for the strength and tenacity of Michiganders. With the help of sound public policies and a proper supporting role for state government, Michigan’s entrepreneurs and hard-working employees will rebuild the state’s economy into an even stronger force for prosperity and well-being.

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.

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

Pandemic highlights need for new school funding model BY RICK JOHNSON AND RANDY LIEPA

Every day, Michigan’s public school teachers and support staff are going above and beyond to serve the unique needs of our students and their communiRick Johnson, ties during the former continuing Republican Michigan House COVID-19 pandemic. Speaker Teachers are providing online instruction, support staff are ensuring individual student mental health needs are being met, and our food service workers are making sure no student goes hunRandy Liepa, gry. As school Ph.D., Wayne buildings remain RESA closed, educators superintendent across Michigan are working harder than ever to help every child succeed under unprecedented circumstances. During this time of crisis, we also have the opportunity to really think about some of our most critical public services, such as public education, and reflect on how we want them to work for us in both good times and bad. It leads us to think about the broken school funding model that has only made current efforts more difficult. Putting aside the chronic underfunding of Michigan’s classrooms, there has been a growing call in recent years for Michigan to abandon its one-size-fits-all approach to

CRAIN’S AWARDS

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

THE DEADLINE TO NOMINATE A CANDIDATE IS MONDAY, MAY 4.

school funding and adopt a new rethinking of Michigan’s school model that reflects real needs inside funding formula to create a needsbased method we need now more our classrooms. We are proud to serve on the than ever. School Finance Research CollabTHE GROUP’S FINAL REPORT RECOMMENDS orative, which produced Michi- A COMPLETE RETHINKING OF MICHIGAN’S gan’s first comp r e h e n s i v e SCHOOL FUNDING FORMULA TO CREATE A school adequacy NEEDS-BASED METHOD WE NEED NOW study that determined the true MORE THAN EVER. cost to educate a By adopting the report’s recomchild in Michigan regardless of income, ZIP code, learning challenges mendations, Michigan can leave beor other circumstances. The group’s hind an outdated and arbitrary final report recommends a complete school funding model that treats all

students as if they have identical needs. This new approach would provide the additional resources needed to help all students meet Michigan’s rigorous academic standards, including those enrolled in special education or living in poverty, and students who speak English as a second language. Most importantly, this new approach would fund the real needs of each and every student and leave schools better prepared to support their success in the best of times, and provide greater opportunity in times of crisis and uncertainty. There’s no question the ongoing COVID-19 crisis is going to have a

devastating impact on Michigan’s economy and leave far fewer resources to invest in our schools moving forward. That is the reality of the situation we now face. And yet, what better time can there be to embrace this challenge and work to ensure every dollar spent on our schools is dedicated to helping all students succeed. The SFRC stands ready to partner with Gov. Gretchen Whitmer and lawmakers from both sides of the aisle to implement this long overdue change to help our schools and our students through this crisis and better support them for years to come. We owe them nothing less.

Take Heart, Michigan.

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

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

APRIL 20, 2020 | CRAIN’S DETROIT BUSINESS | 9

Q&A

MACOMB COUNTY REAL ESTATE

NEW RETAIL REALITY

Traffic is down along Macomb County’s M-59-Hall Road corridor during the pandemic.

Hall Road, other shopping centers face changing landscape amid COVID-19  Hall Road, other shopping centers face changing landscape amid COVID-19. THIS PAGE

BY KIRK PINHO

What is perhaps Metro Detroit’s busiest shopping corridor is hurting. At 10.5 miles, the stretch of M-59/Hall Road that runs east to I-94 in Macomb County produces one of the most formidable retail hot spots in the region. So what happens when half of the 90,000 to 100,000 cars that traverse it daily stay in their driveways or garages? Nothing pretty. But Hall Road serves only as a snapshot — albeit an outsized one — for the area’s retail sector amid a once-ina-century public health pandemic that has killed more than 2,000 across the state as of April 16 and arrested the state’s economy. The same can likely be said for busy stretches like Big Beaver Road through Troy and Ford Road running through Canton Township, among others. Hall Road offers shoppers of a wide swath of incomes big-box stores like Walmart and Target and Meijer Inc., mom-and-pop businesses, national and international clothiers, local grocers and Krogers, and a pair of regional shopping centers — all of which are attempting to navigate the new retail reality the COVID-19 outbreak hath wrought.

10 | CRAIN’S DETROIT BUSINESS | APRIL 20, 2020

 Uptick in demand for industrial space may signal sector poised for rebound. PAGE 11

Parking lots and stores along the M-59-Hall Road Corridor. | LARRY PEPLIN FOR CRAIN’S DETROIT BUSINESS

“These are obviously completely different circumstances, but the fallout of what’s happening right now is reminding me a lot of what happened during the great recession,” said Luke Bonner, senior economic development adviser for Sterling Heights and CEO of Ann Arbor-based economic incentive, real estate and economic development consulting company Bonner Advisory Group LLC.

“The reality right now is I think relationships matter most in all this, tenant-landlord relationships. I think everyone needs to understand the situation everyone is in before everyone starts throwing the baby out with the bathwater.” From owners to landlords to bankers, there are no sacred cows, and no sacred trunklines. None are spared. See REALITY on Page 12

“THESE ARE OBVIOUSLY COMPLETELY DIFFERENT CIRCUMSTANCES, BUT THE FALLOUT OF WHAT’S HAPPENING RIGHT NOW IS REMINDING ME A LOT OF WHAT HAPPENED DURING THE GREAT RECESSION.” — Luke Bonner, senior economic development adviser for Sterling Heights and CEO of Bonner Advisory Group LLC

LARRY PEPLIN FOR CRAIN’S

Lombardo Homes’ Greg Windingland on trends, affordability and the coronavirus PAGE 12

FOCUS | MACOMB COUNTY REAL ESTATE

Uptick in demand for industrial space may signal rebound Macomb County outpaced region with 2.8 percent vacancy rate before coronavirus hit BY KIRK PINHO

Up until last month, the industrial market in Macomb County was performing about as well as any in the region. The vacancy rate in Metro Detroit was 4 percent across nearly 399 million square feet, with one-fifth of that market, or nearly 83 million square feet, in Macomb County outpacing the region at just 2.8 percent vacancy, according to a first-quarter report from the brokerage firm Newmark Knight Frank. Warehouse/distribution space ($6.52 per square foot) and general industrial ($5.25 per square foot) bested the regional average of $5.30 and $5.53 per square foot, respectively. Then March 10 hit, the day the first coronavirus cases in Michigan were revealed, and everything was upended. The state’s stay-at-home order has prompted businesses to shut down, and many had already halted operations to prevent the spread of COVID-19. “The repercussions of the virus on the industrial real estate market are likely to be a halt to new construction starts, as manufacturing comes to a standstill; a decrease in leasing activity; downward pressure on rents, as tenants become financially bur-

A Burton-Katzman industrial building at 7000 19 Mile Road in Macomb County. | COSTAR GROUP INC.

dened; and increased vacancies,” the Q1 report reads. Peter Burton, principal of Bingham Farms-based developer Burton-Katzman LLC, said a dozen tenants in the company’s approximately 45-building, 5 million-square-foot industrial portfolio have asked for rent relief for several months as a result of the coronavirus outbreak. That has been tricky because lease modifications need lender approval, Burton said. “But there hasn’t yet been a single instance where a lender said they’re not going to cooperate, which is real-

ly a fantastic time because typically lenders won’t,” he said. And Kevin Hegg, vice president in the Canton Township office of New York City-based industrial/warehouse developer and landlord Ashley Capital, said many tenants on the company’s rent rolls have asked for rent deferral. But there has also been an uptick in the need for warehouse space, he said, with short-term requests of three months to a year for space ranging from 150,000 to 200,000 square feet. “We received calls from national

grocery store chains looking to stockpile paper products early on to disinfectant companies that make sanitizers and hand wipes who have trailer loads full of products that they need to place quickly,” Hegg said. “We’ve also been contacted by logistics companies that are handling personal protective equipment for customers that are working in conjunction with FEMA.” Peter J. Kepic, senior vice president specializing in industrial real estate in the Southfield office of brokerage house Colliers International Inc., has seen a similar uptick in demand.

“While we are obviously seeing a temporary slowdown in activity due to stay-at-home orders, we’ve seen a spike in activity for short-term needs supporting COVID-19 related issues,” he said. “For example, we have seen a recent demand for temporary warehousing of supplies and manufacturing of medical equipment, hand sanitizer, etc. These are short-term deals but plugging the few holes that exist throughout Macomb County while we work through the current situation.” Hegg remains confident that when the dust settles, the industrial market will continue its hot streak. “Right now, if we come out of this relatively quickly, the demand that was there before this happened didn’t go away,” he said. “It’s just been put on the back burner. So a tight market is probably going to get tighter and, knock on wood, I’m fairly optimistic.” And Kepic says industrial real estate will be quick on the rebound. “The general sense is that industrial space will be the first to bounce back and should hopefully remain a bright spot in the real estate economy as we come out of this,” Kepic said. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

We are more than just coworkers—

We are a team and everyone makes a vital contribution to our success. #StronglyHeldBeliefs

APRIL 20, 2020 | CRAIN’S DETROIT BUSINESS | 11

FOCUS | MACOMB COUNTY REAL ESTATE

REALITY

From Page 10

Just last week, the parent company of chain restaurants Bravo! Cucina Italiana and Brio Tuscan Grille — FoodFirst Global Restaurants — filed for Chapter 11 bankruptcy; Brio has a location at The Mall at Partridge Creek in Clinton Township, Restaurant Business reported. Justin Winslow, president and CEO of the Michigan Restaurant and Lodging Association, has previously estimated that as many as one-third of the state’s more than 16,000 restaurants may fall victim to the pandemic. “For some retailers that were hanging on by the skin of their teeth, this could be a knockout punch for them,” said Joseph Sowerby, partner for Mt. Clemens-based commercial real estate firm Anton, Sowerby & Associates. Tenants that have outposts along the stretch have asked for rent forgiveness and, in some cases, received it, like at Lakeside Mall. They populate a dense retail corridor with millions of square feet across its 10.5 miles. According to CoStar Group Inc., a Washington, D.C.-based real estate information service, Macomb County as a whole has two of the three most valuable retail markets in the region — eastern Macomb and western Macomb, both valued at

Lakeside Mall in Macomb County has granted its tenants rent forgiveness during the coronavirus pandemic.

Q&A

Greg Windingland on trends, value and the coronavirus slowdown BY KIRK PINHO

Greg Windingland began his commercial real estate career in 2002 after spending 23 years as a municipal government employee with Rochester Hills. Today, as vice president of land development for Shelby Township-based homebuilder Lombardo Homes, Windingland is responsible for overseeing due diligence all the way to rezoning, land division, infrastructure improvements and utilities. He spoke with Crain’s last week about what he has been seeing in the homebuilding industry in Macomb County and, more recently, in the wake of the coronavirus pandemic.  Crain’s Detroit Business: Give us a feel for what you’ve seen the last year or two in the single-family home building market. Windingland: As far as sales last year, we had a very strong year. That was across the board in Macomb County, Oakland County, Livingston, Washtenaw, Wayne County. Pretty much wherever we are, we had a very good year. Even March of this year. We had forecasted 51 sales and we wound up with 49. So we did very well in March. April, of course, has been very challenging, just because of the remoteness. We can’t meet face-to-face with our customers, so we are doing video appointments with them. We have virtual tours of our homes, but it’s still not the same as being able to sit down with a customer and talk to them.  I imagine that opening the state back up will be a very gradual psychological process as opposed to something that just happens overnight at, you know, 12:01 a.m. on whatever day. What does that look like on the construction and home development side of things? We’ve been talking about figuring out 12 | CRAIN’S DETROIT BUSINESS | APRIL 20, 2020

“WE’VE BEEN TALKING ABOUT FIGURING OUT A STRATEGY FOR IT (THE STAY AT HOME ORDER ENDING) BECAUSE RIGHT NOW, OBVIOUSLY THERE’S A PIPELINE.” — Greg Windingland, vice president of land development, Lombardo Homes

a strategy for it because right now, obviously there’s a pipeline. Being a production building, we have things very structured and sequenced. With everything essentially coming to a halt, that pipeline is just backing up. Once we get the OK to go back to work and our trade partners get the OK to go back to work, we expect there’s going to be a lot of competition for their time. So we’re trying to get ourselves in the best position to be ready. We’ve got many homes that are very close to closing, that were within a matter of days from closing, that are sitting there. We’ve got open excavations that we fenced off. We’ve got a lot of things in the pipeline. One of our biggest concerns is just having the ability to get the trades back on our sites versus having them go to other sites.

versation about how hard it’s been to get into the entry-level housing market with the way the economy has worked, so what do you see in terms of demand?

 What other trends or overarching issues are you seeing on the ground out there? Prior to the recession, you could go from the start of a site plan to get it all municipally approved and permitted and ready to go in probably 12 to 18 months. And then during the recession, a lot of municipalities lost their institutional knowledge with retirements or buyouts or whatever. So I don’t think we’d still come back to the point where there’s that across the board level of experience. It seems now it’s taking us 24 months, where it used to take 12 to 18 months to get a site approved. So we’re working a lot sooner than we otherwise would have to get sites permitted and ready to go.

 What else should we know before I let you go? Other than like I talked about with that plug in the pipeline right now, but once it releases, we do think residential home construction is going to be very strong again. All the other indicators leading up to this had been very good for us, so we’re very optimistic it’s just a matter of getting through it.

 What are you seeing on the demand side of things, relative to the price ranges? There’s been a lot of con-

Customers are looking for the best value they can get. When we go to a municipality, there’s usually discussion about affordability and bringing affordability into the community. But it seems like the requirements that the municipalities impose on you, whether it’s stormwater requirements or pavement thickness or whatever it might be, those all drive the cost up. So, it is kind of a conflict with being able to provide the affordability component. We’re really niche, where we capture a lot of the first-time homebuyer, but we also get everything else in that spectrum.

 You were saying you had 51 anticipated home sales in March and came in with 49. Are there other indicators or metrics that reinforce that? Just a lot of traffic we had prior to this, people going through our models and registering. That’s a designated indication for the traffic and it had been very strong. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

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FOCUS | MACOMB COUNTY REAL ESTATE

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$3.1 billion for $6.2 billion in value. Only the southern I-275 corridor matches it ($3.1 billion); St. Clair and Lapeer counties combined total $2.4 billion while Washtenaw County west of U.S.-23 is $2.4 billion. Strictly along Hall Road at its western edge in Utica to the west at I-94, there is at least 5.1 million square feet of retail space with a 4.1 percent vacancy rate and rents at $24.07 per square foot, CoStar says. Lakeside Mall is 1.55 million square feet, while The Mall at Partridge Creek is 650,000, totaling 2.2 million. By comparison, Twelve Oaks Mall in Novi is 1.5 million square feet and Somerset Mall in Troy is 1.45 million square feet. In the second quarter, vacancy along Hall Road’s retail space is expected to bump slightly to 4.4 percent. Much of the square footage is shuttered under Gov. Gretchen Whitmer’s stay-at-home order limiting business activity in the state in an effort to stymie the virus’ spread across the state’s 83 counties. How Hall Road and other major retail corridors reopen is an open-ended question. “I think it’s going to take time to get back to normalcy while keeping our social distancing when meeting for a drink or coffee,” said Louis Ciotti, an associate broker with Farmington Hills-based Landmark Commercial Real Estate specializing in Macomb’s dense retail footprint.

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“HALL ROAD WILL MAINTAIN ITSELF BECAUSE IT’S A THRIVING CORRIDOR, A NATIONAL CORRIDOR AND A STRONG MARKETPLACE.” — Louis Ciotti, associate broker, Landmark Commercial Real Estate

“There will be apprehension while doing so.” The closings trickle up to the banks. With revenue depleted or nonexistent, tenants have a tough time paying rent. When that happens, landlords have a difficult time making debt service payments on their loans. There are no fewer than three dozen commercial mortgage-backed securities loans along or near the Hall Road corridor that could be impacted by decreased retail and vehicular traffic, according to data provided by Trepp LLC, a

New York City-based company that tracks CMBS debt. In Macomb County alone, there is $6.57 billion in CMBS debt across more than 200 loans across all property types, ranging from retail to multifamily, industrial to office, hotel to storage. CMBS debt that is secured by hotels and retail is generally expected to be the most at risk. In recent weeks across the region, hotels have hovered between 20 and 25 percent occupancy and pulled in just a quarter of the revenue they did before the coronavirus pandemic struck, according to STR, a hotel-industry analysis firm with its North American headquarters in Tennessee. “It’s definitely going to be a process, and it’s not coming back overnight,” said Ophir Sternberg, the new owner of Lakeside Mall in Sterling Heights and head of Miami-based Out of the Box Ventures LLC, a subsidiary of Lionheart Capital LLC. “It’s a strong retail corridor and will stay strong.” Ciotti agreed. “Hall Road will maintain itself because it’s a thriving corridor, a national corridor and a strong marketplace. It just may take some time to get the consumer back to spending dollars at the different types of businesses.” Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

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CRAIN'S LIST: GENER GENERAL AL C CONTR ONTRA ACTOR ORS S Ranked by 2019 revenue Company Address Phone; website

Top local executive(s)

Barton Malow Holdings LLC

Ryan Maibach president and CEO

Walbridge

Michael Haller 1 CEO John Rakolta, III executive VP, chief administrative officer

Aristeo Construction Co.

4 5

Revenue ($000,000) 2019/2018

Value of new contracts ($000,000) 2019/2018

Local employees Jan. 2020

Total new projects 2019/2018

Southeast Michigan projects started 2019

$1,900.0

$1,699.6 $1,950.0

1036

403 359

170

1,810.0

NA 1,685.2

353

NA 202

Michelle Aristeo Barton president

467.8

375.5 359.5

488

461 370

Clark Construction Co.

Charles Clark CEO

350.0

NA NA

The Christman Co.

Ronald Staley senior VP, Southeast Michigan operations

321.8

1,136.7 1,002.1

354 276

106

Roncelli Inc.

Gary Roncelli, chairman and CEO; Thomas Wickersham, president and COO

302.0

NA 255.0

252

NA 85

Commercial Contracting Corp. (Commercial Contracting Group Inc.)

Stephen Fragnoli president and CEO

280.2

426.1 NA

175

NA NA

Turner Construction Co.

David Kelly vice president and general manager

247.0

118.9 635.2

30 42

Ideal Contracting

Frank Venegas Jr. chairman and CEO

227.3

NA 223.0

313

NA 840

George W. Auch Co. (dba Auch Construction)

Vincent DeLeonardis president and CEO

213.8

435.8 234.5

105

145 143

145

Sachse Construction and Development Co. LLC

Todd Sachse, CEO and founder; Steve Berlage, president and COO

208.0

239.0 195.0

163

172 200

Granger Construction Co.

Tim VanAntwerp vice president

167.9

480.2 123.8

70 89

Walsh Construction Co.

John Kiessling, executive vice president ; Sam Bahou, vice president

161.7

87.4 430.0

100

3 6

Oliver/Hatcher Construction and Development Inc.

Paul Hatcher president Paul Oliver principal

141.0

93.5 NA

17 33

Kasco Inc.

Michael Engle vice president

123.8

60.0 100.0

120

100 130

C.E. Gleeson Constructors Inc.

Charles E. Gleeson II, president and CEO; Brad Baker, VP of Construction Operations

110.0

175.0 140.0

26 43

DeMaria

Joseph DeMaria Jr., CEO; Anthony DeMaria, president

101.8

95.0 137.0

123

47 56

Frank Rewold and Sons Inc.

Frank Rewold president and CEO

97.9

89.5 205.0

30 25

Kirco Manix

Douglas Manix president

89.0

130.0 150.0

20 25

O'Brien Construction Inc.

Timothy O'Brien president

86.8

NA 34.1

NA 9

Alberici Constructors Inc.

Aaron Walsh general manager

71.3

103.1 27.8

8 6

Ronnisch Construction Group

Bernd Ronnisch president and CEO

56.0

NA NA

A.Z. Shmina Inc.

Andrew Shmina president

28.0

32.0 25.0

25 20

MIG East LLC dba/ MIG Construction

Paul Jenkins Sr., CEO; Brian Deming, president

24.5

NA NA

White Construction Co., Inc.

Donovan White president and CEO

15.6

8.5 NA

13 NA

1 2

8 9

18 19

26500 American Drive, Southfield 48034 248-436-5000; www.bartonmalow.com 777 Woodward Ave., Suite 300, Detroit 48226 313-963-8000; www.walbridge.com

12811 Farmington Road, Livonia 48150 734-427-9111; www.aristeo.com 3535 Moores River Drive, Lansing 48911 517-372-0940; www.clarkcc.com The Fisher Building, 3011 W. Grand Blvd., Suite 2600, Detroit 48202-3030 313-908-6060; www.christmanco.com 6471 Metropolitan Parkway, Sterling Heights 48312 586-264-2060; www.roncelli-inc.com 4260 N. Atlantic Blvd., Auburn Hills 48326 248-209-0500; www.cccnetwork.com

535 Griswold St., Suite 1525, Detroit 48226 313-596-0500; www.turnerconstruction.com/office-network/detroit 2525 Clark St., Detroit 48209 313-843-8000; www.idealcontracting.com 65 University Drive, Pontiac 48342 248-334-2000; www.auchconstruction.com

1528 Woodward Ave., Suite 600, Detroit 48226 313-481-8200; www.sachseconstruction.com

39475 13 Mile Road, Suite 100 , Novi 48377 248-724-2950; www.grangerconstruction.com 3011 W. Grand Blvd., Suite 2300, Detroit 48202 313-873-6600; www.walshgroup.com 27333 Meadowbrook Road, Suite 100, Novi 48377 (248) 374-1100; www.oliverhatcher.com

226 E. Hudson St., Royal Oak 48067 (248) 547-1210; www.kascoinc.com 984 Livernois, Troy 48083 (248) 647-5500; www.gleesonconstructors.com 3031 W. Grand Blvd., Suite 540, Detroit 48202-3008 (313) 870-2800; www.demariabuild.com 333 E. Third St., Suite 300, Rochester 48307 (248) 651-7242; www.frankrewold.com 101 W. Big Beaver, Suite 200, Troy 48084 (248) 354-5100; www.kircomanix.com 966 Livernois Road, Troy 48083 (248) 334-2470; www.obriencc.com 26711 Northwestern Hwy. Suite 255, Southfield 48033 734-367-2500; www.alberici.com 4327 Delemere Ct, Royal Oak 48073 248-549-1800; www.ronnisch.com

11711 Grand River, Brighton 48116 (810) 227-5100; www.azshmina.com 422 W. Congress Ste. 400, Detroit 48226 313-964-3155; www.migconstruction.com 1120 W. Baltimore St., Detroit 48202 313-872-6700; www.whitecon.com

$1,900.0

1,340.0

470.0

274.0

305.2

263.0

367.0

206.5

183.5

191.8

213.0

191.7

78.4

72.0

71.1

101.7

145.7

139.6

80.0

119.1

63.2

39.0

25.0

16.3

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

This list of general contractors is a compilation of the largest such companies in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. 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. Companies with headquarters elsewhere are listed with the address and top executive of their main Southeast Michigan office. The Colasanti Cos. which was No. 14, Dearborn Mid-West Co. which was No. 17, Spence Brothers which was No. 21 and Marsh Construction which was No. 22 on last year's list were all not able to respond before publication. Devon Industrial Group which was No. 18 declined to participate. NA = not available. 1 Succeeded John Rakolta Jr. as CEO after he was confirmed by the Senate in September to be the U.S. ambassador to the United Arab Emirates. LIST RESEARCHED BY SONYA D. HILL 14 | CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS | APRIL 20, 2020

CRAIN'S LIST: BIG DEALS: REAL E ES STATE S SALE ALES S Ranked by square feet 2019 Property

Buyer

Amazon Regional Distribution Center, Livonia

Cantor Commercial Real Estate LP, New York City

Promanas Inc. portfolio, Multiple

Morning Calm Management LLC, Boca Raton, Fla.

Faurecia North American headquarters, Auburn Hills

American Realty Capital, Jenkintown, Pa.

Earhart Corporate Center, Ann Arbor

Integris Ventures, St. Louis, Mo.

47440 Michigan Ave., Canton Township

Seller

Broker

Square feet

Price ($000,000)

Ashley Capital, Canton Township

CBRE Inc.

1,009,292

$86.8

Promanas Inc., Ann Arbor

Newmark Knight Frank

1,381,847

83.7

Lexington Realty Trust, New York City

JLL

278,000

48.4

Vereit Inc., Phoenix

JLL

196,057

36.1

Stag Industrial Holdings LLC, Boston

ValStone Asset Management LLC, Birmingham

Signature Associates Inc.

477,061

29.5

Lakeside Mall, Sterling Heights

Out of the Box Ventures LLC, Miami

Wells Fargo Bank, New York City

Farbman Group

1,505,504

25.7

The James, Ferndale

Krimson LLC, East Lansing

J.S. Capitol Group, Rochester Hills

CBRE Inc.

102,581

21.5

Joe Louis Arena, Detroit

Sterling Group, Detroit

Financial Guaranty Insurance Corp., New York City

CBRE Inc.

14.8

Park Avenue Building, Detroit

MKiezi Investments LLC, Troy

Harrington Properties LLC, Detroit

L. Mason Capitani Inc.

103,040

13.5

College Park Office Center, Detroit

Mermelstein Development LLC, New York City

Redico LLC, Southfield

Colliers International Inc.

184,767

13.4

Executive Hills North, Auburn Hills

Webasto Roof Systems Inc., Rochester Hills

Spirit Realty Capital, Dallas

Signature Associates Inc.

109,380

13.0

Concept Technical Park, Warren

Realta Group, Garden City, N.Y.

Broder & Sachse Real Estate Services Inc., Detroit

Signature Associates Inc.

243,635

12.6

Northfield Office Park, Troy

Group RMC, New York City

The Hayman Co., Southfield

CBRE Inc.

234,687

12.2

43155-43157 Nine Mile Road, Novi

Morning Calm Management LLC, Boca Raton, Fla.

Sterling Group, Detroit

Signature Associates Inc.

318,390

12.1

Three-property portfolio, Spring Arbor/Chelsea

Spirit Realty Capital, Dallas

Hatch Stamping Co., Chelsea

Signature Associates Inc.

193,527

12.0

53500 Grand River Ave., Lyon Township

Exotic Rubber, Farmington Hills

Brivar Construction, Brighton

Signature Associates Inc.

125,000

12.0

Mission Health Medical Center, Livonia

Global Medical REIT Inc., Bethesda, Md.

Mission Health Corp., Southfield

CBRE Inc.

61,621

10.5

36800 Woodward Ave., Bloomfield Hills

Vision Investment Partners, Birmingham

Danto Management LLC, Troy

Friedman Real Estate

46,678

8.6

Robbins Executive Park, Troy

Realta Group, Garden City, N.Y.

EA&S Investments, Birmingham

Colliers International Inc.

207,111

8.3

810 Van Riper, Fowlerville

Asahi Kasei Plastics North America, Fowlerville

CZ Cartage Inc., Fowlerville

Signature Associates Inc.

137,000

8.1

901 Tower Drive, Troy

Friedman Real Estate, Farmington Hills

Dominion Real Estate Advisors, Bingham Farms

Friedman Real Estate

125,612

7.7

5430 Data Court, Ann Arbor

Thiago Guerra, Ann Arbor

JPMorgan Chase, Miami

Friedman Real Estate, Mission Capital Advisors

89,000

7.7

3950 Pinnacle Court, Auburn Hills

U.S. Roof LLC, Troy

Monahan Development, Eastpointe

Newmark Knight Frank

123,352

7.6

47765 Halyard Drive, Plymouth

Brembo North America Inc., Plymouth

DeMattia Group, Westport, Conn.

Signature Associates Inc.

45,000

7.5

14061 Lappin St., Detroit

CoreCivic, Nashville

LNR Partners LLC, Miami Beach, Fla.

CBRE Inc.

36,520

6.9

Oakland Technology Park land, Auburn Hills

Fanuc America Corp., Rochester Hills

General Development Co., Friedman Real Estate, Southfield, Farmington Hills

Friedman Real Estate

6.4

Holly Plaza, Holly

Steward Real Estate Partners, Bloomfield Hills

Raymond Antoon, Farmington Hills

Friedman Real Estate

90,146

6.1

Two-property portfolio, Taylor

Ashley Capital, Canton Township

Manheim Remarketing Inc., Atlanta

CBRE Inc.

6.0

Eastern Market portfolio, Detroit

Firm Real Estate, Detroit

Gavrill Fermanis, Detroit

Farbman Group

34,925

5.7

3245 East Jefferson Ave., Detroit

West Second Street Associates LLC, Flint

Michigan Basic Property Insurance Association, Detroit

Farbman Group

45,383

5.6

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List is based on information from CoStar Group Inc., Crain's research, from published information or as submitted by brokers, advisers or property owners. Crain's has tried to list all brokers involved in a transaction, but in some cases brokers may have been omitted. 1 5.3 acres 2 40 acres. 3 75 acres. LIST RESEARCHED BY KIRK PINHO APRIL 20, 2020 | CRAIN’S DETROIT BUSINESS | 15

CRAIN'S LIST: BIG DEALS: IND INDU USTRIAL LEA LEASE SES S Ranked by square feet 2019 Property

Owner, owner city

6836 Georgia St., Detroit

Crown Enterprises Inc., Warren

FCA US LLC

Cushman & Wakefield

997,000

11851 Freud St., Detroit

Crown Enterprises Inc., Warren

FCA US LLC

Cushman & Wakefield

925,660

26090 23 Mile Road, Chesterfield Township

Metro International Trade Services, Romulus

Topvalco Inc

JLL, Signature Associates Inc.

711,547

9 Mile Road at Hoover Street site, Warren

Crown Enterprises Inc., Warren

FCA US LLC

Cushman & Wakefield

451,000

Brownstown Business Center South, Brownstown Township

Ashley Capital, Canton Township

Dakkota Integrated Systems LLC

Newmark Knight Frank

429,970

Tri-County Commerce Center, Hazel Park

Ashley Capital, Canton Township

Dakkota Integrated Systems LLC

Signature Associates Inc.

423,271

Brownstown Business Center South, Brownstown Township

Ashley Capital, Canton Township

Ford Motor Co.

Ashley Capital

373,580

6837 Wyoming, Dearborn

Comau LLC

Signature Associates Inc.

317,000

Mound Road Business Center, Warren

Ashley Capital, Canton Township

Mayco International

Newmark Knight Frank

311,123

537 Bradford St., Pontiac

Crown Enterprises Inc., Warren

Howard Ternes Packaging Co.

Newmark Knight Frank

303,077

6500 Huber Road, Detroit

FCA US LLC

Cushman & Wakefield

302,970

12 13

Former Stacy's Golf Center property, Warren

Hillwood Enterprises LP, Dallas

Modular Automotive Systems LLC

Colliers International Inc.

295,510

14200 Haggerty Road, Plymouth Township

Hillside Investments, Novi

Webasto Roof Systems

Signature Associates Inc.

290,000

Tenant

REZ Property LLC, Dearborn

Cherokee Insurance Co., Sterling Heights

Broker

Square feet

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List is based on information from CoStar Group Inc., Crain's research, from published information or as submitted by brokers, advisers or property owners. Crain's has tried to list all brokers involved in a transaction, but in some cases brokers may have been omitted. 1 Renewal plus expansion. 2 Lease renewal. 3 Build-to-suit. LIST RESEARCHED BY KIRK PINHO

CRAIN'S LIST: BIG DEALS: OFFICE LEA LEASE SES S Ranked by square feet 2019 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Property

Owner, owner city

Corporate Crossings, Dearborn

Ford Land Development Co., Dearborn

34375 West 12 Mile Road, Farmington Hills

Northern Equities Group, Farmington Hills

Marquette Building, Detroit

Sterling Group, Detroit

Earhart Corporate Center, Ann Arbor Southfield Town Center, Southfield

The Village at Bloomfield, Bloomfield Township/Pontiac Laurel Park Place Office Center, Livonia

CBRE Inc.

217,870

JLL, CBRE Inc.

180,000

WPP plc

CBRE Inc.

138,254

Integris Ventures, St. Louis

XPO Logistics Freight Inc.

Colliers International Inc.

118,095

610W Cos., New York City

Secure 24 LLC

Colliers International Inc.

99,834

Henry Ford Health System

Redico LLC

82,599

AAA Life Insurance Co.

Colliers International Inc.

81,190

UAW

CBRE Inc., Colliers International Inc.

78,642

Concentrix

JLL

77,926

Redico LLC, Southfield

Verus Development Group, Bloomfield Hills

Westhills I, Farmington Hills

JFK Investment Co., Bloomfield Hills

Comerica Building, Detroit

Square feet

Trinity Health Corp.

Oxford Pointe Office Center, Southfield 2

Broker

J. Walter Thompson Co.

Schostak Bros. & Co., Livonia

Tenant

Quicken Loans Inc.

Bedrock LLC

77,327

Fairlane North Technology Park, Dearborn

Oakwood Healthcare Inc., Southfield

The Automobile Club

Signature Associates Inc., Plante Moran CRESA

75,244

Fairlane North Technology Park, Dearborn

Oakwood Healthcare Inc., Southfield

Carhartt Inc.

Signature Associates Inc., Plante Moran CRESA

67,413

North Troy Corporate Center, Troy

Bedrock LLC, Detroit

Friedman Real Estate, Farmington Hills

Siemens Real Estate Inc.

CBRE Inc.

64,423

Grace Lake Corporate Center, Van Buren Township

Sovereign Partners LLC, New York City

JPMorgan Chase

JLL, CBRE Inc.

62,338

The Assembly, Detroit

Bedrock LLC, Detroit

Coyote Logistics LLC

Bedrock LLC, MB Real Estate Services Inc.

58,192

The Fisher Building, Detroit

The Platform LLC, HFZ Capital Group, Detroit, New York City

Strategic Staffing Solutions

JLL, Advocate Commercial Real Estate Advisors

57,424

3000 University Drive, Auburn Hills

Edge Realty LLC, Gibralt Capital Corp., Oak Park, Vancouver

DXC Technology

CBRE Inc., Colliers International Inc.

54,474

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List is based on information from CoStar Group Inc., Crain's research, from published information or as submitted by brokers, advisers or property owners. Crain's has tried to list all brokers involved in a transaction, but in some cases brokers may have been omitted. NA = not available. 1 Lease extension. 2 Lease renewal. 3 New/extension. 4 Sublease. LIST RESEARCHED BY KIRK PINHO

16 | CRAIN’S DETROIT BUSINESS | APRIL 20, 2020

RELIEF

From Page 3

Munson Healthcare’s nine-hospital system that spans from Manistee to St. Ignace has 84 ventilators, a limited capacity for a potential surge in visitors and seasonal residents during the summer travel season that normally kicks off in five weeks over the Memorial Day weekend. “If the ban is lifted and people start vacationing in the ways that we’ve seen in the past, we’re very concerned about our ability and capacity because most of our hospitals are small community hospitals,” Michalek told Crain’s. Munson’s Paul Oliver Memorial Hospital in Frankfort, for instance, doesn’t have a ventilator and there’s just one ventilator at its affiliated Mackinac Straits hospital in St. Ignace. The Munson hospital system has designated its Traverse City, Cadillac and Grayling hospitals to treat COVID-19 patients, Michalek said. Intensive care unit beds needed for COVID-19 patients with severe medical emergencies also are in limited supply in the thousands of square miles between Houghton Lake and the Mackinac Bridge. As of Friday, there were 119 ICU beds in that region of the Lower Peninsula — less than one-tenth of the ICU beds in Wayne, Washtenaw and Monroe counties — and 18 were occupied with COVID-19 patients, state data show. “We’re doing our best to prepare for that surge,” Michalek said. “But we only have so many ventilators and so many resources for (personal protection equipment) right now.” As the Whitmer administration plots out how to resume normal economic activity this summer, one of the things state officials are studying is the infrastructure of medical facilities in tourism areas to handle the seasonal migration toward the beaches of Lakes Michigan and Huron. “I’m concerned about the hospital capacity,” Joneigh Khaldun, M.D., the state’s chief medical executive, told Crain’s. “Hospital capacity in those areas is not what we have in Southeast Michigan.” Last week, Michigan received 50 ventilators from California and New York’s governor said he was sending 100 spare ventilators.

For now, the state is stockpiling the extra ventilators in anticipation that they may need to be sent Up North to build greater capacity for treating people who may contract the respiratory disease. “I think it’s incredibly important to be prepared ... to expect the increase in cases to spread across the state,” Khaldun said Friday. “For our hospitals that don’t have the capacity that some in Southeast Michigan do, we want to make sure we’re prepared to send them ventilators if they need them.” There’s a general consensus among business, health care and political leaders that this summer in April 6, 2020 Michigan will not look like a normal summer of freedom for travel Up North. An economic reopening plan floated Thursday by Republican state senators suggested there should be no festivals or sporting events over 250 people until there’s “no active spread for 30 days or a vaccine has been available for 30 days.” Given the likelihood of the coroFebruary 17, 2020 alive well into the navirus remaining summer, canceling Traverse City’s December 2, 2019 July 3-10 cherry festival was a logical move that put “health and safety of the visitors and the locals ahead of a long-standing tradition and revenues,” said Trevor Tkach, president of Traverse City Tourism. “It doesn’t appear there’s going to be a cure by July 4, so we better be prepared to do business differently,” Tkach said.””... If you have an occurrence like what they’ve experienced in some of the metro areas in our state, that would be devastating for us.” Whitmer said Friday she’s developing a phased-in approach for resuming some normal economic activity after her current stay-at-home order expires on April 30. “I am hopeful that come May 1, we will make some steps forward,” the Democratic governor told Detroit Regional Chamber members during a webinar. “And as we proceed, if that goes well and we continue to see progress, then we go into a second phase.” Crain’s Staff Reporter Kurt Nagl contributed this report. Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood

ISAIC

From Page 3

“Making PPE certainly wasn’t how we planned to launch our training and apprenticeship programs at our factory, but the urgency of the need and our ability to create a scalable local model was certainly motivational,” Guarino said. At the center of everything is the need for training to ready a workforce in apparel manufacturing and other types of sewing, she said, something ISAIC has been providing in Detroit and other states over the past year. “The pandemic has shined a spotlight on how critical it is to have the infrastructure in place to produce domestically,” Guarino said. Local suppliers of sewn PPE products have been getting to know each other over the past several weeks, and those relationships are going to help ISAIC and others grow the industry more quickly, she said. The launch of isolation gown production will enable ISAIC to train and hire more employees than it initially envisioned out of the gate. Those apprentices will gain experience that will enable them to jump right in when U.S. apparel retailers look to locate production in Detroit after the pandemic subsides, ISAIC said. While build-out of its Detroit factory was underway, courtesy of Carhartt, ISAIC launched industrial sewing training and instruction locally through partnerships with Henry Ford College and the Empowerment Plan in Detroit as an apprentice training site and in Asheville, N.C., and Nashville, Tenn., working with textile

consortiums and colleges. At the same time it was working with a number of organizations to develop plans for expanding the sewn goods industry in Matherly Detroit, Guarino said. They included Carhartt, the Detroit Economic Growth Corp., Detroit Mayor Mike Duggan’s office, the Detroit Regional Partnership and the MEDC. ISAIC’s initial production was set to begin with three U.S. apparel retailers, CRAIN ’S D ETROIT to BUSINESS two of them looking reshore production, and with Carhartt for an undisclosed product, Guarino said. When the pandemic hit and apparel retailers paused production, ISAIC made the decision to pivot, launching production of isolation gowns instead of apparel. The shift is enabling it to continue with a planned production launch in a factory above Carhartt as an apprenticeship and teaching site, while also CRAINa’Srevenue DETROIT stream. BUSINESS providing Production of masks will also begin in May, CRAIN DETROIT BUSINESS through an’Sautomated line Quicken Loans Community Fund purchased. Beginning next week, ISAIC will have a staff of 12, including three formerly homeless women, who are joining ISAIC after training with the Empowerment Plan, Guarino said. Investments to ramp up gown production include about a $500,000 investment out of pocket in materials and equipment and technicians in addition to in-kind donations. Funded with support including a

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$150,000 grant from the MEDC, a $25,000 grant and $100,000 line of credit from Quicken Loans and $100,000 from Autodesk, ISAIC will oversee material procurement, standardized product specifications, inventory, distribution and coordination with partner sites as well as delivery to the state and DMC. Cutting material for the effort is being handled by 3CON Corp., whose North American headquarters for automotive interior technologies is located in Wixom, and Acme Mills in Hillsdale. ISAIC is sending kits with precut material to subcontractors including Empowerment Plan, Detroit Denim, Deviate, Refuge for Nations, St. Clair Systems, William & Bonnie, Public Thread, York Project and Pingree. Guarino is projecting ISAIC will see $6 million or more in total revenue for fiscal 2020 ending Sept. 30, triple the revenue projected before the pandemic. As a provider of industrial sewing training, ISAIC has been part of some proposals that the Detroit Regional partnership has been working on to bring apparel manufacturing to Detroit, said Ann Fitzpatrick, communications consultant to ISAIC. “These companies aren’t going to come if we don’t have the workforce,” she said. The pandemic is accelerating reshoring conversations, Barry Matherly, CEO, Detroit Regional Partnership, said. “Companies are rethinking their supply chains and there will be changes,” he said.

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“With the presence (of a positive) test or a high suspicion, we will start them on therapy or enroll them in studies, recognizing that any therapy outside of studies is not proven to be effective,” said Christopher Carpenter, M.D,, chairman of medicine at Beaumont Hospital in Royal Oak. “We’re just trying to not cause harm and potentially provide benefit.” Carpenter, an infectious disease specialist, said testing early and getting rapid results is helpful. “But not knowing if hydroxychloroquine is truly effective in taking care of patients is a bit of a struggle,” he said. “We are trying to use this judiciously and see where we think there might be benefit, but not put patients at risk.” Adnan Munkarah, M.D, chief clinical officer at Henry Ford, said anecdotal evidence over the past two weeks shows some patients are improving under various therapies. He said lack of data prevents concluding that any existing treatment works on COVID-19. Still, something is happening, because over the past 30 days Henry Ford has discharged more than 1,274 COVID-19 patients, possibly indicating early treatment helps. It currently has 617 patients hospitalized, 100 fewer than a week ago, officials said. However, average lengths of stays increased in a recent period at Henry Ford. Doctors tell Crain’s this indicates that patients remaining in the hospitals are sicker. For example, on April 15, the average length of stay in ICU was 8.87 days compared with 7.71 days on April 8, Henry Ford said. “Like with any treatment, we give medications based on the benefits versus the risks,” Munkarah said. “We do not feel we have enough benefits to say let’s give everybody a certain medication so that they will (improve).” Munkarah added: “The good news is

Carpenter

Munkarah

that we have not seen anything at the present time for these protocols that we are using that will push us to believe that the outcomes are getting worse. ... Anecdotally, some patients are getting better.” Vineet Chopra, M.D, chief hospitalist at Michigan Medicine in Ann Arbor, said early identification of COVID-19 and locating patients in the correct unit is the key before starting treatments. Second, because COVID-19 initially affects the lungs, Chopra said giving patients oxygen or placing them on ventilators helps with the respiratory problems. “We’ve seen our share of folks that just don’t make it. But one of the things that we’ve been able to do because of early recognition is that it’s opened up opportunities for drug therapy,” Chopra said. “We started early with hydroxychloroquine based on the French data, but we didn’t see much benefit from using it broadly.” Chopra said there has been some improvement using a drug called tocilizumab. “We had a great story of a young man, with no medical problems with COVID-19. He came in breathless, but not needing oxygen,” Chopra said. “Within eight hours he was ... heading down that path (of ventilation) and we were able to give him this interleukin-6 blocker. And literally within 48 hours, he turned around from not needing mechanical ventilation.” Chopra said the young man came off oxygen, left the ICU after several days and was discharged.

Vineet Chopra

Teena Chopra

Creating a standard of care Hospitals follow similar steps when dealing with COVID-19 patients. First, all patients treated at most large teaching hospitals in Michigan are tested for the coronavirus using their own inhouse reference laboratories. Test results are usually made available within a few hours, giving physicians crucial information where to locate patients in the ER or specially designed intensive care units for COVID-19 patients. Richard Zarbo, M.D., Henry Ford’s chair of pathology and laboratory medicine, said the system’s in-house testing has expanded over the past month where it performs an average of about 700 COVID-19 tests a day on patients and health care workers at Henry Ford and the TCF Regional Care Center, a field hospital located at the old Cobo Center along the Detroit River. “We offer rapid testing within the hospital to the providers across the entire health system. We now test five different methods on 10 instrument platforms,” said Zarbo, adding that 57 percent of tests are completed within six hours and 95 percent within 12 hours. “We do whatever comes in the door. We have given our health care providers knowledge, and knowledge is power that allows them to make safe decisions for patients” and also protect health care workers from infection, Zarbo said. The last large health system in metro Detroit to institute quick lab testing

PPP

From Page 1

Now that the initial $349 billion tranche of PPP funds has run dry, and Comerica would only manually process select applications, Rogison and others say they’re looking elsewhere for their commercial banking needs. Should more PPP funds be allocated, Rogison said he’s found a local community bank that he could not only apply for those loans with, but that would also refinance the debt he has with Comerica. Ultimately, Rogison said he wants a “financial partner that is interested in the financial success” of Batch Brewing. Comerica officials did not respond to multiple requests for comment on the issue. To be sure, Comerica is hardly the only bank to struggle with the nascent lending program. PPP was rolled out on the morning of Friday, April 3, and lenders had only just received the proper guidance the night before. Many large banks, and some smaller banks, weren’t ready to begin processing loans until the following week. “The Treasury and the SBA were so late with the guidance and then they had to drop it on the doorstep,” said Charlie Owens, state director for the Michigan chapter of the National Federation of Independent Businesses (NFIB). “They’ve got to come up with processes and systems to move this paper, and when you give them 18 | CRAIN’S DETROIT BUSINESS | APRIL 20, 2020

Batch Brewing Co. founders with Comerica Bank officials during happier times. | CONTRIBUTED

the guidance this late, it’s hard.” But it’s Comerica Bank that has attracted the greatest amount of business ire, with one source calling the lender “public enemy number one” for small business owners. One executive at a Southeast Michigan firm who asked to remain anonymous over fears that the bank might retaliate on the company’s line of credit noted that his company had done business with Comerica for over 30 years. Similar to Rogison, the executive said he believes the bank did a “huge disservice” to the company and Michigan small businesses. Several customers said much of their anger at the bank stems from what they say were repeated assurances that the portal being developed would be up and running soon and that would simplify the process. Now with the funds having run dry and a stalemate at the U.S. Capitol over

adding another $250 billion, Comerica is still giving that same message. “While we await replenishment of PPP funding, we are working hard to finalize our new online application portal,” the bank wrote in an email to customers Thursday afternoon after the SBA announced the PPP funds had been exhausted. “Until Congress authorizes additional funds, we urge you to continue preparing your documentation for submission.” However, Rogison said he heard from associates who also banked with Comerica that the lender had asked some customers to manually apply while telling others that wasn’t an option. With all 18 of his employees laid off, Rogison said he’s now evaluating the next steps for his business. “We’re doing what everyone else that is completely shut down should be doing, which is evaluating our business model, wondering what kind

was Detroit Medical Center, which found waiting up to 10 days for a commercial lab test result wasn’t working. Teena Chopra, M.D., DMC’s corporate director of epidemiology, said the use of in-house rapid testing with financial assistance from Wayne State University “has helped us tremendously, provide better quality care for patients, (a safer work environment for) employees and discharge patients (more efficiently).” Even before in-house lab testing began, Chopra, who is not related to Vineet Chopra, said DMC separated patients with likely COVID-19 symptoms to protect staff and other patients. For treatment, Chopra said DMC doctors prescribe hydroxychloroquine and other medications as appropriate. At Henry Ford, Munkarah said COVID-19 patients are grouped based on mild, moderate and severe disease symptoms that include fever, coughing and shortness of breath. “We know for mild symptoms that treating with existing drugs does not help them,” he said. “Once you get to moderate disease and severe disease we look at different settings, oxygen and ventilators. These patients might get worse, and we might not be able to bring them back.” Depending on their underlying chronic disease or condition, Munkarah said patients are given hydroxycholoroquine, sometimes steroids, or they could be candidates for clinical trials such as the antiviral remdesivir. Munkarah said azithromycin is not used to treat COVID-19 patients at Henry Ford. Other hospitals have used the drugs in combination. Last month, Michigan Medicine used an outside lab to test patients with coronavirus symptoms, but doctors were unhappy with lag in results. “We could never tell whether the patient in front of you had the disease or didn’t have the disease and could be spreading it,” Chopra said. “We would put them in negative pressure rooms

and pray until the lab tests returned.” Chopra said the days-long wait wasn’t good for patient care and also caused anxiety for family members. “Once we developed our in-house test and now get results back in two or four hours, it felt great and was a game changer for us,” he said. “We literally can pull them out of the ER and get them into proper isolation and get them to a particular unit and see what therapy or treatment they may be eligible for.” Chopra said because many critically ill COVID-19 patients experience a decreased ability to oxygenate blood and diminished lung function, therapies that reduce inflammation can prevent lung injury and improve outcomes. “The bottom line is we are seeing improved outcomes with earlier treatments for these underlying (lung inflammation) problems,” Chopra said. At Beaumont, like most large hospitals, patients with COVID-19 are grouped into units or medical floors that are progressively more intensive. Regardless of the therapy used, all treatments are designed to address the body’s inflammatory reaction to the coronavirus, Carpenter said. For example, some patients are prescribed hydroxychloroquine and others are given azithromycin in combination with it. “The choice is left up to the provider,” he said. Beaumont will soon launch a small clinical trial with about 10 patients who are trying remdesivir and another study to evaluate the interleukin-6 blocker tocilizumab, Carpenter said. Another clinical trial underway at Henry Ford and Beaumont is using blood from recovered patients that contains COVID-19 fighting antibodies — known as convalescent plasma — and transfusing it into patients with serious or immediate life-threatening COVID-19 infections.

of pivots and tactical changes we need to make and how big we’ll be able to relaunch our business,” Rogison asked. “How many employees will we be able to support once we crack our doors open. Trying to project the kind of revenue we’ll have over the next three to six months, I don’t want to call it an effort in futility, but it’s going to be a lot of guesswork.” Under the program, businesses of up to 500 employees who keep workers on the payroll can receive forgivable loans for doing so that can be used on normal costs of doing business like rent and utilities. As of Monday, according to the most recent data available from the SBA, Michigan businesses had received almost 25,000 loan approvals totaling more than $7.3 billion. The anger at Comerica comes despite the institution’s long-standing presence in Southeast Michigan. Before moving its headquarters to Texas in 2007, the bank and its predecessor companies had called Detroit home for decades. Its name is on the home of the Detroit Tigers. In 2019 Comerica Bank was still the second-largest bank in the state, behind JPMorgan Chase & Co., with $288.9 million in deposits, according to Crain’s data. Comerica had 192 offices inside Michigan in 2019, compared with 243 in its other markets. Even with the goodwill in the marketplace, sources wonder whether the bank was too inept to get its system up and running, or whether it was a matter of Comerica preferring to stay away from a loan product that offers far less return on investment

than many other business loans. While an exact answer is unclear, it is known that banks are only making 1 percent plus a processing fee on PPP loans. That may be less than banks are used to making, but by and large, they still have incentive to work closely with their customers, said Brian Calley, president of the Lansing-based Small Business Association of Michigan and a former small business banker. “While it doesn’t represent a big interest margin opportunity for financial institutions, it does serve everyone’s long-term interest in maintaining business infrastructure as long as we can,” said Calley. “Banks have a strong incentive to ensure customers that have other loans with them survive. Even though there wasn’t a high-margin opportunity, I felt the interest of banks and their customers were well-aligned.” Mary Kay Shaver, a partner in the Grand Rapids office of corporate law firm Varnum LLP with a focus on finance issues, said she’s seen two distinct approaches that banks have taken over the last couple of weeks as they’ve navigated PPP. “It seems like some banks have taken a very proactive approach to trying to help their clients through the process, and others are more or less not trying to be in the middle of it,” Shaver said. “‘Just fill out the application and we’ll forward it on.’ Being more of an intermediary than helping the customer through it.”

Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene

Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

NOMINATE AN INSPIRING PROFESSIONAL

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COPING WITH COVID-19

Food processing, distribution infrastructure, workforce iss Food supplies are there, but other links in the chain aren’t working as they do in more normal times BY SHERRI WELCH

Food supplies are generally healthy, with a few exceptions, despite the skyrocketing demand that’s left many grocery store shelves sparse or empty during the pandemic, distributors said. So why aren’t grocery store shelves as full as they used to be? Distributors point to infrastructure and workforce challenges. Food production, processing and distribution systems weren’t set up to handle the retail onslaught that came with stay-home orders in Michigan and other parts of the country amid the pandemic. Much of the production had been geared to food service quantities required by restaurants, schools and other large users. Food processors and distributors don’t have the equipment and packaging to just flip the switch to produce more retail products. At the same time, food producers and distributors like Warren-based Lipari Foods LLC and Grand Rapids-based SpartanNash Co. are facing labor and capacity issues due to COVID-19 illnesses. And those things are adding up to

FOOD CHAIN

From Page 1

The coronavirus outbreak has revealed that two disparate, and complex, supply channels are preventing critical provisions from making it to grocery store shelves while front line workers’ exposure to the deadly virus is paralyzing agriculture’s ability to merge those two channels. While there is no lack of food, agriculture experts worry the industry may not maintain enough workforce in the age of COVID-19 to feed the masses. “We’ve never had to worry about food being available in this country. The first time people saw an empty grocery store shelf was three weeks ago,” said Dave Armstrong, CEO of GreenStone Farm Credit Services, which holds 75 percent of the state’s agriculture industry debt. “But in addition to retooling for the loss of institutional businesses, like universities and schools, labor is becoming restrictive. People are either getting sick or not wanting to come into work over fear of getting sick. This is a ripple effect we’ve never seen before.”

Bacon the mold Meat processors are facing new challenges on the types of products in demand. More than two-thirds of bacon is used in the food service industry, said Mary Kelpinski, CEO of the Michigan Pork Producers Association. For restaurants and arenas, bacon is packaged in 10-pound to 20-pound wraps compared to just 1-pound or 2-pound packages for consumers. At beef processing plants, efforts are shifting to more versatile cuts, like ground beef, said George Quackenbush, executive director of the Michigan Beef Industry Commission and Michigan’s Cattlemen’s Association. “What you’re going to find is some changing in the product supply at the 20 | CRAIN’S DETROIT BUSINESS | APRIL 20, 2020

frustrations for consumers looking to get their fill at grocery stores.

Shifting demand When the pandemic first showed its face in the region, Lipari was delivering orders that had been placed previously as part of two-week replenishment cycles, said CEO Thom Lipari. But consumer demand surged with the closures of schools, workplaces and restaurants. Where workers grabbed lunch at the corner deli and children ate in school cafeterias, people in Michigan and across the country began eating every meal at their kitchen tables. Stores have struggled to keep food and other products stocked since the pandemic began in March, and grocery pickup and delivery orders continue to be rampant with unavailable and substituted items. There are still actual shortages of hand sanitizer and cleaning products based on demand from consumers, first-responders, health care professionals, nonprofits and essential companies that continue to operate.

Toilet paper shortages are also continuing, and there are other product-by-product shortages, distributors said. Eggs are also in short supply in some areas as moms and dads become short-order cooks at home. “There’s lot of talk about eggs and why egg prices have gone up,” said Meredith Gremel, vice president, corporate affairs and communications for SpartanNash and executive director of the SpartanNash Foundation. There are only so many hens that can lay eggs right now, and demand has gone up as much as 500 percent in some areas. “What are you going to do — tell the chicken to lay (its) eggs faster?” Gremel said. Juice has become a hot commodity as people seek to up their vitamin C intake at the same time bottlers are pulling back on juice packing to increase milk production, Lipari said. And sales of flour, which typically pick up around the holidays when cookie baking starts, have also risen as families try their hand at homemade bread and other baked goods. Overall, the supply of available

Lipari Foods’ warehouse in Detroit. It distributes food to 16 states. | LIPARI FOODS LLC

food and household items is healthy, Lipari said. But with most people eating the majority of their meals at home, demand has shifted to retail channels. And that’s putting a kink in how food manufacturers and processors get their product from plants to consumers’ shopping carts. Typical production processes were set up to mete out some percentage

of food into food service portions or quantities for restaurants and schools, Lipari said. Schools, for example, used to buy large quantities of little cartons of milk. There’s a glut of milk now, given that schools aren’t purchasing it anymore. “The raw material is there, but it’s converting it into what consumers are looking for” is the issue, Lipari said.

meat case and potentially some pricing difference,” Quackenbush said. “Consumers are focusing on ground beef because it’s most versatile. So processors are using the round and the chuck in the grinds, using more of the animal for ground. That’s going to lead to some increases in ground beef prices. But there’s not as much demand for rib and loin, such as fillets. That’s going to be a bargain for consumers.” But changing packaging and cuts is even more difficult in the middle of a deadly virus outbreak.

Uncured meats The nation’s largest pork processor Smithfield Foods Inc. shut down its Sioux Falls, S.D., plant indefinitely on April 12 after a major outbreak in the plant. The company has reported at least 238 confirmed COVID-19 cases among its 3,700 employees. The Sioux Falls plant accounts for about 5 percent of total U.S. pork production. Smithfield then closed plants in Wisconsin and Missouri last week after employees there tested positive. “Our country is blessed with abundant livestock supplies, but our processing facilities are the bottleneck of our food chain,” Smithfield CEO Kenneth Sullivan said in a statement. “For the security of our nation, I cannot understate how critical it is for our industry to continue to operate unabated.” A Tyson Foods pork plant in southeast Iowa shuttered temporarily after more than two dozen workers tested positive for COVID-19. In Michigan, Wolverine Packing Co. in Detroit’s Eastern Market, the largest lamb processor in the country, and JBS USA Holdings Inc., which processes beef in Plainwell, have all suffered positive cases among its workers, said Quackenbush. “There’s just a lot of sickness in these plants because workers are in close proximity to each other,” Quackenbush said. “Everyone is tak-

Most bacon is produced for restaurant customers — but it is packaged in far larger packages than supermarket bacon. |FARM NEWS MEDIA

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ing extra precautions now but that’s also slowing down processing.” JBS in Plainwell is only processing around 800 to 1,000 cattle per day, down from the usual 2,000, Quackenbush said. JBS declined to discuss capacity at its Plainwell plant or confirm the

number of cases at its plant, but said new safety protocols are in place. “We have implemented several enhanced safety measures, including travel and visitor restrictions; increased sanitation efforts, including heightened disinfection of common areas; screening and checking team members’ temperatures prior to entering the plant; providing masks to all team members; staggering starts, shifts and breaks; segregating the workforce during breaks; heightened health protocols and enhanced worker benefits to protect the health and well-being of our team members,” Cameron Bruett, head of corporate affairs for the Greeley, Colo.-based company, said. Executives from Wolverine Packing did not return emails or calls on the matter, but a switchboard operator did confirm it’s working on a reduced and staggered schedule. To manage drops in labor force, the more cash-flush processors may turn to automation, said Decker Walker, managing director and lead of the global food and agribusiness

practice at Boston Consulting Group. “Much of the cuts of meat are still done by hand,” Walker said. “The industry is already leaning away from an art to science and math. We’re not far from real time updates to allow cuts based on forecasted pricing. People get sick. Robots generally don’t.” Trey Malone, agriculture economist and assistant professor in food and resource economics at Michigan State University, pushes back against that idea. “Less than 1 percent of the population is involved in agriculture already,” Malone said. “We’re already very automated in agriculture. Part of the problem with automation is now you have a more specialized supply chain. We’re all going to take this step back and realize that there are tradeoffs in gains of efficiency.”

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“The system was geared to put the majority of that milk into cartons.” But people want to buy milk in larger cartons or jugs or made into yogurt and cheese for the meals they’re eating at home, he said. “Businesses don’t have that kind of capacity sitting around waiting for something like this (pandemic) to happen. These are multimillion dollar machines, and it takes a year to make them. It isn’t something they can just flip the switch on.” Last week, Lipari said he and his team were starting to hear that some manufacturers are beginning to convert food service production into retail production. But they are also working to solve logistical issues, such as how to transport the increased perishable food products moving into retail channels with a limited number of refrigerated trucks. “Even though there may have been many trucks not being used in other industries, they are not equipped to ship certain categories of food products,” Lipari said.

Workforce challenges While food processors are figuring out how to shift production and solve logistical challenges of moving that food, workforce issues are hitting production and distribution. slaughter. Roughly 50 percent of what processors purchase is from livestock auctions, which is called spot buying in other commodity markets, said Quackenbush. “If the plants are operating at half capacity, their buyers aren’t out in the auction markets buying cattle,” he said. “We’ve seen the volume of cattle of auction markets significantly decrease. Cattle don’t stop growing, so that means farmers are holding on to cattle longer leading to more input costs (like feeding and caring for them).” That’s a potential benefit to consumers as meat that hits the market later will be more choice, or higher-rated quality from a slightly older animal, but harder for farmers as cattle prices continue to drop. The daily futures trading prices in the cattle market hit the lowest since December 2009 earlier this month. But those stuck in the middle, either raising or feeding cows, are left holding the bag until the supply chain rectifies its issues. “Cattle feeders stuck with cattle are losing some money,” Quackenbush said. “We need each segment of the supply chain to be profitable. But right now, it’s tough on cattle feeders.” Prices for pork have dropped so much that hog farmers are selling livestock for a loss of $50 per animal, Kelpinski said. “This is costing them to get their hogs to market weight than they receive at market,” Kelpinski said. “Many pork producers can’t carry on much longer.”

Crop concern Crop farmers are watching optimism from the signing of the United States-Mexico-Canada Agreement and positive trade talks with China evaporate after one of the worst grow seasons on record in 2019. Sixth-generation farmer Doug Darling, proprietor of Darling Farms LLC in Monroe County, is nervous

The recent rash of COVID-19 cases at a Smithfield pork processing plant in Sioux Falls, S.D., followed by escalating cases reported at other food manufacturers, is impacting food production. Workforce issues are also hitting distributors. Lipari Foods distributes food to 16 states across the Midwest and into Kentucky, Tennessee and Florida, all from its Michigan base. On any given day, 40 percent of Lipari’s warehousing staff calls in, the company’s CEO said. “Attendance has been a real challenge … a lot of people are concerned.” There are also employees living with an elderly parent and a driver with a daughter who has respiratory issues, he said. “That’s been our challenge, to get people to understand their country needs them,” Lipari said. “If we can’t get food to the stores, we’re going to have another big problem.” The company has brought in nurses to screen employees and added staff to do constant sanitation on any touch points, Lipari said. Recently, it also launched a campaign posting YouTube videos to thank warehouse staff for enabling drivers to continue to work. “We’re doing a lot to make the employees understand how important

their jobs are right now,” Lipari said. To supplement its own staff, it’s borrowing hi-lo drivers, selectors who pick food for grocery stores by the pallet and other warehouse staff from food service suppliers like Warren-based Reinhart Foodservice LLC that are seeing lower volumes of work with school and restaurant closures. Between those efforts, Lipari has been able to staff two 10-12-hour basic shifts and three hi-lo shifts, Lipari said. Initially, there were concerns shortages were due to people hoarding, Gremel said. “But now it’s because people don’t have as many options. They are staying at home.” SpartanNash, which supplies independent corporate-owned and family-owned stores and military commissaries in Michigan and 17 other states, has seen the same concerns ripple through its distribution employees, Gremel said. The West Michigan company has hired 2,000 new employees over the past three weeks across its corporate-owned grocery stores and warehouse operations. About 850 were for spots in its warehouses, she said. “One of our deli people described it, saying, ‘It’s like Black Friday every day,’” Gremel said.

the conditions for planting aren’t improving over last year while at the same time prices are plummeting. “The pricing specifically on corn and soybeans have just been decimated,” Darling said. “We thought we had saw some bright light when USMCA got passed as the markets started to pick up. But then the COVID-19 hit.” The other issue facing Michigan farmers is access to seasonal workers. About 40,000 work seasonally on Michigan farms, 9,000 of whom are immigrants on H-2A work visas. Katie Vargas, operations manager for Great Lakes Ag Labor Services LLC, a service firm that supports farms in hiring immigrant laborers, said immigrants are being processed but arranging travel is a challenge. “We’re seeing major concerns with transportation up to the state,” she said. “A lot of the bus companies are not running. They’ve significantly cut down because they don’t have the tourist passengers. We’re concerned that’s going to happen to flights as well, especially if there’s a larger outbreak in Mexico.” To alleviate some of these challenges, the Department of Homeland Security announced last week it would alter rules to allow immigrant workers currently in the U.S. to stay beyond the three-year maximum period and fasttrack some of the process. The other issue revolves around its domestic workforce, which may be stuck at home caring for children who aren’t in school due to cancellation of the school year. Vargas said even if crop farmers get 80 percent of the usual workforce, they will struggle to get fruit and vegetables to market.

Malone. “The U.S. supply chain for food is shockingly resilient, as we’re seeing,” Malone said. “But this is a ticking time bomb. No one is running out of food any time soon ... but when this is costing (farmers) more money to produce the food than they are receiving for producing it, that’s troublesome.” Crop farmers in the U.S. face heavy punishment from stay-athome orders because 40 percent of corn crops are used in ethanol, Walker said. Roughly 27 percent of Michigan’s $1 billion corn crop industry is used for ethanol production, according to the Michigan Corn Growers Association. Most regular gasoline sold in Michigan contains at least some percentage, up to 10 percent, of ethanol. The International Energy Agency projects global oil demand in April to plunge by 29 million barrels a day, compared to a year ago, reaching the lowest levels since 1995. “Corn isn’t like a car part that you can sit on a shelf until production resumes,” Walker said. “There’s a limited window you can move crops and with 80 percent of all crops being planted in North America in the next four to six weeks, you’re going to see farms facing tough questions on how they move forward.” Malone said the lasting effect of the virus on agriculture is to provide a new opportunity for local farming, pointing out that involvement in community-supported agriculture, often in the form of farmers markets, has “blown up” in the last month. By buying direct from farmers, consumers cut out much of the complex supply chain that’s causing problems during the virus. “If there was ever a moment for local foods, it is now,” Malone said.

Left to rot or grow closer The long-term consequences of COVID-19 on Michigan’s agriculture industry, like other industries, will be determined by the length of the virus’s grip on business, said

Contact: swelch@crain.com; (313) 446-1694; @SherriWelch

Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh

Calder Dairy employee Doug Pair (right) helps Steve Brancato (left), owner of Old Fashioned Country Dairy, load up. | LARRY PEPLIN FOR CRAIN’S DETROIT BUSINESS

SPECIALTY

From Page 1

Some want Brancato’s service because they’ve always had it. Others like the convenience, or the eco-friendly reusable bottles. It hasn’t been easy going as of late, though. Half of Brancato’s business dropped off when child care centers, restaurants and schools closed in waves as Gov. Gretchen Whitmer instituted shutdown orders to mitigate the coronavirus’ spread across Michigan. He estimates his wholesale accounts have dropped from around 23 to six. He has about 200 home customers, approximately 30 of which are new. It helps make up for the loss of wholesale, but doesn’t entirely replace it and requires more fuel for smaller orders, he said. But he’s focusing on building up the in-demand home delivery business, regularly bringing milk and other essentials to the Grosse Pointes, where his business started, and the Rochester and Shelby Township areas. “I’m getting a steady stream of calls every day,” he said. “Bloomfield, Huntington Woods, other areas. I just can’t on this type of short notice ... It would take time to build that area and do that.””

Delivery inundated Anyone who has tried recently to use Target Corp.-owned Shipt, a grocery delivery app that works like Uber, knows it can be difficult or nearly impossible to nab a time slot. Fewer shoppers want to or can go to the store themselves. Instacart and Amazon Fresh nearly quadrupled sales March 12-14, compared with the same days last year, according to Rakuten Intelligence data reported by Forbes. Michigan Gov. Gretchen Whitmer on April 9 extended her stayat-home order through the end of the month, meaning many will continue to avoid grocery stores through then — and likely longer. “With each new executive mandate that comes out, we try to alter our operations,” said Samar Saad, vice president of Eastern Market Detroit-based Saad Wholesale Meats. The family business established in 1976 specializes in meat that’s halal — food permissible for Muslims to eat or drink under Islamic principles. Traditionally, bulk buyers would come in for pickup, but during the pandemic they have been shifting more to online sales and call-ins for delivery or curbside service. Overall sales are down around 20 percent. The company serves a long-held

niche. Saad said they’ll do their best to offer delivery as far as Mount Pleasant or Fort Wayne, Ind., for example, if customers can find other nearby families and group their orders so Saad can afford to send a van. “We’re really trying to help people out,” she said. “Especially because this isn’t just food, this is halal. During this time, there’s Muslims who live in areas where the halal supply is scarce as it is. So during this, it really tugs at my heart strings.”

Business bustling The pandemic has changed milkman Brancato’s delivery regimen in some ways, but the old-world service provider’s daily routine remains. He is in bed by 7 p.m. and up around 1:45 a.m. five days a week. The first customer gets their milk in the dark at 3 a.m. For many, he leaves it on their doorstep. “So obviously I don’t see a lot of people, but you know, toward the end of the day (4 p.m.), I’ll have a mask on if I know I’m going to see somebody,” he said. He has also started wearing plastic gloves under his work gloves. The pandemic has also affected prices. Eggs, for example, skyrocketed from $13 for 15 dozen to $53 or more in the last month. Brancato also delivers a smattering of juices, snacks, baked goods and ice cream, as well as other staples like cheese. He said his milk supplier, which he visits twice a week, has remained steady. He has sourced it from Calder Dairy & Farm for the last 35 years or so. Calder, established in 1946, also does its own home delivery. Its farm is in Carleton, with two stores in Lincoln Park and Flat Rock. Calder’s website said last week it was “inundated” and had to suspend new home delivery sign-ups. At Pure Pastures, an 11-year-old organic and local farm-sourced grocer in Plymouth and Dearborn, the phone has been ringing nonstop. Sales are two to three times above normal, manager Mary Bracey said. More people outside its hardcore base are turning to their products, and while Bracey doesn’t see a long-term future in delivery for Pure Pastures, she is considering doing more. “We had a very loyal following prior to this,” she said. “It’s very oldschool. There’s no putting in a computer order (to source products), it’s, ‘Hey, Joe, you got a cow ready to go?’ ... We aren’t set up where we have an online system, so it’s people calling and giving their orders (for retail, too).” Contact: afrank@crain.com; (313) 446-0416; @annalise_frank APRIL 20, 2020 | CRAIN’S DETROIT BUSINESS | 21

THE CONVERSATION

DCFC CEO Mann: ‘ Committed to kicking a ball this year'

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DETROIT CITY FOOTBALL CLUB: Fortunately, Sean Mann, co-founder and CEO of Detroit City FC, is good with neighbors. That attribute helped him organize the Detroit City Football League and take it from a block club in southwest Detroit to a professional soccer team with a diverse, fiercely loyal following. It’s also helped him bond with neighbors at his Detroit home, where he is spending a lot more time thanks to Michigan’s stay-at-home order. A routine happy hour on the back deck also helps. The pandemic has devastated the sports world and made for a particularly painful start to Detroit City FC’s debut professional season. | BY KURT NAGL ` Crain’s Detroit Business: How did you start Detroit City FC? Mann: I’ve always worked in politics and public policy. I live in southwest Detroit by Clark Park. Back in 2009 or 2010, I bought an old house and was rehabbing it. I met some great neighbors, and I was trying to think of a way that neighbors could hang out together. The idea was to create a very, very recreational soccer league, adult co-ed, with the idea that it was more of a community organizing tool. At that time, I saw a lot of my friends move off to Chicago and New York. I felt like there were people in metro Detroit that could name off neighborhoods in Brooklyn and Chicago better than they could Detroit. So, it was in part an opportunity to promote neighborhoods in the city and hopefully create some neighborhood identity, but more importantly to get neighbors to meet each other. It was called the Detroit City Football League, and the first year we had 11 neighborhoods and 300 people participating. Two of those 11 neighborhood captains went on to become City Council members — Scott Benson and Raquel Castaneda-Lopez. It was an awesome mix of small business owners and community activists. By the second year, we had 22 neighborhoods and over 600 people playing in it. I happened to be on a business trip to Chattanooga (in 2011) and by chance met the owner of the soccer team. Just kind of got bitten by the entrepreneurial bug. At the time, a lot of friends were starting small businesses in the city. I came back wanting to start a business of my own, inspired by what they did in Chattanooga. There were five of us. Each had different areas of focus and expertise. We knew the neighborhood league was our built-in fan base to get going. I think we each chipped in $2,400 to get it going, which was enough to buy a set of goals at Cass Tech (High School in Detroit). (Midtown Inc. Executive Director) Sue Mosey gave us a small grant to help pay for some of that cost. The team kicked the ball for the first time in 2012.

` What is your role in the organization now? My responsibilities are primarily corporate relations and revenue for the team in terms of ticketing and sales/ marketing. Overseeing operations of the team, league relations, navigating American soccer — all that kind of B.S. ` What’s tough about that? You know, we’re really the outlier in terms of sports in general. Soccer’s popularity has come on the tail end of all the other pro sports. So, while being a global sport, soccer in the U.S. has definitely modeled itself after the other major leagues. And so, the idea that a group of friends could start a team and get it going and bring it to the highest level, well, that’s kind of the beauty of the sport globally, but American soccer has done everything possible not to support that. Every step of the way, there’s rigid guidelines about professional league standards, and while we met nearly all those criteria, the one we missed was having an owner of a certain net worth. So, the five of us middle-class average guys, you know, it was never really designed for us to own a team. ` What makes the team’s fan base so loyal? It’s been our approach since day one that we embrace the most rabid of our fans, the people that care most about the team. We are the host of the party, not the life of the party. We didn’t have the money for the cheerleaders, we didn’t have the money for the flamethrowers or the blimps or anything like that. We were never going to compete on that level with the pro teams in town, but we had people who from day one wanted a team that they could care about and love and devote themselves to like soccer fans around the world have. Part of it was us getting out of the way, part of it was us working hand-in-hand to create an experience that they want. For us, it’s creating a platform for those fans to express themselves. In that sense, they are our

marketing arm. ` How has the coronavirus outbreak affected the organization? This has been pretty brutal. For us, it couldn’t have happened at a worse time. We had already ramped up, we had already played a game and had all our staff in place. Our main revenue drivers are our home games. Each home game represents roughly $100,000 in revenue, so we’re working as much as possible to figure out how we can reschedule games and get in as many games as possible. Our partners are going through the same thing. Sponsorship checks have been deferred or delayed, so yeah, it’s a real tough time. Sports in general — we are in the business of gathering large groups of people. ` How are you coping with the quarantine? I’ve got a 2-year-old and a 4-year-old who are very rambunctious, and my wife Rachel has a very busy job, and here we are navigating this with the club, so yeah, it’s a lot, being cooped up here in our house. Some of our best friends are our nextdoor neighbors, so we have happy hours in the back yard, so it helps to have some degree of socialization. It was a very sobering realization of where we’re at when the city reached out earlier this week to see if they could use the training facility as a morgue as they do all their contingency planning. It got ruled out instantly because they didn’t realize it wasn’t a hockey rink anymore. They were just doing diligence. It kind of

just puts things into perspective — the human aspect of this beyond just our business frustrations. ` Are you hopeful that DCFC is going to play soccer this season? Yeah, very much so. I’m on conference calls every day with partners in the league, and we’re all trying to figure out, get our head around this. We’re building out contingencies for when we get a green light to play in June, July, August — with crowds, without crowds, you know, whatever the scenarios look like. But, yeah, we’re absolutely committed to kicking a ball his year.

Sean Mann Co-founder and CEO at Detroit City FC

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Home offices range from snazzy to make-do in coronavirus era The social distancing forced by the coronavirus pandemic has meant a transition from office to home office for hundreds of thousands, perhaps millions, of workers. So what do those home offices look like? Some have a separate room with a door and windows, others are working from a kitchen counter or a corner of the basement. But we’re making it work, with a dash of pizzazz and humor. Most home office setups needs are the same: computer, internet access, phone, desk, a supportive chair 22 | CRAIN’S DETROIT BUSINESS | APRIL 20, 2020

Elizabeth Barnes, an interior designer at Gensler who lives in Farmington, has a built-in office nook in a spare bedroom. | GENSLER

and maybe a printer. Toss in some good lighting and a view out a window and you’re all set. But some work-from-homers take it a step further, adding artwork, music, a napping couch or coffee machine. We asked you to show us your home workspaces and you came through with some inspiring photos and stories. You can see the best of your submissions at CrainsDetroit. com/homeoffices, and you can share more home office pictures by emailing them to bvalone@crain. com.

IZEA’s COO Ryan Schram splits time between the company’s headquarters in Florida with his home office in Milford. | RYAN SCHRAM

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