Crain's Detroit Business, June 15, 2020 issue by Crain's Detroit Business

DETROIT RISING ` Hudson-Webber’s Melanca Clark on protests, policing and putting more African Americans at decisionmaking tables PAGE 13

Crain’s Excellence in HR Awards PAGES 8-12

CRAINSDETROIT.COM I JUNE 15, 2020

REAL ESTATE

How the SimonTaubman deal came together, then fell apart BY KIRK PINHO

On Oct. 24, Robert S. Taubman and David Simon met for dinner. The two men in previous years had tangled, at times acrimoniously, in the shopping mall business: Taubman the head of Bloomfield Hills-based Taubman Centers Inc.(NYSE: TCO) and Simon the head of Indianapolis-based Simon Property Group (NYSE: SPG). That was in the past. The hatchet had been buried and it was time for a deal, a complex agreement that Simon ended up being worth $3.6 billion, with the Taubman family selling part of its 70-year-old business to the nation’s largest mall operator. It was eventually to be dubbed Project Metal by Taubman advisers at Bermuda-based Lazard Frères & Co. LLC, with internal documents referring to Taubman as “Titanium” and Simon Property Group as “Silver.” But 231 days after that initial meeting, the luster had worn off, with Simon attempting to pull the plug on the largest local real estate M&A transaction in recent memory. Taubman is fighting the effort, proceeding with its previously scheduled June 25 meeting to vote on the deal, and what happens is contingent upon how a case in Oakland County Circuit Court plays out. On Wednesday, Simon Property Group said it was backing out of buying Taubman Centers and seeking a declaratory judgment on its exit from the purchase, citing the COVID-19 pandemic and what the SPG called poor financial choices during the outbreak that has killed more than 114,000 nationwide and brought the economy to its knees.

HEALTH CARE

ANALYSIS | CORPORATE RESPONSIBILITY

You sent a #BlackLivesMatter statement. What’s next? Eight ways your company can address racism, starting now BY ALLISON TORRES BURTKA | SPECIAL TO CRAIN'S DETROIT BUSINESS

Since George Floyd’s death and the protests that have followed, companies have responded in different ways. Some issued statements to the public and to their employees, with various messages on police brutality and the Black Lives Matter movement. But beyond such statements, what can organizations do to address these issues — which might include systemic racism in their own space? The value of diversity, equity and inclusion (DEI) has gone mainstream, but many organizations have fallen short in practice. This moment — when public attention is focused on racial injustice and inequity — is an opportunity for

companies to evaluate where they stand, what they stand for and what they can do moving forward.

` TALK TO YOUR EMPLOYEES It’s imperative for companies “to communicate within their internal organization about what they believe in terms of diversity, inclusion and equity in the workplace,” even before issuing public statements, said Graci Harkema, a diversity and inclusion consultant.

Inside ` A letter to my fellow CEOs, by Carla Walker-Miller. Page 6

See DEAL on Page 18

NEWSPAPER

COVID-19 HEROES

Sherelle Hogan’s Pure Heart Foundation aids children of incarcerated parents from a distance. PAGE 7

“The employee shouldn’t have to look on the company’s social media post to see what they stand for,” said Harkema, who started her own firm, Graci LLC, after stepping down from her position as Founders Brewing Co.’s diversity and inclusion director. The worst thing to say is nothing at all, said Darlene King, executive director of the Michigan Diversity Council and a consultant. Even if all you say is: “I am at a loss for words. But I want to learn from you what it is that I need to do, and we need to do to be a better organization, to have better community engagement, to have better corporate responsibility.” See RACISM on Page 15

MSU steps into role with Henry Ford Health Deal mirrors what Wayne State sought BY JAY GREENE

The plans on the table in a far-reaching affiliation proposal between Detroit-based Henry Ford Health System and Michigan State University look a lot like a previous proposal with Wayne State University that fell through last year. Among the proposals contained in a letter of intent signed Wednesday by Henry Ford Health and MSU are a new health sciences center managed by a joint operating company that would undertake research, education and clinical activities. The plan would mark a big step into Detroit for MSU's medical operation, and gives Henry Ford an academic partner that could help it along the road to becoming an academic and clinical powerhouse. However, it would leave Wayne State officials with dim prospects for improving a longtime partnership with Detroit Medical Center that has been marked by conflict. It was management of the joint operating company that scuttled the proposed deal last year between Henry Ford and Wayne State, Crain’s reported in February 2019. Officials for Henry Ford and Michigan State said the details of the management and governance structure of the proposed health sciences center are still being worked out. They said they don't foresee similar problems ahead with the boards closely involved. In an interview with Crain's on Thursday, MSU President Samuel Stanley Jr., M.D., said the MSU board has approved the general concept of the letter of intent. He said the boards want to look more closely at the final language before making final decisions. "The letter of intent says we're going to work on these things. We're going to explore it," he said. "We haven't made decisions on how this would be structured it yet." Norman Beauchamp Jr., M.D., MSU’s executive vice president for health sciences, said the boards of MSU and Henry Ford will be closely involved in helping decide the structure and authority of the new company or committee that would oversee the proposed health sciences center. See MSU on Page 17

NEED TO KNOW

WATER WARS

THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT ` REPORT: QUICKEN LOANS CONSIDERS IPO THE NEWS: Detroit-based Quicken Loans Inc., the nation’s largest mortgage lender, is considering going public in an initial public offering, according to a published report. CNBC reported Thursday that Dan Gilbert’s mortgage giant has filed a private prospectus with the U.S. Securities and Exchange Commission and may make it public as early as next month. CNBC cited people familiar with the matter who asked not to be named. A Quicken Loans spokesman told Crain’s: “We don’t comment on speculation and rumor.” WHY IT MATTERS: A potential value for an IPO is not known, but could be in the tens of billions of dollars, CNBC reported. Low interest rates have kept the mortgage business healthy even amid the coronavirus pandemic.

` STATE SUES DAM OWNER AFTER FLOODING THE NEWS: Gov. Gretchen Whitmer’s administration claimed Tuesday that the “gross mismanagement” by the private owners of a mid-Michigan dam led to the flood last month that officials estimate caused at least $200 million in property damage. The Michigan Department of Environment, Great Lakes and Energy and the Department of Natural Resources filed suit Tuesday in Ingham County

Circuit Court against Boyce Hydro Power, the owner of four hydroelectric dams along the Tittabawassee and Tobacco rivers.

WHY IT MATTERS: The lawsuit alleges the response from Boyce Hydro’s owners to the May 19 dam failure has been too slow in light of the widespread damage created by the draining of Wixom and Sanford lakes after two of Boyce’s four dams failed to hold back flood waters. Midland County officials estimate about 2,500 businesses and homes were damaged by the floodwaters, while lakefront property on both lakes has been reduced to mudflats and drinking water and road infrastructure has been damaged.

` CHAMBER CANCELS MACKINAC CONFERENCE THE NEWS: The Detroit Regional Chamber is canceling this year’s Mackinac Policy Conference in August due to concerns about COVID-19 and keeping attendees socially distant inside Mackinac Island’s Grand Hotel. On March 24, the

chamber had decided to postpone the annual confab of business, education, nonprofit and government leaders, moving the conference from May 26-29 to Aug. 10-13. WHY IT MATTERS: After considering problems with keeping attendees socially distant inside the Grand Hotel, conference organizers decided to call off this year’s event, Detroit Regional Chamber CEO Sandy Baruah said. The 2021 edition of the conference is scheduled for June 1-4.

` STATE BUSINESSES HIT $15.7B IN PPP LOANS THE NEWS: Michigan businesses, as of June 6, have been the beneficiaries of more than $15.7 billion from more than 114,000 loans from the federal Paycheck Protection Program. The U.S. Small Business Administration, which is administering the program aimed at helping small businesses affected by the coronavirus crisis, along with the U.S. Treasury, announced the updated numbers last week. Across the six-state Great Lakes Region, businesses received more than $86 billion via 681,481 total loans, according to SBA figures.

Nestle looks at sale of water business ` Nestle SA said it’s considering a sale of its U.S. mass-market bottled water business as the world’s largest food company focuses the unit on premium hydrating products. Nestle announced the “new strategic direction” Thursday, also pledging to make its global water portfolio carbon-neutral and replenish watersheds by 2025. The Nestle Waters business in North America had sales of $3.6 billion of brands. Nestle Waters North America employs approximately 280 people in Michigan, where it bottles the Ice Mountain brand. Nestle’s operations in Michigan have been under attack for years by environmentalists and local communities. In April, Nestle won a key decision in its effort to pump more water from a well in western Michigan. An administrative law judge upheld a state permit, which allows Nestle to pump 400 gallons a minute from a well near Evart in Osceola County, a 60 percent increase, MLive.com reported. The company pays a $200 annual fee for its water pumping facility.

WHY IT MATTERS: The money was a lifeline to businesses struggling with government-ordered shutdowns. Changes passed last week loosened the requirements on how and when the money could be spent.

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2 | CRAIN’S DETROIT BUSINESS | JUNE 15, 2020

TRADE

Suppliers prepare for USMCA in the middle of a pandemic

FINANCE

IPO TIME FOR QUICKEN?

Agreement goes into effect on July 1 BY DUSTIN WALSH

Continental Automotive Systems Inc., the North American subsidiary of Germany’s Continental AG, has been shifting some production from its Asia operations to Mexico in recent months. Now with the rulebook in hand for the United States-Mexico-Canada Agreement, the Auburn Hills-based auto supplier is scrambling to ensure its downstream suppliers are up to speed on the trade agreement and in line with tougher rules of origin requirements. USMCA’s long-awaited uniform regulations were published just last week by the Office of the U.S. Trade Representative and will be implemented on July 1 — a little more than two weeks away. Experts worry Longo the industry simply won’t be ready to meet the agreement’s rules while also attempting to ramp up production in three different countries with dozens of different and new rules for operations amid the COVID-19 pandemic. “It’s almost unfathomable that we’d be implementing this as suppliers are trying to reopen,” said Lou Longo, partner and head of the international consulting practice at Plante Moran.

Quicken Loans co-founder and Chairman Dan Gilbert at the Crain’s Newmaker of the Year event earlier this year. | ANDREW JOWETT FOR CRAIN’S DETROIT BUSINESS

Quicken Loans would find big demand in potential IPO, experts say “THIS IS A GOOD TIME TO TAP THE IPO MARKET.” COMPANIES LIKE QUICKEN LOANS “HAVE TAKEN MARKET SHARE BY USING A DIGITAL APPROACH TO CUSTOMER ACQUISITION.” —Kathleen Smith, principal, Renaissance Capital

See USMCA on Page 16

BY NICK MANES

A public stock offering for Quicken Loans Inc. would make for a “blockbuster deal” for the Detroit-based company, industry sources say. However, in making the decision to go public, which has been reported as under consideration, the private mortgage lender giant would suddenly find itself opened up to considerable sunshine given the mandatory reporting requirements put on publicly traded companies. Industry sources say that a decision to go public has multiple catalysts. Among those drivers could be

estate planning for Quicken Loans co-founder and Chairman Dan Gilbert, as well as an opportunity to capitalize on the relative strength of the U.S. housing market during a period of extreme uncertainty. “This is a blockbuster deal, any way you put it,” John Donnelly, managing director at Grosse Pointe investment bank Donnelly Penman & Partners Inc., said of the potential IPO for Detroit’s largest employer. But Donnelly, who has no direct involvement in the possible IPO, also expressed some surprise at the news. “I’m somewhat surprised at the decision, given the privacy that (Gil-

bert) has historically kept,” he said. “But you think of the many, many businesses he’s run, I think of the casinos. This is not exactly their first foray into the public market.” Gilbert, 58, suffered a stroke in May 2019 that left him with partial paralysis on one side of his body. He related the story of his recuperation to Crain’s last year. Forbes estimates Gilbert’s wealth at $7.8 billion. His Rock Ventures ranked second on Crain’s Private 200 list of largest privately held companies in metro Detroit, with 2019 revenue of $7.8 billion. See QUICKEN on Page 17

MANUFACTURING

Companies pivot to UV products to sanitize phones, hands, offices BY NICK MANES AND CHAD LIVENGOOD

As a wide array of Michigan companies have pivoted to the manufacturing of personal protective equipment to aid in the fight against COVID-19, several now see a new way as the economy reopens. With the fear of spreading the coronavirus that can lead to potentially fatal illness now top of mind, companies increasingly see the use of ultraviolet light as one way to combat that spread. Ultraviolet light is a decades-old technology that has seen a resurgence in use during the coronavirus pandemic, in part because it’s seen as scientifically effective in killing airborne pathogens such as COVID-19, which can be transmitted by droplets from the mouth or nose. When surgical face masks were in low supply, doctors and nurses across the country were reportedly buying up

Craig Malstrom, director of tech publications and training for Unified Business Technologies, demonstrates UBT’s Illuminant 6 ultraviolet light sanitizing machine. CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

small UV lamps to place their used masks under after work. The labor, time and chemical intensive use of disinfectants for cleaning facilities of all types has spurred greater interest in ultraviolet light for sanitizing surfaces in the pathway of the lights. Among them are Ann Arbor-based Archimedes Inc., which does business as Halo — also the name of its nascent product — which began working to find a path toward scaling up operations over the last few months of the pandemic. The company is set to pilot its UV hand-and-phone sanitation product at the reopened Zingerman’s Roadhouse restaurant in Ann Arbor. The product is expected to be on site sometime next month for customer and employee use. While Halo’s nascent UV sanitation product may only be available at Zingerman’s Roadhouse to begin with, Archimedes co-founder Peter Forhan said he expects it to be part of a growing

trend of new technologies embraced by businesses and consumers as they attempt to get back to some semblance of normalcy. “An essential step in reopening businesses and offices is incorporating new technologies and new products that can make consumers feel safer and more confident,” Forhan said. “And Halo definitely slots right into that rollout plan of reopening safely, reopening with confidence and reopening with new technologies designed to keep transmission rates down and keep people safe.” Zingerman’s co-owner Ari Weinzweig said he believes the Halo machines will provide an added layer of comfort for guests and makes for a low-maintenance solution for the restaurant and its staff. “It’s low risk and it’s not a lot of work,” he said. See UV PRODUCTS on Page 16 JUNE 15, 2020 | CRAIN’S DETROIT BUSINESS | 3

COMMENTARY

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Crain’s May Days of Giving campaign extends to June 20 Last week, nonprofit beat reporter Sherri Welch reported on a little-known provision of the CARES Act: This year, for those who itemize, 100 Mary percent of donaKRAMER tions to public charities can be deducted on federal tax returns. The normal deduction is 60 percent. What better news as we close out our online charity campaign? More than 30 nonprofits are profiled on the web site, http://maydaysofgiving. crainsdetroit.com. As of Friday, nearly $60,000 had been raised collectively. But 21 nonprofits have raised less than $1,000 in the campaign that ends June 20. Consider sharing a bit of savings you may have from not traveling or eating out a lot. That’s what I did. The contributions support nonprofits that have lost major fundraising events while demand for their services surged in the pandemic. More than 300 Crain readers have already participated with donations ranging from $25 to $5,000; consider the impact if that grew to 1,000 additional donors, with an average gift of $25. It would get the entire campaign over $100,000. Each nonprofit has a profile outlining its operations on the May Days page. In addition, they have profiles in our June 8 Giving Guide. Here are some of the causes trying to reach $1,000: Catholic Charities of Southeast Michigan distributes more than 10,000 pounds of food weekly. The mental health services they offer switched to telehealth. The charities are doing home deliveries to more than 1,500 seniors who need help. Oh, and their biggest fundraiser was postponed while they were adding four new programs focused on food and mental health. Community Care Services in Lincoln Park is another agency focused on mental health as well as substance abuse. Services delivered by more than 70 licensed clinicians to 5,000 children, teens and adults went to a telehealth model with the pandemic, with emergency services available as well as a sliding fee scale for people with low incomes or no insurance. Detroit-based COTS — the Coalition on Temporary Shelter — continues to provide emergency shelter and housing services to homeless families. Donations support that work. The nonprofit also has an ongoing list of supplies posted on its Amazon Wish List that will support our crisis management efforts. Rose Hill, an Oakland County-based long-term residential health care facility — usually six to nine months — for adults with treatable mental health issues, worked hard to prevent exposure to the COVID-19 virus to protect residents and employees. All employees are screened upon entering the campus. No visitors — including family — have been allowed. The cafeteria

Incoming Teach for America teachers train at Detroit Summer Learning Institute, a summer enrichment program for Detroit students. | TEACH FOR AMERICA

was closed, and a new meal service plan instituted. All this, with extra costs for essential cleaning to maintain a virus-free environment have led to a big hit to the nonprofit’s budget. But residents and staff are safe. The biggest need? Better technology for video conferencing, telehealth, remote work, file sharing and the new relating of connecting staff and clients online. Meanwhile, spring fundraising events were canceled. The biggest hit was halting new admissions to reduce the risk of infections.

MORE THAN 300 CRAIN READERS HAVE ALREADY PARTICIPATED WITH DONATIONS RANGING FROM $25 TO $5,000. The Salvation Army of Metro Detroit mobilized quickly as the pandemic arose, amassing more than $1 million in in-kind donations, mostly food, since mid-March. In the first seven days of Michigan’s “lockdown” in March, the Eastern Division of the Salvation Army packed 20,000 food boxes, containing nearly 7 days of meals for one person. Jack Aronson, founder of Garden Fresh Salsa and an advisory board member, provided the warehouse space to handle the job. By May 26, volunteers had logged nearly 2,000 hours to serve 668,284 meals and 123,864 beverages. The Army tells donors: 87 percent of money donated goes to direct programming. Every day, more than 120 caregivers from Franklin-Wright Settlements fan out to make in-home visits to support in care, comfort and simply attention. The nonprofit also provides food and other essentials. Money raised in this campaign will go toward PPE, sanitation and cleaning supplies and meals for clients. Samaritas, one of the largest faithbased nonprofits in Michigan, provides more than 40 programs in 60plus locations. During the pandemic,

Samaritas has lost nearly $4 million in revenue while costs related to COVID-19 escalate. The nonprofit’s programs include homeless shelters, affordable housing and crisis services. In addition to money, the nonprofit is seeking supplies for care kits, including antiviral wipes, hand sanitizer, toilet paper, laundry detergent, baby formula and children’s games. Teach for America-Detroit’s corps of young teachers pivoted when COVID-19 closed school buildings. Besides working remotely on daily lessons with students in Detroit schools, they have purchased and delivered groceries for families. In the 2019-20 school year, 60 TFA corps members and alumni fellows were assigned to 18 schools, interacting with more than 4,000 students. The program renews in the fall. Detroit Children’s Fund is also devoted to education in Detroit, supporting everything from teacher/ leader development to foundational investments in specific schools and programs — charter schools and traditional public schools. Other education causes on the May Days page include the Fostering Futures Scholarship Trust Fund and the Youth Connection. Not all of the nonprofits are crisis-driven. As Detroiters begin to venture out and return to downtown, the Downtown Detroit Partnership ensures the area is ready, with clean and safe parks that serve as anchors for the district. In all, the partnership manages nine acres of gardens, lawns, monuments and gathering spots in Campus Martius Park, Cadillac Square, Capitol Park, Grand Circus Park, the Woodward Esplanade (now closed to traffic) and Beacon Park on the western fringe of downtown. The conservancy created to manage those spaces relies 100 percent on private funding. The official close to May Days of Giving is Friday, June 20. We’ll provide a final tally in the June 22 print edition. Mary Kramer is group publisher of Crain’s Detroit Business.

THOUGHT LEADERSHIP FORUM

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TAKING HUMAN RESOURCES FROM COST CENTER TO CENTER STAGE As the business world evolves in response to the coronavirus pandemic, human resources leaders are called to build a brand within their organizations and position their teams as a critical function, to positively affect the bottom line. HR manages the largest expenses of almost any organization—payroll and health care. The cost of employee absence and risk management (workers compensation and other business insurance) typically doubles the cost of health care alone. Where challenges used to be focused primarily on health care cost increases, a hardened market has now extended over disability and all business insurance lines of coverage. Coronavirus claims will reverse a five-year trend of decreasing worker comp pricing. The challenge of managing employee absence will be exponentially more complicated. Business insurance carriers are looking at all aspects of an organization’s risks and mitigation strategies, with renewals not always guaranteed. Some may view HR as simply a cost center, yet the ability to successfully manage the occupational and non-occupational health and absence of a workforce directly connects with virtually all success metrics for any organization. Company leaders may quickly lose interest in HR discussions that focus solely on cost increases for insurance and other benefits, because they may not see

Elaine Coffman joined Lockton Companies as shareholder and Michigan president in October to lead the privately held insurance broker’s expansion across the state. She has more than 30 years of industry experience.

how these topics are unrelated to the core business. HR must lean in to educate leadership on the complexity of solutions, discuss options for cost avoidance verses reduction, and gain support for the possible investment requirements. HR strategies should incorporate three key elements. GOOD DATA. Know what your organization spends on health and absences (both occupational and non-occupational). Collect and interpret data on the main cost drivers. Understand the impact on employee turnover, which typically costs 33% of each former employee’s annual salary. Be prepared to discuss the full range of impact HR can make on future cost predictions and guide decisionmaking that includes cultural changes. GOOD COST-MANAGEMENT PROCESSES. Orchestrating a relationship between your organization and your vendors is difficult yet rewarding. For example, without some

type of programmatic support (internal or external), managers are often unsure of how to control employee absence, so they do nothing. Given the challenges that COVID-19 has introduced, defining processes, and identifying vendor partners that are culturally and economically aligned with the company’s strategy related to leave, are crucial. GOOD PARTNERS. Every organization is unique and needs solutions tailored to its situation and partners that support the ability to effectively articulate HR’s strategic and financial value within the organization. Seek a broker or consulting partner that serves as an extension of your team to meet your organization’s unique needs and help drive effective strategies internally and with other vendor partners. HR has gained a seat at the C-suite table—it’s time to own that seat, effect change, and help further impact the organization’s financial success. To learn more about developing cost-effective strategies for health care, employee absence, or risk management, contact the Lockton Michigan team at Lockton.com.

BUSINESS LEADERS FOR MICHIGAN

RESTARTING MICHIGAN’S ECONOMY – THE RIGHT WAY At Business Leaders for Michigan, we understand what it takes to grow the economy. But as COVID-19 hit in March, we knew this was going to be different than just recovering from a recession. No one had a playbook to navigate recovering from a recession during a pandemic! So we wrote one. Doug Rothwell has worked as an executive in the public, private and non-profit sectors. For the past decade, he’s led Business Leaders for Michigan – a business roundtable of executive leadership from the state’s largest companies and universities working to grow jobs and the state’s economy.

The playbook builds on the long-term strategic plan we developed to help Michigan become a Top Ten state and incorporates best practices from regions around the world that successfully recovered from natural or fiscal emergencies. In short, the playbook is designed to stabilize our state’s economy while protecting public health and positioning Michigan for a swift, sustainable economic turnaround. We adopted guiding principles and offer policy suggestions that can be immediately implemented in Lansing. We know the state is losing revenue by the day. But there are still actions state government can take to use the revenue it does have to boost workers and the economy, without leveraging new taxes. 1) RESTART PRINCIPLES: Reengage the Michigan economy safely and responsibly, limiting the chances of another shutdown or prolonged economic downturn by relying on public health and safety to guide policies. Policy suggestions: • Support implementation of a statewide testing system; • Collaborate with financial instituions to identify, fund programs to provide short-term

We have a plan to restart Michigan’s economy.

loans and gap financing to Michigan-based businesses; • Support continuation of the Work Share program. 2) RESTRUCTURE PRINCIPLES: Adapt to new conditions, advocating for state government to leverage federal stimulus funds and revenues appropriately to redeploy displaced workers. Policy suggestions: • Review tax structure for alignment with accelerated trends toward remote work and household delivery of goods and services. • Assign the Department of Licensing and Regulatory Affairs to identify accelerated certification programs for in-demand positions. 3) REIGNITE PRINCIPLES: Facilitate conditions for growth, shifting economic development priorities during the recovery to focus on retaining and growing Michigan’s existing companies and attracting growth from their supply chains. Policy suggestions: • Focus on helping existing Michigan companies attract their critical suppliers in anticipation of a realignment of global supply chains; • Fund Pure Michigan to support restarting our tourism industry. Now that we are reopening the economy, state government needs a playbook to reignite it. Let’s work together to get Michigan back on track to becoming a Top Ten state. The full Economic Recovery Plan can be found at BusinessLeadersforMichigan.com/restart.

If we get the restart right, Michigan can come back even stronger than before. That’s why Business Leaders for Michigan has proposed a three-pillar plan:

1. RESTART: Reengage the economy safely & responsibly 2. RESTRUCTURE: Adapt to new conditions 3. REIGNITE: Facilitate economic growth

Get the full details of the plan at BusinessLeadersforMichigan.com/ restart. Let’s get Michigan on the road to recovery.

COMMENTARY

CEOs can make a difference by expediting pace of change

WAYNE STATE UNIVERSITY

BY CARLA WALKER-MILLER

Wayne State University’s School of Medicine in Detroit.

EDITORIAL

MSU’s gain is another loss for Wayne State It could have been a contender. But ego, short-sightedness and dysfunction on Wayne State University’s Board of Governors continues to cost the institution at every turn. And inaction — or unwillingness — by Gov. Gretchen Whitmer to step in to resolve the issue by removing at least one or two dissident trustees for ample cause didn’t help. Henry Ford Health System last week announced a primary affiliation with Michigan State University after nearly two years of unproductive talks with WSU. It’s a win for Henry Ford and MSU — and Detroit — but a lost opportunity for the state’s major urban university. The partnership leaves Wayne State’s crown jewel — its medical school — an orphan, without a reliable primary teaching hospital to lure young talent. And it puts at risk a billion-dollar-plus higher eduWAYNE STATE’S cation institution in INABILITY TO the heart of the city that’s a key part of DeKEEP HENRY troit’s future. FORD ON ITS The university’s inability to keep Henry HOOK CEDES Ford on its hook CRITICAL GROUND cedes critical ground to MSU and UniversiTO MSU AND ty of Michigan, which UNIVERSITY OF is planning a major investment in Detroit MICHIGAN. through its $300 million Detroit Center for Innovation east of downtown. Now, those two players — which for years had not engaged in Detroit — will reap the benefits of these new initiatives while WSU’s status as an academic and research institution sinks. Henry Ford’s president and CEO, Wright Lassiter III, told Crain’s this week that while

discussions are still early, the two health organizations foresee at least two physical buildings coming to Detroit — a research institute and a regional campus building for Michigan State. Henry Ford is one of the region’s major academic medical centers, receiving nearly $100 million in annual research funding and ranking among Michigan’s largest NIH-funded institutions. “Michigan State wants to have more of a presence in the city of Detroit,” Lassiter said. “A regional campus corresponds to a medical school campus in the city of Detroit. It would be operated by Michigan State and jointly planned with us.” WSU’s potential deal with Henry Ford was the lightning rod for dissident trustee Michael Busuito in his quest to oust M. Roy Wilson as president. Busuito, a medical doctor, had lobbied instead for Wayne to buy the Detroit Medical Center. Wayne State’s loss is due entirely to a faction of board members who have been publicly warring with Wilson since last year. Whitmer could have removed board members based on the result of an independent law’s review of trustee behavior that jeopardized the university’s accreditation. Henry Ford can’t be blamed for bailing on the talks. The resulting mess for Wayne State points to the importance of effective university governance — and a reminder to pay closer attention to the bottom of the ballot in November. Dysfunction isn’t found only at WSU. The early days of the Larry Nassar crisis at Michigan State found board leadership lacking. So as we’ve noted before, it may be time in Michigan for a constitutional change allowing governors to appoint board members at the “Big 3” universities rather than electing them.

To my fellow CEOs, My heart truly aches because of the recent senseless killing of Mr. George Floyd and the long legacy of systemic racism that has caused the deaths of countless numbers of black people and continues to conCarla Walkertribute to the generaMiller is CEO of tional trauma of so many Walker-Miller others. Energy. As CEO of Walker-Miller Energy Services, a black- and woman-owned company committed to changing lives through energy efficiency, I wanted to speak to CEOs, who, like me, lead companies of 100 team members or more. Our companies are the economic engines of our region, state and nation. We help define the way residents live and help determine what community causes are important. My 20-year-old company is headquartered in Detroit, a city with a population that is about 80 percent black. Part of our reason for being is to empower people and enrich communities. Our core value of Inclusive Stewardship is born of the belief that we are not just an employer, but a steward of the very livelihoods and thus the well-being of our culturally diverse team members, customers and collective communities. I fight every day to increase the number of black people in the clean energy industry, where we are woefully underrepresented. I struggle to realize sustainable profits in today’s complicated business ecosystem. Even so, in 2018, our commitment to equity drove four new, key decisions: ` We instituted a $15-an-hour minimum wage; ` We adopted fair-chance hiring practices for citizens returning from incarceration; ` We doubled down on recruiting Detroit residents by setting a goal of hiring Detroiters for 60 percent of the jobs in our Detroit headquarters; ` We decentralized our company procurement process to spend money with diverse businesses in the communities we serve. “If you want something you’ve never had you must be willing to do something you’ve never done.” I didn’t say it. Those words are sometimes attributed to Thomas Jefferson, the third president of the United States, author of the Declaration of Independence and a slaveholder. But I live by them. So do so many black people, and our very hearts long for the fundamental “somethings” we have never had. Something like justice. Something like equity. Something like the basic presumption of innocence. Recently, in a historic act, the CEOs of some of southeast Michigan’s most influ-

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited for length or clarity. Send letters to Crain’s Detroit Business, 1155 Gratiot Ave, Detroit, MI 48207, or email crainsdetroit@crain.com. Please include your complete name, city from which you are writing and a phone number for fact-checking purposes. 6 | CRAIN’S DETROIT BUSINESS | JUNE 15, 2020

ential corporations stood with Detroit Mayor Mike Duggan and the NAACP to pledge to eliminate racism and bias within their companies. Nationally, corporations are releasing beautifully crafted statements vowing solidarity with Black Lives Matter. These seminal actions give me hope that our corporate community will be instrumental in expediting the pace of change. As we grapple with the necessary re-education that I believe is required to trudge the difficult trail to racial equity, Proverbs 4:7 reminds us that “Wisdom is the principal thing, therefore get wisdom: and with all thy getting, get understanding.” This very scripture compels me to recommend a very quick read, “The Burden: African Americans and the Enduring Impact of Slavery” written by Rochelle Riley, one of our community leaders whose commentary and commitment to our city have been profound for some time. As your understanding of why we are where we are as a country grows, so will your commitment to be the change we all want to see. I implore you to expedite the pace of change by paying a $15-an-hour minimum wage to improve the lives of black, work- MY 20-YEAR-OLD ing-class families. I challenge you to COMPANY IS drastically improve HEADQUARTERED corporate recruiting, hiring, training and IN DETROIT, A promotion strate- CITY WITH A gies so that all black POPULATION families can work. I encourage you to THAT IS ABOUT 80 spend procurement dollars with black PERCENT BLACK. companies so that PART OF OUR black businesses can REASON FOR thrive. And finally, I urge BEING IS TO you to invite black voices into the rooms EMPOWER where real decisions PEOPLE AND are made, the proverbial meetings before ENRICH the meetings, typically hosted by people COMMUNITIES. we do not know in places we do not frequent, the rooms where recipients of inherent privilege make decisions that disproportionally impact those who are not there. Invite us in. Hear us. And take heed. But only if black lives really do matter. This letter originally appeared in the Michigan Chronicle.

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.

COVID-19 HEROES

Pure Heart Foundation aids children of incarcerated parents from a distance BY ANNALISE FRANK

During the coronavirus pandemic, Sherelle Hogan and members of her Pure Heart Foundation can’t hug or high-five the children of incarcerated parents with whom they work. “It’s been a huge transition from dealing with young people every day to not being able to see them at all,” said Hogan, who founded the Detroit-based nonprofit in 2015. “When (the COVID-19 pandemic) happened, we had to strategically make sure we were keeping the children connected to one another ... then make sure (they’re supported) emotionally, educationally, financially, receiving necessary resources and intervention.” Pure Heart designed virtual ways to keep its clients in touch with the organization and each other. Some of the communication goals are to assure kids that it’s not their fault — Hogan said they “tend to take on the stressors of parents and blame themselves” — and affirm that they are strong and their parents care about them. The families Pure Heart works with face a barrage of worries: With the outbreak, they can no longer see incarcerated family members, children aren’t getting support from friends at school and it’s traumatic, Hogan said, to see stories on the news about people in prison dying from the coronavirus. Last month, Michigan ranked highest in the U.S. for prisoner deaths due to COVID-19, the Detroit Free Press reported. The nonprofit says it serves mostly black youth and people of color and that about 1 of 9 African American youth have had a parent incarcerated. Research group Child Trends compares that statistic to 1 in 14 for the general population. Pure Heart says on its website and social media that it aims to “(dismantle) a system that was designed to fail” these young people and “break the cycle of generational incarceration.” Pure Heart’s annual budget is around $125,000, according to Hogan, though the pandemic has affected it “drastically,” requiring the group to cancel two fundraisers and shifting funding allocations. The nonprofit slashed its staff from three to one, and relies on volunteers. But demand for its services has increased: Pure Heart started with 100 clients for 2020 and is now up to 250. To solve the problem of lack of technology while they aim to connect from a distance, the nonprofit is using $15,000 from United Way for Southeastern Michigan to get laptops and tablets to clients. They’re using Facebook and Instagram live for programming, Hogan said, and plan to start virtual counseling on the Zoom videoconferencing platform in a couple of weeks. “It’s been very, very effective ... but there’s nothing like a hug, nothing like that positive reassurance,” she said. “Those are small gestures that they even voice that they miss.” Late this month, Pure Heart will celebrate its five-year anniversary with an online painting class dedicated to the Black Lives Matter movement. Painting kits and canvases are being ordered and will be dropped off for families. Pure Heart is also dropping off biweekly care packages with

toiletries, hygiene products, coloring books and journals. Pure Heart is encouraging kids to write letters to incarcerated parents that the nonprofit will send. The nonprofit also got $3,500 in gift cards for families from the Detroit Lions and $5,000 from Lions linebacker Christian Jones. The pandemic came after Pure Heart faced a different kind of setback — one that cost it $18,000. An eastside home the nonprofit is turning into a drop-in center with program-

“WHEN (THE COVID-19 PANDEMIC) HAPPENED, WE HAD TO STRATEGICALLY MAKE SURE WE WERE KEEPING THE CHILDREN CONNECTED TO ONE ANOTHER ... THEN MAKE SURE (THEY’RE SUPPORTED) EMOTIONALLY, EDUCATIONALLY, FINANCIALLY, RECEIVING NECESSARY RESOURCES AND INTERVENTION.”

ming, lounge space, a kitchen and gardening got broken into and looted in February. The opening is being pushed back and the nonprofit has so far raised $8,000 to make up for what was lost, said Hogan, who was a Crain’s 20 in their 20s honoree in 2019. “It’s been a huge hit, but we are rising through all of the adversity that comes our way,” she said. Contact: afrank@crain.com; (313) 446-0416; @annalise_frank

Sherelle Hogan | JACOB LEWKOW FOR CRAIN’S

— Sherelle Hogan, Pure Heart

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HUMAN RESOURCES AWARD WINNERS

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 TEAM OF THE YEAR: Lineage Logistics. THIS PAGE 8

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uman resources leaders have had their work cut out for them this year. Companies have scrambled to figure out how to respond to a once-in-a-lifetime global pandemic, rapidly transition their workplaces to accommodate social distancing and remote work, navigate safe reentry and weather the resulting economic crisis.

Human resources teams have been the linchpin of it all. And the importance of a strong human resources team to business success has never been more apparent. Here, we honor remarkable HR leaders and teams whose work has delivered measurable results: reduced turnover, cost savings and a demonstrated improvement to employee experience. The winners were selected from nominations by a judging panel of experienced HR professionals:  Dandridge Floyd, Assistant Superintendent of Human Resources and Labor Relations, Oakland Schools; 2019 Excellence in HR Award winner  Johannah Schiffer, Director of People and Places, Telemus Capital; 2019 Excellence in HR Award winner  Christina Schneider, Senior Benefits Consultant, Oswald Companies

WINNER: HR TEAM OF THE YEAR

Lineage Logistics’ HR team onboards thousands globally Company improved processes as it had its biggest mergers and acquisitions year in 2019 BY RACHELLE DAMICO | SPECIAL TO CRAIN'S DETROIT BUSINESS

Lineage Logistics’ human resources team onboarded thousands of employees last year and improved HR processes while the company expanded its global footprint. The Novi-based international warehouse and logistics company is the largest and one of the fastest-growing refrigerated warehousing company in the world. When Lineage started in 2008, it had a single warehouse in Seattle, Wash. Today, the company has more than 15,000 employees across 311 locations worldwide. In 2019, the company had its single biggest merger and acquisitions year ever, completing eight acquisitions. As a result, the HR team welcomed about 3,000 employees. To prepare for the transition, Lineage’s HR team implemented tactics to onboard and recruit new employees, develop leadership and restructure benefits and compensation across the company. One way Lineage increased quality and volume of hiring was by outsourcing recruiting efforts at its

8 | CRAIN’S DETROIT BUSINESS | JUNE 15, 2020

Lineage Logistics employees volunteered 3,874 hours at food banks last year and provided 934,240 meals by participating in food drives. | LINEAGE LOGISTICS

largest warehouses to SevenStep RPO, a recruiting firm based in Boston, Mass. After candidates are selected, hiring managers interview the candidates to make sure they’re the right fit for the role. “When (hiring managers) are directly involved in the hiring process you have more ownership over the

success of that person and whether or not they’re the right candidate for the job,” said Sean Vanderelzen, chief human resources officer. To increase productivity among new employees during their first 30 days, Lineage created weekly benchmarks for each position to meet. For instance, a shipping and

receiving operator who receives and stocks items for a customer’s order must meet benchmarks for timely completion of those tasks. If benchmarks are consistently met, hourly employees are eligible to receive a raise every six months for up to 30 months. After 30 months, employees are eligible for annual increases as a salaried worker. “This gave people earlier gratification in their job here if they were successful in their performance objectives,” Vanderelzen said. “When you feel success at the job earlier and faster, you tend to want to stay longer.” The company’s leaders are also held to high standards. Leaders attend training programs throughout the year to hone their skills, such as how to give constructive feedback and how to lead employees based on their development needs. Lineage has also committed to making strides in diversity and inclusion. For instance, a Women in Leadership at Lineage group was launched in 2019. See LINEAGE on Page 11

“WHEN (HIRING MANAGERS) ARE DIRECTLY INVOLVED IN THE HIRING PROCESS YOU HAVE MORE OWNERSHIP OVER THE SUCCESS OF THAT PERSON AND WHETHER OR NOT THEY’RE THE RIGHT CANDIDATE FOR THE JOB.” — Sean Vanderelzen

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HR leaders, teams deliver measurable results

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` EMPLOYEE EXPERIENCE: Sachse Construction. PAGE 10

` FINDING AND GROWING TALENT: Brose North America. PAGE 12

` EMPLOYEE EXPERIENCE: Keyantee’ Davis, St. Joseph Mercy Oakland.

` HR INNOVATION: Marilyn Elliott, GroupeStahl North America . PAGE 12

PAGE 10

` DIVERSITY & INCLUSION: Jocelyn Giangrande, Sashe LLC . PAGE 11

WINNER: COMPENSATION & BENEFITS

A ‘holistic approach’ to employee benefits Secure-24’s HR team works with management, health care providers for competitive package BY RACHELLE DAMICO | SPECIAL TO CRAIN'S DETROIT BUSINESS

Secure-24 employees participate in a volunteer activity. | SECURE-24

ums, including dental, vision and other benefits. Piwowar said employees are only liable for low deductibles and co-pays.

“It’s been a key differentiator for us,” Piwowar said. “It’s important for people to have that peace of mind to know that if employees get sick,

“IT’S IMPORTANT FOR PEOPLE TO HAVE THAT PEACE OF MIND TO KNOW THAT IF EMPLOYEES GET SICK, THEY’RE TAKEN CARE OF AND THEIR FAMILIES ARE TAKEN CARE OF.” — David Piwowar

GETTY IMAGES/ISTOCKPHOTO

Secure-24, a provider of cloud computing and managed hosting, has attracted and retained talent through a focus on healthy work-life balance and offering a competitive spread of employee benefits. The Southfield-based company has more than 1,000 employees globally and about 750 employees nationally. Last year, Secure-24 generated more than $140 million in revenue. Under the leadership of David Piwowar, vice president of human resources, Secure-24’s HR team has worked with health care providers and executive management for competitive employee benefits. One of the key benefits that Secure-24 offers employees is paid health care. Secure-24 pays 100 percent of employee health care premi-

they’re taken care of and their families are taken care of.” To allow employees flexibility, the company also offers unlimited personal time off. Wellness initiatives are another benefit. Employees can request treadmills at their workstations and have complimentary access to an on-site fitness center, for example. And a mobile meditation truck visits Secure-24 once a week for onsite meditation therapy. Employees also enjoy perks such as catered lunches, tickets to sporting events, access to on-site game rooms and complimentary Starbucks. In the last three years, less than 10 percent of Secure-24’s staff has left the company voluntarily. “A big part of our culture is taking a holistic approach with our people and our company benefits,” Piwowar said. “Our attrition rate is proof that we’re doing something right.”

TECHNOLOGY DRIVEN. PEOPLE POWERED. Brose puts people first! Recruiting, retaining and growing talent is ingrained in the fabric of our culture. Brose is proud to be the winner of Crain’s Detroit Business 2020 Excellence in HR “Finding & Growing Talent “ award.

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JUNE 15, 2020 | CRAIN’S DETROIT BUSINESS | 9

WINNER: EMPLOYEE EXPERIENCE

Sachse Construction invests in employee well-being People & Perks Department, Sachse Construction BY RACHELLE DAMICO | SPECIAL TO CRAIN'S DETROIT BUSINESS

Sachse Construction has seen an increase in retention and a rise in employee engagement scores since its People & Perks department launched a companywide wellness program. The Detroit-based construction management and general contracting firm has 170 employees and generated $164 million in revenue last year. Three years ago, Sachse’s People & Perks department created Project:U, a wellness program for employees that focuses on four categories: health, wealth, mind and body. “We needed to create a wellness program that would be embraced by all generations of our company and a place where all of our team members can go to find resources,” said Myra Ebarb, director of People & Perks. Multiple initiatives are offered to

“WE NEEDED TO CREATE A WELLNESS PROGRAM THAT WOULD BE EMBRACED BY ALL GENERATIONS OF OUR COMPANY AND A PLACE WHERE ALL OF OUR TEAM MEMBERS CAN GO TO FIND RESOURCES.” — Myra Ebarb

HOW THEY PIVOTED:

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10 | CRAIN’S DETROIT BUSINESS | JUNE 15, 2020

employees across each wellness category. For instance, employees who want to work on their wealth can take an online course, talk to a financial adviser and use online budgeting and finance tools paid for by the company. Team members who want to get fit are eligible for a $20 per month gym membership subsidy if they work out four times per month. Last year, in an effort to destigmatize mental health, the company launched individual wellness programs that are accessible online and through mobile devices. Employees can customize their program by answering questions about their stress and happiness levels. The People & Perks team analyzes the anonymized responses of each team member and develops a suite of initiatives that caters to the needs of the team. Since the COVID-19 pandemic, the company has offered additional mental health resources for em-

Sachse Construction employees take a 15-minute ice cream social “clarity break,” a Project:U activity to promote mental health and productivity. | SACHSE CONSTRUCTION

WINNER: EMPLOYEE EXPERIENCE

WIN

A focus on communication and safety

Keyantee’ Davis, Chief Human Resource Officer, St. Joseph Mercy Oakland

BY RACHELLE DAMICO | SPECIAL TO CRAIN'S DETROIT BUSINESS

Keyantee’ Davis increased employee engagement by improving communication, highlighting employee accomplishments and promoting a safe work environment. Davis is the chief human resource officer at St. Joseph Mercy Oakland hospital in Pontiac. The 443-bed community teaching hospital was founded in 1927 by the Sisters of Mercy, part of St. Joseph Mercy Health System. The five-hospital system is affiliated with Livonia-based Trinity Health, one of the largest nonprofit health systems in the nation with 94 hospitals in 22 states. In 2016, Davis led the creation of quarterly town hall meetings, increasing transparency between senior leadership and staff. The venue allows any staff member at the hospital to ask questions or air concerns to St. Joseph Mercy Oakland’s president, Shannon Striebich. “The more venues (employees) have to be able to answer questions or receive information is always going to make the organization perform better because people are informed and they feel that their needs are being addressed,” Davis said. During a town hall meeting in

“I WANT OUR COLLEAGUES TO RETURN HOME TO THEIR FAMILY MEMBERS THE SAME WAY OR BETTER AS WHEN THEY LEFT THEM THAT DAY.” — Keyantee’ Davis

2018, many hospital staff members expressed concerns about how to manage their safety if a patient becomes violent, a rising issue in the health care industry. As a result, the hospital launched the Hospital Assault Response and Prevention Training Program that year. The program teaches colleagues how to mitigate a situation if a patient is becoming violent and how to exit if a situation continues to escalate. Since the program has been in effect, severe injuries reported at the hospital have decreased by 61 percent. “I want our colleagues to return home to their family members the same way or better as when they left them that day,” Davis said. Davis was instrumental in expanding communication among hospital staff through the use of online platforms that can be accessed through smart devices. One of the platforms, StandOut, allows managers and colleagues to communicate on a real-time basis to address any questions or concerns. VOICE, another platform, allows colleagues to anonymously report incidents or air grievances to managers. In addition to improving communication and addressing safety concerns, Davis and her staff have recognized employees’ accomplishments by launching individual and team award programs. Since Davis has been at the forefront of these efforts, the hospital has seen employee engagement increase by 11 percent during 2017–2018.

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ployees. Employees are eligible for free memberships to mental health apps like Calm, a sleep and meditation app. Team members can also chat with a counselor and access mental health assistance programs. More than 44 percent of employees have participated in Project:Uâ&#x20AC;&#x2122;s individual wellness programs since its launch. The demand for the programs led the company to adopt a program from the University of Michigan called Mood Lifters, a voluntary 15-week program that allows participants to evaluate and improve their mental health through a series of wellness activities. Employees that work outside of the Detroit office can also take advantage of Project:U benefits. Theyâ&#x20AC;&#x2122;re offered a quarterly wellness care package that includes resources such as a digital budgeting workshop, a spa gift card and a restaurant survival guide book that helps employees make smart decisions about what to eat while traveling. Last year, more than 84 percent of employees participated in Project:U. Since its launch, the company has seen a 2 percent increase in retention. Employee engagement scores have also increased by more than 10 percent in two years. â&#x20AC;&#x153;We put our team first and weâ&#x20AC;&#x2122;re always looking after them,â&#x20AC;? Ebarb said. â&#x20AC;&#x153;Everyone appreciates our wellness program because itâ&#x20AC;&#x2122;s a benefit that you really donâ&#x20AC;&#x2122;t see anywhere.â&#x20AC;?

LINEAGE

From Page 8

The group is made up of 15 top company female leaders that help Lineage recruit, develop and empower women leaders. Last year, the group established a mentorship program that connects high-potential women at the company with mentors from Lineageâ&#x20AC;&#x2122;s leadership community. Lineageâ&#x20AC;&#x2122;s HR team also spearheaded a partnership with Feeding America, a hunger relief organization with a nationwide network of food banks. Last year, Lineage provided 1.7 million meals through employee and company donations totaling more than $170,000. Team members also volunteered 3,874 hours at food banks and provided 934,240 meals by participating in food drives. Lineage reduced employee turnover by 20 percent in 2019. Additionally, the companyâ&#x20AC;&#x2122;s largest regional distribution centers, which employ anywhere from 300700 people at a single facility, saw a 40 percent reduction in turnover. â&#x20AC;&#x153;To say Lineage couldnâ&#x20AC;&#x2122;t succeed without our incredible HR team is the understatement of a lifetime,â&#x20AC;? said Greg Lehmkuhl, president and CEO. â&#x20AC;&#x153;They exceed expectations every time and deserve to be recognized as the truly world-class team that they are.â&#x20AC;?

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WINNER: DIVERSITY & INCLUSION

A track record of improving diversity Jocelyn Giangrande, Founder and President, Sashe LLC BY RACHELLE DAMICO | SPECIAL TO CRAIN'S DETROIT BUSINESS

Jocelyn Giangrande, founder and president of diversity and inclusion consultancy Sashe LLC, has a track record of helping her clients attract, retain and develop their talent pools. Giangrande founded Sashe LLC in 2011. She has more than 25 years of experience in the D&I field and has worked with more than 100 companies to improve their D&I efforts. Giangrande has driven business results by implementing diversity councils, advisory committees and employee resource groups (employer-recognized groups who share the concerns of a common race, gender, national origin or sexual orientation). Since founding Sashe LLC, Giangrande has facilitated the implementation of more than 50 diversity councils and employee resource groups for her clients. â&#x20AC;&#x153;If your current talent feels respected and valued and they have an opportunity to contribute to the success of your organization, they will be the ambassadors to bring others in,â&#x20AC;? Giangrande said. Giangrande increased diverse talent pools for a major health care company by 38 percent by carrying out a yearlong strategic workforce planning initiative in 2011. The initiative involved collaborating with

â&#x20AC;&#x153;IF YOUR CURRENT TALENT FEELS RESPECTED AND VALUED AND THEY HAVE AN OPPORTUNITY TO CONTRIBUTE TO THE SUCCESS OF YOUR ORGANIZATION, THEY WILL BE THE AMBASSADORS TO BRING OTHERS IN.â&#x20AC;? â&#x20AC;&#x201D; Jocelyn Giangrande

key departments and using recruitment methods to reach a diverse talent pool. For instance, Giangrande strategized print and online advertisements to target diverse candidates by projecting messages that connected and resonated across different groups. Further, Giangrande increased diversity in leadership by 32 percent and increased promotions among diverse employees by 22 percent for the health care company during 2008-2011. One of the ways Giangrande achieved this was by overseeing a center to help entry-level employees build their job skills so they could advance within the organization. Giangrande has built more than 250 training modules and educational programs throughout the country. Most notably, she spearheaded the diversity and inclusion training curriculum at Henry Ford Health System in 2008. The curriculum provides leaders and team members a variety of training and education workshops and learning programs. â&#x20AC;&#x153;Organizations have to make sure theyâ&#x20AC;&#x2122;re creating an environment where all of their diverse talents, perspectives and backgrounds have an opportunity to contribute,â&#x20AC;? Giangrande said. â&#x20AC;&#x153;That leads to an organization or business being profitable, competitive and sustainable.â&#x20AC;?

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WINNER: FINDING & GROWING TALENT

Brose brings German-style apprenticeships stateside Auburn Hills-based auto supplier has variety of programs to fill skilled trade talent gap BY RACHELLE DAMICO | SPECIAL TO CRAIN'S DETROIT BUSINESS

Brose North America has put in place a variety of training and development programs to fill the skilled trades talent gap and strengthen its workforce. The Auburn Hills-based automotive mechatronics supplier has about 6,000 employees. It is a subsidiary of Brose Fahrzeugteile GmbH, a German company that has about 26,000 employees and generated 6.2 billion euros in revenue last year. Germany has historically homegrown its skilled workforce. In 2013, Brose adopted the German model and created a two-and-a-half year apprenticeship program for its manufacturing and technical departments. The program allows high school students to receive a free college education and paid, on-the-job experience. Graduates of the program have their associate’s degree paid in full and have the opportunity to be hired full time at Brose. “The apprenticeship program is important for us because they’re hard-to-find skills,” said Tanya Misajlovski, training coordinator lead at Brose North America. “We want to make sure our apprentices love us and stay with us.” Another way the company has grown its talent pipeline is through a four-year co-op program with Kettering University in Flint. Since 2006, students enrolled at Kettering can obtain paid, hands-on work experi-

“THE APPRENTICESHIP PROGRAM IS IMPORTANT FOR US BECAUSE THEY’RE HARD-TO-FIND SKILLS. WE WANT TO MAKE SURE OUR APPRENTICES LOVE US AND STAY WITH US.” — Tanya Misajlovski

Members of Brose North America’s training team including, from left: Catherine Gardner, Training Intern; Michelle Serafino, Training Coordinator; Tanya Misajlovski, Training Team Lead; Chris Hunt, Technical Trainer. | BROSE NORTH AMERICA

ence at Brose in their field of study. Students may also be hired at Brose full time upon completing the program. On average, one to two Brose training sessions take place daily, whether in-person or online. More than 80 internal trainers and 15 development programs have been integrated into the company to strengthen and retain its existing North American talent pool.

This year, Brose is also introducing an online training system, Brose Skills Matrix. The system organizes employees’ skill sets to help Brose leaders identify skill gaps, develop company training programs and strategize succession planning. Further, Brose employees who complete certain development programs are eligible to receive promotions. Today, Brose North America has

hired 17 apprentices and 13 co-op students. Since each program’s inception, more than 32 students have graduated and work full-time at the company. “Brose has grown many students into management and technical experts over the years, which has been instrumental in aligning employees’ skill set with company needs and closing our skill gap,” Misajlovski said.

WINNER: HR INNOVATOR

Building an HR department from the ground up Marilyn Elliott, Vice President and Chief Human Resources Officer, GroupeStahl North America BY RACHELLE DAMICO|SPECIAL TO CRAIN'S DETROIT BUSINESS

Marilyn Elliott has transformed GroupeStahl North America’s human resources department, reducing turnover and saving the company millions of dollars — while staying on the leading edge of new ideas in the HR space. GroupeStahl is a global manufacturer, distributor and direct supplier of garment decoration materials and equipment, with headquarters in Sterling Heights. Elliott is the vice president and chief human resources officer of GroupeStahl North America, overseeing nearly 1,600 employees. She has been with GroupeStahl since 1989 when she began building the HR department from the ground up. GroupeStahl has been growing rapidly over the past several decades, leading Elliott to design an onboarding process for employees 12 | CRAIN’S DETROIT BUSINESS | JUNE 15, 2020

“IT’S IMPORTANT THAT LEADERS SET A GOOD EXAMPLE AND SET A POSITIVE ENVIRONMENT FOR EMPLOYEES.” — Marilyn Elliott

to ensure they understand their value as well as the company’s operations and culture. One way Elliott achieved that is by implementing a “buddy system” for employees throughout their first six months. New employees are partnered with existing employees in their department that can offer guidance and assistance. “We did not want them to fall short because they didn’t know what to do, where to go, or how to do it,” Elliott said. “This way they feel welcome and know where to go for technical assistance.” To encourage a healthy lifestyle and promote work-life balance, Elliott spearheaded GroupeStahl’s wellness program in 2006. Employees are provided wellness passport books that they can use to track wellness activities, such as preventive health checks. Employees can earn up to four days of paid time off each year as an incentive for improving their well-

ness and work-life balance. Elliott also introduced remote health care access in 2017, which comes at no extra cost to the employees. About 70 percent of employees currently use the service for medical care and about 24 percent use it for behavioral health. Under Elliott’s leadership, GroupeStahl transitioned to a more comprehensive payroll program that incorporates benefits, paid time off and an online performance management system. The system allows employees to complete and access performance reviews remotely, allowing teams and their managers to engage and review their goals throughout the year. In 2014, Elliott put in place a centralized safety program. To improve safety throughout all of GroupeStahl’s U.S. facilities, each facility established a safety team responsible for preventing injuries and following established safety protocols. As a result, workplace in-

juries and workers compensation costs reduced by 58 percent. Elliott also initiated an executive coaching program for about 30 executives, as well as leadership training for managers across the United States. The program focuses on self-assessments, 360-degree reviews, action planning and coaching. This allows leaders to develop and refresh leadership strengths and areas of improvement. “It’s important that leaders set a good example and set a positive environment for employees,” Elliott said. “I want employees to want to come to work, learn and make meaningful contributions. That starts with leadership.” With Elliott at the helm of GroupeStahl’s HR efforts, health benefit plan initiatives have saved the company nearly $13 million over the past six years in the United States. Employee turnover has also remained low, ranging from 14-22 percent over the last 30 years.

DETROIT RISING

Hudson-Webber’s Melanca Clark on protests, policing and putting more African Americans at decision-making tables The shocking video of a white Minneapolis police officer suffocating a black man, George Floyd, to death in broad daylight has set off nightly Chad in DeLIVENGOOD protests troit and other cities across the country over police brutality toward African Americans. It’s also reignited a larger debate about the underlying issues of economic and social justice that have long challenged Detroit’s trajectory over the past half-century. Melanca Clark, president and CEO of the Hudson-Webber Foundation in Detroit, has been working on policing and criminal justice issues for most of her career, both as a philanthropic leader in the city and in her prior roles in the Obama administration and U.S. Department of Justice. On the Detroit Rising podcast last week, she talked with Crain’s Senior Editor Chad Livengood about Floyd’s death and what can be done to change the way police departments operate in America. She also says African Americans need a seat at the tables of corporate

“I THINK WHEN I LOOK AT IT, POLICE BRUTALITY IS THE ISSUE THAT WE’RE LOOKING AT, BUT IT’S REALLY A LARGER SYSTEM THAT’S BRUTALIZED. AFRICAN AMERICANS.” — Melanca Clark, president and CEO of the Hudson-Webber Foundation in Detroit

and philanthropic leadership in Detroit when decisions about capital and investment in the community are made. This partial transcript has been edited for clarity. Listen to the full interview at crainsdetroit.com/detroitrising. Chad Livengood: Melanca, tell us a little bit about your perspective on all that has transpired the past week, both in Detroit, Minneapolis and around the country. Melanca Clark: I think we have to start with that horrific image of (Minneapolis police officer) Derek Chauvin with his knee on George Floyd’s neck. I have to say, that image is telling in that I think when you look at the whole context of what that image showed, one of the things that was most shocking was just the officer’s complacency as he gazed at spectators and presumably knew he was being taped. And I think it speaks to a larger issue, not of just this one officer — and I think this is why it’s resonated in the way it has with folks. But that there was no assumption that there would be any accountability around what he was doing, and that speaks to larger structural problems that go well beyond any individual officer’s actions, but really to the fact that the charges were slow to come from the prosecutor’s office. And there’s certainly no guarantee that there will be a conviction. And we’ve seen,

obviously, in the past many instances where officers are not held accountable. I think when I look at it, police brutality is the issue that we’re looking at, but it’s really a larger system that’s brutalized African Americans. You can spin that out in lots of ways. But I just start with the fact that this policing incident — horrific incident — is the most visible manifestation of a broken system. But behind that front door is actually a system that is incarcerating African Americans at a staggering rate with all the many implications that flow from that. That structure, the way the justice system has impacted African Americans, obviously then in turn speaks to just the discounting of our humanity, and I say that as a black woman. ` There’s a lot of raw issues that have come to the surface here. From the foundation standpoint, what are some areas where you think there could be some meaningful change that comes about in Detroit, in our community, or in how our police department has its own relationships with the people of Detroit? Let me just give some context about how our foundation has been thinking about this, and I’m proud to say we’ve been thinking about this before this very moment. We’ve got a long history in the city with origins that go all the way back to 1939 and this enduring

mission of improving the quality of life in the city. But over the last few years, our strategy is really focused on supporting partners and projects and initiatives that are focused on shared prosperity, really an opportunity agenda. And because of that, our trustees have put this front and center that for us to achieve that, we’ve gotta be really intentional about addressing racial inequity and structural barriers to opportunities. We have been working on this, being explicit about this, that the problem that ails us is one that needs to be named. And that’s this issue of structural racism. Because of that, we’ve got our hand in a number of different types of projects. ... One of those is what we call Safe and Just Communities. We’ve been doing a number of things that we want to, of course, double down on and want to bring others to really investing in things that make this a more just and inequitable system. On the policing front ... we’ve got a partner, for example, First Detroit that’s part of the Faith in Action network that has been engaging in pertinent partnering with the Detroit Police Department to really ensure that the community is informing the proactive policing strategies that the police department has been engaged in, and that’s a pretty recent grant. But not as recent as last week. See CLARK on Page 15

Our communities are relying on each other more than ever. We must band together. We must support economic justice.

Together we can inspire change and rebuild a nation.

Delta Dental of Michigan

JUNE 15, 2020 | CRAIN’S DETROIT BUSINESS | 13

CRAIN'S LIST: MICHIG MICHIGAN AN A AC CCOUNTING FIRMS

Ranked by number of Michigan employees (includes Southeast Michigan employees) Number of employees in Michigan June 2020/ 2019

Number of employees Southeast Michigan June 2020/ 2019

Number of Michigan employees engaged in audit/ accounting

Number of Michigan employees engaged in taxes

Number of Michigan employees engaged in consulting

Number of Michigan employees engaged in other

Number of CPAs Michigan June 2020/ 2019

Company Address Phone; website

Managing partner(s)

Plante Moran PLLC

James Proppe

1,646

1,197 1,198

461

324

427

434

732 705

Deloitte LLP and its subsidiaries

David Parent

1,375

1,198 1,264

481

239

429

226

320 330

Ernst & Young LLP

Angie Kelly, Detroit; Jay Preston, Grand Rapids

906

786 720

361

236

211

309 342

PricewaterhouseCoopers LLP

Ray Telang

800

322 322

Rehmann

Ryan Krause

696

294 292

114

180

136

266

255 253

BDO USA LLP

Keith Klucevek and Andy Zaleski

634

154 175

197 179

UHY LLP

Thomas Callan

421

158

138

174 151

KPMG LLP

Betsy Meter

411

322 327

103

175

83 94

Doeren Mayhew & Co. PC

Chad Anschuetz

236

235 231

105

108 101

Crowe LLP (formerly Crowe Horwath LLP)

Rhonda Huismann

197

2 2

74 76

Yeo & Yeo PC

Thomas Hollerback

158

36 34

78 83

Andrews Hooper Pavlik PLC

William J. Mulders Jr.

156

29 22

61 60

Maner Costerisan

Jeffrey Stevens

140

4 2

19.5

57 64

Grant Thornton LLP

Jim Tish

92 90

45 45

Baker Tilly Virchow Krause LLP

Patrick Killeen

80 85

38 NA

Cohen & Company

Robert MacKinlay

83 87

29 31

Clayton & McKervey PC

Robert Dutkiewicz

70 72

37 37

RSM US LLP

Larry Keyler

66 60

41 40

Gordon Advisors PC

Executive Commitee

59 66

30 34

MRPR Group PC

Angela Mastroionni

50 55

28 28

Cole, Newton & Duran CPAs

Christopher Boloven

50 46

19 17

Croskey Lanni PC

345 Diversion St., Suite 400, Rochester 48307 248-659-5300; www.croskeylanni.com

David Croskey

48 48

26 26

3001 W. Big Beaver, Suite 700, Troy 48084 248-649-3400; www.DKSScpas.com

Derderian, Kann, Seyferth & Salucci PC

Ursula Scroggs

46 43

30 26

EHTC (Echelbarger, Himebaugh, Tamm and Co. P.C.)

David Echelbarger

0 NA

18 NA

Mattina Kent & Gibbons

Vincent J. Mattina Jr.

24 26

18 19

24 25

3000 Town Center Suite 400, Southfield 48075 248-352-2500; www.plantemoran.com 200 Renaissance Center, Suite 3900, Detroit 48243-1895 313-396-3000; www2.deloitte.com/us/en.html 777 Woodward Ave., Suite 1000, Detroit 48226 313-628-7100; www.ey.com 500 Woodward Ave., Detroit 48226 313-394-6000; www.pwc.com

1500 W. Big Beaver Road, 2nd Floor, Troy 48084 248-952-5000; rehmann.com 2600 W. Big Beaver Road, Suite 600, Troy 48084 248-362-2100; www.bdo.com Chrysler House, 719 Griswold St., Suite 630, Detroit 48226 313-964-1040; www.uhy-us.com 150 W. Jefferson Ave., Suite 1900, Detroit 48226 313-230-3000; www.kpmg.com 305 W. Big Beaver Road, Suite 200, Troy 48084 248-244-3000; www.doeren.com 55 Campau Ave. N.W., Suite 500, Grand Rapids 49503 616-774-0774; www.crowe.com 5300 Bay Road, Suite 100, Saginaw 48604 989-793-9830; www.yeoandyeo.com 691 N. Squirrel Road, Suite 280, Auburn Hills 48326 248-340-6050; www.ahpplc.com 2425 E. Grand River Ave., Suite 1, Lansing 48912 517-323-7500; manercpa.com 27777 Franklin Road, Suite 800, Southfield 48034 248-262-1950; www.grantthornton.com 2000 Town Center, Suite 900, Southfield 48075 248-372-7300; www.bakertilly.com 719 Griswold St., Suite 920, Detroit 48226 313-424-4871; www.cohencpa.com 2000 Town Center, Suite 1800, Southfield 48075 248-208-8860; www.claytonmckervey.com 719 Griswold St., Suite 820, Detroit 48226 313-335-3900; rsmus.com 1301 W. Long Lake Road, Suite 200, Troy 48098-6319 248-952-0200; www.gordoncpa.com 28411 Northwestern Highway, Suite 800, Southfield 48034 248-357-9000; www.mrpr.com 33762 Schoolcraft Road, Livonia 48150-1625 734-427-2030; www.cndcpa.com

2301 East Paris Ave. SE, Grand Rapids 49546 616-575-3482; www.ehtc.com 1214 N. Main St., Rochester 48307 248-601-9500; www.mkgpc.com

1,658

1,446

835

796

708

616

398

404

231

204

209

147

136

750 752

403 398

Want the full Excel version of this list — and every Crain's list? Become a Data Member: CrainsDetroit.com/data

This list of accounting firms is an approximate compilation of the largest such companies in Michigan. It is not a complete listing but the most comprehensive available. Unless otherwise noted, information was provided by the companies. Companies with headquarters elsewhere are listed with the address and top executive of their main Michigan office. NA = not available. 1 Crain's estimate. 2 As of January. 3 As of June 2018. LIST RESEARCHED BY SONYA D. HILL 14 | CRAIN’S DETROIT BUSINESS | JUNE 15, 2020

RACISM

From Page 1

` ASK FOR INPUT AND LISTEN

window that some people had opened up to them about the extent to which black folk endure racism every day,” Spreitzer said.

` USE THE DATA YOU HAVE

Companies can invite employees to share their perspectives through To really understand what it’s like town hall meetings, focus groups and to work at your organization, particuanonymous surveys. Lisa Tolbert, di- larly for people of color, companies rector of human resources at Barton need to dig into their data from emMalow, noted the importance of ployee feedback or engagement sur“having open dialogue and giving veys, Giangrande said. “See what stoteam members a platform and an op- ry it tells, because you may find that portunity to have a voice, to express there are trends that are going on their thoughts and their feelings.” with certain groups of people,” reFor example, Barton Malow regu- garding who gets hired, promoted or larly conducts short surveys on spe- terminated, and who gets access to cific topics, and a recent one asked development opportunities. for input on DEI. “We’ll use that to Yen Hannah, of Engaged Consulthelp guide some actions and direc- ing, agreed. “I think that companies tion where there may be opportuni- have these numbers, but a lot of comties to do things a little bit differently panies don’t do anything with them. within our organization,” Tolbert And I think that now is a good time to said. Another example is that the kind of evaluate those numbers.” company publishes an article on diversity and inclusion each month on June ` RETHINK 15, 2020YOUR TRAINING its intranet, and a recent one was written by a team member who wantTraining on diversity, sensitivity, ed to share his perspective on finding and biases is common, but it varies in inspiration during this time of unrest. breadth and depth. New hires often Humility is important. “Corporate sit through a computerized course allyship or individual allyship begins on diversity and inclusion training, with a humble spirit,” said Steve and then companies consider them Spreitzer, president and CEO of the Michigan Roundtable for Diversity & “NO ONE WANTS TO BE TO BE Inclusion. When listening to people CALLED RACIST OR BE ON THE who are different from you, “that’s a humble space, because you’re not WRONG SIDE OF THIS, BUT speaking — what you have to say THEY DON’T GO DEEP ENOUGH.” about yourself is irrelevant. It’s what — Yen Hannah, Engaged Consulting December 2, 2019 you’re going to learn.” trained, Hannah said. “But that’s not enough.” To have a real impact, it ` CREATE SAFE SPACES June 1, 2020 should be in person and across all Companies should ensure that departments, she said. “No one wants to be to be called they have policies and practices in place “that clearly state that they will racist or be on the wrong side of this, not allow discrimination” and that but they don’t go deep enough,” Spthey are building an equitable, inclu- reitzer said. “While there is a surplus sive, safe and supportive workplace of opportunities for people to experi“where every employee knows that ence some implicit bias training, they can go to work as their authentic there’s probably less of a way for peoself,” Harkema said. Employees need ple to really get that over time.” to feel comfortable going to their Sometimes, employees get notiteam leaders with problems. fied that they need to attend a diverAsking people of certain demo- sity training, but they might not ungraphics to speak for a whole group derstand what the point is and what’s can be problematic. If someone in it for them, Giangrande said. Comthinks, “‘I’m going to go to Jamal, be- panies should convey how this traincause he’s going to know all the an- ing will create a better organization, swers on all things black men,’ that make them more attractive to top talisn’t placing that employee in a safe ent, and help them meet the diverse space,” Harkema said. “And then that needs of the communities they serve, adds a lot of pressure, when that em- she said. ployee was probably already feeling a lot of internalized pressure.” ` BE BOLD — BUT THOUGHTFUL

` CALL OUT RACISM In the current climate, people may be less willing to stay silent when racism surfaces. “If you hear something that may be inappropriate or may be offensive,” hold the person accountable, but do so respectfully, recommended consultant Jocelyn Giangrande. How do you call someone out respectfully? “I assume innocence,” Giangrande said. For example: “I’m not sure if you know that, but that could be offensive to some people.” If you assume innocence, your message will come across as “more about building awareness,” she said. It’s important to “create a culture where we can let someone know if they’ve perpetrated a microaggression,” and it’s normative, Spreitzer said. People should feel comfortable saying, for example, “When you told me that I spoke well today, or when you asked me where I was from, I found that offensive.” With COVID-19’s disproportionate impact on black people, and recent instances of anti-black racism, “the

Leaders should be bold in their actions, King said, pointing to the nine metro Detroit executives who recently announced their commitment to four goals, including working to eliminate racism within their companies. “That’s being bold, that’s being authentic, and that’s being intentional. Companies are missing the mark by not doing that,” she said. At the same time, companies should acknowledge the history of diversity at their organization, Giangrande said. “Because if you dismiss the history, and you think you get a whole clean slate, you may not be able to build trust with those groups and your community that you’re hoping to build trust with.” Sometimes, leaders may value diversity and inclusion, but “they aren’t even aware of how adverse systemic racism is in their own organization,” Harkema said. In her trainings, she tries to address “what systemic racism is and how it’s manifested, and the ripple effects. Understanding that is huge, because when you understand that, then you have

the opportunity to be able to check your biases and have deeper understanding of other people and where they’re coming from.” “If these same organizations that are making these bold diversity statements have the exact same makeup on their leadership team 1, 2, 3 or 4 years from now,” then maybe they took action “because it was trendy, not because they were focused on doing the work,” Harkema said. “It is always evolving, and the work never stops.”

` SIZE UP YOUR CULTURE If you look at your board of directors, your C-suite, and your VPs, and none of them are people of color, “then there’s a problem, because that means that you are not a culturally competent organization,” King said. “If you are not a culturally competent organization, you will not be sustainable in the 21st century.” Spreitzer recommended experiences that bring employees together with members of the communities they serve, such as Habitat for Humanity builds. It’s “finding a way to have a solidarity or a deeper connection with the community,” he said. Without that connection, the organization might not appreciate issues such as “people that are struggling with water shutoffs, that are dealing with gentrification, or that are dealing with health care disparities.” Barton Malow realized that it could support its employees by helping them deal with the emotional toll of the social unrest through its employee assistance program. It made available resources on “understanding the trauma that’s associated with racism,” as well as tips on talking to children about it, Tolbert said. This time is an important opportunity, Spreitzer said. “We can start wagging the dog, if you will — we can start changing some of the history that we all have,” he said. “Whether you call it white supremacy or structural racism, this stuff is in the air we breathe.”

CLARK

From Page 13

We want to be in a place where, just looking at Detroit specifically, there’s a coproduction of safety, you don’t just have a situation where the police are an occupying force, but in fact, they are in service of the community that they’re serving. That’s important. The other piece, and there are multiple pieces, but one of the other things that we have invested in is a law enforcement diversion program ... (through) Southwest Detroit Community Justice Center. And that’s a program where the police department, when they come across folks that clearly have substance abuse issues and ... mental health issues, they have a warm handoff to a social worker so they don’t bring that person to a jail, which is the last place that person needs to go, but toCactual can address RAIN’Sservices DETROITthat BUSINESS the root causes of the problem for which that officer had to had to come. And I’d say again, just to kind of draw this out a bit, the larger context is that we have invested tremendous resource and capital into the mechanisms of enforcement and in control and incarceration. And at the very same time divested in support and resource for the things that would keep people out of that system, and to which that system is so poorly situated to address, like substance abuse and mental health, S DETROIT BUSINESS butCRAIN also ’education and housing and the types of investments that bring about economic mobility ... CRAIN’S DETROIT BUSINESS ` Earlier this week, we saw the leaders of General Motors, Blue Cross Blue Shield, Ford Motor Co., Fiat Chrysler Automobiles, Quicken Loans — some of the biggest corporations in Detroit — make a general pledge and commitment to concrete and tangible change in the wake of the

police brutality demonstrations within their own corporations. There weren’t a lot of very specific commitments, but there is a overall commitment to work to try to eliminate all forms of bias, racism, sexism and violence within their communities and companies. What do you think is needed at the corporate level to really make cultural change within companies in Detroit? There are a number of companies that are ahead of the curve on this, but intentionality around ensuring that they’ve got a diverse workforce ... (and) accountability for ensuring that there is a level playing field for folks to succeed in that workplace, that there were appropriate supports and that the leadership is reflective of what, in fact, is a diverse society. Let me caveat that by saying like I’m by no means an expert on corporate diversity initiatives. ... But it was wonderful to see them, see their leadership, for them to come out and take a stance. As I understand it, they had committed to do absolutely all that they could within their own corporations, but I think they’re also leaning into their collective leadership outside of their corporations, and that’s what I think is particularly exciting. That said, I think the thing that needs to be remembered and is at the heart of this, is that as folks come up with solutions and interventions, that they ensure that at that table of decision makers are the very folks that they are hoping to reach and serve. And I think too many times, and this has been true in Detroit, which is a predominantly African American city, but where, frankly, decisions about resource and capital are often not made with African Americans predominantly at the table and certainly not folks that are in the community, low-income disenfranchised folks that have not been at any of these tables.

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UV PRODUCTS

From Page 3

The initial rollout of the Halo UV product will be mostly focused on business-to-business deals, Forhan said, noting that restaurants, airports and health care facilities will all be among its initial focus. Further consumer sales could come down the road, he said. The co-founder cites preliminary lab data demonstrating that the Halo product kills roughly 20 times more microbes than soap and water. Still, co-founder Margarita Hernandez emphasizes that the company is not trying to replace the all-important cleaning of hands with hot water and soap. â&#x20AC;&#x153;Soap and water is still really important,â&#x20AC;? Hernandez said. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s getting rid of the grime, the oils and the dirt that are on our hands, our fingertips, inside of our nails. Weâ&#x20AC;&#x2122;re adding another layer.â&#x20AC;? The company began working with germicidal light last year and at this stage is largely pre-revenue, Forhan said. The founders are in ongoing talks about closing on a round of investment, but Forhan declined to discuss any details at this time pertaining to the amount or parties involved in the capital raise. Upon closing on that funding, the company plans to grow its headcount from four people now to around 10 and begin scaling to be able to produce upward of 4,000 Halo machines per week, Forhan said. â&#x20AC;&#x153;The investment is laying the foundation, (for) personnel, I.P. and manufacturing, to get to this surge of scalability this fall,â&#x20AC;? Forhan said.

USMCA

From Page 3

â&#x20AC;&#x153;Suppliers have a higher level of compliance under these agreements than ever before and they have to understand which way their product qualifies under the rules. USMCA is more complicated (than the North American Free Trade Agreement).â&#x20AC;? Longo calls it a â&#x20AC;&#x153;Herculeanâ&#x20AC;? effort. Under the new USMCA pact â&#x20AC;&#x201D; which replaces NAFTA, which went into effect in 1994 â&#x20AC;&#x201D; is a requirement that 75 percent of a vehicleâ&#x20AC;&#x2122;s components must be made in one of the three North American countries to cross borders tariff free, up from 62.5 percent under NAFTA. The content requirements were critical to the U.S., believing a higher standard would force more production stateside. Roughly 30 percent of the 2.33 million vehicles imported to the U.S. from Mexico in 2017 didnâ&#x20AC;&#x2122;t meet the current 62.5 percent content requirement, Mexican Economy Minister Ildefonso Guajardo told Bloomberg TV in 2018. Only three vehicles exported to the U.S. â&#x20AC;&#x201D; the Nissan Versa, Audi SQ5 and Fiat 500 â&#x20AC;&#x201D; were above that 62.5 percent threshold but below the new 75 percent requirement. Those three vehicles sold a combined 141,944 units, or about eight-tenths of a percent, of the 17.05 million total units sold in the U.S. last year, according to sales data. Under USMCA, Nissan, Audi and Fiat Chrysler will have to either pay the standard 2.5 percent WTO tariff on those models imported to the U.S. or source more parts from the trade pact countries. Theoretically, this could create jobs in the U.S. But itâ&#x20AC;&#x2122;s complicated for suppliers, who often ship parts of parts and systems back and forth between the na-

Cleaning whole rooms Joining in the fight with UV technology is Unified Business Technologies Inc., a Troy-based electronic engineering firm, which began contemplating what they could build that would make workplaces and public facilities safer in the absence of a vaccine for COVID-19. In two months time, UBT has developed a series of ultraviolet light machines for sanitizing whole rooms in an office setting or other enclosed spaces, such as a store, bus or classroom. They also have developed a 24-inch-long hand-held ultraviolet light machine for zapping viruses up close, as well as table top and standing steel cabinets for sanitizing masks, clothes or tools with UV light. â&#x20AC;&#x153;Some people made face shields, this was our approach â&#x20AC;&#x201D; letâ&#x20AC;&#x2122;s make something thatâ&#x20AC;&#x2122;s a lesser addressed spot in the market to help with getting everybody back to work,â&#x20AC;? said Steve Todoverto, vice president of engineering and protection systems for Unified Business Technologies, which is a defense contractor and does work for tier one automotive suppliers. UBTâ&#x20AC;&#x2122;s engineers created a 3-foottall array of UV lights in a standing machine that can be placed on a table or floor. The company also has developed a 6-foot tall version â&#x20AC;&#x201D; called Illuinant 6 â&#x20AC;&#x201D; that is on four caster wheels and can be rolled into an office, restaurant or manufacturing facility. The sheet metal covering the electronic housing for each unit was custom-bent by Stelmatic Industries Inc. tions to be completed as systems that end in a final vehicle. The challenge is clarity into their supply chains to understand where parts are coming form and going to, said Bryan Hargreaves, senior manager of North America customs and foreign trade for Continental Automotive. â&#x20AC;&#x153;Some of our challenges are with our tier-two and tier-three communities that just arenâ&#x20AC;&#x2122;t as well informed on the agreement,â&#x20AC;? Hargreaves said. â&#x20AC;&#x153;In this pandemic environment, everyone is looking for cost cuts and itâ&#x20AC;&#x2122;s hard to justify resources to track and monitor parts across the border. Because of the pandemic, we donâ&#x20AC;&#x2122;t know what our demand is going to be, so itâ&#x20AC;&#x2122;s even more difficult for us to plan out product. The big challenge is we donâ&#x20AC;&#x2122;t know how our supply base is going to support this process with those limited resources.â&#x20AC;? U.S. automotive assembly and parts manufacturing employment was down to 662,100 in May from 993,600 in March. Suppliers across the board were faced with massive financial shortfalls after nearly two months of closures under the pandemic. Liquidity remains an issue. Fred Hubacker, managing director of Birmingham-based turnaround firm Conway MacKenzie told CNBC last month that â&#x20AC;&#x153;once (suppliers) start to resume operations, the cash is going to disappear pretty quick. We wouldnâ&#x20AC;&#x2122;t be surprised to see some bankruptcies at all tier levels.â&#x20AC;? Michael Robinet, executive director of automotive advisory services at IHS Markit, said given the financial pressures implementing USMCA will prove to be â&#x20AC;&#x153;one of the greatest challenges they have ever had.â&#x20AC;? Education proves to be a critical step for Continental and others. An April Plante Moran survey revealed 49 percent of respondents had a limited understanding of USMCA and

in Chesterfield Township, Todoverto said. Because direct contact of ultraviolet light is harmful to the human eye, the machines have corded and remote control operation. UV light bulbs made of quartz glass cannot penetrate regular glass windows, Todoverto said. The company also is working on developing a robotic version of the UV light tower on wheels. UBT has developed a mobile phone app for calculating how long the UV lights need to be in order to kill pathogens such as coronavirus or E. coli based on the square footage of a room or enclosed space, Todoverto said. The company is working to fulfill custom orders of the whole-room machines with the U.S. Department of Defense and has started to commercialize the hand-held UV lamp under its UVSheltron brand. UBT has the manufacturing capacity to assembly 400 hand-held UV light machines â&#x20AC;&#x201D; called the Irrupt â&#x20AC;&#x201D; and up to 50 of the standing units, Todoverto said. Michelle Dâ&#x20AC;&#x2122;Souza, CEO and owner of UBT, said her engineers have taken a concept from the drawing board to production â&#x20AC;&#x153;extremely fast, especially for a small business like ours.â&#x20AC;? â&#x20AC;&#x153;That why it helps to be agile,â&#x20AC;? Dâ&#x20AC;&#x2122;Souza said. â&#x20AC;&#x153;Any large company, it would havenâ&#x20AC;&#x2122;t taken I donâ&#x20AC;&#x2122;t know how many months to do.â&#x20AC;? Contact: nmanes@crain.com (313) 446-1626; @nickrmanes Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood believed there was more they didnâ&#x20AC;&#x2122;t know about it than what they did. Longo said the ignorance around the free trade agreement among suppliers is dangerous. USMCA carries stricter penalties than the agreements it replaces, thus requiring suppliers, even smaller ones, to understand its harmonized tariff system. Thereâ&#x20AC;&#x2122;s now a more complex methodology for compliance using that system and suppliers must be up-to-date on those procedures and steps, Longo said. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve seen many clientsâ&#x20AC;&#x2122; products that qualified (as tariff free) under NAFTA that are no longer qualified,â&#x20AC;? Longo said. â&#x20AC;&#x153;Suppliers used to be able to bring in (from overseas) raw material or some sub assemblies, made some modifications, slap a sticker on it and call it a North American product. Those rules have changed and if youâ&#x20AC;&#x2122;re not paying attention to that, there are repercussions.â&#x20AC;? Those penalties include retroactive tariffs with interest, additional duties and possible fraud charges, which were rarely implemented under NAFTA. The auto industry was hoping the rules would not be enforced until Jan. 1, 2021, but U.S. Customs and Border Patrol will enforce the new USMCA rules after a 90-day grace period, or by Oct. 1. â&#x20AC;&#x153;The majority of the industry was counting an entry in force January 2021 and expecting a six-month period where we were working back and forth with CPS. That didnâ&#x20AC;&#x2122;t happen, so time is of the essence, â&#x20AC;&#x153; Hargreaves said. â&#x20AC;&#x153;We canâ&#x20AC;&#x2122;t snap our fingers and be in compliance, but weâ&#x20AC;&#x2122;re working quickly and diligently toward it. Weâ&#x20AC;&#x2122;re in a decent position but there are still a lot of unknowns.â&#x20AC;? Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh

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MSU

From Page 1

"The role of both of the boards of our organizations are really important," Beauchamp said. "We want to make sure we don't take away the important authority they have in helping us be successful." Stanley described the proposed affiliation, still in its early stages, as a great opportunity for MSU and Henry Ford. "When I first came to MSU (August 2019), one of the things I looked at was how could we expand our impact in the health care area," said Stanley, adding that MSU has hundreds of medical and osteopathic students serving clerkships in hospitals across the state, including Henry Ford, Detroit Medical Center and Ascension Health in metro Detroit. "But as I looked at kind of our clinical impact and what we were doing in biomedical research, I thought there were opportunities to grow that," said Stanley, an infectious disease specialist. "I really set out then to try and find partners who we could work with who could help us really expand in those areas. Henry Ford, I think, is an ideal fit for that. We're excited about the opportunity to sign this letter of intent and start working on an agreement." Wright Lassiter III, Henry Ford's president and CEO, said the plan is to complete negotiations this fall of the necessary affiliation agreements, which include a master agreement, a primary academic agreement and a governance agreement. “Partnerships with the potential for greater impact are more important than ever before,” Lassiter said in a statement. "The COVID-19 pandemic and the ongoing injustices and recent protests in cities across our nation have amplified the importance of and urgency for innovation and discovery that radically improves the health of all of the communities we serve.”

Project Leapfrog II? The outline of the Henry FordMSU LOI is very similar to a proposal between Henry Ford and Wayne State University that was negotiated mostly during 2018. While the Wayne State board of governors approved the LOI in September 2018, four members of the WSU board opposed the outline of the proposed deal. The affiliation

QUICKEN

From Page 3

Quicken Loans’ previous iteration, the Livonia-based Rock Financial Corp., went public in May 1998, raising $33.3 million, before selling the company to financial software firm Intuit Inc. for $532 million, as Crain’s has previously reported. With the mortgage business outside the scope of Intuit’s core tech business, it sold back to Gilbert and a group of investors the mortgage arm, now called Quicken Loans, four years later for $64 million. CNBC first reported the news Thursday night that Quicken Loans, based in downtown Detroit, could make its filings public as early as next month, with a targeted valuation in the tens of billions of dollars. Crain’s has not been able to independently verify the CNBC report; however, the company is not denying the report. “As the nation’s largest mortgage lender, Rocket Mortgage is continuously looking for new ways to invest in

talks collapsed in March 2019. Last April, after it appeared the partnership was dead in the water, as WSU board member Michael Busuito, M.D., described it, Lassiter said he asked Henry Ford staff to go back to the drawing board. He wanted a strategy to turn Henry Ford in an academic health system that could rival Michigan Medicine, the University of Michigan's hospital, medical group and medical school enterprise. "(I wanted Henry Ford) to accomplish the goals that we had set out in Project Leapfrog with Wayne State," said Lassiter. WSU President M. Roy Wilson said Tuesday that the announcement of a Henry Ford-MSU affiliation was not unexpected. He expressed regret WSU couldn't have struck a similar deal. "I respect and support both Wright Lassiter and President Stanley, both of whom are strong leaders and personal friends, and I have confidence they can build a health model that will be good for them and our community," Wilson said in a statement. "I wish we could have continued on our earlier path to becoming Henry Ford’s academic partner. I remain convinced that our proposed partnership would have been transformational, and would have benefited Wayne State, Henry Ford and the community far into the future. The good news is that we still maintain a strong partnership with Henry Ford Health System that serves our respective organizations and the people of Detroit." WSU has few options other than to continue its primary affiliation with DMC. Some Wayne State insiders believe the university’s best hope is that DMC’s parent company, Tenet Healthcare Corp. of Dallas, sells all or part of the six-hospital system in 2021, when the 10-year purchase and sales agreement restrictions expire. New WSU medical school Dean Mark Schweitzer has told Crain’s over the next year he wants to focus on ensuring Wayne State’s nearly 1,200 medical students have clerkship opportunities at the university’s affiliated hospitals, which includes DMC, Detroit VA, St. John's, Henry Ford and Ascension. Schweizer said he wants to improve the relationship with DMC and its CEO, Audrey Gregory, but that DMC should understand that an affiliation with a medical school requires cooperation and communication, a point that he believes has been lacking the past few years. Meanwhile WSU’s faculty continand grow our business, while also contributing in significant ways to our home communities,” a spokesperson for Rocket Mortgage, a Quicken Loans subsidiary, said in an emailed statement. “Given our continued growth, market leadership and strong financial performance, we are frequent targets of rumor and speculation. If, and when, there is news to report, it will come directly from us.” Quicken Loans is working with Morgan Stanley, Goldman Sachs, Credit Suisse and JPMorgan Chase to manage the possible deal, according to the CNBC report. Spokespeople for each of the investment banking giants declined to comment for this report. Donnelly noted that a possible IPO and the leaked news of it could make for a “trial balloon” in which the parties are testing the regulatory waters before making a final decision. But he added that the presence of four of the largest investment banks makes it appear that an offering is likely. Despite the COVID-19 pandemic

Beauchamp

Lassiter

ue to provide administrative and educational support to DMC’s many departments. The Wayne State University Physician Group also is working well with DMC to provide clinical services to the health systems patients under a five-year contract.

Details of the LOI One key long-range aspect of the proposed affiliation calls for MSU faculty physicians working in metro Detroit to join the 1,900-physician Henry Ford Medical Group. Other MSU doctors could also participate in managed care contracts and other integration efforts with the Henry Ford Physician Network, the LOI said. Beauchamp said MSU currently doesn't have any faculty physicians practicing clinical medicine working in metro Detroit, but one of its goals would be to recruit doctors to the region with Henry Ford. "Our practice is largely in East Lansing with Sparrow and McLaren and all those individuals belong to the MSU Healthcare team," he said. "If we were together with Henry Ford, we would look at expanding the number of practitioners. They would join Henry Ford practice and have MSU faculty appointments. That's the intention." Under the health sciences center platform, Henry Ford and MSU would to jointly undertake education and clinical activities. The LOI calls for the HSC to establish a governance and administrative structure with joint research and clinical service commitments. It would develop multiyear financial, capital and operating plans with budgets and recruiting and hiring plans. Accountability goals and milestones would be set for the new entity. Lassiter said none of the plans with Michigan State would interfere with any existing relationships either organization has with other partners. "We want to do a number of things together to raise the bar for clinical research, raise the bar for talent attraction, medical and scientific talent attraction" and jointly develop rethrowing the economy into a tailspin that is only now appearing to bottom out, the mortgage industry has been on the uptick in recent weeks. Historically low interest rates are driving demand for the purchase of new mortgages as well as refinancing for existing homeowners. The current period in the mortgage industry, coupled with investor interest in direct-to-consumer companies such as Quicken Loans’ mortgage lending model make conditions ripe for a public offering, according to Kathleen Smith, a principal with Greenwich, Conn.-based IPO advising firm Renaissance Capital. “This is a good time to tap the IPO market,” Smith said, adding that companies like Quicken Loans “have taken market share by using a digital approach to customer acquisition.”

Pros and cons As a privately held company, Quicken Loans has faced no shortage of regulatory scrutiny, as Crain’s has

search and clinical programs that help the community, Lassiter said. Besides Henry Ford in Southeast Michigan, MSU has a variety of medical affiliations with Sparrow Health, Spectrum Health, Ascension Health and Detroit Medical Center. Michigan State has several regional campuses across the state operated by its College of Human Medicine and the College of Osteopathic Medicine in Grand Rapids, Flint, Traverse City, Marquette and Midland. MSU faculty physicians work at Sparrow Hospital in East Lansing and will be developing a deeper clinical relationship in the coming years with McLaren Healthcare Corp. in Lansing, especially when McLaren opens its new $450 million hospital campus on property purchased from MSU.

New construction for medical education, research The new MSU-Henry Ford entity also would build a new research center and a regional health campus building in Detroit to train MSU's medical, osteopathic and nursing students and possibly students from other academic departments, including engineering and information technology, the LOI said. Stanley said the research center building will be modeled after the Grand Rapids Innovation Center that MSU is constructing in phases over the next several years. MSU has partnered with Health Innovation Partners, a real estate development joint venture between MB Real Estate, Walsh Construction/Walsh Investors and Rockford Construction. "We've done these public private partnerships where we build those buildings and then used revenue with the rentals" and generated research to pay for the building costs, Stanley said. But he added that because of the COVID-19 pandemic, MSU and Henry Ford are fiscally challenged. "We have had some impacts on enrollment and housing and Henry Ford has absorbed a lot of costs," he said. "Both of us are dealing with those dollars right now. So I don't seek major capital investments early on at this stage because I don't think we have the resources right now." Lassiter said it could take up to five years for Henry Ford and MSU to develop a regional campus and the research institute, given the COVID-19 pandemic and the challenges surrounding financing projects. reported, despite being able to operate mostly without significant public reporting. In June 2019, the company agreed to pay $32.5 million to settle a federal lawsuit tied to Federal Housing Administration lending standards. The settlement came with no admission of wrongdoing, something the company has long denied anyway. In an interview with Crain’s last year, Bill Emerson, vice chairman of Quicken Loans, said the lender “never committed fraud or anything like that.” He said the company had done $108 billion in mortgages since 2007 and the $25.5 million settlement represented 0.02 percent of that. To David Sowerby, managing director and portfolio manager at Bloomfield Hills investment firm Ancora Advisors, the question of whether to go public or stay private is one that every company must ask upon achieving a certain size and scale. A public Quicken Loans would surely find itself with a significant spotlight upon it, he said.

Stanley said MSU has long wanted to develop a larger presence in Detroit where it draws lots of students and has many alumni. He also said the university wants to contribute to the renaissance of the city. "We have strong connections there. We've done great things for rural Michigan (with education and other outreach efforts) and we'd like to be able to do more for the urban areas in Michigan as well," Stanley said. The new research center would be 200,000 square feet and located either on a 300-acre parcel south of Henry Ford Hospital off Grand Avenue, where a new outpatient cancer center is nearing completion, or in the Midtown area of Detroit. Wayne State's medical school is located on the campus of Detroit Medical Center in Midtown. Beauchamp said MSU envisions the investment for research center to be built at no cost to either partner. "You do this by finding partners that are interested public private partnerships. Then you ask (businesses) if they want to sign a 10-year lease to be a part of it," Beauchamp said. "If you get enough organizations to be a part of it and commit to a lease, then you go to a developer and ask them if they will build the building." Beauchamp said the model is compelling to potential partners. "We'll be able to largely fund it through a public private partnership and through philanthropy," he said. Henry Ford and MSU plan to engage in combined research areas that will address health inequities and disparities, social determinants of health, primary care, implementation sciences, precision health and cancer. As one of the region’s major academic medical centers, Henry Ford receives nearly $100 million in total annual research funding, including about $41 million from the National Institutes of Health. When combined with MSU's total research portfolio of $700 million, including $40 million on NIH funding, the combined research enterprise could total $800 million. Currently, Michigan State is 32nd on the National Science Foundation's top research institutions based on 2017 dollars, the last year data was available. With Henry Ford's total research funding, Michigan State would rise to 26th. The combined research funding for a HFHS-WSU affiliation would have been about $344 million, ranking 74th. Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene “There’s so many pros and cons,” Sowerby said of the decision facing the company. “If you’re privately (held) you don’t have to report quarterly, you don’t have to answer to the Wall Street sell-side analysts or buy-side investors,” he said. “You still have answers to give, but when you’re public there’s a whole different level of transparency and compliance that needs to take place.” Steve Wybo, a senior managing director in the Birmingham office of corporate consulting firm Conway Mackenzie Inc., echoed those sentiments, noting that the introduction of shareholders adds a whole new element to the homegrown giant. “Even Dan Gilbert will have a new boss,” Wybo said. Crain’s Detroit Business reporters Kirk Pinho and Dustin Walsh contributed to this report Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes JUNE 15, 2020 | CRAIN’S DETROIT BUSINESS | 17

DEAL

From Page 1

The merger of the two mall giants has been brought to them as well.

Path to a price It was a deal that Taubman saw as reducing its leverage, strengthening its balance sheet and mitigating its risk in a brick-and-mortar retail environment that has delivered body blow after body blow with the emergence of online retail, major bankruptcies and now a global pandemic largely forcing people indoors for weeks and months on end under government orders. Three and a half months of negotiations between the two companies and advisers resulted in a deal, in short, for Simon Property Group to pay $52.50 per share cash for all of Taubman’s common stock and the Taubman family to sell one-third of its ownership interest and remain a 20 percent partner. Within four days of their initial meeting in October, and after Taubman consulted with Myron Ullman III, the Taubman board’s independent lead director, Taubman and Simon again discussed a deal, this time over the phone, according to a detailed accounting filed with the U.S. Securities and Exchange Commission of what led up to the Feb. 9 announcement of the merger. During that discussion, Taubman told Simon the various components that would be needed in order to move forward, including that the Taubman family would retain a large ownership position in the company’s operating partnership and that family members would need other financial protections, as well as the ability to cash out of the operating partnership in the future if desired. Simon agreed, and within a few days on Nov. 1, the Taubman board held a meeting along with the company’s senior leadership. The board, minus Taubman and executive leadership, agreed to proceed forward considering the transaction, according to the filing. On Nov. 3, two days later, the board met and invited representatives of Kirkland & Ellis LLP, an international law firm. By Nov. 15, the first mention of the acquisition price is made: $53 per share coming in the form of a mixture of cash and Simon Property Group shares. That was a 51.3 percent premium over the previous day’s Taubman Centers closing price of $35.03. But that price didn’t sit well with Taubman, who according to the summary, told Simon that day that “although he was disappointed with the price proposed,” a special committee of the board would review it and respond to him. That response occurred over a dinner the two men had Nov. 21, with Taubman telling Simon that although he believed the company was being undervalued, discussions about a merger should continue. So they did. The special committee — consisting of board members Mayree Clark, Michael Embler, Cia Buckley Marakovits and Ullman — wanted Taubman to play hardball, directing him on Dec. 2 to meet with Simon and propose $63 per share instead of $53, a 19 percent increase over the initial offering price and an 80 percent premium on the Nov. 14 stock price. Again, the two men met for dinner. Simon countered with $58 per share, which was 81.3 percent above the Dec. 2 closing price of $31.99. By Dec. 18 | CRAIN’S DETROIT BUSINESS | JUNE 15, 2020

Twelve Oaks Mall in Novi is among Taubman Centers’ Michigan properties.| TAUBMAN CENTERS

At a glance Taubman Centers Inc.

Simon Property Group

Founder: A. Alfred Taubman

Founders: Herbert and Melvin Simon

CEO: Robert Taubman, chairman, president and CEO Headquarters: Bloomfield Hills Properties: Owns, manages and/or leases 26 super-regional shopping centers in the U.S. and Asia, consisting of about 25 million square feet of gross leaseable area, including Twelve Oaks Mall in Novi and Great Lakes Crossing Outlets in Auburn Hills Stock price, June 12: $37.08

6, the special committee had softened, directing him to not take a purchase price of less than $60 per share. That day over lunch, Simon dropped the offer to $57 per share, or a 92.7 percent premium over the $31.13 per-share closing price on Dec. 5. More than a month later, after rounds of negotiations on various other aspects of the deal, on Jan. 12, the Simon purchase price continued to stand at $57 per share. He relayed that to Taubman and Marakovits. “During this conversation, Mr. Simon communicated to Ms. Marakovits and Mr. R. Taubman that, in light of a variety of factors, including the deteriorating retail environment, the pending bankruptcy of Forever 21 and Simon’s recent stock performance, the per share price of $57 represented Simon’s best and final price and that should the parties fail to agree on price and move forward with the transaction at that time, Simon would need to put the transaction on hold, for a period of four to six weeks, while it focused on a potential transaction involving Forever 21,” the SEC filing says. Behind-the-scenes discussions between advisers and members of the Taubman and Simon teams continued for several weeks on a variety of provisions of the proposed merger, but things accelerated following a steep stock price decline for both companies and a Feb. 4 report in Bloomberg breaking the news on the negotiations. According to the SEC filing, Taub-

CEO: David Simon, chairman, CEO and president Headquarters: Indianapolis Properties: Real estate investment trust owns shopping, dining, entertainment and mixed-use centers, including Briarwood Mall in Ann Arbor and Birch Run Premium Outlets in Birch Run Stock price, June 12: $75.98

man’s shares fell 16.4 percent between Jan. 23 and Jan. 31, or $31.59 to $26.42, and Simon Property Group’s shares fell 9.6 percent, from $147.25 to $133.15. After the Bloomberg report, Simon contacted Taubman to “reengage in transaction discussions” and proposed a new price: $52 per share. That didn’t sit well with Taubman, and Simon raised it to $52.50 cash.

Other investor squabbles Taubman’s recent history has been fraught with shakeup efforts from activist investors. In November 2017, it was revealed that Paul Singer’s Elliott Management Corp., an activist hedge fund, had purchased a 3.8 percent stake in the company. While it wasn’t known at the time what Elliott’s plan was, Bloomberg had reported that it was believed to be seeking changes that could include taking the company private or a sale. That came at the same time Taubman was fielding incoming arrows from another activist investor, Jonathan Litt of Connecticut’s Land & Buildings Investment Management LLC, which has had some success in agitating for change in the company, including promoting diversity among its board. Six months later, however, Elliott Management exited its stake of 2.9 million shares, the Wall Street Journal reported in May 2018. “Given Elliott’s long staying power as evidenced by its bond pursuit with Argentina, we doubt they would have

exited so quickly if they saw long term potential,” Alexander Goldfarb, managing director of Sandler + O’Neill Partners, told the WSJ at the time. Litt, meanwhile, has been peppering Taubman the past few years with various criticisms, including lack of diversity on the board, financial underperformance and flawed capital expenditures in Asian markets and in Puerto Rico. Last year, he threatened a third proxy battle. Taubman Centers — which owns, manages and/or leases 26 super-regional shopping centers in the U.S. and Asia, consisting of about 25 million square feet of gross leaseable area, including Twelve Oaks Mall in Novi and Great Lakes Crossing Outlets in Auburn Hills — has also fended off takeover efforts from Simon in the past. There was a yearlong hostile takeover bid by Simon and Westfield America Inc. that ended in October 2003, a day after Gov. Jennifer Granholm signed legislation that made it more difficult to acquire Michigan-based companies through hostile takeovers. Founded in 1950 by A. Alfred Taubman, who died in 2015 at age 91, Taubman Centers has held an illustrious place as a pioneer of shopping mall development. The company developed Lakeside Mall in Sterling Heights, its first enclosed Michigan mall, in 1976. Simon Property Group owns Briarwood Mall in Ann Arbor and Birch Run Premium Outlets in Birch Run.

Lawsuit seeks damages The Oakland County lawsuit says that although Taubman’s shopping malls have started to reopen, they are coming back online in a much different environment than they were when they shuttered in March. “Taubman’s properties are uniquely vulnerable to the postCOVID-19 retail environment for a multitude of reasons, including because they are primarily indoor properties that many customers will avoid, are heavily dependent on a tourism industry that has been decimated, serve wealthy customers who are now more likely to shop online and feature high-end upscale stores that are suffering heavily from the

economic effects from the pandemic,” the complaint says. It goes on to say that the pandemic has “financially devastated” Taubman Centers and that the company breached its agreement and “irreparably damaged its business by failing to take required ordinary course steps to cut the operating expenses and capital expenditures and prudently manage its financial resources to mitigate the profound effects of the pandemic.” The lawsuit says Taubman drew down $350 million, or virtually the remainder, of a $1.1 billion credit facility at the end of March (with Simon Property Group’s approval) — which the latter said was “to fund its enormous and unnecessary expenditures.” Simon Property Group is seeking a declaration that it validly terminated the merger agreement, as well as damages. Taubman Centers confirmed in a Wednesday afternoon statement that it had received the notice to terminate the agreement. “Taubman believes that Simon’s purported termination of the merger agreement is invalid and without merit, and that Simon continues to be bound to the transaction in all respects,” the company said in its statement, adding that a special shareholder meeting is scheduled for 10 a.m. June 25 to vote on the merger. “Taubman intends to hold Simon to its obligations under the merger agreement and the agreed transaction, and to vigorously contest Simon’s purported termination and legal claims. Taubman intends to pursue its remedies to enforce its contractual rights under the merger agreement, including, among other things, the right to specific performance and the right to monetary damages, including damages based on the deal price.” A source familiar with the matter called Simon attempting to back out of the deal a case of “buyer’s remorse.” “Simon made a deal. It’s an airtight deal,” the source said. Analysts told Bloomberg that the cancellation could be a negotiating tactic to lower the purchase price. One analyst said he is seeing “significant increased risks of SPG (Simon Property Group) prevailing in its termination.” “If successful, TCO (Taubman Centers) will be left in a precarious position post-COVID ... with a high debt level,” said Chris Kuiper, equity analyst at CFRA Research. “At a minimum, we see a potential legal battle weighing on shares, while continued mall disruption and more store closures will depress TCO’s fundamentals.” Some viewed the transaction as being troubled for weeks. Forbes noted on Thursday that Simon, during an earnings call with analysts on May 11, seemed to hint that the Taubman deal was already dead even though he wouldn’t comment on it. “We are not a mall company,” Simon said during the call, Forbes wrote. “We are predominantly a retail real estate company, but we’re not — I wouldn’t by any stretch of the imagination, consider us a mall company.” “That begged the unasked question: If being called a mall company is so bad, why are you spending $3.6 billion to buy another mall company?” Forbes wrote. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

THE CONVERSATION

Gensler’s Don Ricker: Reentry will create need for balanced offices GENSLER: As strategy director and regional consumer goods practice leader for Gensler in Detroit, Don Ricker has a hand in how companies begin to reconsider space usage needs in light of the COVID-19 pandemic that has recalibrated virtually every facet of American life in the workspace and elsewhere. Ricker, a graduate of Northern Illinois University and DeVry University’s Keller Graduate School of Management, came to Detroit five years ago after spending two in the Chicago office of Gensler, an architecture and planning firm. Upon his arrival to Detroit, he bought a house in the | BY KIRK PINHO city that had been vacant for three years and renovated it. ` Crain’s Detroit Business: Let’s talk big picture about what ramifications the pandemic is going to have on things like space usage. Ricker: We published our work-fromhome survey to better understand how people have been working since they left the office. People do expect and plan to be working from home for a percentage of time. That’s going to be a huge impact on how much space gets utilized, the impact on physical space. The population of a company may not change, but the space per person will, and it will be significantly less. Work is going to change. We are going to see this coming back, a reentry, and some of that reentry sequence is going to involve a staggering, a shift-type of a solution. We think that’s going to translate into people working from home part of the time and then in the office part of the time. What we found from the survey is that only 12 percent of people absolutely think they can work from home all of the time. About 50 percent of the people plan to work from home to some degree, anywhere from two to three days a week. I’d like to say that translates into cutting space in half, but that’s not true. One of the reasons people are wanting to go back to the office is truly for that sense of community and collaboration. ` I can process this a couple different ways. First, an increased need for office space because people are more spaced out, but also a need for less space because more people are going to be working from home. What’s the right way to look at that? The other findings from the initial surveys shows that people have been able to increase the focus on independent work by working from home. If you correlate that to previous information and what the office was doing for people, there were a lot of distractions. That conversation was

ongoing, the definitely open office. We are talking about it as a balanced office. We need to limit distraction, but people are finding the ability to focus better at home. That means you can consider less physical desks for the individual and focus more on an office environment, that collaborative environment. Seventy-three percent of the folks we surveyed, they were expecting to have some aspect of physical distancing in the office. We don’t know that’s going to stay for the long term, but certainly as part of the near term. ` Lots of the physical space changes are going to be expensive for landlords. What are you hearing from your individual clients, whether they are businesses or in the property ownership sector as well? Any tenant inside of a building has expectations of their landlord. Many of my clients are also property owners. So we also talk about what the real estate is going to be, not just from a tenant perspective but as a building owner. How can you begin to think about building a better, more strategic asset to getting back to work and then also for the future? We’re also talking to many of the property managers about what the impact to their spaces is going to be. We’ve really begun to put pencil to paper on what some of those challenges are and how landlords can reconfigure what they have and help bring people into the building a different way. Certainly thinking about things like elevators and restrooms and restroom renovation opportunities, but also a lot of surface technology to help create a more fluid and more barrier-free type of entry. All of those are certainly going to have some level of cost. Are they all necessary right now? No. As long as good cleaning protocols are in place and we’ve got new behaviors

acting in our everyday lives, we’re going to bring all that into the workplace with us. There’s also this codependency on the inhabitant, not just the landlord, to be responsible, because it’s symbiotic. We have to work together with one another to understand what the tenant, or the individuals, need, and what is on the owner. All those conversations are happening. Landlords who lease space can expect tenants requiring less space, right, there’s going to be a lot of people probably looking at a right of first refusal or right to first offering, ways to shed space. So that’s going to create an aspect of surplus. Right now, some of the things we are working on are showing almost 30 percent less (space) if a company leverages a work-from-home solution, and that solution is for two to three days a week.We’re looking at social distancing, we’re looking at widening corridors, increasing collaboration space. And we’re looking at ways to sort of reuse a lot of our clients’ existing space and reuses of the work environment, and we’re able to show a 30 percent savings. What that means to a landlord is they might want to start thinking about sponsoring some type of a coworking environment. Landlords could perhaps become more of a landlord or property of choice by having more of a spec

space, something that is available to the tenants for a day here or there. They might want to think about repositioning some of that extra or additional unused office space into more of a coworking center that they can operate. ` So when you’re not in the office at Gensler, what consumes your time? I jumped on the bandwagon when I moved to Detroit and I bought a house that was needing a lot of work. The house keeps me busy. I bought a house on the east side of Detroit that was abandoned for three years. So I spent about six months getting it livable, and there’s all these little projects to do.

Don Ricker, strategy director and regional consumer goods practice leader, Gensler

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RUMBLINGS

Port Huron-to-Mackinac race still planned for July, with changes The annual sailboat race along Lake Huron will be held next month, despite cancellations of other events due to the coronavirus pandemic. The Bayview Mackinac race is planned for July 11, but it will have one route instead of two. Participation is down about 40 percent so far, which Bayview Mackinac race Chairman Chris Clark credited to circumstances related to the pandemic. “The mantra this year is ‘Patience and Flexibility,’” Clark said in a Times Herald report. “We are working hard with all those involved in hosting the race to make sure everyone has a safe fun race!”

The Bayview Mackinac race in 2017.

The Port Huron-to-Mackinac race is seeing other changes, as well. Earlier this year, organizers said they had tapped a new sponsor for the 2020 event after longtime supporter Bell’s Brewery Inc. pulled its sponsor dollars. Detroit-based At-

water Brewery is the new presenting sponsor of the race, which is entering its 96th year. The Chicago Yacht Club posted a statement last week announcing the cancellation of the 2020 Chicago to Mackinac Island sailboat race. Race Chairman Martin Sandoval said the Chicago race’s committee had taken a “patient and pragmatic” approach to following limitations and guidelines. The race was scheduled for July 17. “Unfortunately, the crew limitations required to maximize social distancing which were adopted by the State of Illinois; no release of boating guidelines from the City of

Chicago; and uncertainty as to when the Chicago lakefront and harbors will open impacted our ability to conduct a safe race for all competitors,” Sandoval said in the written statement. Clark noted that the Chicago race does not affect the Bayview race. “The CYC race to Mackinac is a great race and it is sad to see any Great Lakes race needing to be canceled,” he said. “Chicago is facing their own unique issues that are not the same as ours.” Other summer events in Port Huron, including the Blue Water Fest and the 100th annual International Day Parade, have been canceled.

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

JUNE 15, 2020 | CRAIN’S DETROIT BUSINESS | 19

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