TRANSPORTATION: How Detroit aims to get federal dollars for city airport. PAGE 3
Q&A CNN’s Sanjay Gupta, a UM alum, on the way forward and what we’ve learned. PAGE 16
CRAINSDETROIT.COM I APRIL 12, 2021
HEALTH CARE
Hospitals face new COVID-19 surge with a different shape Younger patients, new variants challenge strategies for health systems BY JAY GREENE
Michigan hospitals are responding to a third surge of COVID-19 patients since the pandemic began early last year that has been highlighted by a larger percentage of admissions of younger patients under 65 who are mostly unvaccinated. Hospital admissions are up 51 per-
cent since the end of March — increasing for all age groups and all regions — but are highest for those 50-59 years old. The numbers of COVID-19 patients in intensive care units also have increased 43 percent, the state Department of Health and Human Services said in its April 6 report. Experts say the surge in hospital
admissions was expected as positive cases started to creep up in early February, just about when the state relaxed restrictions on businesses and people started to go out and travel more. But few expected Michigan to lead the nation in positive cases per 100,000 people at 72 and hospitalizations per 100,000 people at 32, according to New York Times data. As
of Thursday, Michigan reported 16,400 confirmed COVID-19 deaths and 723,297 positive cases, MDHHS said. Over the past six weeks, an increasing number of people in their 20s, 30s, 40s and 50s are contracting COVID-19. Those in their 20s and 30s See COVID on Page 20
NEW LEAVES
How the food chain has changed after a year of tumult
CRAIN’S MICHIGAN BUSINESS | FOOD ECONOMY
The business of getting food on our plates, and the paths it takes to get there, have been disrupted by COVID-19 in ways that require flexibility and adaptation at all levels of the industry. This month’s Crain’s Michigan Business examines how that is playing out in food transportation, restaurant business models and even in food waste. PAGES 8-14
NEWSPAPER
VOL. 37, NO. 14 l COPYRIGHT 2021 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED
Restaurants: New modes of service aren’t going away anytime soon. PAGE 8 Shifted system: How new need shifted food transport. PAGE 9 New growth: How Detroit’s urban farms have dealt with the pandemic. PAGE 10 Waste not: Restaurants, nonprofits ramp up to reduce food waste. PAGE 10
NEED TO KNOW
MATT PRENTICE, 1959-2021
THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT
Serial restaurateur dies at 62
` GM FACTORY ZERO GETS MORE PRODUCT PLANS
` GILBERTS DONATE $30M TO CRANBROOK ART ACADEMY THE NEWS: Jennifer and Dan Gilbert have donated $30 million to the Cranbrook Academy of Art to help make the private graduate school more accessible to underrepresented racial and ethnic groups. The gift, made directly by the founder and chairman of Detroit-based Rocket Companies Inc. and his entrepreneur wife, is the largest in the history of the academy and believed to be the largest to a graduate art program in the country. WHY IT MATTERS: The donation will fund 20 full-tuition fellowships for underrepresented students and establish a permanent endowment to fund the fellowships in perpetuity. It also will fund visiting faculty artists over the next five years, focusing on artists of color, as well as engagement projects by diverse artists including women and members of the LGBTQIA community.
THE NEWS: General Motors Co. plans to build a battery-powered version of its top-selling U.S. nameplate — the Chevrolet Silverado — at its planned electric vehicle plant in Detroit. GM declined to provide production timing at the Detroit plant, known as Factory Zero, but forecasting company AutoForecast Solutions expects output to start in late 2022.
maker. Platinum will acquire the building products company from New York private equity firm American Industrial Partners and other smaller equity holders for an undisclosed sum. WHY IT MATTERS: Cabinetworks, whose brands include Behr, KraftMaid and Merillat, was formed last year after American Industrial Partners’ ACProducts portfolio company acquired the Masco Cabinetry unit from Livonia-based Masco Corp. in a $1 billion deal.
WHY IT MATTERS: The plans represent more products for the Factory Zero project, the new name for the company’s Detroit-Hamtramck Assembly plant, which is rapidly becoming a center for GM’s all-electric future goals.
` Metro Detroit chef and restaurateur Matt Prentice died last week after a short, non-COVID-19 illness. Prentice died early Thursday morning at age 62 after spending more than three weeks in the hospital, said Mary Liz Curtin, who opened restaurant Three Cats in Clawson with Prentice in 2019. He died of complications from multiple surgeries for a bowel obstruction, according to his sister, Megan Kler. Prentice owned numerous well-known restaurants around metro Detroit, including Coach Insignia atop the Renaissance Center and the Deli Unique delicatessens. At its peak, the Unique Restaurant Group employed hundreds. Prentice was a largely self-taught chef and known as a giant in the industry, both physically and by reputation. “Some call him a wunderkind. To others, he’s an enfant terrible. Nobody is neutral about restaurateur and chef Prentice,” Crain’s wrote in a profile of Prentice when he was a 40 Under 40 honoree at age 34. “Why the controversy? He isn’t shy about his own accomplishments, which are many, or his opinions, which are equally plentiful.”
`KELLY SERVICES ADDS TO TECH, ENGINEERING FIREPOWER
` GORES’ FIRM BUYS FORMER MASCO CABINET OPERATIONS
THE NEWS: In an effort to expand into the burgeoning sectors of technology, engineering and other growing areas of the workforce, Kelly Services Inc. said it has acquired Softworld Inc. out of Waltham, Mass., for $215 million in an all-cash transaction.
THE NEWS: Tom Gores’ private equity firm Platinum Equity announced Monday it signed a definitive agreement to acquire Ann Arbor-based Cabinetworks Group, the nation’s largest kitchen and bath cabinet
WHY IT MATTERS: Kelly Services says it supplies services to 91 of the Fortune 100 largest companies, which are demanding high-tech talent including app developers, software engineers and cybersecurity specialists.
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OneStream, StockX deals up Michigan’s standing in VC activity BY NICK MANES
The Coleman A. Young International Airport on nearly 300 acres on Detroit’s east side hasn’t seen commercial passenger traffic since 2000. Its future has been under discussion for decades, with the city planning now to submit an improvement plan to the Federal Aviation Administration. | ANNALISE FRANK/CRAIN’S DETROIT BUSINESS
Detroit finalizing FAA plan that could garner big federal dollars for city airport BY ANNALISE FRANK
The city of Detroit expects to get the go-ahead as soon as this summer to apply for federal funding to pay for a wide swath of work needed to bring its city airport into compliance with national standards. The proposed changes would need an estimated $82 million over the first five years, and then total upward of $150 million within 20 years. It’s the latest step in propelling the long-languishing 264-acre property toward more regular use for
those wanting corporate and charter air travel access directly to and from the city. Detroit and its Coleman A. Young International Airport submitted in November — the first time in 24 years — a proposed Airport Layout Plan to the Federal Aviation Administration. “I’m really excited about the future and the plan and where it’s going to take us long term,” said Jason Watt, the airport’s director. “It’s just been a mountain of work, and it’s really going to solve big problems for the airport ...”
The city is working with the FAA to revise the initial proposal and expects to send in a final version later this month, with federal approval expected in the summer or fall, Watt said during a March 19 conversation on Zoom with Detroit City Council about the city airport department’s budget. The plan shows conditions at the airport’s facilities and plans for future development that have been in the works for years. See AIRPORT on Page 18
“I’M REALLY EXCITED ABOUT THE FUTURE AND THE PLAN AND WHERE IT’S GOING TO TAKE US LONG TERM.” — Jason Watt, director, Coleman A. Young International Airport
Two metro Detroit companies hauled in nearly $500 million in new investment last week. StockX LLC, a Detroit-based e-commerce platform focused on sought-after sneakers and high-end collectibles, and Rochester-based corporate financial management software company OneStream Software LLC, have little direct connection in Gordon terms of business. But between them, the two companies have been darlings of the global capital markets, hauling in billions in private equity and venture capital investment at a combined valuation that now approaches $10 billion. StockX on Thursday announced $255 million in new investment at a valuation of $3.8 billion. The announcement came about 48 hours after OneStream Software announced a $200 million haul at a valuation of $6 billion. The deals far outstrip the billion-dollar valuation that starts the VC world referring to a company as a “unicorn” —and could help change the conversation about Michigan . “It’s time to stop thinking of us as a flyover state,” said Erik Gordon, a clinical assistant professor focused on finance and technology matters at the University of Michigan’s Stephen M. Ross School of Business. OneStream counts KKR & Co. Inc. — among the largest private equity firms in the world with a reported $252 billion in assets under management — as its majority owner. See VENTURE on Page 18
WORKFORCE
Help wanted: Small businesses, restaurants struggle to add staff BY JAY DAVIS
If you’re out and about and noticing “Now hiring!” signs at every turn, there’s a reason: Small businesses are having issues staffing up in the COVID-19 pandemic era. A combination of extended unemployment benefits, fears about contracting the coronavirus in the workplace and a lack of stability in a variety of industries and has led prospective workers to stay home or pursue a different line of work. Too few people are applying for positions that are reopening, and that’s setting up a battle for talent. Restaurants and hotels are raising wages, offering bonuses for worker referrals or luring people from other states to cope with the shortage. Alison Heeres, chef and co-owner
Coriander Kitchen and Farm co-owners Alison Heeres (left) and Gwen Meyer would like to expand its hours and days of operation, but haven’t been able to hire enough staff to be able to do that. | TERRY MCNAMARA
of Coriander Kitchen and Farm on Detroit’s east side, would like to expand the hours of operation as the business now operates just Friday-Sunday since opening in March. To do so, Heeres and her business partner Gwen Meyer need to hire more staff. Therein lies the problem. “I’m in a precarious position,” said Heeres, who has a total staff of 14, with five kitchen staffers getting full-time hours. “I need to add more days so people can get the necessary hours. I need to hire more people to make those additional days work. “At first, I just tried contacting people I know, which is how most people I know have the most success in hiring. ... the landscape of service workers has shifted a lot in
the last year. I think a lot of people who worked in food service have transitioned into new lines of work. The pandemic has forced people to learn new things, and I don’t think a lot of those people are coming back. It’s sad because those are some of the best workers in the industry — the ones with the drive and ingenuity to figure things out.” Michigan Restaurant and Lodging Association President and CEO Justin Winslow said the food service industry has lost more employees than any other line of work by a sizable margin. At one point during the pandemic, Winslow said, the industry was down 45 percent from where it stood pre-pandemic. See STAFF on Page 17 APRIL 12, 2021 | CRAIN’S DETROIT BUSINESS | 3
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Middleton Farms Cider Mill on Dequindre Road closed in 2019. | SHELBY TOWNSHIP
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It's not every day that a cider mill goes up for sale. The former Middleton Farms Cider Mill on Dequindre Road between M-59/Hall Road and Auburn Road has been listed for $1.85
million. The Pini family has owned the property since 1956 when it was founded by Gino Gaetano Pini. In August 2019, a post on the cider mill's Facebook page said that they decided not to reopen following Dianne Pini's death and health challenges for her husband, Ron. "Since 1956, our family has had the pleasure of servicing our community by providing a family friendly atmosphere spanning over five generations," the post reads. "We have been known for our delicious apple cinnamon donuts, fresh cider, hot pies and old fashioned candy apples." Realtor Michael Thornton has the listing on the property, which is 8.9 acres across three parcels. He said last week that the equipment in the building has been sold, leaving the building shell. A representative from the Pini family declined comment. The mill building is 12,551 square feet and sits on a 1.99-acre parcel along with a 1,734-square-foot house, according to listing details posted two weeks ago to CoStar Group Inc., a Washington, D.C.based real estate information service. Another parcel is 2.236 acres and has a three-car garage and barn with a four-car garage, and a third parcel is 4.659 acres of vacant land.
Roberts Riverwalk Hotel buyer falters on deal After a $15 million high bid during an online auction last month, the organization attempting to buy the Roberts Riverwalk Hotel was unable to complete the terms of the contract and the owner has taken the property off the market.
Roberts Riverwalk Hotel’s owner has taken the property off the market. | COSTAR GROUP INC.
Michael Roberts, the owner of the O108-room hotel, declined last week
OWNER MICHAEL ROBERTS BOUGHT THE HOTEL IN 2010 IN THE YEARS LEADING UP TO DETROIT’S MUNICIPAL BANKRUPTCY AND HAS OWNED IT AS INVESTMENT ACTIVITY ALONG THE RIVER HAS HEATED UP IN THE LAST SEVERAL YEARS. to reveal the high bidder other than say it was "more of an institutional" buyer. (If you know who the potential buyer was, I'd be interested in hearing.) Roberts said business has been picking up after a lull during the COVID-19 pandemic. A broker on the deal previously said the buyer needed to make a siz-
able deposit within 24 hours of the auction ending and that they had 21 days to finalize the deal. The auction was run through Bethesda, Md.-based special servicer CWCapital's RealINSIGHT Marketplace team. It had been under contract to a joint venture between real estate developers Christos Moisides and Dominic J. Moceri, but that deal collapsed. It was then relisted with a $26 million asking price. Roberts, a St. Louis business mogul, bought the hotel in 2010 in the years leading up to Detroit's municipal bankruptcy and has owned it as investment activity along the river has heated up in the last several years. Developed nearly 30 years ago as the River Place Inn as part of the $200 million, 25-acre Stroh River Place project, the Roberts Hotel sits on land formerly owned by Parke-Davis & Co., the former Detroit-based pharmaceutical company. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB
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EDITORIAL
ichigan, we’re in a race that we’ve got to win. Our state has become the crossroads of what we hope are the final throes of the coronavirus pandemic. But to get past it, we have to solve two problems: COVID cases that are again raging out of control, and efficiently getting a substantial majority of our people vaccinated. Employers have not just an incentive, but a responsibility, to aid in this effort. They can play a big role. Encouraging employees to get shots is the bare minimum, and businessENCOURAGING es can and should go EMPLOYEES TO far beyond that: ` Large businesses GET SHOTS IS can sign up for proTHE BARE grams like the city of MINIMUM, AND Detroit’s that bring vaccinations to emBUSINESSES CAN ployees, just like flu We hope simiAND SHOULD GO shots. lar programs are creFAR BEYOND ated for smaller businesses soon as THAT. vaccine supplies become more plentiful. ` Encourage employees to get vaccinated. But there’s plenty businesses can do beyond that without going to the extreme of requiring vaccination. Some employers have offered bonuses to the vaccinated — sometimes with a bigger bonus once the
whole company is vaccinated, as an extra incentive. And some pressure is not unwarranted; some businesses have told employees they’ll be required to get weekly COVID tests if they choose to skip the shot. Avoiding the inconvenience and discomfort of a weekly stick up their noses might be enough to get some employees to brave a shot or two. ` Communicate clear and accurate information on the vaccine. Overcoming hesitation and unfounded fears is a process that requires consistent messages from trusted sources, and employers and co-workers qualify. ` Employers also can also help employees with what has been one of the trickiest parts of vaccination so far: Finding an appointment. Training an in-house expert who can help direct employees in finding and signing up for appointments could make a big difference. Navigating the maze of provider websites gets easier and more efficient with practice. Benefits managers already do something similar in helping workers navigate health insurance. COVID numbers in Michigan right now look dire, and Gov. Gretchen Whitmer appears to be committed to avoiding the harsh lockdown strategies she applied in previous surges. She’s clearly betting on the vaccines and behavioral exhortations winning the race. Everyone should do what they can to help in this final kick before the finish line.
LETTER TO THE EDITOR
Show teachers that society has their backs TO THE EDITOR: The March 29 Crain’s Forum on education shines a light on many pressing issues facing teachers in Michigan. We appreciate Chad Livengood’s excellent in-depth reporting on rising midyear teacher retirements, exacerbating the prospects of a teacher shortage as older teachers reach retirement age and fewer college students choose teaching as a profession. One proposed solution is to allow retired teachers to return to full-time teaching while collecting their pensions with House Bill 4375. This answer belies a much more profound truth that must also be brought out into the light — that we as a society have not helped our teachers, who are front-line workers not only during the pandemic. For decades teachers in vulnerable Michigan communities have been expected to succeed at educating students who are not ready to learn because they cannot read, face food insecurity, and/or lack heat in their homes, and they are suffering. Until we send well-fed, literate children into schools, our teachers will be bound to fail, especially in Detroit and other vulnerable communities, where 85 percent of students are struggling readers. How long can
we expect our teachers to feel as though they are in a losing battle, until they become overwhelmed and choose to leave the profession prematurely? When our teachers are in crisis as they have been long before the coronavirus pandemic spread, and especially as it persists into a second year, it is our obligation to say, “How can we help?” Teachers want to do what they have been trained to do. Many stay in the classroom even when they aren’t able to, just so they can be a positive force in a child’s life. But how long must they wait? It is our legacy as American citizens to inconvenience ourselves to help others. People who are struggling begin to thrive when they form caring relationships with others. At Beyond Basics, we see the power of relationships every day. Our students advance to grade-level proficiency in reading as they work side by side (or virtually now), one-onone, with a tutor who shows up just for them and mentors them. This is the way to propel children forward. If we help our teachers, they will stay where they want and need to be — in the classroom. Pamela Good Co-founder and CEO Beyond Basics Detroit
GETTY IMAGES/ISTOCKPHOTO
How employers can aid in vaccine race M
CRAIN’S VOICES
For special education, a steep climb to recovery BY BRIAN CALLEY
O
ur most vulnerable students need our leaders to step up, put politics aside, and do whatever it takes to help them recover. The need has never been greater, but the opportunity is greater still; if the adults are willing to make Calley learning loss among kids with disabilities a top priority. Even in the best of times, students with disabilities struggle to gain access to an effective education. Graduation rates, employment, and independence rates among people with disabilities are unacceptably low. In these most challenging times, special education suffers most. This is not a criticism of teachers. They work hard, and I believe they do their best given the circumstances. But our system was designed and built at a time when children with disabilities were segregated from the general population. It was not created with these students in mind, so it should not be a surprise that it rarely meets their needs or taps their potential. April is Autism Awareness Month, but this year I hope we use this time to unite everyone around the goals of advancing the interests of children with all kinds of developmental disabilities. I have three asks. First, we must acknowledge the problem. Special education outcomes were lacking before the pandemic, and things have gotten much worse. Kids with disabilities have paid a higher price than most during this public health crisis. It is easy to fall into the trap of getting defensive about measures taken to slow the spread of COVID-19, but that is not the point. It is possible to believe both that the measures taken were necessary and that those measures had a disparate impact on children with developmental disabilities. Remote learning is not learning at all for many children with developmental disabilities. We need leadership at all levels to embrace the size and scope of the problem and take real action to improve it. Next, we must be realistic that it is going to take extra time, focus and yes, money, to provide the level of services kids with disabilities need and deserve. Prior to the pandemic,
Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited for length or clarity. Send letters to Crain’s Detroit Business, 1155 Gratiot Ave, Detroit, MI 48207, or email crainsdetroit@crain.com. Please include your complete name, city from which you are writing and a phone number for fact-checking purposes. 6 | CRAIN’S DETROIT BUSINESS | APRIL 12, 2021
About Crain’s Voices Crain’s Voices is a series of occasional essays from a panel of contributors selected by Crain’s Detroit Business to offer thoughtful, informed commentary that spans the political and industry spectrums. Today’s contributor, Brian Calley, is president of the Small Business Association of Michigan, board member of the Autism Alliance of Michigan, and a former lieutenant governor of Michigan.
state data showed that the gap between special education spending at the local level and funding provided for special education by the state exceeded $750 million. You can be assured that the gap is now larger when you consider that kids with disabilities are further behind than ever today. But this is not just a state issue. Federal resources are coming into state and local governments at record levels. And yet, the federal government has never once met its own requirements on special education support. They average about 15 percent funding support, far lower than the 40 percent that has been required in federal law for decades. The feds living up to their own standards would make a huge difference. Finally, we must turn this crisis into a reinvention opportunity. One where we start with an assumption of effective and inclusive education for all students. To accomplish this, we need to build a strong pipeline of talent into special education and to provide effective, evidence based professional development for teachers in the classroom. We need a funding distribution model that provides resources based on the needs of the student, not the ZIP code of their home. And student needs should be identified earlier, and interventions should be better integrated with the supports, services, and treatment plans in place outside of school. We have a problem. It will require enormous effort and many resources to fix it. Special education has needed attention and focus for a long time. We need our leaders at every level is to make a commitment of “whatever it takes” to provide a better future for all kids.
Sound off: Crain’s considers longer opinion pieces from guest writers on issues of interest to business readers. Email ideas to Managing Editor Michael Lee at malee@crain.com.
OTHER VOICES
How to make internships work in your remote workplace BY JERRY NORCIA
In the first two months of 2020, before COVID-19 changed everything, Team DTE prepared to launch a new year of summer student programs to create Jerry Norcia is opportunities for president and our youth — the CEO of DTE future leaders of Energy. our companies and communities — to gain critical life and job skills that would set them up for success. Through the meaningful work our summer students do, and through the mentorship and support this diverse and dynamic group receives during its time with us, we unlock new opportunities for these students to thrive and propel our company and the energy sector forward. Then came mid-March, when the pandemic shuttered Michigan’s economy, and our planning for a distant future became all about the urgency of now. To protect people and ensure the continued delivery of the essential energy we provide, DTE became one of the first companies to direct all employees who could work from home to do so. Suddenly, we were faced with a challenge: How do we give our 500 high school and college interns a quality work experience when they can’t come to work this summer? While many organizations understandably scrapped their 2020 internship programs, DTE’s talent acquisition and workforce development teams rolled up their sleeves to figure out innovative ways to help our summer students write their success stories. They met for weeks at the peak of the pandemic, often late at night, to develop and launch a virtual internship program — and then they captured their learnings in a toolkit we shared with other companies hoping to salvage their programs. Those lessons we learned a year ago are applicable today, when Michigan businesses are re-launching their summer internship programs, but also in the years to come, because remote work is here to stay. “The workplace as we used to know it, quite frankly, is dead,” concluded Harvard Business School faculty in a recent survey. “Not only is remote work considered table stakes to employees, but the pandemic has challenged conventional thinking about work in other ways, too — perhaps permanently.” Those of us dedicated to giving disadvantaged youths a leg up on economic mobility must also challenge our thinking, permanently. Here are some lessons we learned from the 90 students in our Summer Youth Internship Program, where we partner with Grow Detroit’s Young Talent, at DTE: Create engaging programming to build connections in a virtual world. Your internship curriculum should give students opportunities to learn about different careers and ask questions. Set up special Teams rooms or Zoom chats just for students, like a break room; and train employees to be virtual mentors. Be patient with students and
technology. Not everything will go they can’t meet face-to-face in the as planned and not all students will office. Accommodate challenges at be working on optimal devices. Do what you can to ensure they have home. For many high school and college stuthe tools and dents, their equipment they THOSE OF US DEDICATED TO homes are need to succeed. challenging Schedule fre- GIVING DISADVANTAGED places to work. quent group Do what you check-ins with YOUTHS A LEG UP ON can to normalstudents. More ECONOMIC MOBILITY MUST ize their perthan ever, emsonal spaces. ployers need to ALSO CHALLENGE OUR Solutions can carve out time to THINKING, PERMANENTLY. be as simple as discuss wins, learnings, questions and challenges. providing fun backgrounds to help Engagement is key to students (and students feel comfortable being on co-workers) staying motivated when camera.
Set aside time for group wellness. Fitness, nutrition talks and meditation are helpful ways to keep students engaged and centered in troubled times. Adapt professional development programs. Building professional skills is important whether students are virtual or not; invest in virtual programs so they can job shadow and build more awareness of potential careers. Lead from the top. Visible leadership produces better engagement and a more meaningful work experience for students and all employees. For DTE, our success started with
a determination to pause: when the pandemic hit, rather than react quickly and in response to false assumptions, we forced ourselves to stop and plan — patiently and deliberately, and in ways that integrated the diverse voices of employees. What we learned a year ago from the students we welcomed to our company during difficult, uncertain times made us a better and more cohesive organization for years to come We never thought at the time we would be taking our learnings and using them again, one year later, but here we are. I’m glad we did the work when we did it, for us and especially for the students.
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APRIL 12, 2021 | CRAIN’S DETROIT BUSINESS | 7
Pandemic restaurant changes aren’t going away anytime soon
THE FOOD ECONOMY
THIS PAGE
Detroit’s food distributors survived the pandemic by delivering food to those in need. Will a new way of doing business continue? PAGE 9 How have Detroit’s urban farms fared during the pandemic? PAGE 10
Restaurants, nonprofits ramp up efforts to reduce food waste. PAGE 10 After failures and losses, vertical farm operations expand on growing trend. PAGE 12
FARM TO TABLE A year of unceasing disruption has irrevocably changed how we eat. Here’s how and why the food chain has changed.
CHARLES OSGOOD PHOTOGRAPHY/ARTESIAN FARM
QUICK CHANGE
ACCELERATED EVOLUTION BY NINA IGNACZAK | SPECIAL TO CRAIN’S DETROIT BUSINESS
When the pandemic is finally over, SheWolf chef Anthony Lombardo plans to bring his staff out to the alley behind the restaurant on Selden Street and make a bonfire The fuel? The boxes the establishment has been using to package its successful SheWolf Mercato meal kit box. Mercato kept SheWolf afloat during a year that no one could have imagined. But Lombardo is ready to be done with it. Mercato will end with the pandemic. “No more carryout. No more Mercato,” Lombardo said. “We’re very excited to get back to being a restaurant serving food.” For Lombardo, keeping Mercato going would mean splitting his focus from the restaurant’s central mission — to provide a sublime dining expe-
8 | CRAIN’S DETROIT BUSINESS | APRIL 12, 2021
rience. “The people in the dining room could possibly suffer,” he said. “And they’re paying for an experience. We want 100 percent of our focus to be on their experience.” But others across the industry aren’t as adamant about dropping the various innovations and pivots they’ve adopted to survive the pandemic. Some have found more efficient ways of doing business, while others have identified unexpected new revenue streams. As the industry was forced to change, not every establishment survived. But among those who did, many plan to carry lessons learned — and new products and ways of doing business — into a post-pandemic future.
Carryout forever “The pandemic expedited trends that were already underway, and it just ramped them up,” Justin
Winslow, president and CEO of the Michigan Restaurant & Lodging Association, said. Curbside, carryout, and delivery are here to stay, Winslow predicts. “It doesn’t replace dining in on a one-to-one ratio, but it’s not going to go back to pre-pandemic levels,” he said. Delivery is what saved The Ferndale Project, an experimental arm of Eastern Market Brewing Co. that moved into the space vacated by Axle Brewing Co.’s Livernois Tap. The new space opened on Feb. 22, 2020. “We opened not knowing that we were about to get hit with a global pandemic,” recalls owner Dayne Bartscht. “I basically just told my wife and kids like ‘Hey, I’m gonna lock myself in a room for the next 48 hours and try to think about what we would do if the pandemic really had an impact on us.’” See RESTAURANTS on Page 14
JOE VAUGHN
Restaurant changes aren’t going away anytime soon
“WE’RE VERY EXCITED TO GET BACK TO BEING A RESTAURANT SERVING FOOD.” — Anthony Lombardo, chef, SheWolf
FOCUS | THE FOOD ECONOMY Lending
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Since the pandemic began, Atlas Wholesale Food Co. has distributed half a million pounds of food to those in need. | JENNIFER KOHL
A SHIFTED SYSTEM
Historic Detroit “Gold Coast” Condo
Detroit’s food distributors survived the pandemic by delivering food to those in need. Will new ways continue? BY NINA IGNACZAK | SPECIAL TO CRAIN’S DETROIT BUSINESS
Atlas Wholesale Food Company CEO John Kohl never expected to be operating a food assistance program. But that’s precisely what he found himself doing almost exclusively by July 2020. Since the pandemic began, Atlas has distributed half a million pounds of food to those in need through U.S. Department of Agriculture’s Farmers to Families Food Box program and another 600,000 pounds through a Families First Marketplace program developed in partnership with Wayne Metropolitan Community Action Agency. Not only did the programs allow Atlas to move stranded produce through the pipeline and onto people’s plates, but they also helped build relationships that Kohl says will change the company’s focus into the future. One of those key relationships was with Wayne Metro. “They are just an absolutely outstanding agency, and I couldn’t be more proud of their team and our team and the way we reacted to this pandemic,” said Kohl. “We were trying to get high-quality food to folks in the city of Detroit and Wayne County that were in desperate need of it. Wayne Metro’s team is stunning with how they just quickly moved to action.” Consultant Erika Block assisted Kohl in developing the Families First program with the help of federal CARES Act funding. Wayne Metro wanted a more dignified approach to food distribution for families than drive-through pickup lines, and it wanted to offer them choice and high-quality food and household items. So Block helped design a platform that allowed Wayne Metro to work with approximately 3,600 clients to create online accounts, select items
and place orders for pickup at seven distribution sites around Wayne County. Delivery was also offered for clients with transportation challenges. Each client was given $200 to spend on food during two order rounds. Wayne Metro funneled approximately $1.6 million in food assistance through the program. Atlas sourced the food and helped with training Wayne Metro staff on delivery and routing. According to Block, federal pandemic assistance dollars brought food distributors and nonprofits together in new ways that created new possibilities.
“WE WERE TRYING TO GET HIGH-QUALITY FOOD TO FOLKS IN THE CITY OF DETROIT AND WAYNE COUNTY THAT WERE IN DESPERATE NEED OF IT. WAYNE METRO’S TEAM IS STUNNING WITH HOW THEY JUST QUICKLY MOVED TO ACTION.” — John Kohl, CEO, Atlas Wholesale Food Company
“The pandemic spurred this innovation. It opened up the food service supply chain to the food assistance world,” she said. The program offered food assistance that included fresh, high-quality food like halal chicken breast, Michigan Farm to Freezer vegetables and LaGrasso Bros. produce boxes. Director of Youth and Family Programs Carla Chinavare helped implement the program for Wayne Metro. The agency had never implemented food assistance on a large scale before the Families First Marketplace.
“What we learned with the pandemic is a lot more families came into that situation where all of a sudden they were faced with those hard choices,” she said. “And if that’s never been your situation, and now it is, having to go through that food line — that’s really something to process for you and your family. So being able to sit in the comfort of your own home, and have this online venue to pick … that just feels really good for us to be able to provide that dignified approach.” The program is now on hiatus in Wayne County as it awaits its next funding infusion. Meanwhile, Block is working with the Oakland Livingston Human Services Agency to replicate it in Oakland and Livingston counties. The idea of delivering food grew out of a Hail Mary pivot on Atlas’ part in the early days of the pandemic. As Kohl’s restaurant customers were abruptly shutting down, a glut of food began accumulating in the supply chain. So Atlas began distributing food directly to consumers. It was ad-hoc at first; Atlas started allowing the public to place orders with a minimum of $100 on its website and staged drop-off sites where customers could pick up orders from the back of the truck. In doing so, Kohl found a way to get food that had been destined for restaurants into people’s hands and avoided laying off staff. That business and a federal Paycheck Protection Program loan saw the company through the initial months. Kohl then saw the federal assistance as a natural extension of the pivot the company had already taken. Atlas connected with Wayne Metro. He won a bid in the USDA farm box program’s first round and shifted nearly all of his resources to food assistance work. See DISTRIBUTION on Page 13
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FOCUS | THE FOOD ECONOMY
NEW GROWTH How have Detroit's urban farms fared during the pandemic? BY NINA IGNACZAK | SPECIAL TO CRAIN’S DETROIT BUSINESS
Andrew Chae and his wife Amy Eckert got into farming for “idealistic reasons,” launching Fisheye Farm in Detroit in 2015 with the intent of advancing environmental and social causes and “just to try and get fresh food out to people,” Chae said. But the realities of sustaining a farm enterprise led Chae and Eckert to sell where they could make a profit. That meant that by the end of 2019, 90 percent of Fisheye’s sales were coming from restaurants. But by March 2020, the pandemic had made clear that selling primarily to restaurants as a business model wasn’t going to work. Chae and Eckert had thought about the idea of doing a CSA (community-supported agriculture). “We’d always been kind of afraid to do CSA because it is such a commitment to your members,” Chae said. “With restaurants, if you don’t have something one week, it’s easy for them to go somewhere else, and they most often come back to you because they want a good local product.” But with restaurant demand essentially at a standstill in March, Fisheye Farm set up its first Friday farmstand in Core City at 16th Street and Buchanan. They marketed on social media, hoping to test direct consumer demand for spring greens that would have gone to restaurant kitchens. “At first, it was just like farmers market-style, lining up one customer at a time. And we were really surprised at how well that went and how many people came,” Chae said. “We had lines down the block with people
“AT FIRST, IT WAS JUST LIKE FARMERS MARKETSTYLE, LINING UP ONE CUSTOMER AT A TIME. AND WE WERE REALLY SURPRISED AT HOW WELL THAT WENT AND HOW MANY PEOPLE CAME.” — Andrew Chae, Fisheye Farm
waiting, but it was really cold. And we didn’t feel right about that. We didn’t want people to be waiting so long outside, and we didn’t want so many people gathering on the farm.” Chae had already been building a website for chefs to place orders, so he pivoted the site to service produce box orders directly from the public. That experiment proved so successful that Chae felt comfortable taking the leap into a full-fledged CSA. Shares sold out quickly. Chae’s original goal was to sell 40 full shares and 20 half shares. He found the half shares were more popular and ended up selling almost 60 half shares and 20 full shares. “It’s a good model; it’s tried and true. CSAs have been around for a long time,” he said. “A lot of people have done it before us. And there’s been a lot of benefits to it.” In 2019, Fisheye made about $98,000 in revenue, with restaurant sales at 90 percent. The revenue held nearly steady in 2020, with about $96,000 in gross sales, split roughly 10 percent from restaurants, 5 percent from the farmstand and 85 percent
from the CSA. Chae believes 2020 revenue would have been higher under a business-as-normal scenario, but costs were lower with no restaurant deliveries. Chae says that making the pivot to CSA was doable for Fisheye because of its small size and the fact that they already had a somewhat diversified crop plan, which was too late to change by March. In 2021, they’ll be planting less in the way of lettuce greens to accommodate their CSA customers, most of whom hail from the suburbs and travel to Core City to pick up their boxes. Chae hopes to increase CSA members’ diversity in 2021. Chae is applying to accept EBT and Double Up Food Bucks and recruit members from a nearby senior center. He also plans to expand the farmstand for people in the neighborhood. He sees CSA demand tapering off this year and restaurant demand coming back slowly. “Our goal is to sell 100 CSA shares this year. And if we don’t sell them all, I’m not going to stress out about it because I’m anticipating there’s going to be more demand from restaurants.”
Getting food to the community Keep Growing Detroit Executive Director Ashley Atkinson said the pandemic was a time to double down on the nonprofit’s mission of expanding Detroiters’ ability to feed themselves through small-scale farms and gardens. The nonprofit had a “record-breaker” year for its Garden Resource Program, which provides seeds, trans-
WASTE NOT Restaurants, nonprofits ramp up to reduce food waste BY NINA IGNACZAK | SPECIAL TO CRAIN'S DETROIT BUSINESS
Before Darraugh Collins moved to Detroit for her husband’s hospitality industry job in 2018, she started asking him questions about the leftovers. What happened to all the food that was left uneaten after the swanky corporate conferences, weddings and bar mitzvahs? “And he was like, ‘you know, we have to throw it away,’” Collins said. “It just started to hit me, exponentially, what that looks like in the amount of food that’s wasted. (And) the number of people that I come in contact with every day who clearly need food.” She didn’t know what to do with that information at the time, but began researching. She happened upon an app, Food Rescue US, that connects food producers, grocers, chefs, restaurants and hotel operators — people like her husband — with agencies that serve people in need. It’s a sort of Uber for food rescue that relies on volunteers to do the driving. “I just thought it was brilliant because I saw it from my partner’s perspective,” she said. “Especially when he worked for large corporations, 10 | CRAIN’S DETROIT BUSINESS | APRIL 12, 2021
“WHAT I LOVE ABOUT FOOD RESCUE US IS THAT IT ALLOWS US TO BE NIMBLE — WE DON’T HAVE MINIMUM REQUIREMENTS LIKE GLEANERS AND FORGOTTEN HARVEST, WHO REQUIRE A CERTAIN NUMBER OF POUNDS IN A DONATION.” — Darraugh Collins
how hard it was to implement those types of changes.” She figured that when she got to Detroit, she’d volunteer with Food Rescue US, both as a way to take action on this problem that was bothering her and meet new people. When she got to town, she tried registering and realized that Food Rescue US didn’t operate in the Detroit area. But before she even had much time for disappointment, she received an email from the nonprofit organization asking her if she’d like to help start a local presence.
Within a year, she was up and running, launching in June 2019. Her job is to pair donors with receivers. Volunteer rescuers then make the pickup and drop-off, with detailed information about where to go and what to do when they get there. Recent donors include Planted Detroit, Chipotle Grosse Pointe and Whole Foods Midtown. Receivers include Soul Harvest Ministry, Motor City Mitten Mission and Downtown Boxing Gym, among others. “What I love about Food Rescue US is that it allows us to be nimble — we don’t have minimum requirements like Gleaners and Forgotten Harvest, who require a certain number of pounds in a donation.” The program has grown even amid the pandemic. By the end of 2019, Collins was amazed to see that Food Rescue US-Detroit had rescued 36,000 pounds of food. By the end of 2020, that number had climbed to 4.2 million pounds of food kept out of landfills. She has 10 consistent donors and more than 150 volunteer food rescuers who have logged more than 3,600 hours ferrying food to those who need it. But Collins went beyond the standard Food Rescue US protocol. She
“Food waste shouldn’t be a problem with chefs,” said Chef Phil Jones. | CONTRIBUTED
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FOCUS | THE FOOD ECONOMY
Andrew Chae and Amy Eckert, Fisheye Farms. | MATT HALLOWELL
was upset when she read news reports of farmers dumping food because of interruptions in the supply chain. “I thought, how can we get some of that here in Detroit? And that’s really what led us to reach out to the Farmlink Project,” she said. Two college students launched the Farmlink Project in response to a New York Times article about farmers tossing food. Like the Food Rescue US model, Farmlink connects farmers with excess crops to food banks around the country and raises funds to compensate farmers for their produce and cover transportation costs. More than 100 college students have signed up so far to help rescue and deliver crops that would otherwise perish. “That’s what led to us getting 42,000 pounds of potatoes here to Detroit last May at TCF Center on the loading dock, and then that led right into us becoming a part of the USDA (U.S. Department of Agriculture) Farmers to Families program.” Food Rescue US volunteers were soon packing 5,000 weekly food boxes at TCF center every Friday, using donations facilitated through Farmlink and other sources, and distributing them to agencies. “Because of COVID, we had to figure out where the need was,” Collins said. “And that’s what led us to this large distribution; so right now it’s like a two-pronged approach, where we do both small-
plants and support for farms and gardens in Detroit, Highland Park and Hamtramck. The program saw 25 percent growth, more than it had ever seen year-over-year since it was established in 2003. Most of that growth came from individuals, with nearly 800 new family gardens joining the program. Atkinson attributes the increase to people’s anxiety about the food chain. “People were saying they were kind of shocked early on, going to the grocery store and seeing empty shelves,” Atkinson said. “It was a level of uncertainty that they just were not comfortable with, and they felt they had to take action to feed themselves.” But the program saw a decline in volunteer-led school and community gardens that directly feed the community. “And of course, that makes a lot of sense because there was just so much uncertainty about schools and gathering face-to-face,” she said. Supporting those gardens in coming back to serve the community is a high priority for KGD when food insecurity in Michigan is up 40 to 60 percent, according to a 2020 report by the Governor’s Food Security Council. To keep food moving to people’s plates amid the pandemic, KGD built an online platform, which accepts EBT. Members of Grown in Detroit, KGD’s cooperative brand for small-scale Detroit growers, sold through the portal after KGD sat out the Eastern Market season. “Our online store has been a total game-changer,” Atkinson said. “It’s great for customers because it allows them to basically build their own CSA box and integrate this Grown in Detroit product into their everyday lives as frequently as they’d like.” KGD will also continue to offer its CSA through the online platform, which will launch for the 2021 season in April. An in-person market will arrive in June, with a host of new safety precautions.
Nurturing Our Seeds is one of the farms that sell through Grown in Detroit. Farmer Erin Cole, who works as a math teacher in Detroit Public Schools Community District, said the nine-parcel farm on Detroit’s east side refocused entirely on feeding the community directly during a time of hardship. In 2019, the farm grossed more than $20,000 in revenue through direct and restaurant sales to places like the Whitney, Supino’s and Pizza Plex. Those numbers went way down in 2020, Cole said. “A lot of our food and produce last year went into the hands of the community,” said Cole. Cole sees a growing demand for her CSA in 2021, and said other growers are looking for local produce to supplement their own CSA programs. She’s also expanding into cut flowers and mushrooms this year. But feeding the community will remain a priority. Cole is one of the recipients of a grant from the Black Farmers Land Fund, a crowdsourcing initiative that grants funds for Black farmers to buy the land they are farming on outright. “I think the bigger picture is that we’re just a community resource, supporting a bigger message of food access,” Cole said. “As Black farmers, we represent maybe two or three percent of all farmers and the numbers as far as land access and ownership are even lower than that.” Atkinson said Cole was just one of many of Detroit’s urban farmers who prioritized feeding the community over sales during the pandemic. “Everyone that participates in Keep Growing Detroit is there because they see themselves as part of a solution to food insecurity,” she said. “When gardeners see an opportunity to use the land and skills they’ve cultivated to help the community survive and thrive, they will rise to that challenge.”
scale and large-scale distribution.” Those Fridays at TCF were part of what got Collins through the pandemic, at least emotionally. “Friday distribution gave us volunteers this opportunity to be around other people, outside on the dock, all wearing masks, so it was safe,” she said. “And we were able to build community with so many new people.” In December, Food Rescue US-Detroit received a $100,000 grant from the Gannett Foundation to support its operation and growth. It’s enabled Collins to become the first paid local site director within Food Rescue US and freed her up to engage in advocacy work. “There couldn’t have been a better opportunity to bring awareness to food insecurity and food waste,” Collins said. “So we don’t want to let that opportunity pass us by. We want to build on that momentum to have more people involved with us. There are still plenty of businesses that don’t donate their food yet.”
mized by learning and implementing best practices throughout the food system — from procurement to storage to cooking to composting. She’d like to see food waste training added to ServSafe certification and education around the meaning of “sell by dates”, which don’t mean the food is not safe to eat. “Many consumers throw away food on the ‘sell by’ or ‘best by’ date, believing it is an ‘expiration date’ while the food is safe to consume past that date,” Todd said. “This is one of the biggest reasons consumers waste food.” Commercial food operators and home cooks alike can apply the same basic techniques to waste less. “On average, people living in cities throw away about a half-pound of food per day, and two-thirds of that is edible,” she said. “If that is true in Detroit, 125 million pounds of food is landfilled each year, 80 million of which is edible.” The issue of food waste is getting increased attention. On April 6, a coalition including the Natural Resources Defense Council, Harvard Food Law and Policy Clinic, ReFED, World Wildlife Fund and others unveiled the US Food Loss & Waste Policy Action Plan For Congress & the Administration detailing steps for the federal policy measures and funding priorities to address the food waste issue.
A less wasteful system
Farmlink connects farmers with excess crops to food banks. | TJ SAMUELS
Danielle Todd is interested in reducing the overall amount of food waste generated in the food system — before it gets into the hands of food rescuers. She launched her Detroit-based nonprofit Make Food Not Waste in 2017 to advocate and educate for better policies and practices. She sees food waste as a logistical problem that can be solved or mini-
See WASTE on Page ? APRIL 12, 2021 | CRAIN’S DETROIT BUSINESS | 11
FOCUS | THE FOOD ECONOMY
GOING UP After failures and losses, vertical farm operations expand on growing trend BY TOM HENDERSON
Two vertical farm operations at opposite corners of the Lower Peninsula hope to continue a trend in the industry — raising equity capital to dramatically expand production. New Buffalo-based Artesian Farm LLC plans to raise a funding round of up to $10 million and build a new 55,000-square-foot indoor farm to replace the former plastics factory where it is now housed, and Detroit-based Planted LLC, doing business as Planted Detroit, will soon embark on a funding round of $50 million to expand operations into a third building of 100,000 square feet Though it is at the far southwest corner of the state, Artesian’s customers include Busch’s, Plum Markets and Whole Foods stores in metro Detroit and the Woodward Corner Market, a small-format, 41,000-square-foot specialty grocery store that Meijer Inc. opened in Royal Oak in January 2020. It also distributes into Chicago and Indiana through Indianapolis-based Market Wagon LLC, an online ordering and delivery service that connects customers to local farmers and artisan food producers. Artesian grows its produce in 10,000 square feet of the 24,000-square-foot building once home to a company called Plastics Masters, under 22-foot ceilings. It uses an additional 5,000 square feet for packaging and storage. Vertical farms — indoor operations with hydroponic crops growing under LED lights in parallel horizontal rows on racks stretching from the floor almost to the ceiling — have been touted as the next great thing for 15 years. In 2007, New York Magazine ran a piece on the future of vertical farming, envisioning a cluster of 150 30-story towers in New York fulfilling the entire city’s demand for fruit, vegetables and grain. Suffice to say that vision hasn’t exactly become reality. Vertical farming has largely been a quixotic endeavor, financial losses and failure commonplace. Milan Kluko, the CEO at Artesian Farm, founded the first vertical farm in Michigan in 2011 in a former factory that had been shuttered for years. He made a profit just one year, in 2014, the same year he was giving TED talks on vertical farming. Thanks to a new investor who is now the CFO, Keith Kudla, Kluko started the third iteration of his farm just before the pandemic hit. They expect to be profitable this month or next, growing basil, kale and four kinds of lettuce. “There has been a lot of roadkill in vertical farming over the last five or six years,” said Kudla. “There’s been a lot of capital flowing into the space and not a lot of money coming out.” “If it was easy, everyone would be vertical farming,” said Kluko. “With any new way of doing things, people jump in before they know what the obstacles are,” said Erik Runkle, a professor at Michigan State University’s Department of Horticulture. “The biggest obstacle is profitability. It’s a high-input segment of agriculture. There are building costs, capital costs, energy costs. With all these inputs, the question is: Can you do it profitably? We are optimistic. One compelling rea12 | CRAIN’S DETROIT BUSINESS | APRIL 12, 2021
Runkle
Kudla
son is energy efficiency. The technology costs are coming down.” In January 2020, MSU announced that Runkle was the principal investigator on a four-year, $5.4 million study, half of it funded by the U.S. Department of Agriculture, to study how best to make the indoor farming of leafy greens, both in greenhouses and in vertical farms, more profitable. Joining in the project are researchers and engineers at Ohio State University, Purdue University and the University of Arizona. The main reason energy costs have fallen sharply in recent years is the transition from high-energy-consumption, high-cost incandescent lighting to super-efficient and inexpensive light-emitting diodes or LEDs. LEDs offer a wide range of colors and the focus of Runkle’s research is on which color or colors optimize production. “How do different colors affect growing? The texture of the leaves? The taste?” he said. Runkle has involved both Artesian Farm and Planted Detroit in his project, along with one other vertical farm in Michigan, Square Roots, a New Yorkbased company with a farm in the Grand Rapids suburb of Wyoming that is a partnership with Gordon Food Service. There is one other vertical farm in the state he is aware of, Arnold Farms of Midland, but said he has not worked with it.
A wave of investment Fundraising for both Artesian Farm and Planted Detroit should be made easier by the large recent funding rounds for other vertical farms. In 2017, San Francisco-based Plenty raised a round of $200 million and to date has raised $401 million total, including money from Alphabet Inc. Chairman Eric Schmidt and Amazon CEO Jeff Bezos. New Jersey-based AeroFarms has raised $238 million in venture capital, including money from the Abu Dhabi Investment Office, and New York-based Bowery Farming Inc. has raised $167.5 million, including funding from Google Ventures. On March 26, AeroFarms announced it was going to go public on the Nasdaq exchange following a merger with Spring Valley Acquisition Corp., a special purpose acquisition company, in a deal valued at $1.2 billion and which is expected to provide the AeroFarms with $357 million in proceeds. The deal is expected to close before the end of the second quarter. And, yet, the reality check for vertical farming is that AeroFarm’s revenue is far less than what one might expect from all that fundraising and IPO. In filings, it said that even in a booming market for its crops, it expects revenue of just $4 million this year. So why the enthusiasm from inves-
Milan Kluko, the CEO at Artesian Farm, founded the first vertical farm in Michigan in 2011 in a former factory that had been shuttered for years. | CRAIN’S DETROIT BUSINESS
“WHEN HE CALLED AND SAID, ‘I WANT TO INVEST IN YOU,’ I THOUGHT HE WAS KIDDING. BUT I WAS READY TO SAY, ‘I’LL DO IT AGAIN.’” — Milan Kluko, CEO, Artesian Farm
tors? Green isn’t just a pun for a company growing lettuce. In addition to less energy use by LEDs, vertical farming uses 95 percent less water than fieldfarmed food, yields are 390 times higher per square foot than farming in a field, and there is no need for spraying with herbicides and pesticides or, perhaps most important, no need for genetic modification. Crops are all non-GMO. The sector also benefits from the local farm-to-table movement and worries about global supply chains exacerbated first by the pandemic and then by the recent blockage of the Suez Canal. For all of those reasons, vertical farms are far more optimistic now about turning a profit than they were just a few years ago. Simone de Souza is an assistant professor of economics at MSU, focusing on agriculture and aquaculture, and is part of Runkle’s research team. She said one recent study in the Netherlands showed a reduction of 40 percent in annual electric costs because of LED lighting. And she said
that according to an annual survey of the world’s vertical farmers, 47 percent of the 220 respondents said they expected to turn a profit in 2020, which was up from 37 percent in 2019 and just 27 percent in 2017. Six percent said they expected 2020 revenue of more than $3 million, and another 6 percent expected revenue between $1 million and $3 million.
Hardly farmers by trade Interestingly enough, the owners of both Artesian Farm and Planted Detroit have no background in farming. Thomas Adamczak, who founded Planted Detroit in 2018, runs an investment management firm with his sister, Colleen Miller, Birmingham-based Davis Street Advisors LLC. For 17 years, from 1997-2014, Kluko was president of his own environmental and civil engineering consulting firm, New Buffalo-based Fountainhead Engineering Ltd. In 2011, he founded a vertical farm, Green Spirit Farms LLC, in New Buffalo and three years later shut down his consulting firm to focus all his energy on the farm. His daughter, Laura, died of a drug overdose in 2009 and was found at her home in Traverse City by her brother, Dan. Kluko said both he and his son were devastated by the loss. A hobby gardener, in 2011 Kluko decided he and his son needed something to take their minds off their loss and launched a vertical farm in a former factory that Kluko had done some environmental work on years earlier.
“The book ‘The Vertical Farm’ had just come out, and that was a catalyst,” said Kluko, referring to a 2010 book by Dickson Despommier that promoted the movement. “Dan was really hurting. It was tough,” said Kluko. “We honored Laura’s memory by doing this. The vertical farm was clearly a place to heal for Dan, and me, too. The last time I saw her was on my 50th birthday. This pushed me into a career change and brought us out of our funk.” They planted their first crop in 2012 and turned their first profit in 2014, but the next year, an expensive lawsuit against a partner in another vertical farm in Ohio cost Kluko so much money he had to bring in outside investors. He said they, in turn, insisted on bringing in their own business manager. In November 2017, lightning from a thunderstorm created a power surge that blew out 40 percent of lighting and circuitry in the farm. It turned out, Kluko said, that the business manager hadn’t paid the insurance bill and the hundreds of thousands of dollars in damages weren’t covered. Kluko said the investors didn’t want to put in any more money, and he kept the business limping along, losing money each month because of the reduced capacity until the electricity was shut off in February 2018 for nonpayment. “There were times along the way when it was time to walk away, but my daughter’s memory wouldn’t let me. Finally, I had to let it go,” said Kluko. After shutting the farm down, Klu-
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FOCUS | THE FOOD ECONOMY
DISTRIBUTION
From Page 9
Restaurant revenue for 2020 was about 20 percent of a normal year. He is cautiously optimistic that things will return closer to normal in 2021, but believes some of the changes introduced by the pandemic are here to stay. “I do think that people will want to go back out to eat,” he said. “But there will be long-standing changes. People who never ordered online before now have done it, and have seen the ease of getting it delivered directly to them. And I think the model for restaurants fundamentally is changed.”
Beyond the market
ko was hired that March as a consultant by a company in Oregon that was going to start a hemp farm and build a CBD extraction facility. He spent much of his time there the rest of the year. The hemp crop was planted, the extraction equipment brought in and CBD oil started being processed that fall. Enter Kudla, a retired health care executive who lived in New Buffalo who had bought Green Spirit’s produce and thought it might be interesting to look into becoming an investor in the company. Kudla had spent 30 years managing large health care companies. Among his positions were CFO of UnitedHealthcare of Illinois, a $1 billion company with a million members; president of the west region of St. Louis-based WellCare Health Plans Inc., a region that had 190,000 Medicaid and Medicare Advantage customers; senior vice president of Connecticut-based Magellan Health Services, a $1.6 billion national managed behavioral health care company; and president and CEO of Chicago-based Family Health Network, a $660 million not-for-profit, provider-sponsored health plan. “I wanted to do something totally different and knew of this farm around the corner from my house. But Milan was hard to track down. The phone had been disconnected, and the farm seemed to have gone out of business,” said Kudla. In July 2019, Kudla was able to reach Kluko. “When he called and said, ‘I want to invest in you,’ I thought
he was kidding,” said Kluko. “But I was ready to say, ‘I’ll do it again.’” They met and Kudla told him he might be willing to help relaunch the farm after doing some due diligence first. And he had Kluko do a small test planting so he could see how the process worked and taste the finished product. In October, Kudla closed on an investment round that made him the majority owner, spending about $300,000 to get the farm back up and running. “He’s done a great job. He’s a dollars and cents guy, and he puts his money where his mouth is,” said Kluko. Kudla wants to expand into a new, much larger building and said he had started lining up investors, with more than $1 million committed, before the pandemic hit. “I wasn’t going to take anyone’s money once COVID hit, but we’ll start raising money, again.” The pandemic had the surprising effect of increasing sales. Their sales to restaurants came to a halt but that loss was more than made up for by increased sales to grocers. Kudla said the farm has grown its total client base to 53 from 15 a year ago and should see that climb sharply over the next year as it expands its client base in South Bend, Ind., and Chicago. Currently, it sells to Detroit area customers and grocers and restaurants on the far southwest corner of the state, between New Buffalo and Stevensville. Contact: thenderson@crain.com (231) 499-2817; @TomHenderson2
The USDA food box program saw several small local distributors through the pandemic, according to Eastern Market Executive Director Dan Carmody. Eastern Market won two contract bids to deliver 2,000 boxes per week between mid-May and mid-November last year, sourcing from its local vendors and processors. The program was created in April as part of the $19 billion federal Coronavirus Food Assistance Program. Food distributors and nonprofits partnered to bid on USDA contracts to distribute food to those in need. Five contract rounds have ensued so far with more than 132 million food boxes distributed going to families in need. The current contract round ends April 30. The program helped shore up revenue for Eastern Market as it reduced the number of vendors and shoppers in the market to allow for social distancing. It also halted most of its events business. Revenue and costs were both down about 20 percent for 2020, Carmody said, and the market about broke even for the year. Not only did the food box program help feed people and provide much-needed revenue for food distributors, but it routed federal funding to small-scale agriculture. “Those are the farmers that seldom have gotten much support from USDA,” he said. “They’re not big commodity growers.” Carmody said he hopes federal food aid can continue to find a way to direct revenue to small-scale agriculture in the future. In addition to the food boxes, Eastern Market reassigned its food access resources toward emergency food support. For example, instead of transporting seniors to its Tuesday market, it found ways to bring the
Joe and Catherine LaGrasso | LAGRASSO BROS. INC.
food to them. The work paid dividends when it came time to fundraise. “In our fall campaign, we were able to roughly triple our individual giving,” Carmody said. “Most of our support has historically come from corporations and large foundations. But all of a sudden, people weren’t just giving to the Eastern Market, they were giving to support families in need.” Eastern Market Corp. stopped participating in the food box program after the second round, because the price-per-box was reduced. “We weren’t able to pay what we wanted to pay our farmers to do it and break even,” he said. But Carmody was able to secure donations to support between 600 and 700 food boxes. He sees the nonprofit’s role in emergency food support continuing into this year. “USDA dollars may have gone away, but the need hasn’t,” he said. “So we’re trying to scrape together more money to keep up food box distribution as best we can, certainly throughout the balance of 2021, and then hopefully we’ll see that need recede a little bit in 2022.”
Meeting the need Tom LaGrasso, the owner of century-old LaGrasso Bros. Inc., also took part in the Farm to Families Program. Like Kohl, his company had not been engaged with moving food for those in need prior to the pandemic. Necessity brought him to partner
with Gleaners and Forgotten Harvest, as well as several smaller nonprofits and churches, to supply USDA food boxes to those in need. “We were able to utilize our resources, not only our warehouse capacity and fleets, but also our employees, to kind of pivot to help out with those kinds of projects,” LaGrasso said. “It provided us with some source of revenue that we desperately needed, because obviously with restaurants closed, schools closed, hotels closed, we had to pivot and kind of reinvent ourselves. This was just kind of a synergy, an opportunity to help out people in need, and put our team to work doing it.” Revenue was down about 70 percent for the year with restaurant closures, forcing layoffs. Some staff was rehired to help out with the food boxes. LaGrasso is hoping for a better 2021. “We’re hoping that at some point, the restaurant, schools, and hotels all return to some kind of normal capacity,” LaGrasso said. “We really don’t have a timeline on that. But we’re hoping that it occurs at some point this year.” LaGrasso hopes to continue working with the USDA contracts so long as contracts are available. But even if it goes away, he’s already looking into ways to continue delivering fresh food to those in need. “There are some conversations we’ve had with people in other states and different organizations on how to find funding to continue to provide fresh produce to people that are feeding people in need in the country.”
Boxes for the Farmers to Families program at Eastern Market. | EASTERN MARKET PARTNERSHIP 2020 APRIL 12, 2021 | CRAIN’S DETROIT BUSINESS | 13
FOCUS | THE FOOD ECONOMY
RESTAURANTS
cery and meal kit businesses. “COVID forced us to change our business model, but it forced us to go into a more sustainable direction,” Pietrzyk said.
From Page 8
Of course, the pandemic did have an impact, and soon dining rooms were completely shut down. So Bartscht turned to delivery. “I knew that we were allowed to deliver beer that we produce directly to consumers,” Bartscht said. “And we’d always kind of had on this long list of things to do, this idea of a beer delivery service, but it was at the bottom of the list.” The delivery service quickly moved to top priority. Bartscht had rehired many of the employees of Axle Brewing, and saw that he had about two months of funds to cover payroll. “So I thought, all right, we’ve got about two months of funds set aside. Let’s just see what we can do for these two months,” he said. “Whereas a lot of others in the industry, completely understandably, kind of had to take a step back from operations to see what happened with restrictions, we kind of took the opposite approach and just doubled down on the idea of pivoting in the early days.” That proactive approach paid off. Bartscht immediately purchased a canning line and set about promoting a home delivery service for The Ferndale Project’s beers. The staff was putting in long hours together, something Bartscht credits to improving morale when many were confused and isolated. Another way to encourage morale during this time was “business day,” in which Bartscht asked employees to pitch a concept for a new business. One of those became Peddler, a fullfledged curbside and delivery business selling local artisanal food wares in addition to Ferndale Project’s beers. Additional spin-offs include a Detroit-style pizza business, and Duped Donuts, a vegan donut business. Not all of the ideas panned out — a frozen food business was too labor-intensive, and a dog biscuit made from spent grain didn’t make sense. But delivery has kept the business alive and, with some help from PPP loans, Bartscht hasn’t had to lay off a single employee. Moving forward, he sees delivery as integral to the compa-
WASTE
From Page 10
Detroit organizations Make Food Not Waste, FoodPLUS Detroit, and Food Rescue US-Detroit have signed on to support the plan, which calls for investing in infrastructure to prevent organic waste from entering landfills, incentivizing surplus food donation and requiring a national date labeling standard. Some companies have begun implementing food waste reduction measures. A U.S. Food Loss and Waste 2030 Champions program under the U.S. Environmental Protection Agency and USDA tracks the pledges of large food manufacturers and distributors to reduce food waste through practices like donating to food banks, optimizing purchasing practices to reduce overbuying, creating secondary markets for surplus produce and composting. The pandemic year was challenging from a food waste perspective because of unpredictable demand, she said. “Waste goes up when your demand is inconsistent or unpredict14 | CRAIN’S DETROIT BUSINESS | APRIL 12, 2021
‘Open for business’
cuisine shop Pietrzyk Pierogis, had been growing a solid business on popups and events. She opened up a carryout/dine-in in Gratiot Central Market in October 2019. The new space was just starting to gain traction when the pandemic hit four months later. Pietrzyk found herself with an empty space and no events to move her product. An experiment with curbside didn’t pan out. But with the help of a small PPP loan and small grants from local economic development agencies, she expedited existing plans to expand into grocery stores. When the pandemic started, Pietrzyk was already in four grocery stores; that number has now expanded to 22, with plans to expand into Kroger stores across the state. Grocery store sales ended up generating more revenue than pop-ups ever did. Scaling up has been a challenge because Pietrzyk makes everything by hand. Their first Kroger order called for 34,000 individual pierogi. “So we got used to working a little bit longer hours for a few weeks, and organized some of our processes, and
had to get a couple more equipment pieces. It definitely took some planning and hiring a couple more staff members,” Pietrzyk said. Alongside expanding into grocery stores, Pietrzyk launched a family-style meal kit box delivered within a 20-mile radius. That move has proven immensely popular with customers — and has been profitable. She’s found herself in a solid position, with new and diverse revenue streams. Pietrzyk broke even in 2020, and projects a 20-30 percent increase in revenue in 2021 through the expanded grocery business alone. Pietrzyk sees a future for both grocery and home delivery in her business mix, even after events and in-person service at the Gratiot Central Market shop resume. After putting 20,000 miles on her car, she’s begun partnering with delivery services Michigan Fields and Market Wagon to take care of the delivery end, while focusing internal efforts on continued grocery expansion. Next, she hopes to secure capital to build out a production kitchen that can service the gro-
Embracing the great outdoors as a dining experience is another pivot that many restaurants have tried during the pandemic. Winslow believes that trend is here to stay as well. “I think you’re going to see greater expansions of outdoor dining opportunities in decent weather months,” Winslow said. “Even if we’re at full capacity, it ended up being a pretty enjoyable opportunity for many people.” The need to support restaurants by allowing for outdoor food and libations was behind Michigan’s social district permit, created by House Bill 5781 and signed into law by Gov. Gretchen Whitmer on July 1, 2020. “It’s been a game-changer,” Kate Knight, executive director of the Farmington Downtown Development Authority, said. “We feel like it’s made all the difference. In fact, we were able to quantify that in terms of what [the DDA] had put into it with sign fabrication, promotion, and installation, assisting with people licensing — it paid for itself for the first weekend.” Downtown Farmington launched its social district on New Year’s Eve to “lines out the door,” Knight said. Local restaurant Sidecar doubled its business by the second weekend. “It was a much-needed source of revenue, at the right time,” Knight said. By the end of summer, food and retail revenues were up 30 percent on average from where they had been in spring. By March, 34 local units of government had created social districts across the state. The concept fits in well with the aim of the downtown experience, which is all about creating a sense of shared public space and community, Knight said. “It signals that we’re open for business, it creates a really stunning experience, and it promotes walkability,” Knight said. “We were shocked to see how people turned out on a Wednesday, Thursday, Friday, Saturday night, or in the afternoon, to just stroll or sit at a hightop next to a heater.”
tions, to model it at an institutional level,” Jones said. “We don’t peel vegetables unless absolutely necessary. We use careful planning so that we’re not overproducing. And any food scraps we do produce get processed into compost through Midtown Compost & Recycling.”
Soul, who agreed to have their food scraps picked up for a fee, then delivered the scraps to local urban farms. The farms made compost from them and also sold produce back to the businesses. “So then it created a closed-loop circle,” Campbell said. “From compost back to local food.” Midtown Composting services commercial and residential customers, with volume about evenly split between the two. In “normal times,” the split is closer to 75 percent commercial and 25 percent residential, Campbell said — about 30 of 60 restaurant subscribers canceled service during the shutdown. Midtown Composting services around 500 residential customers — a number that had doubled amid the pandemic. Those who want the service can sign up via the company’s website; if there’s no service in their area, they are tracked. When enough people in a ZIP code want to participate, Midtown Composting starts a route. Revenue comes from picking up the compost and selling finished compost to small-scale urban farmers like Brother Nature, D-Town Farm, and Georgia Street Communi-
ty Collective, as well as to individual gardeners. Midtown Composting is launching a farm this year in Detroit’s Morningside neighborhood, where it will grow in the compost processed from scraps it collects from local restaurants, selling produce back to those restaurants. The farm will also offer a CSA (Community Supported Agriculture) to residents on Detroit’s East side and in the Grosse Pointes. Having multiple revenue streams is essential to making the enterprise sustainable, Campbell said. Midtown Composting approached $100,000 in revenue last year, supporting the Campbells, a part-time driving assistant and a part-time bookkeeper. By living frugally and maximizing efficiency, especially on collection routes, Midtown Composting has grown revenue and breaks even so far, although expansion costs are a continued challenge. But Campbell sees no limit to the potential demand. “We have a strong business model. Food waste to compost to local foods — it sells itself,” he said. “We’re always gonna need to eat, or you need to have food, and there’s always going to be food waste.”
Downtown Farmington launched its social district on New Year’s Eve. | DAVID LEWINSKI
ny’s future. Peddler accounted for 90 percent of beer sales during the pandemic, but that number has shifted downward as the patio has opened up a bit. Selling draft beer over-the-counter is hands-down the most profitable way to sell beer, Bartscht said. But curbside and delivery don’t add much in the way of additional costs. Bartscht never thought he’d be running what he terms “a logistics company” with routes and apps and notifications. Now he sees delivery as a profitable incremental revenue stream. “We have the largest direct-to-consumer beer delivery service in Michigan, and that’s something that we’re really proud of. We put a lot of time and energy into the infrastructure. We have a fleet of vehicles, we have a dozen employees dedicated to it. So from a numbers perspective, it makes sense to continue doing. And it’s a way for us to interact with the end consumer.”
Jumping the aisles Erica Pietrzyk, owner of Polish-style able, and that’s all we’ve had for a year,” she said. Make Food Not Waste collaborates with other local groups and chefs to educate people about food waste. That work has led to the recent launch of Upcycle Kitchen out of Jefferson Avenue Presbyterian Church. There, local chefs transform rescued produce into chef-created meals for 50 Detroiters in need every Friday. Todd also collaborated with Chef Phil Jones to feed thousands of Detroiters during the pandemic holidays. “Food waste shouldn’t be a problem with chefs,” Jones said. “We are trained on how to use the entire animal, the entire plant. Policies and convenience have gotten in the way.” The industry veteran has dedicated his career to righting the food system’s ills and advocating for food justice in Black communities. That includes a lot of education and a new initiative called Farmacy Foods at the Marygrove Conservancy, which will provide affordable, healthy food based on diasporic cooking for low-income Detroiters. “We are incorporating Make Food Not Waste principles into our opera-
Makes a ‘closed loop’ With restaurants closed, more people than ever are cooking at home and ordering carry out. That’s been apparent in the compost buckets picked up each week by Midtown Composting, a nonprofit composting service operating in the city and suburbs. “We compost a lot more food waste per customer than we used to,” Midtown Composting founder Tim Campbell said. Campbell launched Midtown Composting in 2017 with his wife Christina in Detroit’s West Village neighborhood as a project of the nonprofit EcoWorks, in response to the neighborhood’s desire for community composting. He connected with local restaurants like Sister Pie, Belle Isle Pizza and Detroit Vegan
CRAIN'S LIST | MICHIGAN'S LARGEST EMPLOYERS Ranked by full-time employees January 2021 COMPANY NAME LOCATION
TOP EXECUTIVE
MICHIGAN EMPLOYEES JAN. 2021/ 2020
WORLDWIDE EMPLOYEES JAN. 2021/ 2020
TYPE OF BUSINESS
1
GENERAL MOTORS CO.
Mary Barra chairman and CEO
47,940
154,854 163,579
Automobile manufacturer
2
FORD MOTOR CO.
James Farley Jr. CEO
46,746
NA NA
Automobile manufacturer
3
STATE OF MICHIGAN
Gretchen Whitmer governor
44,462
NA NA
State government
4
STELLANTIS NV (FORMERLY FCA US LLC) 2
Carlos Tavares CEO Michael Manley head of Americas
36,145 3
NA 90,000
Automobile manufacturer
5
UNIVERSITY OF MICHIGAN
Mark Schlissel president
35,892
51,426 4 52,488 4
Public university and health system
6
U.S. GOVERNMENT
NA
30,014
2,077,911 1,997,242 5
Federal government
7
BEAUMONT HEALTH
John Fox president and CEO
24,288 6
24,509 27,172
Health care system
8
MCLAREN HEALTH CARE CORP.
Philip Incarnati president and CEO
23,330
24,453 NA
Health care system
9
SPECTRUM HEALTH SYSTEM
Tina Freese Decker president and CEO
22,761
NA NA
Health care system
10
AMAZON.COM INC.
Jeff Bezos CEO 7
22,000 8
1,298,000 9 798,000 10
Ecommerce, tech and telecom
11
TRINITY HEALTH
Robert Casalou, president and CEO, Mercy Health and Saint Joseph Mercy Health System; Mike Slubowski, president and CEO, Trinity Health
20,903 6
123,000 6 131,000
Health care system
12
HENRY FORD HEALTH SYSTEM
Wright Lassiter III president and CEO
20,428
33,189 NA
Health care system
13
ASCENSION MICHIGAN
Kenneth Berkovitz SVP and ministry market executive
20,290
20,290 20,491
Health care system
14
ROCKET COMPANIES 11
Jay Farner CEO Dan Gilbert chairman and founder
19,000
24,000 29,916
Holding company consisting of technology, personal finance and consumer service brands
15
U.S. POSTAL SERVICE
Richard Moreton district manager
18,000 3
640,000 500,000
Postal service
MICHIGAN STATE UNIVERSITY
Samuel Stanley Jr. president
11,682 12
11,743 12 11,893 13
Public university
17
DTE ENERGY CO.
Jerry Norcia president, CEO and director
10,600
11,298 10,756
Energy company
18
BLUE CROSS BLUE SHIELD OF MICHIGAN/BLUE CARE NETWORK
Daniel Loepp president and CEO
9,176
10,548 10,699
Nonprofit mutual insurance company and subsidiary companies
19
MAGNA INTERNATIONAL OF AMERICA INC.
Swamy Kotagiri 14 CEO
9,065
158,000 166,000
Mobility technology
20
CMS ENERGY CORP.
Garrick Rochow, president and CEO, CMS Energy Corp. and Consumers Energy Co.
8,510
8,982 NA
Energy company
21
CITY OF DETROIT
Mike Duggan mayor
8,478
8,478 9,408
City government
22
DETROIT MEDICAL CENTER
Audrey Gregory group CEO
8,338 6
8,338 6 NA
Health care system
23
UNITED WHOLESALE MORTGAGE 15
Mat Ishbia president and CEO
7,567
7,567 5,300
Mortgage lender
24
SPARROW HEALTH SYSTEM
James Dover president and CEO
7,188
8,961 8,963
Health care system
25
DETROIT PUBLIC SCHOOLS COMMUNITY DISTRICT
Nikolai Vitti superintendent
6,932
6,932 6,992 16
Public school system
16
300 Renaissance Center, Detroit 48265 313-667-1500; www.gm.com 1 American Road, Dearborn 48126 313-322-3000; www.ford.com 3042 W. Grand Blvd., Cadillac Place, Suite 4-400, Detroit 48202 313-456-4400; www.michigan.gov 1000 Chrysler Drive, Auburn Hills 48326-2766 248-576-5741; www.fcagroup.com
Ann Arbor 48109 734-764-1817; umich.edu
477 Michigan Ave., Detroit 48226 313-226-4910; www.usa.gov 26901 Beaumont Blvd., Southfield 48033 248-898-5000; beaumont.org One McLaren Parkway, Grand Blanc 48439 810-342-1100; mclaren.org 100 Michigan St. NE, Grand Rapids 49503 616-391-1774; www.spectrumhealth.org 150 West Jefferson, Detroit www.amazon.com 20555 Victor Parkway, Livonia 48152 734-343-1000; trinity-health.org 1 Ford Place, Detroit 48202 800-436-7936; henryford.com
28000 Dequindre Road, Warren 48092 866-501-3627; ascension.org/michigan 1050 Woodward Ave., Detroit 48226 (313) 373-7990; www.rocketcompanies.com
1401 W. Fort St., Detroit 48233-9998 313-226-8678; www.usps.com 426 Auditorium Road, East Lansing 48824 517-355-1855; www.msu.edu 1 Energy Plaza, Detroit 48226 313-235-4000; newlook.dteenergy.com 600 E. Lafayette Blvd., Detroit 48226 313-225-9000; bcbsm.com 750 Tower Drive, Troy 48098 248-631-1100; www.magna.com
One Energy Plaza , Jackson 49201 517-788-0550; www.cmsenergy.com 2 Woodward Ave., Coleman A. Young Municipal Center, Detroit 48226 313-224-3700; www.detroitmi.gov 3990 John R, Detroit 48201 313-745-5146; www.dmc.org
585 South Blvd. E, Pontiac 48341 800-981-8898; uwm.com
1215 E. Michigan Ave., Lansing 48912 517-364-1000; sparrow.org 3011 W. Grand Blvd., Fisher Building, Detroit 48202 313-240-4377; www.detroitk12.org
48,124
46,000 1
45,602
36,815
37,101
29,103 5
27,151 6
23,500
25,674
NA
22,697
26,079 5
20,491
18,096
18,000
11,850 13
10,076
9,395
10,558 5
8,121 5
9,408
9,398
5,300
7,104
6,992 16
Researched by Sonya D. Hill: shill@crain.com | This list of Michigan employers encompasses companies with headquarters in the state. Number of full-time employees may include full-time equivalents. It is not a complete listing but the most comprehensive available. Crain's estimates are based on industry analyses and benchmarks, news reports and a wide range of other sources. Unless otherwise noted, information was provided by the companies. NA = not available. NOTES: 1. As of Jan. 1, 2019. 2. The Fiat Chrysler merger with PSA Group was completed on Jan. 16. 3. Crain's estimate. 4. Includes approximately 15,000 in-state part-time employees. 5. As of July 2019. 6. Figures are FTE counts. 7. Bezos will transition to role of executive chair this summer and be succeeded by Andy Jassy as CEO. 8. The Detroit News. 9. As of Q4 2020. 10. As of Q4 2019. 11. Formerly reported as Rock Ventures. Rocket Companies became a publicly-traded company on Aug. 5, 2020. 12. Employee counts are as of Oct. 1, 2020. 13. Employee counts are as of Oct. 1, 2019. 14. To succeed Don Walker as CEO, effective Jan. 1 15. Formerly know as United Shore Financial Services LLC. 16. Figures are FTE counts from the Center for Educational Performance and Information.
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Q&A
Novi native, UM alum Dr. Sanjay Gupta weighs in on path ahead CNN’s chief medical correspondent reflects on pandemic insights and lessons learned BY ADAM FINKEL | SPECIAL TO CRAIN’S DETROIT BUSINESS
Dr. Sanjay Gupta is well known as the Emmy Award-winning chief medical correspondent for CNN. He also is the associate professor of neurosurgery at the Emory University School of Medicine and is the bestselling author of “Chasing Life, Cheating Death,” “Monday Mornings” and, most recently, “Keep Sharp.” A native of Novi, Gupta went on to receive his undergraduate and medical degrees at the University of Michigan in Ann Arbor. “I have incredibly fond memories of my early childhood in Michigan. That is the feeling I get as soon as I think of that place. I conjure up this feeling of goodwill and of home,” Gupta said. His family knows about the power of purpose first hand — sometimes seen even in random acts. In 1967, for example, his mother’s car broke down outside of Ann Arbor. As his brother, Suneel Gupta remarked, “She was an immigrant from the other side of the world. No cellphone, no friends, and very little money. She walked to a local phone booth and looked up the most common Indian name she could think of. That guy wasn’t home. But his roommate, Subhash Gupta, picked up after one ring.” Last month, they celebrated their 53rd wedding anniversary. It proves that even with the best planning — in life or business — it’s important to think agile and be open-minded along the way. As post-pandemic plans are in the works as more people get vaccinated even as Michigan experiences a spike in COVID-19 cases, Gupta weighed in in an interview on what insights he’d share with decision makers today in his hometown.
As you look toward the next decade, how likely is it that we’ll need to embrace a greater culture of caution when it comes to travel and gatherings? As Yogi Berra once said, “it’s tough to make predictions, especially about the future.” But I do think that over the next few months, it’s going to feel a lot safer. And objectively, it will be safe. Because I think viral transmission will continue to go down. And, you know, we’re increasingly vaccinating people, especially people who are at risk of getting sick; elderly people and people who are vulnerable because of preexisting conditions. So I think going into the summer, I think we’re gonna see and hear guidance, and recommendations from the CDC (Centers for Disease Control and Prevention) that is going to make travel seem a lot less ominous and scary. I think there probably still will be a significant amount of mask wearing on planes and in gatherings — large gatherings, concerts, big festivals, conferences, things like that. But I think it’s gonna feel a lot safer.
Dr. Sanjay Gupta, CNN’s chief medical correspondent, grew up in Novi and received his undergraduate and medical degrees from the University of Michigan. | JEREMY FREEMAN/CNN
“YOU COULD HAVE HERD IMMUNITY OVER THE SUMMER, BUT THEN SLIP OUT OF HERD IMMUNITY GOING INTO THE FALL, BECAUSE NOT ENOUGH PEOPLE ARE PROTECTED.” — Dr. Sanjay Gupta, CNN’s chief medical correspondent
I think the big question is what happens next fall. Because it’s sort of this weird psychological impact that if things get better, people tend to forget. And with regard to vaccines, people that were hesitant about vaccines, they may just think they don’t need it, everything’s fine. And as a result, you could have herd immunity over the summer, but then slip out of herd immunity going into the fall, because not enough people are protected. And all of a sudden, you think we are done with this, and you could have surges in the fall. So it’s a strange
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Distinguished attorney Justin B. Weiner recently made partner at Bush Seyferth PLLC (BSP Law), a leading boutique litigation firm in Troy, MI. Justin joined BSP Law in 2019 after practicing for over a decade in Chicago. Justin focuses on complex business litigation, product liability litigation, and intellectual property litigation. His unyielding dedication to cases, clients, and colleagues makes him a strong leader and guarantees him a bright future as BSP Law’s newest partner.
Detroit Future City names Kate Cherry as the “think-and-do” tank’s first development director. During this last year as a consultant, Kate brought an incredible amount of expertise to the table, helping DFC build and begin to implement a fund development strategy that has quickly afforded new sources of support. In this role, she will be developing programming and resources to promote sustainable land and water use, community and economic development, and economic equity in Detroit.
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40 40
Dandridge Floyd, 37
UNDER
Assistant Superintendent of Human Relations and Labor Relations, Oakland Schools
T
hroughout Dandridge Floyd’s careers — whether as a social worker, attorney or assistant superintendent of Oakland Schools — making change has always been a center point. When United Way pitched a framework to Oakland Schools for a countywide breakfast program to address poor nutrition as a way to improve academic achievement, Floyd — who experienced food insecurity growing up — knew firsthand the powerful impact it could have. To secure the needed funds, Floyd led a team that earned support from all 28 local districts to finance the program — despite the fact that a majority of them would see no benefit. “The local districts were phenomenal,” Floyd said. “The biggest surprise was how quickly it happened. Education is a democratic system and democracy can be very slow, but this happened in six to seven months. That showed how committed people were to making sure the students of Oakland County have everything they need to be successful.” In a county where over 7,000 children suffer from hunger, and only two in five eligible students access a school breakfast, Floyd said a common misperception is that “Oakland County is rich.” “That makes this program all the more important, because if that is the bias or the thought process people have about Oakland County, then these kids would have never gotten help.” In a groundbreaking public/nonprofit partnership between the Oakland County Board of Commissioners, Oakland Schools and United Way, Oakland County is Better with Breakfast was born. “I’m impacting lives now,” Floyd said. “I know the effect food insecurity had on me and my peers growing up, and this was an opportunity to make a change that I wish an adult could have made for me.” — Laura Cassar
October 30, 2017 | crainsdetroit.com
UBS to open downtown Detroit office By Annalise Frank
October 30, 2017 | crainsdetroit.com
• UBS plans to open wealth management office in Detroit in mid-2018 • Office to include 6,000-squarefoot space30,nonprofits and civic October 2017 | crainsdetroit.com
UBS to open downtown Detroit office By Annalise Frank
groups • UBS plans to open wealthcan use free of charge • Bedrock-owned buildings
office in Detroit “I’m impacting lives now. management I know undergoing renovations in mid-2018 6,000-squarethe effect food insecurity• Office had onto includeUBS plans to open an office in downfoot space nonprofits and civic town Detroit in mid-2018, the company Annalise Frank growing groups meByand my peers up, andcan useannounced free of charge Monday.
UBS to open downtown Detroit office • Bedrock-owned buildings
UBS Group AG’s U.S. and Canadian UBSan plans to open wealth this•was opportunity toundergoing make a renovations wealth management business, New Jermanagement office in Detroit sey-based Wealth Management change I wish an adult UBScould plans to open an office UBS in downin that mid-2018 Americas, to lease 13,000 square town Detroit in mid-2018, theplans company • Office to include 6,000-squarefeet on the connected sixth floors of have made for me.” announced Monday. foot space nonprofits and civic
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UBS will lease 13,000 feet from Bedrock LLC starting around mid-2018 in two buildings: the Grinnell Building (center left) at 1515 Woodward Ave. and the Sanders Building (center right) at 1529
buildings at 1515 Wood- Woodward Ave. Group AG’sneighboring U.S. and Canadian groups can use free UBS of charge ward Ave. and Fourteen metro Detroit employees don’t really have adequate resources wealth management business, New 1529 Jer- Woodward Ave. • Bedrock-owned buildings The twoManagement buildings built around 1900 are will move to the downtown office to or adequate office space to host dosey-based UBS Wealth undergoing renovations by Detroit-based will lease LLC 13,000 feet from Bedrock LLC starting around mid-2018 buildings: Grin- meetings or things nor events the or board start, but the office has the capacity toin two Americas, plans toowned lease 13,000 square UBSBedrock nell Building (center at 1515 Woodward andnew the Sanders Buildingalong (centerthose right) at 1529 Bush said. and are undergoing said left) lines,” hold another six toAve. eight staff memon inthe connected sixth floors of renovations, Reprinted with permission from Crain’s Detroit Business. © 2019 Crain Communications Inc. All RightsUBS reserved. plans to open anfeet office downAve. for bers, Bush said. It will act as an extension John Bush, 60, WoodMichiganWoodward market head UBS’s investment in the new ofneighboring buildings at 1515 Further duplication without permission is prohibited. Visit www.crainsdetroit.com. #CD1134 town Detroit in mid-2018, the company UBS Wealth ManagementFourteen Americas.metro of fice will resources be “significant,” he said, as its the other wealth management offices. don’t really have adequate Detroit employees announced Monday. ward Ave. and 1529 Woodward Ave. “The real impetus open atonew The twoCanadian buildings built around 1900 arefor us “uniqueness Bush is based theadequate Birmingham office space to hostcomes do- at a price.” He said willto move the downtown office out to ofor UBS Group AG’s U.S. and office inBedrock Detroit is to support what’s owned by Detroit-based LLC he could or not yet provide an estimate but travels to to the will meetings norothers eventsand or board things start, but the goofficeoffice, has the capacity wealth management business, New Jering renovations, on in the city, ” saidhold Bush, a Detroit and are undergoing said on the be spending in thealong Detroit branch. those lines,” Bush said.cost of the build-out, as some another six to eight new stafftime memsey-based UBS Wealth Management nativemarket who grew City. “We John Bush, 60, Michigan headup forin Garden have yet The location have atheless UBS’s investment in the new of- to be finalized. said. will act asDetroit an extension fromBush Bedrock LLCItstarting around mid-2018 in twowill buildings: Grin- contracts Americas, plans to lease 13,000 square UBS will lease 13,000 feetbers, UBS Wealth Management Americas. really felt like we wantedofto have a physfice will be “significant,” hecompany said, as its the other wealth management offices. The plans to start its buildtraditional, more “urban” feelright) than 1515 Woodward Ave. and the Sanders Building (center atthe 1529 feet on the connected sixth floors of nell Building (center left) at “The real impetus for us to open new ical presence downtown to reinforce “uniqueness comes at saidnext year, depending Bush is based outothers, of the he Birmingham outa price.” processHe early said. New York-based architecAve. a neighboring buildings office at 1515 Wood- toWoodward in Detroit is our support go-particular vision what’s for this areatravels and toture he will could not yet an estimate office, but the firm others and will Cale on when renovations on the buildings Verderame design the provide ward Ave. and 1529 ing Woodward don’t really have adequate resources Fourteen metro Detroit employees on in theAve. city,”tosaid Bush, a Detroit reinforce our on Barton the cost of the build-out, as some be spending time inspace; the Detroit branch. are complete. Southfield-based Malow The two buildings builtnative around 1900 areup in adequate office space to have host dowill moveCity. to tothe officelocation to or will who grew Garden “Wedowntown commitment contracts finalized. The Detroit have aon less based in Switzerland, employs Co. has signed as general contractor.yet to beUBS, owned by Detroit-based Bedrock nor events or board or things start, thea physoffice has the capacity really felt likeLLC we wanted tobut The company plans to startacross its buildtraditional, moreto“urban” than the outmeetings the city. ” have 60,000 54 countries. About 34 UBS feel plans to rent about half of the and are undergoing renovations, along those lines,” Bush said. early next year, depending hold six to eight new he staff memical presencesaid downtown toWealth reinforce others, said. New office York-based architecUBS another — 6,000 square out feetprocess — at no cost percent of them work in the AmeriJohn Bush, 60, Michiganour market head UBS’s investment the renovations new of- on the buildings bers, said. It will act an extension vision for for thisMparticular oninorganizations, when tureasfirm VerderametoCale will design theother a n aBush g e marea e n tand cas, according to a news release. UBS nonprofits and UBS Wealth Management will beMalow “significant,” he said, as its of the other also wealth management offices. ficeBarton to Americas. reinforce our Americas are be complete. space; Southfield-based Bush said. The space will called UBS Wealth Management Americas em“The real impetus for commitment us to open a new “uniqueness comes at a price.” He said is based thehas Birmingham to has Bush based signed on as Woodward general contractor. metro De- out ofCo. ploys 280employs in Michigan, 225 of whom Gallery. Its UBS, design and in artSwitzerland, office in Detroit is to support what’s go- office, but travels to theUBS heabout couldhalf not an estimate others and the city. ” 60,000 across 54 countries. 34 Detroit. plans towill rent will out of yet the provide troit offices in are basedAbout in metro aim to showcase Detroit’s history ing on in the city,” said Bush, on the cost the build-out, asthem somework in the Amerispending Detroit branch. UBS a Detroit Wealth B be percent office — 6,000 square at noofcost irm i n g h a time m , in the The wealth management business andfeet a— hub-and-spoke layout ofwill renative who grew up in Garden contracts have yet to be finalized. M a n a gCity. e m“We e n t Troy, The Detroit location will have a less cas, according to a news release. UBS to nonprofits and other organizations, Farmington recorded operating income of $2.13 flect the city’s road system. really felt like we wanted to have a physAmericas also Hills, The plans to startManagement its buildmore “urban” traditional, Wealth Americas em- quarter of 2017 — a Bushfeel said.than The the space will becompany called Plymouth in the third “Some of theUBS organizations that op- billion reinforce ical presence downtown has tometro De- others, he said. New York-based outdesign process early year,280 depending architecploys in Michigan, 225 of whom Woodward Gallery. Its and art next John Bush erate and Dearborn. and provide services in the city 7 percent increase over last year. our vision for this particular area and troit offices in ture firm Verderame Cale when renovations the buildings the onDetroit’s in metro Detroit. will will aimdesign to showcase history areonbased to reinforce our B i r m i n g h a m , space; Southfield-based complete. Malow arelayout The wealth management business andBarton a hub-and-spoke will reReprinted with permission from Crain’s Detroit Business. © 2019 Crain Communications Inc. All Rights reserved. commitment to Troy, Farmington Co. has signed on as general UBS, basedis prohibited. in Switzerland, employs income recorded operating contractor. flectFurther the city’s road without system. duplication permission Visit www.crainsdetroit.com. #CD936of $2.13 Hills, Plymouth the city.” billion in About the third “Somehalf of the organizations that op34quarter of 2017 — a 60,000 across 54 countries. UBS plans to rent out about of the John Bush and Dearborn. UBS Wealth 7 percent and provide city work percentinofthe them in theincrease Ameri-over last year. office — 6,000 squareerate feet — at no cost services Management to nonprofits and other organizations, cas, according to a news release. UBS Reprinted with permission from Crain’s Crain Communications Inc. All Rights reserved. Americas also Wealth Management Americas emBush said. The space will be Detroit calledBusiness. UBS © 2019 Further duplication without permission is prohibited. Visit www.crainsdetroit.com. #CD936 has metro DeWoodward Gallery. Its design and art ploys 280 in Michigan, 225 of whom troit offices in will aim to showcase Detroit’s history are based in metro Detroit. Birmingham, The wealth management business and a hub-and-spoke layout will reCRAINSDETROIT.COM I MARCH 9, 2020 I Troy, Farmington recorded operating income of $2.13 flect the city’s road system. THE CONVERSATION Hills, Plymouth “Some of the organizations that op- billion in the third quarter of 2017 — a John Bush erate and provide services in the city 7 percent increase over last year. and Dearborn.
Albert Berriz talks workforce housing, Ann Arbor and Cuba
Reprinted with permission from Crain’s Detroit Business. © 2019 Crain Communications Inc. All Rights reserved. | BY KIRK PINHO Further duplication without permission is prohibited. Visit www.crainsdetroit.com. #CD936
MCKINLEY INC.: Ann Arbor-based real estate company McKinley Inc. saw the writing on the wall for its retail portfolio a few years ago and cut bait, turning its focus primarily to its large crop of tens of thousands of workforce housing units across the country. One of the people at the helm of that decision was Albert Berriz, CEO and managing member, who came to America as a young boy fleeing Cuba and now steers a large company with a portfolio valued at more than $4 billion. Crain’s Detroit Business: Can you talk a little bit about how the McKinley portfolio began and where it’s at today? Berriz: McKinley started in 1968 in Ann Arbor, and it was founded by (former U.S.) Ambassador Ron Weiser. It started in the student housing business and eventually transitioned into more traditional multifamily housing, and in addition to that, office and retail, as well. Today, we’re primarily a workforce housing multifamily operator. We have essentially disposed of our retail and office assets in an effort to really focus on multifamily and also focus on an asset class that I think is more in line with our current goal, which is to have a generational multifamily real estate enterprise and a pool of assets that really are long term in nature. Explain workforce housing versus affordable housing. We’re not in luxury housing. Our residents are working. They’re going to wake up tomorrow morning and go to work. Our average rents are, for example, in Washtenaw County, about $1,100 to $1,200 or in Orange County, or Seminole County, Florida, $1,400 or $1,500. So these are affordable rents. And the difference between us and affordable housing is our buildings are not subsidized. They’re all market rate, and they’re all privately owned. The owners are not receiving any form of subsidy, nor are the residents. However, if you wanted to sort of assess residents and low-income housing tax credit deals compared to ours, they’re probably not too dissimilar, the median incomes. The McKinley residents in, let’s say, Washtenaw County, when you look at the numbers are probably not going to be too much different than what you would see in a traditional LIHTC deal. But again, our buildings, the primary differences, our buildings are market rate and they’re not subsidized any way.
I don’t think it’s overblown to use the word “crisis” for Ann Arbor’s affordable housing situation. Give us your perspective on how the city should go about addressing it. I think it’s a supply issue. The reality is that Ann Arbor has not really welcomed solutions from the private sector and has only sought solutions from the public housing side or the community nonprofit side. And both of those groups, while I think they’re very well intentioned, don’t have the capital and the expertise to resolve the problem at the scale it’s needed. To put it in perspective, you know, the Washtenaw County study that came out had a need of about 3,000 units. And if you look at the cost per unit today, and let’s say $250,000 or $300,000 per unit to build a brand new unit today, you know, it’s an $800 million to a $1 billion problem, so I don’t think that’s a problem that gets resolved on the public side or on the community nonprofit side. You know, they have to go to places to seek capital and there just isn’t enough capital, nor do they have enough resources or expertise to resolve the problems. So the city I think, by and large, has attempted to do this in those ways because they really haven’t welcomed the private side. And there is a lot of expertise and there’s a lot of capital that could do this, from the private side perspective. It just hasn’t been the way that Ann Arbor operates, so you see what has happened in Ann Arbor year over year, decade over decade is there’s a lot of conversations about affordable housing, but there’s no solutions. You were talking a little bit earlier about how McKinley got out of retail and office. What led to that decision and how has that reflected or shaped your business strategy? It was a risk profile that we were just not comfortable with. We are a generational business and so we look at our assets in
a way that we never expect to sell them. We expect to invest in them so they last for long term, and we just couldn’t see that on retail. We saw a significant degradation of our rent rolls. We had buildings that were, let’s say, 70 percent to 80 percent investment-grade credit tenant composition and then we saw that we saw that quickly degrade. We just didn’t see a place where we could really have an asset class retail that would last for the long run. And then office in many ways, the same way. The way people are shopping and the way people are occupying offices today, the risk profile is very different than it was, let’s say, when we were making those investments 20 and 30 years ago, so for us, it was the right move. It’s paid off because, had we held many of the assets today, they would be significantly compromised. I think they would be worth a lot less. We started those sales about six years ago, and we sold a lot of that early on, so we sold them still at a time they were being valued significantly more than they would be worth today, in our opinion. And we sold some big buildings. I mean, these weren’t small buildings. We sold a 1 millionsquare-foot shopping center, for example, in Norfolk, Va., which is one of the largest power centers in the state of Virginia. So these weren’t small assets. So they were important for us to move them out at the right time, and for people that thought that was there was a good upside for them, so we actually sold them at good prices, and certainly we couldn’t have sold them at those prices today.
trajectory was to where you are today in terms of the head of McKinley. I left (Cuba) compliments of Fidel Castro in early 1959 because of the Cuban Revolution. We had to flee. It was survival to leave the country at the time and my parents relocated to Miami. We were fortunate for that. We’re fortunate to have left alive, fortunate to have resettled in what is without question the greatest country on the planet. I was not born here. I was born in Havana and I emigrated as a Cuban refugee just before I was 4 years old with my parents. What consumes your day outside of the office? My wife and I walk. We like to boat, so those are the two things. In our summers we live at Saugatuck, and it’s a great place to live. We’d live there year-round, but it’s a little too cold in the winter.
Can you give thumbnail sketch of coming here and what your
Albert Berriz, CEO and managing member, McKinley Inc.
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thing. But you have to convince people, as things get better, that they still have to get vaccinated. What is your advice to decision makers working to re-open businesses, restaurants, concerts and sporting events over the next few months? I think that, you know, the second half of the year, or certainly in the fall, sort of August, September timeframe, that the idea of planning in-person events at that time seems very reasonable. And I know a lot of organizations are doing that. Beyond the obvious in terms of planning, I think you do need to have systems in place to determine how you’re going to ensure safety. Are you going to ask people to wear masks, are you going to ask for some evidence of immunity to the virus? What are you going to do if there is somebody testing positive? Are you going to have testing? I’m not necessarily saying you need to do those things. But I think having the plan in place now makes a big difference. You gave the graduation address for the 2012 class at the University of Michigan. How would you update your remarks if you were to give them again to this year’s class? Yeah, I think there’s just a couple of things I would say. I spend a lot of time talking to younger people as I have three teenagers myself, so we have these conversations a lot. Personally, I am very optimistic that things will get better. If you look at history, going back to the 1918 flu pandemic, we know that the roaring 20s followed and there was an earnest return to some sense of normalcy. I think that will happen here as well though I don’t know the timeframe of when that will happen. And I hope that that’s encouraging and inspiring to people who are embarking on their new lives. I would also say that these are really consequential times. We don’t always recognize how consequential things are in the moment. It’s hard to believe that there will be volumes of books written about what is happening right now, and what’s happened over the last year. Don’t ignore it. Have conversations about it. Make sure you understand how society responds to something like this because it may inform you or some of your future career decisions. Things will get better, but lean in to the importance of what is happening now as opposed to just saying, ‘I think this is an interruption and we’ll get through it.’ Learn from this. I’ve learned a lot. I’m in my 50s. And I’ve learned a lot about society including how humans evaluate risk and scientific processes.
What have you learned about the role of communicating health information over the last year? I think in some ways, the role hasn’t changed, but the importance has in that we are dealing with something that is truly a novel virus. What that also means is that there is no existing fund of knowledge around us. And I would even go so far as to say that people who have existing sums of knowledge, who are experts in this area, while they’re very helpful, they can also get in their own way. Because they immediately start to apply previous constructs to this novel virus, and you just don’t know what’s novel. When is the last time you experienced something for the first time? You know, it doesn’t happen often. And my point is that, as journalists, in some ways, we are just taking in lots and lots of information, and knowledge from around the world, and basically, laying out the pages of what is happening right now. And just providing that background and allowing it to be contextualized as opposed to sort of hypothesizing about what is happening, because there were surprises. And one of the best examples is that we started hearing out of China very early on that there were households becoming infected despite the fact that nobody else in their house actually got sick. The first evidence of asymptomatic spread. That was a shock to most people in the infectious disease community. That is something that they had really never seen before. Typically, you only are contagious when you’re sick. As journalists, we were just laying out the facts and the evidence and the data. For journalists whose currency is facts and data and evidence, this has been a really important time. What insights have you gleaned this past year about the future of digital health? We’ve seen huge changes with how providers are communicating with patients through telemedicine and things like that. I find that a really interesting example and I was just surprised that it hadn’t already happened. You have this opportunity to communicate directly with people. You can do it via a screen. You can have a patient history and add on to that laboratory tests and things like that. In the first two months of 2020, there were a total of 880 telehealth visits in the entire hospital system at Emory. By May of 2020, there are 80,000. And I’m not exaggerating, I checked these numbers over and over again. It just needed something to accelerate. But I think the other thing that sort of comes out of this is there’s an incredible desire for autonomy among patients. They want to control their own health information. There’s not a single sort of health app that rises to the top in terms of medical records; which can be very predictive about when and what I should eat, when I should get out of bed, the best times for me to be creative, the best times to do busy work etc. Those types of things can actually make people’s lives better, but they’ve got to be frictionless. Adam Finkel is a venture capital investor and a contributing writer to Crain’s.
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COVID-19 vaccination. Most of Heeres’ staff has received at least one dose, she said. Coriander Kitchen was forced to close last weekend, though, due to a positive COVID test. Heeres said she’s working to put aside a certain amount of revenue so her staff can be compensated in the event that happens again. “I want that to be a deterrent from them leaving,” Heeres said.
From Page 3
Over the past 12 months, Michigan has lost 332,300 payroll jobs, or 7.5 percent, according to a U.S. Bureau of Labor Statistics report. The state’s unemployment rate has recovered for the most part since the height of the pandemic, but that’s largely due to significant withdrawal from the workforce, according to the Michigan Department of Technology, Management & Budget. Winslow said there’s a lot of pentup frustration from restaurant owners. Per state health order, restaurants can operate at 50 percent capacity through April 19. Winslow said small business owners don’t feel they’re able to meet hiring standards at that level. “That’s a big reason why I pushed for (food service workers) to be prioritized as it relates to vaccinations,” said Winslow, a longtime advocate for the full reintegration of restaurants.
Support to blame? With federal unemployment benefits in place until at least September, Micah Babcock, Small Business Association of Michigan director of government operations, said he believes the hiring issues facing small businesses will last at least that long. If prospective members of the workforce opt to remain out another six months, that could have a major effect on Tom Schwark’s business. Schwark, president of Sycamore Hills Golf Club in Macomb Township, said he’s feeling the effects of the pandemic in his kitchen. The club, which hosts banquets and weddings, cannot offer a full menu as Schwark struggles to bring on line cooks. Schwark, who said he’s had no trouble finding employees in the more than 30 years the club has operated, is promoting dishwashers to line cooks in an effort to ramp up March 8,business. 2021 “The limitations on banquets are still impacting us,” said Schwark, who’s seen the number of banquets hosted at Sycamore Hills decline by 50 to 60 percent during the pandemic. “Things are starting to get relaxed a bit, so hopefully by July things are kind of back to normal.”
Work less appealing A “Now Hiring” flag blows in the spring breeze in front of D&B Landscaping Inc.’s Livonia headquarters on Merriman Road just south of I-96. It’s been there since November, yet the 49-year-old landscaping and snow removal business has received only three applications. Dan Bywalec, president of D&B, which primarily works with commercial clients such as Henry Ford Health System, called the labor issue “insurmountable.” Bywalec said D&B is paying $20 an hour for lawn-mowing jobs and $25 an hour for sidewalk shovelers in the winter. And it’s not working. The company used to hire five to six college students in the summer, but they don’t apply anymore. Stricter immigration policy since the Trump administration has also impacted his ability to hire H-2B immigrant labor. Bywalec says federal support is only the catalyst to an ongoing blight in his industry’s labor field. “People are just not interested in doing this manual serviceable type of work anymore,” Bywalec said. “That’s the stickler. Younger people are not interested in this work when there are more technology jobs that are more
Incentives a slippery slope April 12, 2021
April 12, 2021
Banquet and wedding services at Macomb Township’s Sycamore Hills Golf Club are down between 50 and 60 percent since the start of the pandemic. The club, according to President Tom Schwark, is having difficulty fielding kitchen staff, making it difficult to meet the needs of potential banquet and wedding guests. | INSTAGRAM/SYCAMORE HILLS GOLF CLUB
appealing to them. It’s hard work when it’s 80 degrees outside and you’re pushing a lawnmower or carrying a backpack blower.” Bywalec said the 70 workers he employs in the summer are also being poached by competitors offering cash signing bonuses. “In all my years in this business, I’ve never seen anything like this,” he said. “It’s going to be really difficult for this industry over the next three to five years and I’m not sure everyone is going to make it.” Oakland County is also having trouble filling its summer parks and recreation job openings, the Oakland Press reported. Positions include seasonal laborers, lifeguards, program specialists, food service and park attendants. Some 600 seasonal workers are needed to run the system’s summer operations, including 350-400 at the two waterparks, spokesperson Desiree Stanfield said. Only 49 hires have been made so far.
Issues vary by industry
ing to picking up the slack. Schwark said the number of golfers hitting the course is the highest it’s been in 20 years. The outdoor aspect, a lack of entertainment alternatives, and players rediscovering their love for the game have helped Sycamore increase revenue 25 percent, according to Schwark. “Golf is helping us more than a lack of weddings is hurting us,” he said. “With weddings, you have labor and food factors. Sure, we want people to have their weddings and banquets here, but with the lost revenue from those events, it keeps labor and food costs down.” Heeres, whose restaurant brings in $20,000-$30,000 each weekend despite not offering indoor service, said it’s always been tough to hire in the food service industry and that she doesn’t want to blame unemployment benefits for her hiring struggles. A number of factors are at play. “There’s still fewer jobs than there were previously. I think, especially with the restaurant industry, that the CRAIN ’S DETROIT BUSINESS limited hours and possibility of more closures are reasons, too,” Heeres said. “I understand why people would rather stay on unemployment. I don’t agree with people being called lazy. People are assessing the options they have available and choosing what’s the most stable.” The MRLA’s Winslow said hiring issues vary by industry. “If you’re a server at a high-end restaurant making $90,000 to $125,000 a year, you can’t replicate that in the current environment, so you’re not going back,” Winslow said. “When a restaurant is stuck at 50 percent capacity, and only 55 to 60 percent of the general population is interested in going to a restaurant, you’re limited. “If you’re on the lower end of the scale, the incentive from government support opportunities, whether it’s stimulus checks or extended unemployment — those are lucrative enough for an employee to not transition back into the industry.”
Gage Cannabis, with seven Michigan locations, including retail shops in Detroit and Ferndale, more than doubled its workforce last year, according to company President Fabian Monaco. The business, headquartered in Troy, pulled in $30 million in the first nine months of 2020 and now has more than 400 employees. But it’s having difficulty on the retail side, where the average wage is more than $16 an hour. Monaco said Gage is hiring in all areas, including human resources, finance, operations and retail, with the hopes of operating 20 locations by the end of the year. Monaco understands retail has a high rate of turnover, but said federal benefits are playing a role in his company’s struggles. “It’s a little tough to get people in, especially with the stimulus money,” Monaco said. “It’s tough to get retail-focused employees in. We try to pay people as best as we can, and Safety concerns they’re getting a chance to work in a growing industry. Overall, we’re seeWith a slew of restaurants that have ing good traction, but we’re finding it recently closed temporarily when emtough to retain retail staff.” ployees tested positive for COVID-19, Schwark also believes unemploy- including Hazel, Ravines & Downment benefits are the mainPOSITIONS culprit in AVAILABLE town in Birmingham, Whiskey Taco small businesses’ struggles. Schwark, Foxtrot in Clawson, Wally’s Frozen Architect; 01 Pos; Novi, who has increased starting wages at Custard in St.MI Clair Shores and FoundDesign, Hills dev &by test apps for Andr-based info taproom, sys using “I Java & Kotlin. Sycamore $2Android to $3 an hour, ers Detroit’s think there’s sys servicebetween comp & HAL comp for Andr-bas info sys C& C++, SW saystest competition businesses still a segment ofusing people who believe comp Linux embed sys.and Perf opti of critical aren’t KPIs such bootplace time & is at play,for too, andbased that restaurants restaurants the as safest to CPU util. Analysis des & docu of SW sys architect using UML & or SysML for aubanquet halls are competing for the be,” Winslow said. to info sys. Direct interact cust for req elicitation, dsgn & code rev, proj mgmt. same In an Electro/Electri effort to promote rev. employees. Req: Bach Deg (or Foreign Equal) in Comp; or relsafety with 5 and yrs Th e food service sideEmbed at Sycamore open, some small businesses are of exp in IT. 5 yrs exp sys dev. 3stay yrs embed sys exp; auto Info sys; Anhas had its struggles, is helpering employees incentives to geton a droid Auto & Android but FW golf comp. Exp Infotoff SW Architecture & Docum. working
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Winslow said he believes restaurateurs are going to continue to incenCRAINemployees ’S DETROIT BtoUSINESS tivize new join their ranks. “I think (the pandemic and hiring issues) are going to impact a lot of things,” Winslow said. “You can see some of the inflationary uptake with so many places raising wages. To what degree the industry tries to staff with labor, or simplify menus to get by with fewer employees, that’s going to be felt across the industry in the state. “I think it’s dangerous because the industry hasn’t had a major hire-back spree yet. The restaurant industry is still the second-largest private employer in the state. I think this has the potential for more systemic problems if we don’t get it under control.” Local businesses are doing their
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best to make joining their staff enticing. Jim Brady’s restaurant, which has locations in Royal Oak and Ann Arbor, advertises paid vacation time and opportunities to “turn this job CRAIN’SGreat DETROIT BUSINESS into a career.” Lakes Ace Hardware offers a “comprehensive benefits package” including medical, dental and vision insurance, 401(k) and ongoing training and career advancement opportunities. V’s Barbershop in Royal Oak entices for barber careers with “excellent wages and tips in the nicest barbershop in town.” A variety of auto suppliers and small manufacturers are advertising immediate openings with the lure of overtime pay, some touting “No experience necessary, will train.” — Crain’s Detroit Business Senior Reporter Dustin Walsh and Bloomberg contributed to this report. Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981
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www.crainsdetroit.com/ classifieds APRIL 12, 2021 | CRAIN’S DETROIT BUSINESS | 17
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It’s necessary to apply for FAA airport improvement program dollars that would cover 90 percent-95 percent of safety-geared development costs. It should generally be submitted every five to seven years, said Brad Dick, director of Detroit’s general services department that oversees the airport. A regional FAA representative directed comment to the city. The city’s layout plan has three central goals, Dick said: Bring Detroit’s airport up to FAA design standards without needing the specialized waivers that it has right now. “Right-size” the airfield for noncommercial flights, such as corporate travel and manufacturing shipments. “Set the stage for future development.” The city would not allow Crain’s to view the Airport Layout Plan as it’s still being revised with the FAA, officials said. But Crain’s did review the city’s Airport Capital Improvement Plan, which is a list of proposed development projects and how much they would cost. It mirrors the projects proposed in the layout plan. Of the $150 million in work proposed over 20 years, the city expects the FAA would pay for around 35 percent, the Michigan Department of Transportation would contribute 3 percent, the city would pay nearly 6 percent and the other nearly 60 percent would come from private sources. The first multimillion dollar project the city is targeting is a long-talkedabout acquisition of mostly vacant residential land just west of the airport. The 72 acres is bounded by McNichols Road, Lyford Avenue, Gilbo Avenue and French Road. The city is looking to scoop up the parcels, then clear and prepare them this year and next at a total cost of $10.6 million, per the capital plan. They’re needed to create an obstacle-free zone for safety reasons, per
Detroit is wrapping up a plan for the Coleman A. Young International Airport aimed at unlocking federal money for improvements and repurposing parts of the airport.
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the FAA, and the site is also targeted for new airport infrastructure, as Crain’s and others previously reported. The city would also study the feasibility of constructing a tunnel for somewhere around $12.8 million under McNichols Road so cars can pass under as the airport currently interrupts the road. It would also allow companies to build on the premises, including an estimated $60 million in private construction to build 18 aircraft storage hangars.
Storied history The city airport became a major regional airport for around two decades starting in the 1930s, but it hasn’t seen commercial passenger airline service since 2000, when Pro Air ceased services there. Officials have said it likely won’t again due to its location between two cemeteries and the limited size of its runway.
VENTURE
From Page 3
StockX has some of the country’s largest venture funds as its primary investors, including GGV Capital, Altimeter Capital and Tiger Global Management, which also invested in OneStream. Additionally, StockX’s two most recent fundraising rounds stand out as the top two largest venture capital rounds in the state’s history. “We’re not a flyover state,” Gordon said. “We have two companies invested in by the best big gun firms in the country. What else do you need to see to be happy about our ability to build big successful entrepreneurial companies?” The deals for both companies fit in with a broader, external trend of exploding deal activity and value. The first quarter 2021 MoneyTree report, published by PwC and CB Insights, found that the $62 billion invested in 1,735 deals in that quarter was nearly half of the $133 billion record for the full year of 2020. The surge in deal value speaks to an increasingly “forward looking” outlook on the part of investors who are banking on growth down the road for companies like OneStream and StockX, according to Chris Rizik, the CEO and fund manager of Ann Arbor-based Renaissance Venture Capital, a fund that primarily invests in other venture funds around the country. “In some ways, we’re seeing capital 18 | CRAIN’S DETROIT BUSINESS | APRIL 12, 2021
Cutler
Koefoed
simply move ahead of where the company is in its progress, and we’re seeing capital sort of anticipating continued growth and that gets priced into the valuation of the companies,” Rizik said. “There’s a fundamental view that I would say is more forward looking than it’s ever been.” The downside is not that of a crash and burn, Rizik said, noting that StockX and OneStream are well-established companies, but rather that the large anticipated returns sought by investors could prove elusive. “The downside risk with the valuations we’re seeing now is that people are getting ahead of themselves,” he said. “So you always question, where does it go from here? If you’ve already priced in future growth, then the risk is that there’s nowhere for the price to go.” Additionally, Gordon at UM notes that such investments stand out given the state’s long-sought goal to diversify beyond the automotive industry, and could bring about a “halo effect” for the region given that large institutional investors are finding opportunity here. “KKR is as good as it gets (in private
The facility — with a main terminal, 14 large hangars and 129 small aircraft hangars — has been used in a limited capacity for private, cargo and corporate travel, lacking investment to maintain or improve buildings. It also rents some hangars for airplane storage and around 100 workers are employed there by organizations including Midwest Air Traffic Control, AvFlight Corp. and the Tuskegee Airmen. The airport was the subject of a blistering 2019 Detroit Office of the Auditor General report that found it wasn’t properly managing its books, that it lost out on hundreds of thousands of dollars in potential revenue because buildings weren’t maintained and coyotes had taken up residence. City officials said at the time that they were working to take action and improve long-neglected processes. The city has spent a half-million dollars upgrading the main runway and added new lighting and censor systems. Ultimately, however, sustainability would likely require the airport to be able to pay its own way. The city subsidizes the airport through a department with a budget of $2.4 million in fiscal 2021, which ends in June, and expects a similar size for next year, fiscal 2022. Of that, $1.7 million came from city taxpayers last year and $1.9 million is expected this coming year. The operating subsidy isn’t expected to go down at least through 2025, per documents outlining the airport department’s budget. Making the airport self-sustaining is a long game, one that’s been been played for decades. The airfield’s future has long been in flux. Mayor Mike Duggan in 2017 sought proposals that would have closed it and redeveloped the land for an industrial or mobility park. But the administration since reversed course. “We have a lot of corporate jets that are flying in and out of there,” Dick said. “You know as Detroit has started to develop new businesses, and manufacturing businesses in the city, there’s a lot more people coming in for meet-
ings and for business there ... We’ve talked with manufacturing entities who want to be at the airport or manufacturing drones or other sorts of airport-related technology, where could they go” (on the airport property). Other potential uses are for air taxi service or there-and-back charter flights, bringing a group to Detroit for concerts or to visit casinos, Watt told City Council. The airport is looking for operators. But the Coleman A. Young International Airport Education Association has questions. David Tarrant, executive director of the group that advocates for the airport, educational opportunities there and in nearby neighborhoods, said he wants to see a clearer, overarching vision brought to the public. He also said the city should use an independent authority to operate the airport like a business, instead of keeping it as a government department. “The city has not done a very good job of building trust with the aviation community so there’s kind of an overarching concern there, and that was really highlighted when the mayor came out in April 2017 and proposed to close the airport,” Tarrant said. “So that’s an aspect that kind of hovers over all of this.” The association supports the administration in its decision to invest in the airport’s future, Tarrant said, and wants to work with it. “We applaud that ... but how that’s being done is a very, very major question,” he said. Also in the layout plan is the city’s previously reported proposal to close the airport’s shorter, secondary landing strip to repurpose it for industrial development. Officials including Dick argue the smaller runway is too expensive to maintain for the amount of use it gets. Detroit City Council Member Scott Benson, whose District 3 includes the airport, said he’s happy with progress on the airport layout plan. “The main community concern is
equity) and they’re going to make a pile of money in something that’s not the auto industry,” Gordon said. OneStream and StockX are generally seen as shoo-ins for initial public offerings. Executives at OneStream have said bluntly that an IPO is the plan, but both companies have been mum on a specific timeframe for such an event. Citing anonymous sources, the Wall Street Journal reported last week that StockX’s foray to the public markets could happen before year’s end. The rapidly growing StockX operates as a reseller of niche products like Air Jordan shoes and KAWS figurines, and has been adding its “authentication centers” around the world. StockX, along with rivals such as GOAT Group, are playing in the increasingly lucrative business of sneaker flipping. Companies including Nike and Adidas don’t benefit directly from the resale market. And because resellers make it harder for the average customer to buy their favored sneakers, shoe brands and their retailer partners go to great lengths to stop people from scooping up multiple pairs. Yet Nike and its peers benefit indirectly from the sneakerhead hype, giving both sides incentive to keep the resale market strong. “The reality is resale within footwear has become critical to the entire footwear ecosystem,” said Simeon Siegel, an analyst at BMO Capital Markets. “The fact that resale exists is what allows for such strong sell-through.”
Indeed, the “asset class” that is collectible sneakers can prove incredibly lucrative, StockX CEO Scott Cutler said last week in a report on CNBC, adding other areas of the e-commerce platform are also seeing explosive demand. “Sneakers as a category has out-performed the market, when you look at the returns, if you were an investor in the asset class of sneakers,” said Cutler. “But we have other categories. For example, puzzles as a category has grown 600 percent.” Meanwhile, OneStream Software finds itself in a crowded marketplace where attracting customers can prove challenging. “The force working against (OneStream) is no CFO, no company, wakes up one day and says: ‘You know what would be fun? What would be fun is to fool with our financial software. We’ll make a lot of money if we do that,’” said Gordon, the UM professor. “If you ever said that in a meeting there would be dead silence. All the people with SAP or Oracle, for a lot of them, the last thing they want to do is make a change ... as long as what they have works.” But it does appear that companies are willing to make that change, as OneStream has reported annual recurring revenue of approaching 100 percent. “This company has shown they can convert people,” Gordon acknowledged. “They can get people off of Oracle or SAP.” The company touts its single platform, or one stream, to which clients
they want (Detroit Public Schools Community District) back at the airport,” he said.
School’s return Airport leadership is in talks with Detroit public schools about using the main terminal building — which used to house commercial services but is no longer suited for them, per Watt — for a new Davis Aerospace High School. There’s also been interest in potentially building a new school. The school was previously located near the airport, but moved in 2013 to the Golightly Career and Tech Center about 4 miles away. It still does limited training at the airport. Detroit public schools is looking for “anchor partners” for the project, Superintendent Nikolai Vitti said in a statement to Crain’s. Tarrant said there’s demand for aviation technicians and pilots and expanding that program is a major opportunity for Detroit students. But he says closing the second runway, as the city proposes, is antithetical to that educational end because its major use is for students. Moving forward, the city plans to show City Council its layout plan, which Watt sees as an overarching vision, sometime this month before submitting its final version to the FAA. The airport department also plans to create a strategy to market the airport for new business once it gets the federal green light. The question for Tarrant, though, is whether Detroit will be able to — after all these years — construct an airport out of the ashes that can drive appreciable economic growth. “There’s a lot at stake here for the city,” Tarrant said. “First of all, it’s a priceless asset ... it’s a 10-minute drive from downtown, it’s unbeatable. There’s so much potential if the airport were properly managed for commerce at the airport.” Contact: afrank@crain.com; (313) 446-0416; @annalise_frank can then add applications. OneStream CFO Bill Koefoed, in an emailed statement to Crain’s last week, acknowledged that chief security and financial officers around the globe struggle with where to invest their tech budget, writing that “replacing an entire ERP (enterprise resource planning) system can have poor results ...” But the challenge on which Koefoed said he’s specifically focused is common for pre-IPO companies. “The biggest challenge OneStream would face is balancing quarterly Wall Street expectations with longer-term investments in this tremendous market opportunity,” he said. The overall market opportunity mentioned by Koefoed could be as large as $200 billion over the next six years, according to Daniel Ives, a managing director covering the software space for Los Angeles-based investment firm Wedbush Securities Inc. However, Ives notes that the market OneStream plays in is akin to a violent television show. “Right now it’s a ‘Game of Thrones’ environment,” Ives told Crain’s in an interview. “A lot of competition going after this digital transformation. There’s going to be some winners. But there’s going to be some losers, too. I think (OneStream Software) has a very good shot to gain share in a market that’s significantly grown.” — Bloomberg contributed to this report. Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes
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COVID
From Page 1 have the highest average daily case rates at 726 cases per million and 638 cases per million, respectively. People in their 40s are close behind at 633 cases per day. The daily case rate for people in their 60s is 309 and for those in their 70s is even lower at 175. The surge extends even to the very young: Daily pediatric COVID-19 admissions have increased by 237 percent since Feb. 19, the Michigan Health & Hospital Association said Friday. Currently, 42 children are hospitalized in Michigan with COVID-19. Nationally, COVID-19 deaths have exceeded 560,000 with 31 million cases, Johns Hopkins University reported. Global deaths have topped 2.9 million with 134 million cases with Brazil, Mexico and India behind the U.S. in COVID-19 deaths. At the Detroit Medical Center, Dr. Teena Chopra, the eight-hospital system’s medical director of infection prevention and epidemiology, said Michigan is the epicenter of another wave of COVID-19 infections and hospitalizations. “We are leading the nation in COVID cases and seeing a much younger age group including 30s, 40s and 50s” who are coming into hospitals, said Chopra, who also is a professor of internal medicine at Wayne State University School of Medicine. “If you look around, about 68 per-
Teena Chopra, M.D.
the spring break, and the mobility of people, the lack of vaccination amongst younger people and the way we are ... are all factors that are causing the spread of this virus,” she said.
Patient ages dropping Dr. Adnan Munkarah, chief clinical officer with six-hospital Henry Ford Health System, said the average age of hospitalized COVID-19 patients in a Henry Ford hospital is now 58, six or seven years younger than the fall surge. In early March, Henry Ford had 65 inpatient COVID-19 admissions, a number that had been declining since December when it had about 200. As of Tuesday, Henry Ford had 366 hospitalized COVID-19 patients, a 463 percent increase from 65 in early March. Dr. Jennifer Swiderek, medical director of the medical ICU at Henry Ford Hospital in Detroit, said ICU admissions have jumped to 50 percent of beds for COVID-19 patients on Monday from 15 percent a week earlier on March 29. “We are seeing less elderly and a younger age group than in the previous surges — in the 40 to 60 age range. They are not vaccinated yet while the over age 65 were eligible earlier,” Swiderek said, adding that the mortality rate hasn’t increased yet. “We might see it. Usually that is behind about two weeks,” she said.
Nick Gilpin, D.O.
Jennifer Swiderek, M.D.
“WHAT WE ARE SEEING NOW IS THESE YOUNGER PATIENTS BECAUSE THEY ARE MORE MOBILE AND NOT VACCINATED .” — Dr. Teena Chopra, Detroit Medical Center
cent of our of the elderly (65 and older) have been vaccinated and they have been somewhat spared because of the vaccine. What we are seeing now is these younger patients because they are more mobile and not vaccinated.” Another major factor in the new surge is that Michigan also has a large number (more than 1,200) of cases of the United Kingdom B.1.1.7 variant “that are more transmissible and can cause more severe disease,” Chopra said. “We expect larger numbers (after)
“The (COVID-19) variants might have something to do with higher level of sickness (in the ICU). Those who may not be as sick, they can still spread it to others. They are more contagious.” Swiderek said Henry Ford isn’t treating patients age 60 or younger any differently than those age 80. Last year, COVID-19 inpatient treatment also included giving patients monoclonal antibodies. But studies have shown that it is best to give antibody infusion treatment on an outpatient basis to patients 65 or
older or have a specific chronic disease who are COVID-19 positive 10 days or less. “We are treating them differently now than in the spring because we know more. We are focused on early steroids and remdesivir, a strong antiviral,” she said. Current clinical management of COVID-19 consists of infection prevention, control measures and supportive care, including supplemental oxygen and mechanical ventilatory support when indicated. The FDA has approved only one drug, remdesivir (Veklury), for the treatment of COVID-19 in certain situations. Swiderek said the work for ICU staff now is different than in previous surges. “We know how to treat patient now, but it is more difficult because more of our patients are parents and have young children. It’s tough for staff,” she said. “The staff is mostly vaccinated, so there is less fear now. But it’s been a year now from when we hit the first surge. Staff are tired. No one expected to be going through another surge.” At Beaumont Health, Dr. Nick Gilpin, the eight-hospital system’s medical director of infection prevention and epidemiology, said the average age of hospitalized COVID-19 patients has dropped at Beaumont hospitals the past several weeks to about 50 from the low 60s. As of Tuesday, Beaumont had a little more than 700 hospitalized COVID-19 patients, slightly lower than the second wave last winter of nearly 800, but much lower than the more than 1,200 daily peak of hospitalizations in the first wave last April. “We are seeing a slightly younger demographic of patients the past several months. That makes sense because we are hitting on vaccines hard on the over age 65 population and just starting on 50- and 40-yearolds,” Gilpin said. “Admissions over age 65 is still a significant proportion of patients, but it has really gone down to the 5054 range. We are seeing a rise in 40s, even in 30s.” Gilpin said he believes higher vaccination rates of those ages 65 or older combined with younger people frequenting bars and restaurants and socializing more is the reason for the drop in hospitalized patients’ ages. COVID-19 patients in Beaumont ICUs have increased the past two weeks to more than 11 percent of beds, up from 7 percent, he said, adding he expects those ICU admissions to increase. “I can see the data (on hospitalized COVID-19 patients) broken down by age and acuity levels,” Gil-
DI
From
Michigan Medicine caregivers work with a COVID-19 positive patient in the Surgical Intensive Care Unit at University Hospital in Ann Arbor.
pin said. “The average length of stay has gone down the past month (indicating a younger and less sick patient). The percent mortality with COVID has gone down, the average use of ventilators, how sick people are, all the indicators are down.”
Variants on the rise Gilpin said those clinical indicators make sense because of the declining average age of COVID-19 hospitalized patients. “We are not doing any different protocols. We are still hitting patients with the standard cocktail of steroids, other medications and antiviral meds,” Gilpin said. One factor that may be contributing to an increase in ICU and hospitalized patients is that the main COVID-19 variant, B.1.1.7, now represents an estimated 50 percent of all of Beaumont’s positive cases. Statewide, MDHHS said the U.K. variant could represent as much as 70 percent of all new cases. “Each week, Beaumont sends a random batch, several dozen, of positive samples to the state for sequencing,” Gilpin said. “B.1.1.7, the main variant number, jumped up to 50 percent. It is more transmissible and contagious. ... We don’t tailor our approach, but we do know the literature presents this with a more severe disease, more higher risk of mortality. We have not seen this so far in our patients.” Chopra said DMC’s adult hospitals are seeing similar trends as Beaumont and Henry Ford: an increase in COVID-19 inpatient admissions, average age of about 50, but ICU admissions of just 11 percent of total beds. “If you look at Detroit’s positivity percentage, we are exactly where the city is,” Chopra said. Detroit’s COVID-19 seven-day av-
erage positivity rate is 19.3 percent, up from 3.2 percent on March 5, with more than 438 positive tests per day as of April 7, the Detroit Health Department reported. Chopra said DMC limited the spread of COVID-19 by not relaxing visitor restrictions as did some Southeast Michigan hospitals. “We have maintained our restrictions and have done a really good job at preventing the spread. We are admitting more patients to the hospital than the ICUs. That is something I am very proud of,” Chopra said. “Our younger patients have better recovery than the older patients who have co-morbidities, but we treat them all the same.” While Chopra said Michigan and Gov. Gretchen Whitmer have done a good job rolling out what vaccines it receives from the federal government, the COVID-19 surge in hospital admissions has got her puzzled. “We relaxed our restrictions on business (including bars and restaurants) a little bit too soon in Michigan,” Chopra said. “The governor is doing a great job in the vaccination campaigns and expanding vaccinations in the state, but these two things (vaccinations and positive cases) at odds. We are at war with the virus and we have to slow down on the openings after you have gained some momentum on vaccinations.” Chopra said the balance between getting ahead on vaccinations and keeping people away from each other with business restrictions is out of whack. “Vaccines are clearly working. It is the silver lining,” she said. “We should have waited a little bit longer before opening up the restrictions.” Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene
Many metro Detroit diabetes patients at high risk from COVID-19 are managing conditions more effectively BY JAY GREENE
Contracting COVID-19 is believed to be especially dangerous for diabetic patients, who already have weakened immune systems. Diabetes is one of the health risk factors — along with such conditions as lung, kidney, liver and heart disease, obesity and a weakened immune system — that experts cite as reasons Detroit’s COVID-19 positive cases and death rates were initially much higher than other areas. 20 | CRAIN’S DETROIT BUSINESS | APRIL 12, 2021
Since March 2020, Detroit has recorded 50,623 positive tests of COVID-19 and 1,890 deaths, representing 7 percent and 12 percent, respectively, of Michigan’s total of 715,478 cases and 16,327 confirmed deaths as of April 7. During the first COVID-19 surge last spring, Wayne, Oakland and Macomb counties represented 38 percent of the state’s total positive cases and 49 percent of the deaths by April 30, according to a Crain’s analysis. Early in the pandemic, Dr. George
Grunberger, an endocrinologist who heads up the Grunberger Diabetes Institute in Bloomfield Hills, said “quite a few of my patients had COVID” and “quite a few were hospitalized.” “I’m not aware of a large number of my patients who died,” said Grunberger, who added most of his patients are diligent about maintaining healthy blood sugar levels. “If you’re in the hospital first, the medications you take can (interfere) with your diabetes even more.”
After Detroit experienced the first two initial COVID-19 surges in April and December, positive cases began to increase again for the third time in mid-February. On March 5, the seven-day average of daily cases in Detroit was 65, rising to 438 on April 5, according to the Detroit Health Department. Daily deaths in Wayne County are also creeping up again, rising from a 7-day average of two on March 19 to 10 on April 8, according to the New York Times database. Grunberger said the majority of
his patients have improved their diabetes condition during the pandemic. There are others, he said, who have become demoralized, depressed and stressed because of the lockdown and lack of social interaction. “Diabetes is something you can actually control. Thankfully, for the most part, the awareness of importance of diabetes control is actually increasing,” said Grunberger. See DIABETES on Page 21
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DIABETES
ic kidney disease and 19 percent with chronic lung disease, the CDC said. Nationally, more than 34 million From Page 20 people in the U.S. have diabetes, ac“They’re locked in, and all of a sud- cording to the CDC. About 95 percent den they have time to take care of of them have Type 2 diabetes, where themselves. They stopped eating out, the body resists the effects of insulin it going to parties. They’ve been at produces, or doesn’t produce home cooking and are able to focus enough. Type 1 diabetes is an autoimmune condition on exercise.” that occurs when In a January report on the body’s immune social determinants of system attacks cells health, Blue Cross Blue in the tissue of the Shield of Michigan said the pancreas. lack of access to nutritious “Most people food during the pandemic with Type 2 diabehas contributed to COVID-19 infections of dites have other conditions” that include abetic patients and others obesity, high blood with chronic diseases. George Grunberger, M.D. pressure and high Michigan doesn’t track cholesterol, and contributing factors to tend to be older, COVID-19 deaths on a Grunberger said. statewide level, but people “People have more with diabetes face a higher strokes, heart atchance of experiencing setacks, heart failure, rious complications, said and diabetes also is the state Department of the leading cause of Health and Human Serkidney failure.” vices. In Michigan, In a national survey, diamore than 1 million betes was found to be the Eran Bashan people have diabesecond most common underlying medical condition for peo- tes, 12.4 percent of the state’s populaple who died related to COVID-19, tion, and 260,000 of them don’t know according to a July report by the U.S. they have it, greatly increasing their Centers for Disease Control and Pre- risks. Another 2.7 million people have pre-diabetes conditions, said the vention. Some 61 percent who died of American Diabetes Association. The Southeast Michigan Hospital COVID-19 had cardiovascular disease, followed by 40 percent with dia- Collaborative, a partnership of four betes mellitus, 21 percent with chron- local health systems, the Greater De-
troit Area Health Council and the National Kidney Foundation of Michigan, have been working to identify the state’s 2.5 million people with pre-diabetes to enroll them in a national diabetes prevention program. Kate Kohn-Parrott, the health council’s CEO, said according to the CDC the prevention program reduced the risk of diabetes among participants by 58 percent. “SEMI-HC’s efforts are critical in our region where COVID-19 hit hard on top of a long history of poverty, homelessness, and disparities, and where chronic conditions like diabetes put people at greater risk for severe illness from COVID-19,” Kohn-Parrott said. GDAHC’s health system partners in the diabetic initiative include Henry Ford Health System, St. Joseph Mercy Health System, Ascension Michigan and Beaumont Health. A study last year found that 20 percent of all ICU admissions for COVID-19 involved people with diabetes, said the Journal of Clinical Endocrinology & Metabolism.
What experts say Eran Bashan, CEO and co-founder of Hygieia Inc., a medical device company based in Livonia that specializes in diabetic monitoring systems, said a diabetic patient with a hemoglobin A1c level of 6.5 percent is at no greater risk to contract COVID-19 than someone without diabetes. “There is data to suggest that if you’re admitted to a hospital and you
are at 8.3 or above you are 10 times more likely to die than someone with well managed diabetes,” Bashan said. “COVID definitely introduced a sense of urgency. But poorly managed diabetes, two-thirds of those are at above 7.0, those people are not doing particularly well. And that’s not a good sign.” So far, Bashan said only “a handful” of Hygieia’s current patient population of several hundred in Michigan have contracted COVID-19. “They are doing better,” he said. “It’s not that statistically significant, but like any other community, our members have been exposed and dealt with COVID.” In the United Kingdom, where Hygieia has a larger patient population, the mortality rate for insulin users across the board is about 3.1 percent, but for Hygieia’s patients, those mortality rates drop to under 0.8 percent, Bashan said. In 2018, Hygieia partnered with Blue Cross Blue Shield of Michigan in a pilot program to test the company’s d-Nav insulin guidance system. “We saw 90 percent of the patients improve within three months. And also there’s a significant reduction in cost of care,” Bashan said. Over the past year, Hygieia has contracted with several insurers, including Priority Health, Health Alliance Plan, United Healthcare, Humana and Aetna. It also has become a specialty provider network for Blue Cross’ diabetic patients in some of its HMO, PPO, Medicaid and Medicare Advantage programs, said Bashan,
adding that its goal this year is to enroll about 2,000 people. From Grunberger’s patient population, who he described as motivated to get their diabetes under control, the pandemic gave them another reason to keep their blood glucose in check. “Elevated blood glucose, uncontrolled sugar levels, hurts your immune system, people are more likely to get sick or any infection if your sugar is not controlled,” Grunberger said. “High sugar, by itself, makes the immune response weaker. Controlling your sugar decreases the chance that you get sick and become hospitalized. That’s a very powerful motivation.” But Grunberger said Detroit’s diabetic population, on average, is not healthy to begin with. “Then you have COVID and the added stress, and those people will be suffering more,” he said. To stay healthy, Grunberger said those with diabetes should monitor their sugar levels, take their medications, eat healthy and exercise. He also said they should be extra careful about interacting with strangers, maintain social distance, wear masks and make an appointment for a coronavirus vaccine. “I do a lot of telemedicine and people ask me if they should get vaccinated. The data and studies have shown that the vaccines in the U.S. are safe for people with diabetes,” he said. Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene
A patient's story: Charita Dancy did everything right, then she got COVID-19 and was hospitalized BY JAY GREENE
deemed sick enough to warrant a trip to the hospital. Several days Charita Dancy, a 40-year-old passed and she still wasn't feeling manager at Ford Motor Co., took all well. Over the past six weeks, an inprecautions to avoid catching creasing numCOVID-19. She wore masks, practiced social ber of people in their 20s, 30s, distancing and washed her hands regularly. 40s and 50s are But on March 21 the contracting Detroit resident felt COVID-19. pressure on the side of Those in their 20s and 30s her neck, like she had a sinus infection. Two have the highdays passed and she est average daiwasn't feeling better. ly case rates at The sinus pressure 726 cases per went down, but then million and 638 she was struck with secases per million, respecvere headaches, body tively. People aches and started to in their 40s are cough. close behind at Even after four days 633 cases per of feeling bad, Dancy didn't think she had COVID-19 be- day. The daily case rate for people in cause how safe she was playing it: their 60s is 309 and for those in their always wearing masks at work and 70s is even lower at 175. "I was told to quarantine on my keeping her distance from people, own, 10 to 14 days, before returning not going out to restaurants or bars. "I thought I had the flu or a bad to work. I was trying to treat myself cold," Dancy said last week from her mostly with just vitamins and a lot of fluids, especially hot fluids," Dan“I’M STARTING TO BELIEVE THAT cy said. "But I lost my taste and OTHER PEOPLE DON’T TAKE IT was unable to SERIOUS ENOUGH. “ swallow water. I was getting so — Charita Dancy weak. My way wasn't working." Finally, Dancy made up her mind: hospital bed at Beaumont Hospital in Royal Oak. "I went to the Get Well "I was like, I gotta go ahead and throw myself into the hospital." Urgent Care in Madison Heights." So, on a Friday night, April 2, DanIt was at Get Well she tested positive for COVID-19 on March 25. She cy trekked to the Beaumont Hospital was given several tests, but not emergency department.
"I was so shocked at the amount of people that were there. There were hundreds of people who came through that door. I was down there three hours just waiting to get into my room. (The people coming in) never stopped," she said. After being admitted on a special dedicated COVID-19 medical floor, Dancy was given antibiotics and IVs of magnesium and saline. She was breathing relatively well. She said she never needed oxygen or a ventilator. But because Dancy is also a sixyear kidney replacement recipient, doctors and nurses monitored her somewhat differently than other COVID-19 patients. "When they gave me the fluids I started to feel better in maybe about an hour," Dancy said. "Their main goal was to make sure that my kidney was still functioning at 100 percent. It is OK."
‘I faced death’ After six days in the hospital, Dancy was released Wednesday, April 7. "I am feeling stronger, not perfect, but much better," she said. "The main reason I came is because I wanted to make sure I get my body back hydrated. I was dehydrated. So once they gave me the fluids, I started feeling better, and my energy was up, I was able to get up and walk around. Then I got a fever. So the last couple of days, I had a fever. They gave me something to break the fever. Once that happened and my kidney function was good, I was told I could go." But there is one thing that bothers her about COVID-19 and the fourth
Charita Dancy, 40, spent six days at Beaumont Hospital in Royal Oak after contracting COVID-19 under what she considers to be mysterious circumstances.
surge of positive cases racing through the community. After the initial surge in April 2020, when Detroit was one of the "hot spots" of the COVID-19 pandemic, Michigan bounced back with good public awareness coupled with some business restrictions. Now, Michigan leads the nation in positive cases per 100,000 people at 72 and hospitalizations per 100,000 people at 32, according to New York Times data. As of Friday, Michigan reported 16,400 confirmed COVID-19 deaths and 723,297 positive cases, the state health department said. "I am very angry about catching it because I feel I do my part to make sure that I keep everyone around me safe. And I'm starting to believe that other people don't take it serious
enough," Dancy said. "They don't respect the fact that masks are very important. I faced death. I was very scared and didn't know if I was going to make it." The one positive out of it has been her job. "They have been very supportive. Managers reached out to me every day on all levels. Human resources called (Wednesday) to make sure I was OK and to take the amount of time that I need," Dancy said. "I have no pressure to return until I feel totally good. They do everything they can to keep us safe daily. That is why I was shocked because we wear our masks at work and I wear the mask whenever I'm out." Contact: jgreene@crain.com; (313) 446-0325; @jaybgreene APRIL 12, 2021 | CRAIN’S DETROIT BUSINESS | 21
THE CONVERSATION
Scarab Club board president on diversity, photography, religion THE SCARAB CLUB: Mariuca Rofick, a Detroit photographer, film scorer, actor and model, has been navigating the COVID-19 pandemic and diversity efforts while leading the board of the more than century-old visual, literary and performing arts organization in Midtown. Rofick, the club’s first Black board president, talks with Crain’s about why the Scarab Club matters, what’s coming up, her favorite places in Detroit to shoot photos and how she broke away from the Jehovah’s Witnesses organization she grew up in. | BY ANNALISE FRANK `For someone who lives and/or works in Detroit, what do you think they should know about the Scarab Club and its impact? The Scarab Club ... is one of Michigan’s oldest art organizations and of course one of the city’s oldest, as well. It started as a group of artists that met to discuss art, and then eat and drink and have organized exhibitions. And then the building we’re housed in now was completed in 1928, so that building was always the Scarab Club. We’re on the city, state and national historic registers. We’ve always had exhibitions, live sketch sessions and we have working artist studios in the building. Also, our lounge beams on the second floor (are), like, the guest book for the club. There’s autographs of many famous artists that have passed through, like Diego Rivera, Norman Rockwell, locally Charles McGee, Gilda Snowden. `What’s it been like during the pandemic? It probably reflects what’s going on in many similar organizations. We’re a club. One of the main things we do is have gatherings and receptions. So, of course, it’s been challenging. But we have switched to a lot of virtual things, so all of our exhibitions have been also virtual. Our operations scaled back quite a bit, but we’ve stayed open and solvent. It’s been a challenge but ... we’ve been through a lot of difficult time periods. `Any big decisions coming up for the board? Well, we have talked quite a bit more about diversity, especially in the last year. And so, every year around this time we’re looking at new board members. We did vote to welcome a new board member and it’s an attorney and a person of color so we’re very excited about that. We’ve got a lot coming up, programmingwise. These weren’t necessarily board decisions, but things that came out of our discussions: For instance, beam signings. For this year we’re having two Black
women sign the beams: Dell Pryor and Shirley Woodson. And these were board decisions that we made in the last couple of months. So I’m very excited about that, and pushed for that. Overall the board has been making decisions with diversity in mind and inclusion and equity. `What were your impressions being the club’s first Black board president, and your thoughts on that while moving forward in the position? I was very happy to even be considered for the position and obviously feel very privileged to be that. I’m happy the organization was already where they were even before I stepped in the door, that this was an organic thing that happened, not at all forced and just felt right, you know, and that everybody was 100 percent on board. Obviously I felt like there were things I wanted to see happen, and I wasn’t sure how much pushback I might receive. It’s an old organization, there can be a resistance to change, you know. It’s not that anyone doesn’t want to see diversity, but sometimes it’s just easy to do what was always done. `\Do you see yourself as an entrepreneur, in your photography? I do, but I have to honestly say that the art side of my brain and the art administration side of my brain, it's hard for both of them to be switched on at the same time. I've found that since I've been on the board and especially since I've been president, it's been a little harder for me to get into my photography groove. In addition to the photography, I also do soundtracks for animation and I have done some of that during these three years. But I love my photography and am actually looking forward to my time off the board to jump back in. I come from a long line of photographers. And I have crazy deep Detroit roots, my family goes back to the late 1700s here. `What's an interesting place you liked to shoot?
It's hard to pick, there's two things. So when I first started, I worked in the Buhl Building on the 19th floor at a law firm. The detail on the buildings that were right across the street from us were so beautiful. And I was like, most people don't get to see this because you don't get up in these buildings to see all this detail. So that was one of the things that kind of got me going. But I lived downtown for a couple years in the building that used to be called Trolley Plaza (now Detroit City Apartments), and one of my favorite things to do was get up really, really early in the morning and go walking through near-empty streets. This was a few years back before downtown was more busy. And I just loved to stand in the middle of the streets and take shots of what looked like deserted streets. `I saw you did a long-form interview on your history with the Jehovah's Witnesses. Could you talk about that part of your life a bit? So I come from a prominent local Jehovah's Witness family and when I graduated from high school I went into full-time working with them. I did a local ministry for four years and then I went to work for their headquarters (in New York) for 10 years. And then in the course of being there and working in their publishing area ... as time went on I found it to be very not friendly toward women and rather cultish, and I ended up making a break with them. While I was
READ ALL THE CONVERSATIONS AT CRAINSDETROIT.COM/THECONVERSATION
in the organization, which I was raised in it, creativity was not encouraged. Higher education was not encouraged. A lot of things that involved your own self-expression were not encouraged. (At the headquarters) I had a position, I was over the proofreading department but technically couldn't be over it because I was a woman. So, a lot of things came to a head when I was there because, technically, I couldn't shut down a (printing) press because I was technically a woman. But I'm the one that found the error. But I need to call a man and the man needs to shut down the press. So, yeah. Don't get me started on that.
22 | CRAIN’S DETROIT BUSINESS | APRIL 12, 2021
Haglund
glund told Crain’s. “We screwed up.” Regulators have barred Live Life from opening new marijuana accounts until April 30, and the credit union is required to implement an automated reporting system by that date. The credit union can maintain its existing members.
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Mariuca Rofick board president Scarab Club
Fraser credit union slapped over marijuana banking violations Banks and credit unions are obligated to verify where a marijuana business is licensed, monitor accounts for unexpected growth in deposits (which may indicate illicit activity) and file regular monitoring paperwork to root out money laundering. If one of Live Life’s marijuana-business customers is illegally selling marijuana in violation of federal law, the Department of Justice maintains its authority to prosecute credit unions and their leaders for violating federal money-laundering law. To stay in compliance, Live Life is required to file about 600 Suspicious Activity Reports annually for its roughly 150 cannabis-business members.
REPORTERS
MEMBERSHIPS
RUMBLINGS
FEDERAL REGULATORS WILTED Live Life Federal Credit Union’s growing marijuana business with a cease-and-desist order — the first known federal crackdown on marijuana banking. The U.S. National Credit Union Administration issued the order in late February to the Fraser-based Live Life for failing to comply with reporting procedures. Credit unions are required to file “Suspicious Activity Reports” every quarter for all marijuana-related accounts. Live Life failed to meet the reporting requirement deadlines, allege the federal regulators and Karla Haglund, CEO of the credit union, confirmed. “We filed some reports late,” Ha-
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The credit union’s entry into the marijuana market in late 2018 has led to exponential growth. At the end of 2017, Live Life held $12.4 million in total assets with 1,368 credit union members. By the end of 2020, the bank’s assets ballooned to $69.2 million with only 254 more members. The credit union’s roughly 150 marijuana-business clients likely account for most of that asset growth. There were 515 banks and 169 credit unions in the U.S. providing banking services to marijuana business at the end of 2020, according to government data. Those financial institutions filed 170,975 Suspicious Activity Reports in 2020.
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