Crain's Detroit Business April 26, 2021, issue by Crain's Detroit Business

THE CONVERSATION Busted Bra Shop owner on finding the right business fit. PAGE 26

CHIP BIZ: Ann Arbor company sees opportunity. PAGE 7

CRAINSDETROIT.COM I APRIL 26, 2021

Ante rises in fight for workers Wages pressured upward as workforce changes BY DUSTIN WALSH

Potential jobs candidates are met by a 7-foot robot of embossed steel, aluminum and plastic upon entering industrial automation and light assembly firm Morrell Group. A soldier, of sorts, reminiscent of the red-armored Master Chief from the popular Xbox video game Halo. But instead of battling for the survival of

human civilization in interstellar warfare, Morrell’s mascot “The Motioneer” is battling for talent. Morrell invested hundreds of thousands of dollars into its robot mascot and remodeling its Auburn Hills headquarters to a more modern, open concept, collaborative environment all in a bid to be more appetizing to potential employees. The firm trademarked the term Mo-

tioneer and is calling its new hires Motioneers. The firm currently has 10 open positions and, like so many employers, is struggling to find applicants. “Hiring is just more challenging than it’s ever been,” Mark Garrett, president of the Auburn Hills-based firm, told Crain’s. “We had some luck during (2020) due to layoffs among competitors but that win-

dow didn’t last long and now it's worse than even before the pandemic.” Despite a massive purge of employees throughout the COVID-19 pandemic, the labor force has tightened in many industries, particularly those operating in manufacturing and low-wage sectors. The reasons prospective employees remain sidelined are complicated — fear of the coronavirus, elevated unemployment payments, child care, to name a few — but for those in the

jobs market, the options and returns are gratuitous. Morrell has raised its starting wages for college engineering graduates from around $50,000 prior to the pandemic to as high as $70,000 in 2021. The pandemic recession hardly dented wage growth across the board, despite as many as 25 million Americans unemployed during the early days of the virus. Median See LABOR on Page 22

RECYCLING Michigan pioneered litter control. Now its recycling rate is down in the dumps.

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SMALL BUSINESS SPOTLIGHT When it comes to planning succession in a family business, it’s complicated but necessary. PAGE 10

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FORUM SECTION BEGINS ON PAGE 15

NEED TO KNOW

VC WATCH

THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT  COVID VACCINATIONS SLOW DOWN IN MICHIGAN

misappropriation of public funding and destruction of public emails.

THE NEWS: COVID-19 vaccinations appear to be slowing somewhat in Michigan, according to a Crain's analysis. State data shows a 28 percent decline to 280,000 in total Michigan residents vaccinated in the week ending April 18 from 358,000 ending April 11. The previous three weeks starting in late March the total residents vaccinated increased from 202,000, to 244,000 and 273,000 in early April. "It's definitely slipping," said Kerry Ebersole Singh, director of the Protect Michigan Commission.

WHY IT MATTERS: Nessel's investigation was prompted by reports in the Detroit Free Press that revealed Duggan's office steered $358,000 of taxpayer dollars to the Make Your Date program founded by Sonia Hassan, a Wayne State doctor with personal ties to the mayor.

WHY IT MATTERS: A slowdown on the demand side could indicate vaccine hesitancy that could delay or derail efforts to get enough Michiganians vaccinated to achieve "herd immunity" that would prevent the virus from finding enough hosts to spread.

AG WON'T CHARGE ANYONE IN 'MAKE YOUR DATE' CONTROVERSY THE NEWS: The office of Michigan Attorney General Dana Nessel won't be charging Detroit Mayor Mike Duggan or his staff with criminal wrongdoing for directing taxpayer resources to a Wayne State University prenatal care program run by a woman with unclear personal ties to the mayor. Nessel's office found no criminal conduct in allegations of

 DECHAMBEAU TO MAKE RETURN TO ROCKET CLASSIC THE NEWS: Big-hitting pro golfer Bryson DeChambeau will return to Detroit this Fourth of July weekend to defend his title at the Rocket Mortgage Classic, where he will also be sporting the mortgage giant’s logo. DeChambeau, who recently signed an endorsement deal with Rocket Mortgage, joins Rickie Fowler, Bubba Watson, Harold Varner III and Jason Day in committing to the tournament. WHY IT MATTERS: DeChambeau powered his way to a victory last summer, bringing the Donald

Ross-designed Detroit Golf Club to its knees with a 23-under par. The Detroit tournament is scheduled for June 28-July 4 this year.

 GM TO EMPLOYEES: 'WORK APPROPRIATELY' THE NEWS: General Motors Co. on Tuesday launched a new remote work standard, dubbed "Work Appropriately," to reflect adjusted workplace expectations post-pandemic. The new guideline is designed to give employees the flexibility to work from wherever they are most efficient, GM said, and it gives the Detroit-based automaker access to a broader talent pool beyond its office locations.

Furniture seller lands $15M funding round  Floyd, a Detroit-based online furniture seller, has raised $15 million in a Series B round and is launching a new online marketplace that will allow consumers nationwide to purchase its gently used or imperfect pieces. Floyd co-owner Kyle Hoff, 33, said the company will use the new funds to continue to expand its product line and supply chain. Investors in the round include San Francisco-based Walden Venture Capital, Farmington Hills-based private equity firm Beringea, Monroe-based La-Z-Boy, New York venture capital firm 14W and JP Morgan. JP Morgan is an investor on the debt side, according to Hoff, but he did not disclose more details. Beringea and La-Z-Boy have worked with the e-commerce business in the past. The furniture maker, founded in 2013, raised $5.6 million in Series A funds in 2018.

WHY IT MATTERS: "The future of work is not a one-size-fits-all approach, and our values and behaviors will guide us in this culture change," CEO Mary Barra said in a statement. "It is up to leaders to focus on the work, not the where, and we will provide the tools and resources needed to make the right decisions to support our teams."

Correction  In our Notable Women in Law section in our April 19 edition, our profile on Linda Paullin-Hebden incorrectly described her role in Belle Capital. Paullin-Hebden is a supporter of the venture capital group, not a co-founder.

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Detroit Rescue Mission expanding Shelter group adds location, respite care BY SHERRI WELCH

Michele Bice (right), a registered nurse with 1st Call Home Healthcare in Clinton Township, checks the pulse of Kelley Miller, a 54-year-old Eaton County woman who was paralyzed in a 2011 auto accident. | DALE G. YOUNG FOR CRAIN’S DETROIT BUSINESS

‘WE’LL BE OUT OF BUSINESS’ Home care agencies lobbying to scrap 55% cap on care for injured drivers BY CHAD LIVENGOOD

The only thing separating Kelley Miller from living in a nursing home is a registered nurse and aide caring for her around-the-clock inside the 54-year-old quadriplegic woman's home in the mid-Michigan village of Mulliken. Paralyzed from the neck down in a 2011 car accident, Miller relies on a ventilator to help her breathe — and the caregivers to bathe, clothe and move her between chairs. Sometimes the ventilator tubing comes unhooked when Miller's caregivers transfer her between a chair, her bed or the shower.

That's when the nurse has to work quickly to reconnect and troubleshoot the ventilator while the aide uses a device to hand pump oxygen into Miller's lungs — and keep her alive. “I just need two people just in case something goes wrong,” Miller said. Miller's in-home care is about to change drastically if a 2019 law signed by Gov. Gretchen Whitmer takes effect July 1, according to the owner of the home health care agency that staffs her 24-7 caregivers. 1st Call Home Healthcare in Clinton Township is telling Miller and dozens of other clients that it will See HOME CARE on Page 25

“I POTENTIALLY COULD END UP IN A NURSING HOME.” — Kelley Miller, on the consequences of a cap in the fees for in-home attendant care that was instituted as part of a 2019 reform of Michigan’s no-fault insurance laws.

After providing shelter for the homeless and substance abuse programs in Detroit and Highland Park for over a century, Detroit Rescue Mission Ministries is expanding its services to a new city and a new client. The organization plans to launch senior respite care of up to a month and a number of other free services in a former Ciena Health nursing home at Ann Arbor Trail and Wayne Road in Livonia. Other services planned for the center include a day center for seniors, walk-in health clinic and outpatient, substance abuse and mental health treatment and counseling. “We always focused on Detroit and Highland Park, but we have been getting a lot of calls from people who have mental health and substance abuse issues in western Wayne County,” said DRMM President and CEO Chad Audi. The local community, including Ciena Healthcare, St. Mary Mercy Livonia Hospital, the mayor, police department and community organizations also expressed a need for other services, including respite care for seniors, he said. DRMM will collaborate with those organizations as it launches services at the new site. The building “was God-given to us, we thought, to meet the need of the people in the western part of the county,” Audi said. Donated by Ciena Healthcare, the 57,000-square-foot building is well-suited to the senior day center and short-term, senior respite care for up to a month that DRMM plans to launch. The building was vacated when Ciena moved to a new site in Westland. See RESCUE on Page 24

'The stakes are high': Detroit plots how to spend windfall Federal pandemic relief for the city totals nearly $1 billion BY ANNALISE FRANK

Detroit leaders will soon start to decide how to spend a once-in-a-generation pot of money that could have a truly transformational impact on the pandemic-addled city. Michigan's biggest municipality is getting an estimated $879 million out of the $350 billion allocated for state and local fiscal recovery in the federal American Rescue Plan Act. It's among thousands of localities that are now trying to comprehend how best to use this new cash. Detroit is to receive its first approximately $440 million in May and the remainder a year later.

"The stakes are high," nonprofit Brookings Institution researchers wrote in a report published late last month. "The decisions made in the coming weeks — and over the next year regarding the second tranche of funding — will determine whether cities merely enjoy a brief stimulus or seed a new trajectory of inclusive economic growth." Detroit City Council has already weighed in, requesting the administration create a task force to look at how the dollars can and should be used. Council wants to see a group formed with its input that can finance programs that Council wants implemented but didn't have capital for in

the budget, the lawmakers said in a resolution that accompanied the fiscal 2022 budget they passed April 7. But the question now is: How can we spend it? Per the act's language, local governments can use the money to respond to the COVID-19 outbreak as a public health crisis, or any of its economic impacts, and cover municipal revenue losses as a result of the pandemic. There's much more flexibility here than with CARES Act aid, said Amanda Kass, associate director of the University of Illinois Chicago's government finance research center. See RELIEF on Page 23

Work to pave and otherwise update Detroit’s Zussman Park. More parks and recreation work is among improvements Detroit City Council is requesting the city consider tackling with its $879 million in pandemic relief. | CITY OF DETROIT VIA FLICKR APRIL 26, 2021 | CRAIN’S DETROIT BUSINESS | 3

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The Hotel Eddystone at 110 Sproat St. in Detroit under renovation in February 2020. | KIRK PINHO/CRAIN’S DETROIT BUSINESS

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With city’s teeth bared, Ilitches meet deadlines for Hotel Eddystone At risk of losing control of one of their key projects under terms of a development agreement with teeth, the Ilitch family has met all of the redevelopKirk ment milestones PINHO the city has required of them for the Hotel Eddystone so far. The Detroit Economic Growth Corp. says the remaining milestone — the issuance of a certificate of occupancy — is required by Dec. 23, which was extended by 45 days because of state orders halting commercial construction last year due to the COVID-19 pandemic. Olympia Development of Michigan didn’t provide more specificity about when the project is to be completed in an emailed statement, saying it looks “forward to its completion in accordance with all of the milestone dates.” The milestones included installation of temporary sheeting to cover windows, new window installation, roof repairs, masonry wall repairs, and applications for permits with the building department and Historic District Commission approvals. The Eddystone, located at 110 Sproat St. directly north of Little Caesars Arena, is being turned into apartments with retail space on the first floor. A 2015 agreement with the Downtown Development Authority says Olympia had one year from the issuance of a temporary or permanent certificate of occupancy for the Little Caesars Arena to redevelop the Eddystone building that opened in 1924. It failed to meet that deadline. The temporary certificate was issued Sept. 12, 2017. The Eddystone was spared from demolition in a compromise agreement with the city that allowed Olympia to implode the former Hotel Park Avenue nearby in 2015. In 2019, the Ilitches and the city inked a revised development agreement for the 13-story building in a plan that at the time said its redevelopment would cost $40.9 million, al-

A rendering of a proposed mixed-use development with 81 apartments at 1331 Holden St. in Detroit.

though in February 2020 Olympia said the redevelopment would cost more in the neighborhood of $35 million. The statement said the project would cost between $35 million and $40 million. The 2019 agreement requires Olympia to have a $33 million letter of credit or performance bond that would be tapped by the city and DDA in the event that ODM or another ODM-chosen developer defaults on terms of the agreement. The family, which made its billions starting with the Little Caesars pizza empire, has taken criticism locally and even internationally over its District Detroit project, which nearly seven years after its unveiling has yet to materialize in a manner close to what was presented to the public after receiving hundreds of millions in taxpayer incentives to build the arena on Woodward Avenue. The Ilitches announced a plan for 686 residential units in the District Detroit area in May 2017, including the 96 in the Hotel Eddystone. The others have either shifted to become other uses or have not started construction. Last year, Olympia said it was teaming up with Lansing-based Cinnaire Solutions to “explore the potential revitalization” of a group of residential buildings the Ilitches previously said were too derelict to be rehabilitated.

Detroit development moving forward A $20 million project that’s expected to bring 81 units of new housing to the city is closer to becoming a reality.

The development by Matt Naimi and Oren Goldenberg is turning a former car factory and recycling center into an affordable housing community for artists at 1331 Holden St. Of the 81 units, 17 are slated for those making 50 percent or less than the federally designated Area Median Income, while another 41 would be for those at 80 percent or less than the AMI (for a family of two that is $50,240 and for a family of four it is $62,800). The remaining units would be for those at 120 percent or less than AMI, according to a press release last week. The capital stack is as follows, according to a spokesperson: ` Capital Impact Partners loan: $6 million ` IFF loan: $3.3 million ` Invest Detroit subordinated loan: $720,000 ` Invest Detroit bridge loan: $1.835 million ` Michigan Strategic Fund Community Revitalization Program funding: $2.4 million ` Detroit Affordable Housing Leverage Fund: $740,000 ` Detroit Housing for the Future Fund: $1.5 million ` Owner value land contribution: $3.8 million ` Owner equity: $110,000 ` Deferred developer fee: $891,000 The plan also calls for the creation of 38,000 square feet of retail and commercial space, including a market and a restaurant. It’s expected to be completed early next year, according to the press release. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

PHILANTHROPY

GET A HEALTHIER Thompsons commit OUTLOOK ON another $52M to CHILDHOOD scholarship programs Tune in to WJR 760 AM for Caring for Kids, a monthly radio program highlighting issues and efforts locally, regionally and nationally, that impact the health and wellness of children.

BY SHERRI WELCH

Michigan paving magnate Bob Thompson and his wife, Ellen, have committed another $52 million to help fund college scholarships for students from working families. The gifts will support additional scholarships to students at Grand Valley State University, Saginaw Valley State University and the Thompsons' alma mater, Bowling Green State University in Ohio. It brings the amount the couple has committed to the Thompson Working Families Scholarships program to $85 million over the past decade and comes as part of a plan to commit roughly $200 million to fund scholarships for about 10,000 students by 2030 as they sunset their philanthropy. The couple’s hope is that the scholarships will have longterm impact not only for the student recipients, but subsequent generations of their families, said Bob Thompson, 88. “Education is impactful. It certainly does change lives, and of course that’s what we’re after.” Many of the students benefiting from the scholarships are the first generation in their families to attend college, he said. “You hope that 80 percent of these kids change their lives for the better economically and socially (by graduating college) and they pass it on to their children.” The couple are funding the scholarship program with the remainder of the wealth they pledged to donate more than 20 years ago following the sale of Thompson-McCully Co. and profits from Bob Thompson’s McCoig Holdings LLC, which sold in November to Tennessee-based SRM Concrete. As part of their commitment to changing lives through education, the Thompsons invested more than $125 million to provide nine rent-free, nonprofit, public charter schools in the city of Detroit before developing the scholarship program.

Gap in support After Ellen Thompson, a former elementary school teacher, noted the gap in support for working-class students who didn’t qualify for the supports available to low-income families, they began working to develop a scholarship program to help them and ensure the majority of those students would graduate from college. Led by Vice President and trustee John Cleary, the Thompson Foundation launched the Thompson Working Families Scholarships in 2011 with Grand Valley State University. The model they developed for the scholarship program ensure that everyone has “skin in the game,” Bob Thompson told Crain’s in 2019. The Thompsons invest $5,000 per student each year, and partici-

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Ellen and Bob Thompson

pating universities match it. The parents and the student make up the remaining cost with savings, loans, additional university or federal grant support and money students earn through working a job. The students who receive the Thompson Working Families Scholarships must maintain a specified grade point average and commit to community service hours. The universities also commit to provide the necessary supports to ensure 80 percent of the new students coming into the program graduate within six years. The foundation provides some scholarships for transfer students and military students and extended support for five-year programs like a master's in accounting, said Ed Parks, retired managing partner at Plante Moran PLLC and a trustee of the Thompson Foundation. The three remaining initial universities working with the foundation will share in the $52 million, with $27 million going to Bowling Green, $19 million to Grand Valley State University and $6 million to Saginaw Valley State University. The couple’s latest commitment will bring the total number of students supported through the program to about 5,200, Cleary said. The Thompsons’ scholarship program has helped Saginaw Valley State University’s board members and donors better understand the challenges students are facing, said Andrew Bethune, executive director of the Saginaw Valley State University Foundation. At the same time, it’s inspiring other donors to think very strategically about their own philanthropy, he said. “Mr. and Mrs. Thompson are so tuned in to what’s going on in education that they really identified a very specific need and addressed it in a way that is a game change for thousands of students and their families.” Contact: swelch@crain.com; (313) 446-1694; @SherriWelch

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SUPPLY CHAIN

Equipment retailers, landscapers face equipment scarcity Pandemic, ports backups to blame BY BY DUSTIN WALSH

The COVID-19 pandemic brought record profits to Utica-based outdoor equipment retailer Weingartz Supply Co. Michiganders stuck at home during pandemic closures and workfrom-home orders took up lawn care and landscaping projects. “In March (2020) when we closed down, sales were down 70 percent, but by the end of June we more than made up for it and then some,” said Ron Weingartz, co-owner and vice president of the family owned company. “I’ve been in this business for 40 years and I’d never seen anything like it. It was crazy. From lawnmowers to chainsaws to trimmers, people were buying up everything.” Weingartz finished the year up 7 percent over a “great” 2019 with sales of roughly $70 million across its four metro Detroit and one Grand Rapids locations. Nationally, sales of residential power lawn and garden equipment grew more than 5 percent in 2020, according to a report by market research firm The Freedonia Group. But like a creeping charlie, the pandemic grew roots and its impact on manufacturing and distribution has overtaken last year’s growing optimism and has left the entire lawn care industry scrambling — for parts, products and profits. Plants were shut down for six weeks or more last spring and are racing to catch up amid labor shortages tied to the pandemic, and ports are backed up across the world, causing further delays. The widely reported six-day blockage of the Suez Canal by container ship Ever Given compounded the problem. Some ships, carrying tens of millions of dollars in cargo, have been stuck in the sea outside ports near Los Angeles for 12 days at a time. The bottlenecks have Weingartz still waiting for equipment it ordered in the fall. “Typically we get our deliveries in February ahead of the spring rush,”

“We are going to be running out of products soon and when it’s starting this early in the season, that’s not good,” said Ron Weingartz. | CYDNI ELLEDGE FOR CRAIN’S DETROIT BUSINESS

Ron Weingartz said. “But some brands have only shipped us 30 percent to 50 percent of our order. That’s a huge challenge for us right now; just not knowing if and when we’ll get product.” Weingartz generates 40 percent of its revenue between March and June annually. The Toro Co., Andreas Stihl AG & Company KG and Kubota Corp. have struggled to fill orders, Ron Weingartz said. John Deere Co. is now struggling as well. “I don’t think we’ll have as good of a year just because we won’t have the product,” Ron Weingartz said. “We are going to be running out of products soon and when it’s starting this early in the season, that’s not good. Manufacturers don’t see an end in sight.”

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Weingartz is waiting for equipment it ordered in the fall. | CYDNI ELLEDGE FOR CRAIN’S DETROIT

Toro, Stihl and Kubota did not respond to inquiries on the matter. Representatives from John Deere declined to comment. Aftermarket replacement parts are an even larger problem, leaving lawn care companies in the precarious position of trying to find spare equipment in lieu of parts when primary equipment breaks down. “We didn’t experience too much under COVID-19 last year; the parts and service was still there,” said Dan Bywalec, president of multimillion dollar Livonia-based lawn care and horticultural maintenance firm D&B Landscaping Inc. “This year, 2021, has been a complete disaster. We have parts shortages that are affecting our vehicles now — from our dump trucks, pickups, trailers, lawnmowers, everything. It’s delaying all the services we offer.” D&B, which maintains the grounds for large corporate clients like Henry Ford Health System, has resorted to investing in expensive backup equipment to supplement primary equipment breakdowns and keep as much on schedule as possible. A commercial-grade zero-turn

lawnmower costs between $9,000 and $12,000, Bywalec said. Backpack blowers cost around $500 and string line trimmers (weed whips) cost roughly $300, he said. “We cut five days a week. Our equipment takes a beating and does break down,” Bywalec said. “This year, we’re going to need to have some backup equipment. A mower breaks down and you can’t get parts to fix it, you’re up the creek without a paddle. We can’t go back to our customers and tell them we can’t cut their grass this week because our equipment is broken. So we have to invest additional money into pieces of equipment — backup lawnmowers, backup blowers, backup string line trimmers — any piece of equipment we utilize on a daily basis. That’s cutting into our bottom line.” While large firms like D&B can tap reserve cash for backup equipment, the expenses can be too much for smaller operations like Flat Rockbased Stadium Lawn Care. “It’s a pain in the ass,” said Adam Kittle, owner and operator of Stadium Lawn Care and an officer with the Dearborn Police Department. “Stuff is always breaking down — belts, wheels

and bearings — and my supplier never has anything in stock. Parts orders are taking three weeks at least right now, if not longer. Downtime without my mowers means I can’t make money.” Kittle said he’s kept older equipment for backup but using that equipment costs him time. For instance, if his 60-inch zero-turn mower breaks down, he can use a 48-inch mower. But the smaller mower deck requires more passes on a lawn to complete the service, slowing down his entire operation that requires several mowings each day. “You make do with what you have,” Kittle said. “But until parts come in and everything is back up and running, we’re going to be struggling.” For Bywalec, the pandemic parts and equipment shortage is exacerbated by a labor shortage. D&B has struggled since the pandemic started to hire workers. The company, which employs 70 in the summer and 200 in the winter for snow removal services, has had three applicants since November. “This is the worst year I have ever seen for any labor help in our industry,” Bywalec said. “It’s really going to be difficult over the next three to five years. We’re hanging in but we’re going to see what direction this industry is going in and, right now, it’s not looking great. There’s just a lot to deal with in the industry.” The industry woes from commercial clients is certainly affecting Weingartz, but the rise in consumer demand is keeping its executives hopeful for a good year, even if it won’t match 2020. “Really, we just need people to be a little more flexible on what’s available to them,” Ron Weingartz said. “We’re just not going to have the selection this year, but we’ll still have stock and I’m hoping we’ll only be down 5 percent this year. But it’s way too early to tell.” Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh

INNOVATION

Movellus sees opportunity amid microchip shortage Ann Arbor company adds technology to existing microchips, increasing efficiency “THEY’RE SOLVING A PROBLEM THAT IS JUST GOING TO BE VERY COSTLY ON A GLOBAL SCALE.”

BY NICK MANES

In a wave fed by the COVID-19 pandemic, mixing soaring consumer demand for microchip-heavy goods with a vastly shrinking supply, a University of Michigan spin-out company finds itself well positioned to help alleviate some of the challenges. The ongoing microchip shortage, which has been simmering for more than a year but has reached a boiling point in recent months, has its roots in the upheaval last spring as the coronavirus crisis took hold, upending both supply chains and consumer behavior. While the squeeze has initially hit automakers and the supply base, it’s moving downstream and hitting all manner of retail companies selling consumer goods like TVs and computers. That’s where Movellus Circuits Inc. hopes to play a role. The company adds proprietary technology to existing semi-conductor chips, increasing performance by roughly 30 percent. The company spun out of the University of Michigan in 2014, and has offices in Ann Arbor, Toronto and San Jose, Calif. Movellus founder and CEO Mo Faisal said he’s seen directly how the chip issue is reverberating around a large variety of industries and believes his company’s solution will likely proFaisal vide some relief. Faisal, in an interview with Crain’s, likens Movellus’ technology to a challenge in the world of commercial air travel. A busy airport such as Detroit Metro will typically maintain a 45-minute window at each gate for a plane to land, preventing other planes from using that gate, he said. Because of that window, each plane needs to pack extra fuel, impacting its efficiency, he notes. Such an analogy directly correlates with the work of Faisal’s company, and streamlining the data that moves through a chip. “What we have figured out (at Movellus) ... we figured out a way to cut that 45 minutes down to five minutes through our technology,” Faisal said, referring specifically to the airport analogy. “And therefore improve the airport (or chip), as well as the data moving through it.” Movellus’ Maestro “intelligent clock” product is likely to be impactful for a host of nascent technologies and industries, according to Dave Hartmann, a mentor-in-residence at the University of Michigan’s Office of Technology Transfer, as well as an early investor and mentor to the company. “The new chips are ... an enabler for artificial intelligence that’s being used in autonomous vehicles, and it’s also being used in ... social networks, it’s being used in supply chain networks, and is of course being used in blockchain,” Hartmann said. “So it’s coming. It’s a wave that’s coming.”

The coming ‘storm’ As automotive plants idled in the spring of 2020 amid the worsening

— Jim Tenzillo, vice president, Invest Michigan

Movellus Circuits Inc. adds its technolgy to microchips, improving their peformance.| MOVELLUS CIRCUITS INC.

COVID-19 pandemic, chipmakers — long vendors to the auto sector as cars became more technologically advanced — moved capacity over to higher margin consumer electronics. Automakers have struggled to regain that capacity, and reports suggest that the car companies could stand to lose as much as $60 billion in revenue this year due to the shortage. But it’s not just automakers feeling the pinch now. In early March, Richard Galanti, the executive vice president and CFO of big box retailer Costco Wholesale Corp., told analysts that rising consumer demand for electronics goods such as TVs, computers and smart home devices are putting pressure on the retailer amid the chip shortage. “We expect these pressures to ease in the coming months, but it’s impacting everyone, of course,” Galanti said in the earnings call. Those pressures are what Movellus aims to alleviate. “So from one side, the supply shrunk and on the other side, the demand is just exploding,” said Faisal, noting that there’s only a handful of large chipmakers in the world able to provide significant capacity, and the infrastructure needed to bring about that capacity is costly and time-consuming. “It’s, unfortunately, a perfect storm.” That storm is something large industry players and federal officials are working to address as well. The White House is set to hold a virtual summit on the issue of domestic semiconductor production on Monday that is expected to include senior U.S. auto executives, including Ford Motor Co. CEO Jim Farley and GM CEO Mary Barra.

Solving a global program Citing the company’s private standing, Faisal declined to provide an annual revenue figure for Movel-

lus. He did say that its clients are in a variety of markets, ranging from internet of things devices, artificial intelligence and broadband internet, and include companies with billions in annual revenue. Faisal said the company is in the midst of raising a Series B fundraising round that he expects to close

later this year and bring in more than $10 million. Invest Michigan, an early-stage venture capital fund launched by the Michigan Economic Development Corp., has participated in multiple fundraising rounds for Movellus, which has raised more than $10 million in capital since its founding.

“They’re solving a problem that is just going to be very costly on a global scale,” said Jim Tenzillo, vice president at Invest Michigan. “So the fact that this technology is so innovative that there’s such a large acute problem in the marketplace — and one that’s not going away in the next two years — I think that’s really exciting.” Other investors in the company have included Stata Ventures, a Boston-area venture firm backed by Ray Stata, who founded Analog Devices Inc., a $60 billion semiconductor company. While the current bottlenecks facing technology and manufacturing companies seeking more chips is expected to be temporary, given long-evolving trends, Faisal’s company is poised for growth over the long term, he said. “If you look at sort of the trends in electronics, we always find more and more uses,” he said, noting the long list of consumer products that require chips, something that shows no signs of diminishing. “Like, it’s never shifted back.” Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

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APRIL 26, 2021 | CRAIN’S DETROIT BUSINESS | 7

COMMENTARY

Costs of the Pause are all too easy to see NIC ANTAYA/SPECIAL TO CRAIN’S DETROIT BUSINESS

BY CHRIS DOUGLAS

EDITORIAL

First steps on fixing a broken bottle law A

nyone who lived through the 1970s and 1980s in Michigan would recognize the conversation. How lucky we were to live in a state with a bottle-return law, how much better the highway shoulders looked compared with other states, free from crushed cans and bottles casually tossed out car windows. It truly was world-changing, one of the most visible — and popular — public policy achievements Michigan has ever seen. But it's not 1980 anymore. A whole world of consumer packaging and products has PART OF THE sprung into being PROBLEM IS that wasn't contemplated back then. And FAMILIAR: the bottle law as it SUPPLY AND stands is standing in the way of where the DEMAND ARE focus should be: imOUT OF WHACK proving Michigan's moribund recycling IN THE rates overall. RECYCLING Everyone know there's no deposit on STREAM. uncarbonated drinks. But it's less well-known that Michigan ranks last in the country in recycling rates, as reported by Eric Freedman and Chad Livengood in this week's Crain's Forum section. Part of the problem is a familiar business issue: Supply and demand are out of whack in the recycling stream. The very kinds of packaging that are subject to the deposit law — especially aluminum cans but also the PET plastic in pop bottles — are also the most profitable for recycling purposes. Taking them out of the larger recycling stream makes it that much tougher to pay for the broader commitment to recycling that's needed to stop filling landfills and improve

recycling rates. There is a complex web of incentives that have led Michigan to our current last-place ranking. There are a number of fixes that could improve the situation: ` Take Michigan’s deposit down to a nickel to match other deposit states. The soda companies will like the lower prices, and it will make the state a less profitable target for fraud. ` As part of that change, take the no-brainer option of expanding the types of products the law applies to, adding water, juice, tea and other drinks beyond soda and beer. ` Take a greater share of unclaimed deposits and devote the money to improvements in curbside recycling programs — and creation of them in the many places in Michigan where they don’t exist. ` Change the incentive structure on recycling by increasing “tipping fees” – the fees paid for dumping in Michigan landfills. This has the added benefit of making Michigan less of a destination for trash from outside the state. ` Possibly most important, Michigan must explore creative ways to make the recycling stream more profitable. That means getting plastic water bottles and other packaging into the same stream as Faygo bottles, to help bring economies of scale into play to the benefit of us all. One strategy tried in some European companies: Where one bottle is recyclable, all bottles should be recyclable, even if they don't have a deposit. Sustainability of this kind is an issue that Michigan can and should again lead on, with creativity, innovation and cooperation.

Great Lakes states that did not issue second shutdown. Fatalities in all of these states with differWhile the full ramifications of Gov. Gretchen Whitmer’s pandemic policies re- ing policies follow a similar pattern: an inimain unknown, it is possible to estimate tial spike early in the pandemic, a lull during the summer months and then ansome of the costs. Recent employment data from the federal other spike in the fall and early winter. If government shows that the second lock- specific policy interventions made as large down that started in November, the “Pause to of a difference as state officials claim, there Save Lives,” led to significant job losses in the would be noticeable differences in state restaurant and bar industry. For the two- trends. Banning indoor dining seems to have a and-a-half months the state banned indoor dining, more than 60,000 people lost their low chance of making a significant difference in changing the tide of new jobs, by far the largest decline cases in a state. Contract tracing among Midwestern states. data that is available tracks only a These job losses eliminated all small percentage of COVID-19 of the employment gains this incases to bars or restaurants. Only dustry achieved after Michigan’s 1.4% of cases have been traced to economy began to reopen in the a bar or restaurant in New York. summer. But by the end of the Four percent were traced to second shutdown, employment “community outbreaks” in Minwas down 23 percent from where nesota, a category that includes, it was before the second ban bebut is not exclusive, to bars and gan. In Illinois, which also prorestaurants. hibited indoor dining at the Similar statistics were reported time, employment fell less, by 15 Chris Douglas is an by the Michigan Department of percent. Indiana, Ohio and Wis- economist at the Health and Human Services in consin, states that restricted but University of October. Contract tracing data in did not ban indoor dining, saw Michigan-Flint job losses of 5 percent or less. and member of the New York found that nearly three-quarters of COVID-19 casThis is strong evidence that the Mackinac Center es were traced to household Pause was the cause of Michi- for Public Policy's gatherings. We should not expect gan’s abnormal job loss. Board of Scholars. a prohibition on indoor dining to It’s not yet clear how many He is also the significantly affect COVID-19 restaurants will end up closing author of "The as a result of the indoor dining Costs of Michigan's cases and fatalities when indoor ban, but it will likely be many. Second Lockdown." dining does not appear to be a significant source of infection. There is a limit to how long a This is likely why pandemic resmall business owner can survive a closure and loss of revenue before sponse plans by agencies such as the Center permanently going bankrupt. The Federal for Disease Control and the World Health Reserve’s 2020 Small Business Credit Sur- Organization did not recommend banning vey found that 17 percent of small busi- indoor dining, and generally recommended nesses would need to close or sell their much less severe restrictions than what business in response to a two-month loss of have been imposed in response to revenue. Only 14 percent had sufficient COVID-19. According to a CDC rating scale cash reserves to cover this loss. Forty-seven from one to five, COVID-19 would be a level percent of business owners said they would three pandemic. Suggested responses that use personal funds to keep their business only need be considered for such a pandemic include workplace social distancing, afloat. Consequently, even business owners quarantining contagious individuals, canwho were able to weather the lengthy shut- celing mass events and closing schools for down may have depleted their lifesavings less than four weeks. For a level five panin the process. Even before the second demic, which would be on the order of the lockdown went into effect, a September 1918 Spanish Flu, these interventions were 2020 survey by the Michigan Restaurant As- then officially recommended. Likewise, the sociation found that 23 percent of Michigan World Health Organization advised school restaurants said it is unlikely they’d still be closings only for a “severe” pandemic and workplace closures were only recommendin business in six months. If the Pause worked, it is hard to see it in ed for an “extraordinary severe” pandemic. Policymakers and the public health comthe data. The rate of new daily cases had already started to decline before the inter- munity have never explained why much vention went into effect, and while cases more draconian restrictions were imposed continued to drop throughout the period, in response to COVID-19 than what were the amount of testing fell too, by about 40 recommended in pandemic planning. Givpercent. Thus, the decline during this time en the massive costs of these restrictions period could also be explained by a decline with little apparent benefit over and above in testing. There was also no noticeable what less severe restrictions would have improvement to COVID-19 fatalities in provided, this is a question that should be Michigan compared to the surrounding answered.

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited for length or clarity. Send letters to Crain’s Detroit Business, 1155 Gratiot Ave, Detroit, MI 48207, or email crainsdetroit@crain.com. Please include your complete name, city from which you are writing and a phone number for fact-checking purposes. 8 | CRAIN’S DETROIT BUSINESS | APRIL 26, 2021

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

Racial equity in nonprofit sector expands possibility for youth BY BLACK NONPROFIT EXECUTIVE DIRECTOR ALLIANCE OF DETROIT

The harsh reality is that life in Detroit can be hazardous for Black youth. Many face hunger, poverty, mental health issues or have unstable housing while pursuing their education. So many are eager for career direction and a chance to positively impact the economy. They respond to mentoring that instills self-worth, confidence and a look at worlds outside their own. Despite the obstacles in their path, they are determined to succeed and do consume available resources. These youth may also lack a meaningful connection to those who have experienced similar life challenges. Importantly, as Black founders of Detroit’s community nonprofits born into these communities, we are making this connection by leading youth development organizations. Many of us experienced struggles on our own path to adulthood. We have a comprehensive understanding of the issues faced by those we’ve been called to serve, many of whom are not that far removed from us in age. Some of us may even still be struggling with challenges, but created our nonprofit to give back from our own experience however possible. As executive directors of color, we’ve encountered many obstacles that can easily be removed. We’ve been working in silos when our individual services are oftentimes complementary and part of the holistic approach needed to truly support our community members in need. There’s much Black executive directors can learn from each other to benefit our own organizations, too. This was the inspiration for our founding of our individual nonprofits. Through our collective knowledge and efforts, our potential when working together is limitless.

Supporting our growth We announce the next step in our unified vision — the formation of the Black Executive Director Alliance of Detroit (BEDAD). Currently comprised of nine Black nonprofit founders leading youth development organizations, we look forward to embracing Black executive directors from a wide variety of nonprofits. We are committed to working closely with each other, sharing supportive strategies, experiences and successes; and partnering in many ways to maximize our complementary skill sets and available resources. We understand the work that goes into building and sustaining a successful nonprofit organization and are committed to that journey. We want to accelerate our growth to expand our reach and elevate the call for social justice. Unfortunately, Black nonprofits tend to be underfunded in comparison to other nonprofits, but are needed today more than ever. Grant writing, finding physical properties for offices and programs and negotiating leases, or human resources management can be complex, daunting tasks for smaller Black-led nonprofits. We’re often able to secure funding for innovative programming, but not the dollars

for staffing those programs. Securing bank financing or building a banking relationship can be an extremely challenging task without deep pockets and we further miss out on support such as that offered through the recent PPP loans. We encourage larger, more established nonprofits, foundations and other sponsors to contribute to our work, help us make the case for the value in partnering with us, and explore nontraditional, creative approaches to seed and early growth funding and development. Lenders, consider our nonprofits in the context of the value we bring to the communities which we serve

and not the dollars in a bank account. In doing so, we will be improving the lives of our Black youth, fostering the next generation of Black leaders, role models. ... and executive directors. We invite you to explore our roster of Black founded and operated nonprofits. Review our qualifications, activities, programs and accomplishments. You will find amazing, inspiring progress for Detroit youth, with much more to come. Share in our efforts and successes. Atlantic Impact Anise Hayes, Executive Director atlanticimpact.org

Caleb's Kids Kiesha Jackson, Founder and Executive Director calebskids.org

JOURNi Richard Grundy, Co-founder and CEO www.journi.org

Detroit Phoenix Center Courtney Smith, Founder and CEO detroitphoenixcenter.org

The Lawn Academy Eric Miller, Founder and Executive Director lawnacademy.com

Developing Despite Distance Tiffany Brown, Founder and Executive Director developingdespitedistance.org Developing K.I.D.S. Kimberly (Newberry) Johnson, Founder, President & CEO developingkids.org

Midnight Golf Program Renee Fluker, Founder & President midnightgolf.org The Yunion Nicole Wilson, Executive Director theyunion.org

Take Heart, Michigan.

When “Financial security from generation to generation” is your wealth management firm’s tagline, you tend to take a long-term view of market performance. You also tend to be optimistic, given that historical market data overwhelmingly favors that mindset—even in the midst of a pandemic. A profound sense of gratitude helps. Gratitude to the pharmaceutical firms who have produced vaccines in record time; to the many who are visibly fighting the virus day and night at risk to their health; and to the equal number of good people who, beyond the spotlight, are providing products, services and hope to so many. As author Mary Anne Radmacher once said, “Courage doesn’t always roar. Sometimes it’s the quiet voice at the end of the day saying, ‘I will try again tomorrow.’” With you, and in good measure thanks to you, we will prevail.

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

APRIL 26, 2021 | CRAIN’S DETROIT BUSINESS | 9

SMALL BUSINESS SPOTLIGHT

Business succession plans key to peaceful transfer, long-term prosperity

GETTING READY FOR WHAT’S NEXT

BY JAY DAVIS

Taking over the family business wasn’t originally in the plan for Megan Ackroyd. Ackroyd earned a degree in supply chain management at Michigan State University before embarking on a career in corporate purchasing and sourcing. That path wasn’t fulfilling enough for Ackroyd, who fancied herself an entrepreneur. So she joined Ackroyd’s Scottish Bakery, where she learned there was no plan for carrying on the business from her grandfather. Al Ackroyd established a butcher shop in Detroit, Ackroyd’s Meat Market with his brother, Silas, in 1949. The business eventually expanded to baked goods with locations in Flint, Dearborn and Birmingham.Allan Ackroyd, Al’s son and Megan’s father, began working there full time as a manager after graduating from MSU in 1976 with a degree in food economics and was owner for more than 30 years. The bakery’s current headquarters, in Redford Township, opened in 1972. Megan Ackroyd joined the family business full time in 2010 as director of business development. She became president in 2015 and took over as owner in 2016. Taking the baton from her family members was a strenuous process, she said. “They didn’t have a plan,” the 40-year-old Royal Oak resident said of her father and grandfather. “There was nothing in place as far as a succession plan. I didn’t just want them to just close the doors one day, lock them and that be the end of it. I wanted something more strategic in place. Our family, the employees and our customers deserved that.” That’s not uncommon. While experts say such plans are essential and can play a pivotal role in saleability and lay a concrete path for how to move forward, studies find most small businesses don’t have a plan. Dennis Theis, director of principal audit, accounting and outsourced solutions for Lansing-based Maner Costerisan, has worked with businesses on succession plans for more than 30 years. He said plans should be in place years in advance of changes. But with most small business owners focused on day-to-day operations, they put off putting together a succession plan, he said. “Lack of familiarity plays a role, too. This may be a one-time thing for a lot of companies,” Theis said. “Most people aren’t going to be an expert at it. I think a lot of business owners think they can sprint until the end and there’ll be qualified people to take over. It’s hard to physically transition a business to somebody else, or to sell it.”

Engaging professionals

Third-generation Ackroyd’s Scottish Bakery owner Megan Ackroyd joined the family business full time in 2010 and took over as owner in 2016, after her grandfather died. YIELD PR

READ ALL OF CRAIN’S SBS PROFILES AT CRAINSDETROIT.COM/SMALLBUSINESSSPOTLIGHT 10 | CRAIN’S DETROIT BUSINESS | APRIL 26, 2021

From

Ackroyd discussed a succession plan with her father when she took on a full-time role at the bakery, prior to her grandfather’s death in 2016. She said her grandfather didn’t want to deal with the process. She sought out a lawyer, a family friend, to help with the planning, along with a certified public accountant to assist in the See SUCCESSION on Page 11

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SUCCESSION

business’ value goes with them,” he said. “You have a lot of people who are loyal to brands and businesses who won’t patronize a business if they don’t have or can’t build a relationship with the new owner.”

From Page 10

process. That presented some issues, too. Neither professional had any experience with succession planning. The CPA had no experience with Theis valuation plans and incorrectly filed paperwork that made Megan Ackroyd 100 percent owner of the business, cutting out her father who was supposed to have 50 percent ownership. “My father continues to be paid and is definitely a part of our success,” she said. “We went on quite the ride to get to where we are now. We all learned a lot. ... You have to work with experienced professionals. The hard part for us was that first generation. My grandparents didn’t want to listen to their son and granddaughter. They’re more willing to listen to a CPA or an attorney. It was really helpful to have that third party involved.” When Ackroyd's grandfather died, her grandmother became owner of the business. That hampered Ackroyd in terms of decision-making and growing the business, as she had to seek her grandmother’s approval whenever moves were to be made. When Ackroyd and her father bought the business from her grandmother, she said they overpaid to make her happy. That hurt when it came time to purchase new equipment because

Sharing the plan

Ackroyd’s Scottish Bakery, headquartered in Redford Township, has been in the Ackroyd family since it opened in Detroit in 1949. | ACKROYD’S SCOTTISH BAKERY VIA INSTAGRAM

the funds weren’t available to make necessary purchases. “We eventually got to a place where (my grandmother) is happy and we’re able to continue to grow the business,” Ackroyd said. Prior to Megan joining Ackroyd’s full time, the company’s best year saw it make about $400,000. In recent years, Ackroyd’s has averaged at least $1 million in sales annually. The bakery closed its brick-andmortar location early in the pan-

demic and has shifted to curbside pickup and ships all over the country. Keeping the company in the family was important to Ackroyd, who notes its customer base is four generations deep. Theis said that plays a role in succession planning, too. “If you own a business with this great reputation, and you don’t transition (to a new owner) in a timely manner, when the original owner leaves, a significant portion of the

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See SUCCESSION on Page 13

Plan, plan, plan: Long before the succession takes place, the founder of the business should write a business plan, an estate plan and a succession plan all at once. These plans must be constructed at the same time because they influence each other. Create an advisory board: Advisory boards are a valuable sustaining resource. The board should include a lawyer, accountant and organizational specialist and at least one other person from your industry whom you respect. Often, the business owner will offer the board members an honorarium instead of a salary. If liability issues are a concern, the business owner can call the board a council. Business owners will benefit from group discussions of important issues. Set a date: As you go through the planning process you will be able to determine a realistic and financially advisable termination date. When your plans are concluded, you should know exactly when the leadership evolution process will be complete and you should be ready to hand your business over to the next leadership. Let go: One of the central goals while writing a business plan, estate plan and succession plan is to create financial security that has no ties to the business. The company owner or founder needs to be financially independent. If not, there will be temptation to interfere with the business. SOURCE: THE FAMILY BUSINESS CONSULTING GROUP

Asian American Pacific Islander Heritage Month May 2021

20th Anniversary

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Jesse Venegas has learned a lot working at the company his father, Frank Venegas Jr., started in 1979. Jesse is a vice president of Ideal Group — a family-owned and operated business in Detroit that includes construction, manufacturing and material handling services across eight companies that has been recognized in Crain’s Fast 50. Frank Venegas continues as company chair and CEO while his brother, Loren Venegas, is company president. Over the last 15 years or so, Frank has been prepping Jesse and his sister, Linzie, to take over the reins of a company that has more than 600 employees. Jesse, 39, and Linzie, 41, also a vice president, have worked at Ideal Group for 19 and 21 years, respectively.They have been taking over large portions of Ideal companies and on track to become majority owners of many of the businesses. “We’ve had different dates as benchmarks since we started. We had to decide if we wanted to work in the family business by 25 and if we wanted to become an owner by 30,” Jesse Venegas said. “At 30 is when we started the succession steps for ownership transfer. Our customers have been aware of the plan for years, and the employees, too. It’s important for us to make them

LESSONS LEARNED Succession plans are particularly essential for family-owned businesses. Following is advice on what to do:

In recognition of the Asian Pacific American Chamber of Commerce’s (APACC) 20th Anniversary, we celebrate Asian American Pacific Islander Heritage Month during the month of May 2021. APACC celebrates 20 years of facilitating business relationships among Asian-owned and U.S.-based companies and promoting the economic advancement of Asian American Pacific Islanders. Thank you to our sponsors for supporting us and the Asian American Pacific Islander business community. Learn more at APACC.net.

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e 11

APRIL 26, 2021 | CRAIN’S DETROIT BUSINESS | 11

CRAIN'S LIST | STAFFING-SERVICE COMPANIES Ranked by 2020 revenue COMPANY ADDRESS PHONE; WEBSITE

TOP LOCAL EXECUTIVE(S)

REVENUE ($000,000) 2020

REVENUE ($000,000) 2019

AVERAGE DAILY EMPLOYMENT 2020

ANNUAL PAYROLL 2020

NO. OF W-2 FORMS ISSUED 2020

NO. OF OFFICES IN METRO DETROIT 2020

KELLY SERVICES INC.

Peter W. Quigley 1 president and CEO

$4,516.0

$5,355.6

100,000

370,000

ACRO SERVICE CORP.

Ron Shahani president and CEO

$446.5

$390.6

1,842

$85.1

5,030

TATA TECHNOLOGIES INC.

Warren Harris CEO and managing director

$365.2 2

$400.0 2

STRATEGIC STAFFING SOLUTIONS INC.

Cindy Pasky founder, president and CEO

$347.6 2

$380.7

STEFANINI INC.

Spencer Gracias CEO

$296.0

$274.0

1,395

$89.9

2,162

TECHNOSOFT CORP.

Radhakrishnan Gurusamy president and CEO

$150.7 2

$165.0 2

EPITEC INC.

Jerome Sheppard CEO Josie Sheppard president

$131.6

$125.0

1,352

$106.7

2,249

THE DAKO GROUP

Scott Baker president and CEO

$76.0

$75.4

800

$58.5

1,300

RAPID GLOBAL BUSINESS SOLUTIONS INC. (RGBSI)

Nanua Singh chairman and CEO

$65.3

$92.3

520

$37.3

2,215

RELIABLE SOFTWARE RESOURCES INC.

Ravi Vallem CEO Venkat Gone president Sridhar Kodati CFO

$60.3 2

$66.0 2

ARROW STRATEGIES LLC

Jeffrey Styers president and CEO

$59.0

$31.3 2

750

$37.9

1,888

W3R CONSULTING

Eric Hardy president and CEO

$47.9

$48.4

313

$13.4

347

ICR SERVICES

Paul Gutierrez president and founder

$40.2 2

$44.0 2

KYYBA INC.

Thiru Ganesan president and CEO

$40.0

$52.9

AUTOMOTIVE QUALITY & LOGISTICS INC.

Sangeeta Ahluwalia CEO

$35.5

$34.1

494

$9.1

1,576

STAFFWORKS GROUP

L. William Brann III CEO Jason Brann president and COO

$35.0

1,800

$35.0

10,000

MALACE & ASSOCIATES INC.

Larry Malace II CEO

$33.7

$29.6

1,020

$24.9

2,397

CONTRACT PROFESSIONALS INC.(CPI)

Steven York chairman and CEO

$26.8

$32.8

400

$23.0

750

BLUE CHIP TALENT

Nicole Pawczuk CEO

$24.3

$26.3

200

DRIVERSOURCE INC.

Jinan Dalloo co-owner and CEO David Olshansky co-owner and COO

$12.5

$18.0

220

$8.5

220

NOVA CONSULTANTS INC.

Sunil Agrawal president

$9.4 2

$10.2

ETCS INC.

Ravi Kapur president and CEO

$4.6 2

$5.0

NUTECHS LLC

Craig Valassis CEO and owner

$4.4 2

$4.8

TRILLIUM TEAMOLOGIES INC.

Greg Stanalajczo vice president and CMO

$2.7

$2.9

HUMAN CAPITAL STAFFING LLC

Mary Oxendine Adams president

$2.1

$5.0

$2.1

250

3 4 5 6 7 8 9 10

15 16 17 18

999 West Big Beaver Road, Troy 48084 248-362-4444; kellyservices.com 39209 W. Six Mile Road, Suite 250, Livonia 48152 734-591-1100; acrocorp.com 41050 West 11 Mile Road, Novi 48375 248-426-1482; tatatechnologies.com 645 Griswold St., Suite 2900, Detroit 48226 313-596-6900; strategicstaff.com 27100 W. 11 Mile Road, Southfield 48034 248-357-2866; stefanini.com One Towne Square, 6th Floor, Southfield 48076 248-603-2600; technosoftcorp.com 24800 Denso Drive, Suite 150, Southfield 48033 248-353-6800; epitec.com

2966 Industrial Row Drive, Troy 48084 248-655-0100; dakogroup.com 1200 Stephenson Highway, Troy 48083 248-589-1135; rgbsi.com

22260 Haggerty Road #285, Northville 48167 248-504-6869; rsrit.com

27777 Franklin Road, Suite 1200 , Southfield 48034 248-502-2500; arrowstrategies.com 1000 Town Center, Suite 1150, Southfield 48075 248-358-1002; w3r.com 28601 Lorna Ave., Warren 48092 586-582-1500; icrservices.com 28230 Orchard Lake Road, Suite 130, Farmington Hills 48334 248-813-9665; kyyba.com 14744 Jib St., Plymouth 48170 734-459-1670; aql-inc.com

1700 Harmon Road Suite 2, Auburn Hills 48326 248-416-1090; staffworksgroup.com

5700 Crooks Road, Suite 112, Troy 48098 248-720-2500; malacehr.com 4141 W. Walton Blvd., Waterford 48329 248-673-3800; cpijobs.com

43252 Woodward Ave., Suite 240, Bloomfield Hills 48302 248-858-7701; bctalent.com 15340 Michigan Ave., Dearborn 48126 800-887-9095; driversource.net

21580 Novi Road, Suite 300, Novi 48375 248-347-3512; novaconsultants.com 21275 Mullins Ave, Warren 48089 248-763-9467; etcsinc.com 39533 Woodward Ave., Suite 145, Bloomfield Hills 48304 248-593-5700; nutechs.com 219 S. Main St., Suite 300, Royal Oak 48067 866-TEAM-TTI; trilliumteam.com PO Box 36, Birmingham 48012 248-593-1950; hcsteam.com

Byline/Source: Researched by Sonya D. Hill: shill@crain.com | This list of temporary-employer/staffing-service companies and companies that provide such services is an approximate compilation of the largest companies in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. It is not a complete listing but the most comprehensive available. Crain's estimates are based on industry analyses and benchmarks, news reports and a wide range of other sources. Unless otherwise noted, information was provided by the companies. Companies with headquarters elsewhere are listed with the address and top executive of their main Detroit-area office. G-Tech Services Inc which was No. 15 on last year's list declined to participate. NA = not available. NOTES: 1. Succeeded George Corona as CEO on Oct. 1. 2. Crain's estimate.

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SUCCESSION

things,” he said. “That’s part of the reason it took (two-plus years). It’s something that’s very complex and emotional. Everyone has their own unique experiences with (succession planning). ... “You’re thinking about things like your legacy and the future of your business. Oftentimes firms, certainly in the private equity industry, they may have a successful investment track record, but have issues when it comes to succession. There aren’t a lot of private equity firms that get to 22 years and six funds. That’s something our partners are happy with. ”

From Page 11

aware of the plan so they know the faces.” “A lot of people associate certain businesses with their founders,” Jesse Venegas said. “It’s been really important for Linzie and I to be a part of those meetings with GM and other (customers) so they know who we are. The customers, and our employees, have to feel comfortable and confident in the next generation or there’s a possibility we could lose that business.” Theis believes having a well-thought out, detailed plan can put a business in a better position to succeed, along with giving new leaders, staff and customers time to become better acquainted with the new leaders. It can also help a business prepare for the unexpected, Theis said. Theis shared a situation in which the owner/operator of a business died unexpectedly. The owner’s spouse, with a vague succession plan in place, held the business together until it was sold. “The death wasn’t anticipated, and the business ultimately got to a successful point,” Theis said, “but they made it a lot harder because they didn’t have a very detailed plan in place.”

Plans essential for nonfamily businesses, too Huron Capital, a Detroit-based private equity firm established in 1999 with six private equity funds aggregating close to $2 million in committed capital, in February announced Jim Mahoney as co-managing partner alongside company co-founder Brian

Unwritten pact

Frank Venegas (seated) established Ideal Group in 1979 and has run the group with his brother, Loren (far left). Frank’s children, Linzie Venegas (far right) and Jesse are in line to succeed their father. | IDEAL GROUP

Demkowicz. The move was made as part of the firm’s management succession plan, designed to strengthen the foundation of the firm. Mahoney will take over the role when Demkowicz leaves the business. Huron Capital started its planning in 2018, according to Mahoney, who joined Huron Capital in 2007. In his new role, Mahoney will manage Huron Capital’s day-to-day operations while continuing to lead new investment opportunities. He also serves on the board of six active Huron Capital portfolio companies. Mahoney called the succession process deliberate.

WE BUILD TALENT

SO YOU CAN BUILD YOUR BUSINESS

“It was very much a brick-by-brick exercise. In the private equity industry, your investors are your partners,” he said. “We work to ensure they had insight and visibility while the process was going on. “We recently celebrated the 20-year anniversary of the firm. To think about 20 more years, it was critical to put succession activities in place to establish leadership for the next 20 years. ...” Huron Capital leaned on outside advisers who have handled private equity succession planning, along with some industry peers, Mahoney said. “Putting something on paper vs. executing it is clearly two different

With some businesses, word is bond. Rod Parks Sr. owns Parks Old Style Bar-B-Q in Detroit, which was opened in 1964 by his parents, Edward “Terry” and Verna Parks. Parks Sr. took over in 1999 following his parents’ retirement. His son, Rod Parks Jr., is president and general manager. Parks Sr., 77, has three grandchildren who have shown no interest in taking over in the future. “At some point in time, the business is going to leave the family or close,” Parks Sr. said. “... If my son isn’t there, my two nephews couldn’t carry the business on. It’ll either get sold or die if I’m not in the picture.” The succession plan for Parks’ restaurant doesn’t include any paperwork. Parks Old Style Bar-B-Q, with 12 employees, is a corporation. Corporate minutes are modified to reflect any change in ownership, Parks Sr. said. Parks Jr. is acknowledged as heir apparent and runs day-to-day operations while Parks Sr. winters in Florida. Parks Sr. and his wife, Connie, pur-

chased the building at 7444 Beaubien St. and its fixtures from his parents. The corporation doesn’t own the building and fixtures. The building, for insurance purposes, is worth $150,000. Parks Sr. said having no written plans hasn’t presented any problems. “People have asked me what I’d be looking for if I sold,” Parks Sr. said, adding the asking price starts at $1.2 million. “I’ve had people inquire, or they’ll come in and want to talk to the owner. If I’m there, I’ll talk to anybody. People want to invest at times. There’s no investment opportunity there, but I’ll always listen.” Theis advocates for written succession agreements but said they’re not an end-all-be-all. If a business owner dies and there’s no written plan, the business can still live on provided there is management in place. “That really can determine how much (a buyer) will be willing to pay for the business,” he said. “The company may operate well and have a good financial performance with the key owner. But if the key owner is gone, what’s the risk that the company can’t perform at the same level as before? That’s really what you’re trying to do with succession: build those next layers of leadership that can operate going forward. ...” Succession planning in general can be interesting, Megan Ackroyd said. Everyone must be on the same page, which can be difficult to accomplish. “Especially as a family-owned business, you have to have difficult conversations related to finances, roles in the business. It can be incredibly challenging.” Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981

Malace|HR would like to thank our amazing team for all of their hard work and dedication to the growth and success of our organization. For 23 years Malace|HR has been providing opportunities that change people’s lives. We continue to support the goals of our clients and the dreams of our employees. Malace|HR has the right jobs, right now!

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APRIL 26, 2021 | CRAIN’S DETROIT BUSINESS | 13

FINANCE

Overall VC investment in Michigan declines in 2020 More companies got venture deals in 2020 than 2019, but at smaller dollar figures BY NICK MANES

More deals for less money. That was the main story line for Michigan startups seeking venture capital funding in the pandemic-ravaged year of 2020. A pair of recently released reports by the Michigan Venture Capital Association and the Michigan Angel Community show that despite a “pause” in the spring of 2020 as the COVID-19 pandemic began its first U.S. surge, Michigan companies still enjoyed the largesse of venture capital and angel investment. In 2020, a total of 88 Michigan-based startup companies received $257 million from Michigan venture capital firms, according to the 2020 Michigan Venture Capital Association Research Report. By comparison, 71 companies received over $2 billion in investment in 2019, according to data from the Novi-based MVCA. However, the sharp spike stemmed from Rivian Automotive LLC obtaining about $350 million in new investment. Ara Topouzian, MVCA’s executive director, acknowledged the investment decline, but noted that activity overall was far better than he, or most others, expected last March and April. At that time investors took a time-

Topouzian

Gross

out from new deals and worked to make sure that their existing portfolio was suited to weather the storm, said Topouzian. That period ended fairly quickly, by the early summer of last year, and new deals commenced. “I think the pause button is no longer,” said Topouzian. “It allows the work to continue.” Startups relying on dollars from angel investors also saw a decline, according to the 2020 Michigan Angel Community report, released last week. In 2020 a total of 102 companies received $49.5 million from the state’s angel investors, according to the group’s 2020 report. That’s down from $73.6 million to 106 companies the year before. The Michigan companies receiving angel investment employ a total of 978 people, according to the report. The number of venture-backed

startups in Michigan now stands at 165, an increase of 17 percent over the last five years, according to the report. Startup or early-stage companies received the vast majority of VC dollars last year, with 65 percent going to companies in that stage of growth. 17 percent was considered growth or expansion capital, and 11 percent was seed capital. Just 1 percent was for ideation or pre-seed funding, an increasing focus for investors. “The Michigan venture capital community demonstrated resilience and strength to support companies that faced unprecedented challenges in 2020, while also providing growth capital to companies poised to thrive in the accelerated digital economy,” Michael Gross, MVCA chairperson and managing director at Farmington Hills-based VC firm Beringea, said in a statement. “As we look to a post- pandemic future, MVCA members can lead a new chapter of economic expansion in Michigan, building on the deep heritage of innovation in our great state.” Approximately 62 percent of all the VC money invested in Michigan companies last year went to firms in the life science and health care space, according to the MVCA re-

port. Another 32 percent went toward IT companies. While some progress has been made, the state’s venture community remains dominated by white men, according to numbers in the MVCA report. Investment in companies run by white men actually increased from 106 in 2019 to 119 last year. Twenty-five companies run by people of color received VC investment last year, along with 19 women-owned businesses and two companies run by people identifying as LGBTQ. Anecdotal indications so far in 2021 show that venture capital in Michigan could be heading toward a big year. Earlier this month, in the same week, Rochester-based corporate financial software company OneStream Software LLC and Detroit-based e-commerce platform StockX LLC announced separate investments totaling nearly $500 million. Several other “mega-deals,” or investments of $100 million or more, were reported in the first quarter of 2021, according to the quarterly Venture Monitor report by Pitchbook and the National Venture Capital Association. Nationwide, VC investment activ-

ity for the first quarter of 2021 was $69 billion in 3,987 deals. Bobby Franklin, the president and CEO of the NVCA, said in a statement that ongoing current events could help position the nation’s startups and venture capital sector for further growth. “The US venture industry started off 2021 with a record quarter, possibly heralding a strong year for startups across the country. As the nation recovers from the COVID-19 pandemic, high-growth startups are well-positioned to help the economy recover and grow,” Franklin said in the release. “A key opportunity for US VC and startups will be if the new Biden Administration and Congress enact key policies crucial to the startup ecosystem as they pursue the president’s Build Back Better agenda,” Franklin said. “Investments into infrastructure, climate, and research and development have the potential to help spur new company formation, if implemented correctly. NVCA will continue to work hard to engage Capitol Hill on key areas of upcoming policy proposals that could benefit the venture industry.” Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes SPONSORED CONTENT

THOUGHT LEADERSHIP FORUM

TALENT SPONSORED BY LOCKTON

4 IDEAS FOR ATTRACTING AND RETAINING TOP TALENT

any HR leaders who participate in the Lockton Talent & Culture Michigan Council, along with many Lockton clients, have voiced concerns about their inability to find talent fast enough. Unfortunately, many candidates accept an offer but continue their search. They quickly leave for the next best opportunity, causing turnover issues. Meanwhile, tenured employees are burned out because they are filling in the gaps. In today’s candidate-dominant job market, talent acquisition is a priority— and challenge. While this is not a new phenomenon, the dynamics have changed dramatically, thanks to COVID. How can employers increase their odds of landing and retaining top talent? Consider four ideas.

Make flexible work arrangements a permanent feature. The majority of workers quickly adapted to a remote work situation and are not inclined to give it up. And those workers seeking new employment today are focusing their searches specifically on jobs that will give them flexibility via remote or hybrid work arrangements. If you don’t already have one, it might be time to create an official, permanent remote work policy. Not only

14 | CRAIN’S DETROIT BUSINESS | APRIL 26, 2021

does this make your employees happy, but remote work also means you can cast a wider net, looking for new talent in just about any location.

Emily Annand, strategic consultant, benefits & human capital, risk management, for Lockton Michigan.

Ensure your culture is simple and lived daily. Whether you like it or not, your culture has shifted during the last year. Actively reshape your culture and your employment brand. Update your communication channels and technologies to account for the various workspaces employees occupy today. As you consider all aspects of how employees work, don’t forget to rethink the entire candidate experience. Your recruiting process, your offer and your work culture must be highly compelling.

Create a strong sense of connection. All employees, including the newest ones, want to feel a sense of connection, even when remote. Prospective candidates want to envision themselves working within the company’s brand and culture. Get creative and offer fun opportunities for people to interact. Ensure strong communication in all directions throughout the organization. Offer more relevant perks. Money saved on office space and other office expenses can be redirected in creative ways, such as a new laptop, gift cards to use for coffee and snacks, a stipend to help pay for connectivity, a new desk or chair, or even an allowance to upgrade their home office. Offer support for back-up childcare and elder care, along with discounts on gym memberships. Employers who continue to adapt in real time are the most likely to succeed. Lockton’s Michigan benefits practice and talent and culture team are both dedicated to helping you design effective strategies for attraction and retention. If you’re ready to win the war on talent, please email Emily Annand at EAnnand@ Lockton.com.

INSIDE: The views from retailers, environmentalists and legislators. PAGES 18-19  Chad Livengood: Bottle law makes other recycling less financially viable. Here’s how to fix that. PAGE 20  Michigan ER doc solves a very Michigan problem with in-home can returns via machine. PAGE 21

RECYCLING

A DECADE OF DECLINE A worker at Schupan & Sons Inc.’s recycling plant in the West Michigan city of Wyoming maneuvers a bale of crushed aluminum cans. | SCHUPAN & SONS INC.

Michigan pioneered litter control. Now its recycling rate is down in the dumps. | BY ERIC FREEDMAN MICHIGAN’S RECYCLING landscape is gray, not green, with a recycling rate that lags far below the national average. One estimate put Michigan’s residential recycling rate at about 15 percent, the lowest in the Great Lakes region and one of the country’s lowest. Another study done in 2020 by BigRentz, a national equipment rental network, says Michigan dumps more waste per capita in landfills than any other state. There are several major reasons for the poor performance, experts say, including low landfill dumping fees, poor recycling infrastructure in parts of the state, inadequate public education and limited markets for some recyclable materials. The COVID-19 pandemic also

closed some recycling facilities and container drop-off spots for months. And Michigan got hit when China banned the import of most waste materials in 2018, asserting that much of the “recyclable” material shipped from the U.S. was contaminated and couldn’t be processed. Like most sectors of the economy, the past year has been unusually challenging for the recycling industry. At the onset of the pandemic, concerns ranged from unknown but possible health risks from handling curbside material to the shutdown of drop-off centers and recycling plants, said Kerrin O’Brien, executive director of the Michigan Recycling Coalition. Since March 2020, many tradi-

tional commercial customers like restaurants and offices have closed or cut back, meaning they don’t generate the usual volume of recyclable materials. Residential customers are producing more materials, but haulers need different trucks and equipment to handle them. “The commercial sector produces higher-value recyclables” O’Brien says, while materials collected through residential curbside pick-up is mixed together and harder to manage. “We need to make recycling at the curb available to everyone for all materials, but recycling doesn’t compete with the cheap cost of landfill in the state,” she said. See RECYCLING on Page 14

Tyrone Mattison of Detroit returns cans at Mike’s Fresh Market in Detroit on March 30. | NIC ANTAYA/SPECIAL TO CRAIN’S DETROIT BUSINESS APRIL 26, 2021 | CRAIN’S DETROIT BUSINESS | 15

RECYCLING

crea cou “I dim from keep O rede ey f dep ers a velo Th stro as re call “W dire recy iden Cha B posi for stor “W expa sive Man (retu sma M hea dirty men nel In con big“it’s con

From Page 15

Lawmakers are talking about reviving legislation that died last year to update the state’s solid waste laws, a topic that sounds nerdy and arcane to many citizens. However, the one aspect of recycling that seems to catch public and press attention is the perennial effort to modernize and expand the 10-cent deposit law for carbonated beverages — commonly known as the “bottle bill” — or change how the money from unredeemed containers gets spent. The impetus behind the 1976 law was public “disappointment in the amount of litter in our outdoors,” said Amy Trotter, executive director of Michigan United Conservation Clubs, which spearheaded a successful citizen petition drive to put the issue on the statewide ballot. Advocates “had developed the concept over time for a bottle deposit law but kept running into roadblocks in the Legislature,” Trotter said, so they turned to the voters, aided by strategic support from a close adviser to Gov. William Milliken, a Republican. The 45-year-old law has achieved its litter cleanup goal, Trotter says, and Michigan residents are “doing a really good job of recycling their beverage containers” — the ones with the dime deposit, that is. “Our recycling rate is not low because we have a bottle bill," said Sean Hammond, policy director at the Michigan Environmental Council. “The bottle bill has a good side benefit, but it’s ultimately about pollution prevention.” Bills introduced in February by Sen. Sean McCann, D-Kalamazoo, and Rep. Christine Morse, D-Portage, would extend the 10-cent deposit on soft drinks, beer and other carbonated beverages to containers for all other non-carbonated beverages, excluding milk containers. The proposal, endorsed by the League of Conservation Voters and Michigan Environmental Council, would let consumers bring any recyclable container to a large store while allowing smaller stores to have smaller takebacks. In addition, it would establish a container handling fund to reimburse dealers and distributors on a per-bottle-basis. McCann describes the current law as “the most widely used and accepted state conservation program in state history.” “It is time for us to build on that

Tyrone Mattison of Detroit returns cans at Mike’s Fresh Market in Detroit. | NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS

should be in a grocery store,” said Jamal Abro, owner of the Mike’s Fresh Market supermarkets in Detroit. For grocers, there’s “a lot of overhead” involved in running an instore recycling center, and crushed cans, plastic bottles and broken glass bottles take up valuable space within the storage areas of a store, Abro said. “Don’t get me wrong, we do sell (beer and pop),” Abro said. “But we don’t make good margins on it. We sell pop below cost sometimes.”

Declining bottle redemptions Crushed cans at Mike’s Fresh Market in Detroit. | NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS

success,” McCann said. “We have established a strong recycling culture, and it makes no sense that Michigan residents aren’t able to return a deposit on plastic water bottles and other single-use containers.”

Opposition to adding new containers to the deposit law has come primarily from retailers required to accept the returns and beverage distributors. “This is not something that

An estimated 3.8 billion to 3.9 billion returnables are sold annually in Michigan. The Michigan Department of Treasury said $381.1 million was collected in 2019, the most recent year with complete figures, and typical yearly refunds have ranged from $346 million to $426 million since 2000.

However, Michigan’s bottle deposit redemption rate has been in steady decline since 2010. The rate dropped below 90 percent for the first time in 2018, when it was 89 percent. It dipped slightly more to 88.7 percent in 2019. In 2010, 96.1 percent of all bottles and cans were redeemed for the 10-cent-per-container deposit, according to the Michigan Department of Treasury. The downward trend is troubling for at least two reasons: For manufacturers that rely on recycled material, it reduces the supply of what O’Brien describes as “very high-quality material, already separated. People are cleaning it out because it’s going to grocery stores.” And it suggests that the inflation-shrinking dime is a weakening incentive to consumers — 10 cents in 1976 is equivalent in purchasing power to only 4.62 cents today. A stronger state economy makes it less likely people will return a container to get back a dime. There’s no serious talk about in-

Bottle deposit redemptions declining The coronavirus pandemic has created a backlog in redemption of bottles and cans subject to Michigan’s 10-cent deposit law. Prior to the pandemic, Michigan’s redemption rate was already in decline. Percent of deposits refunded

Total bottle deposits collected $450 million

$381.1 million

400

100%

89 percent

300

250 200

150 100

‘90

‘92

‘94

‘96

‘98

‘00

‘02

‘04

‘06

SOURCE: OFFICE OF REVENUE AND TAX ANALYSIS, MICHIGAN DEPARTMENT OF TREASURY

16 | CRAIN’S DETROIT BUSINESS | APRIL 26, 2021

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‘14

‘16

‘18

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‘90

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CRAIN’S DETROIT BUSINESS GRAPHIC

RECYCLING creasing the deposit, already the country’s highest. “It’s hard to change from that dime,” Hammond said. “It has to go from a dime to a quarter if you’re keeping with one coin.” On the other hand, the declining redemption rate means more money from escheats — the unclaimed deposits that get funneled to retailers and the state Cleanup and Redevelopment Fund. The proposed expansion faces strong opposition from critics such as retailers and business groups that call it unworkable and onerous. “We can all agree the state is in dire need of a reset as it pertains to recycling,” said Martin Manna, president of the Chaldean American Chamber of Commerce. But adding new bottles to the deposit law should not be “a burden”for small grocers and conveinence store owners, Manna said. “We believe surely that we should expand the program and be inclusive and take other types of returns,” Manna said. “We just don’t believe (returnables) should be taken to small businesses or stores.” Manna cited concerns about health and safety, such as “taking dirty bottles back to a food establishment,” as well as merchants’ personnel and payroll costs. In addition, Manna said many consumers buy their beverages at big-box stores or supermarkets but “it’s convenient to return them to convenience stores” that don’t re-

Drumm

Manna

ceive much of the proceeds from unredeemed containers.

‘Extremely burdensome’ Under the existing system, 25 percent of the unclaimed dimes go to beverage retailers, while the balance supports the state’s cleanup of environmentally contaminated properties. Allocation of the 25 percent is based on the amount of returns, Manna said, and for small stores “it’s not much money, having to hire people and taking away much-need space.” Amy Drumm, the vice president for government affairs at the Michigan Retailers Association, advocates a thorough review of the current container deposit law to assess whether it’s accomplishing the state’s overall recycling goals — something she contends it isn’t achieving. “It’s extremely inefficient, extremely burdensome for stores, and with pandemic concerns about contaminants, food safety in stores, that brings this full circle,” Drumm said. Beyond beverage containers,

Drumm said Michigan has done “really poorly” in investing in recycling infrastructure. “It’s really a patchwork, depending on funding,” Drumm said. “Every community has its own rules on what to accept. There’s no convenient access.” Drumm added: “If you’re walking downtown in a community or stopping at a state-run rest area and there’s a trash can, there should be a recycling bin.” Michigan’s more rural areas face particular challenges in implementing cost-effective recycling programs. They’re often distant from markets for the collected material and sometimes rely on grants to implement or expand programs. Ishpeming Township, near Marquette, for example, recently received $71,000 in “Renew Michigan” funding from the state Department of Environment, Great Lakes and Energy and the national nonprofit Recycling Partnership to buy about 1,300 recycling carts and a trailer for recycling glass, according to township Supervisor Jim Nenkervis. Whether the new program reduces litter in the parks and roadsides remains to be seen, Nenkervis said. “I think we’ll still have problems with glass in the parks because of the kids,” he said.

Legislative logjam The COVID-19 pandemic drew at-

tention to flaws in the system as re- deposits from unredeemed contailers were forced to shut down tainers exceed $50 million a year — their deposit returns and as empty a likelihood in 2021, according to containers accumulated in con- Emmerich. In the past, the number never sumers’ garages, closets, backyard sheds and basements — or were came close to $50 million, and was about $43 million in 2018 and 2019, dumped into the trash. Like Manna, Drumm says com- Treasury figures show. “Coming out of the pandemic, pensation for retailers from escheats is inadequate and covers the unclaimed deposit fund is going only a fraction of retailers’ expens- to be significantly more than anything we’ve ever seen,” he said. “We es. “Some are spending millions on expect over $100 million this year.” Even with the new windfall of unmaintenance, sanitation,” she said. “It would not be likely to cover their claimed dimes, a decades-old costs even if you gave them 100 per- chasm separates environmental groups, the recycling industry and cent of the escheats.” In an effort to address concerns retailers, distributors and bottlers from the beverage distribution in- over how to modernize and reform dustry, the House Regulatory Re- the bottle bill law. If a legislative solution can’t be form Committee has passed bills introduced by Reps. Kevin Hertel, D-St. Clair A DECADES-OLD CHASM SEPARATES Shores, and Jim Lilly, R-Park Township, that ENVIRONMENTAL GROUPS, THE would provide a tax RECYCLING INDUSTRY, RETAILERS, credit for distributors that originate container DISTRIBUTORS AND BOTTLERS. deposits. The bills, which advanced to the reached, any of those special interHouse floor on March 16, also est groups could mount a citizens would revise how money from the initiative to gather signatures and Bottle Deposit Fund is allocated. put the issue before voters or force Tom Emmerich, chief operating the Legislature to take a vote — a officer of Schupan & Sons Recycling process that can cost millions of in Wixom and Wyoming, said that dollars. legislation would provide support “There’s no perfect solution as for distributors that face increasing we’ve seen,” McCann said. costs for infrastructure needed to handle returns. Crain's Senior Editor Chad Tax credits would be available if Livengood contributed to this report.

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Watching our waste Keeping trash out of landfills part of Consumers Energy’s environmental commitment As we celebrate Earth Month, Consumers Energy’s plans to protect the planet are well under way with five-year goals to: • Save 1 billion gallons of water. • Enhance, restore or protect 5,000 acres of land in Michigan. • Reduce waste sent to landfills by 35 percent. We’re making progress on each of our “planet” goals. Since 2017, we’ve reduced water use by nearly 900 million gallons and enhanced, protected or restored over 2,200 acres of land through activities such as volunteer cleanup and habitat restoration projects. “We are passionate about protecting the planet as we power Michigan’s future,” said Linda Hilbert, Executive Director of Environment, Sustainability and Laboratory Services. “We’re committed to doing our part to safeguard the natural resources we all cherish.” We’ve focused sharply on reducing waste

— and those efforts are generating positive results. In fact, we’ve already reached our first goal by cutting the waste we send to landfills by 55 percent since 2017. Our strategy includes: • Installing recycling and composting collection centers throughout the company as part of a broader effort to reduce trash by 5 percent. We’re working to better understand how much trash we generate and how our facilities handle their waste. • Recycling utility poles and rubber protective equipment used by line workers. Our Investment Recovery Center collects a wide variety of materials, including rubber gloves, sleeves and other protective equipment used to safely maintain and restore power on Michigan’s electric grid. Rather than go to landfills, those materials have potential reuse as a primary ingredient in surfaces at playgrounds and dog parks.

biomass fuel at our Genesee Power Station. Last summer, we worked with landscape supply and mulch production companies to recycle wood waste from a massive pipeline replacement project as mulch for homes and businesses. • Engaging employees to work in “green teams” devoted to caring for the environment at and near their work locations. Our Saginaw green team recently helped plant a community garden

at a school where students with disabilities learn to live and work independently. • Fighting Phragmites, an invasive species that threatens the health of Michigan’s coastal wetlands. We’re using innovative land-management tactics to keep the tall, harmful grass out of landfills once it’s safely removed. Learn more about how we’re protecting the planet at ConsumersEnergy.com/Sustainability.

• Conserving and recycling soil and construction materials on projects that require clearing and digging. We recently recycled about 2,300 pounds of soil on a city gate project and recycled wood mats from a natural gas pipeline project as

APHIC

APRIL 26, 2021 | CRAIN’S DETROIT BUSINESS | 17

RECYCLING COMMENTARY

Michigan's bottle bill is a false sense of accomplishment BY WILLIAM J. HALLAN

cans and bottles to the room to sort and store store is enough. It isn’t. empty containers in limYet, local recycling ited space and juggle year ago, when the COVID-19 programs struggle beemployee time to handle pandemic hit, we all started to cause the cardboard and them. look at the world differently. Retail plastic food containers Collectively, retailers employees began looking at bottle returned don’t offer and distributors spend returns with even more fear and dismuch value. The real over $100 million each gust. valuable materials: aluyear managing the takeHow long could viruses live on minum and PET plastics, back of these materials William J. Hallan these containers that have been in are diverted through the given the state-prescribed is president and contact with people’s saliva and bottle deposit law inmethod of takeback. mouths? Would handling them CEO of the stead of helping offset Michigan’s current re- Michigan Retailers present another way retail workers the costs of local recycould be exposed to COVID-19? cycling programs are dis- Association. cling programs. The bottle deposit law has always mal at best. Despite beLet’s imagine a better presented cleanliness and safety ing the Great Lakes State, way. The Michigan Legislature is challenges for retail workers. where we take pride in promoting working on reforms that would reEmployees are tasked with con“Pure Michigan,” somehow our quire most communities to provide overall recycling rate of just 18 pertaining and cleaning up the sticky curbside recycling and recycling cent lags well behind our neighbordrips and all that’s attracted to them drop-off centers. ing states and the U.S. average of 34 (yes, we mean bugs). We strongly support efforts for percent. We send a lot of pure recyThat’s not to mention the other the state to invest in more robust, cling to landfills. surprise items humans tuck inside convenient recycling opportunities Yet, Michigan is the only RECYCLING NEEDS TO BE AS EASY state among our neighbors for residents. Recycling needs to be as easy and with a bottle deposit law and AND CONVENIENT AS TOSSING convenient as tossing something in also the only one that barely the trash. Building programs and ininvests in recycling, budgetSOMETHING IN THE TRASH. frastructure is one step. We need to ing only $15 million a year. make it easier on residents by havThat’s 15 percent of what retailers returned bottles and cans. It is treing a single-stream system. and distributors are paying to manmendously expensive and ineffiIf we direct all our recycling, inage deposit containers, which only cient to manage the collection of cluding bottles and cans, through a make up an estimated 2 percent of these containers in a retail setting. single-stream, convenient drop-off the waste stream. Larger retail stores have to deal system model, we should see actual Part of the problem is that resiwith extraordinary volume of reresults that improve Michigan’s redents believe that taking back their turns and smaller stores have to find

cycling rate. It will also eliminate the food safety concerns of bringing dirty containers that attract pests into stores where we buy groceries and reduce the risk to retail workers currently required to handle them.

The state should lead by example and include recycling bins at state highway rest areas, in state buildings and on state property. And while businesses have a role in helping these programs be successful, the entire cost of recycling

and be s is a solu step Th velo

Second, we need to make it easier to return bottles. Taking them back to the store is still the most effective way to handle bottle redemption worldwide, but Michigan’s law doesn’t reflect modern shifts that could make the bottle bill more con-

sumer-friendly. I often have to take home bottles of Michigan-brewed beer from my grocery run because that variety wasn’t sold at Meijer. Changes should be made so all containers can be returned at the

bigthey Th Mic tles stre A

COMMENTARY

How Michigan can be a national leader in recycling BY SEAN HAMMOND

well for pop cans and beer bottles. According to beach clean-up data hether on the beach from Alliance for the or in the gutter, you Great Lakes, Michigan almost never see a pop and New York (the Great can or a beer bottle on the Lakes States with Bottle ground in Michigan. Bills) both have signifiThat’s because Michicantly less beverage congan’s container deposit tainers among beach litlaw, called the bottle bill, Sean Hammond is ter than other Great has worked great at pre- the policy director Lakes states. venting litter and encour- for the Michigan That’s because nearly Environmental aging recycling. 90 percent of those conBut since it was adopt- Council. He serves tainers are returned to ed back in the 1970s, on the state’s Solid the store, getting crushed we’ve started drinking a Waste and and recycled as many as lot of different things Sustainability six times every year. from bottles, from water Advisory Panel. But pop and beer arto juice to sports drinks — en’t the only single-use all trash you now see beverage containers anymore. We floating in the lakes and clogging up have an endless variety of drinks roadside drains. available at grocery stores, like cans The bottle bill needs a refresh, a of Michigan craft ciders, bottles of modern law for the modern Michiiced coffee and everything you can gander. imagine in between. Our current law works incredibly

18 | CRAIN’S DETROIT BUSINESS | APRIL 26, 2021

This variety also means taking back bottles can become a chore, as you have to deposit items like Michigan craft beer at the stores they were sold at. It's time to make a change to our effective recycling and pollution prevention law so it reflects today’s society instead of the era of bell-bottoms and lava lamps. First, we need to expand the containers covered under the law to reflect our modern variety of beverages. The explosion of bottled beverages like tea, juice, sports drinks, water and craft-brewed cider makes managing this stream of mostly single-use containers in a responsible manner critical. We should even consider including liquor bottles, which often rise to the top of discussions around what litter people see on the streets. New bottle return machines would make it easy to take back these containers.

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COMMENTARY

Make it a crime to defraud Michigan's bottle deposit system BY MIKE MUELLER, TIM SNELLER, TYRONE CARTER AND ANDREW FINK

MICHIGAN ENVIRONMENTAL COUNCIL

and managing our waste should not be shouldered by private industry. It is a state problem that needs a state solution, and everyone needs to step up. The state is long overdue in its development of a comprehensive

solution for all our recyclable materials. Michigan cannot continue relying on an outdated and overly costly deposit law that neglects 98 percent of the remaining waste stream while giving residents a false sense of accomplishment.

big-box stores, regardless of where they were purchased. This will make returns simpler for Michiganders and ensure more bottles are captured into the recycling stream. Additionally, looking at how to

best implement regional return centers to further help ease returns should be a top priority for discussion around the bottle bill. Finally, we must ensure the containers we forget to deposit support environmental protection, recycling and water infrastructure. Currently, the unclaimed money from bottles you don’t return is split between retailers and state programs that clean up pollution. With more containers comes more diverse funding not only for our bottle bill system’s continued success, but also for one of Michigan’s highest environmental priorities. We could send dollars from unclaimed beverage deposits to schools and local water departments to make and keep our water clean. Michigan’s bottle bill was once the envy of the nation. It made us a leader in recycling and protected the natural beauty we all enjoy. But time has worn away the luster we once had, and our leadership has fallen away. Let’s lead again, Michigan. We can set a new standard for bottle bills, one that protects our Great Lakes from plastic pollution, keeps our recycling system modern and efficient, and continues to be loved by the people of Michigan as much as our current system.

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RECYCLING

magine you are the owner of a neighborhood grocery store, gas station or party store. Someone walks in and says they just bought some pallets of soft drinks across the state line. Since there is no container deposit law in any of our neighboring states, a 10-cent deposit was not added on to the purchase price of each beverage when it was purchased there. This person tells you they can consequently sell to you at a lower cost than you are charged from your regular Michigan Coke, Dr Pepper or Pepsi distributor. Over the past decade, a growing number of deceptive distributors are importing out-of-state beverages by the truckload into Michigan and selling them to retailers without first initiating the deposit. This practice costs Michigan-based beverage companies more than $10 million annually — robbing Michiganders of jobs and the state’s unclaimed deposit fund of millions of dollars each year. Our bill package seeks to stop this deceptive practice. In 2019, 89 percent of the containers on which a deposit was paid were returned. The 11 percent of deposit containers which were not redeemed at Michigan stores generated nearly $43 million. Approximately 25 percent of that fund (roughly $11 million) was distributed to retailers to help with a small portion of their labor and machine costs. The other 75 percent — about $32 million — is captured by the state and sent to the Department

Left to right:State Rep. Mike Mueller is a Republican from Linden. Rep. Tim Sneller is a Democrat from Burton. Rep. Tyrone Carter is a Democrat from Detroit. Rep. Andrew Fink is a Republican from Hillsdale. of Energy, Great Lakes and Envi- case. Our legislation seeks to do the ronment, which uses the funds for employees overseeing envi- following: ronmental cleanup sites. When we stop those scamming ` Make it a crime to sell carbonatthe deposit law by bringing in ed beverages without first initiatout-of-state containers on which ing the deposit. no deposit was initiated, the redemption rate will stop being ar- ` Give law enforcement the tools tificially inflated by the imported to catch those who break the law cans, and the state will gain more by directing $1 million from the state’s unclaimed deposit fund to revenue. There are now only 10 states the Michigan State Police and lowith a bottle deposit law. As a state surround- A GROWING NUMBER OF DISTRIBUTORS ed by nonde- ARE IMPORTING OUT-OF-STATE posit states, we are finding bev- BEVERAGES BY THE TRUCKLOAD. erages imported from Ohio, Indiana, Illinois, Wis- cal police agencies. consin and even Canada. Often, these operations move ` Hold those performing these product out of nondescript ware- acts accountable by establishing houses into convenience and and codifying financial and criminal repercussions and sentencparty stores throughout the state. The states that have been suc- ing guidelines associated with cessful in investigating and ap- this abuse. prehending those who are maThrough passage of these bills, nipulating deposit laws have only been successful when they made we can ensure we are purchasing it a priority and devoted the re- soft drinks made and delivered by sources necessary to conduct the Michiganders and stop those curkind of surveillance and investi- rently robbing from the state’s gative work needed to bring a unredeemed deposit fund.

The Michigan Soft Drink Association says there’s a growing problem in Southeast Michigan with stores buying bulk pop imported from Ohio, Indiana, Illinois and Ontario that is evading Michigan’s 10-cent bottle deposit law. | GREAT LAKES COCA-COLA DISTRIBUTION APRIL 26, 2021 | CRAIN’S DETROIT BUSINESS | 19

RECYCLING COMMENTARY

The bottle bill is a mess. Time for reform or repeal.

20 | CRAIN’S DETROIT BUSINESS | APRIL 26, 2021

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ach day at its Detroit bottling plant on Gratiot Avenue in Detroit, Faygo fills the exact same 2-liter plastic bottles with its Ohana fruit punch and its iconic Rock & Rye soda pop. After consumers drink those refreshing beverages, one bottle usually ends up traveling through Michigan’s byzantine bottle deposit recycling system. The other bottle might end up in a separate recycling system, but more likely just gets pitched in the trash. The difference is in the fizz. M i c h i g a n ’s nearly half-cenChad bottle LIVENGOOD tury-old deposit law is badly in need of being modernized. There are dozens of sport drinks, bottled waters, canned wine, ice coffees and flavored whatevers on the shelves of stores today that simply hadn’t been invented in the late 1970s. But the law doesn’t treat all bottles and cans the same. If it doesn’t have carbonation, it’s not subject to the 10-cent deposit, even when it’s the same exact bottle as a carbonated pop. To any reasonable person, this is complete nonsense. For years, the Michigan Legislature has dragged its feet on modernizing the bottle bill. Meanwhile, the percentage of bottles being redeemed has been in decline for a decade and Michigan’s recycling rate is somewhere around 15 percent of recyclable materials. For a state that values its natural resources, that’s just embarassing. Like any third rail of Michigan politics, touching the bottle bill involves upsetting the apple cart of a lot of powerful interests in Lansing: Retailers large and small, supermarket chains, beer distributors, waste haulers, Big Soda, the Michigan Environmental Council and the list just goes on and on. The time has come to expand the bottle bill to include most beverage containers and create the infrastructure to take the redemption work outside of places where fresh food is sold. The alternative is to repeal the law, get rid of the 10-cent bottle deposit and adopt universal curbside recycling in every corner of the state and hope people will voluntarily separate their cans from their coffee grounds. I grew up collecting pop cans as a kid to cash them in and buy baseball cards. The bottle bill is as Michigan as a coney dog with onions and cheese on top. It pains me to suggest that Michigan’s altruistic ten-cent bottle deposit law is broken, but it just is. If someone was designing a recycling system, they wouldn’t say Ohana two-liters go through one recycling system and Faygo Rock & Rye through another. “The whole system doesn’t make sense,” said Derek Bajema, presi-

Joewaski Willis, left, and Muhammad Collins, both of Detroit, bring a container full of recycled cans straight through the fresh produce section to the back of the store at Mike’s Fresh Market in Detroit. | NIC ANTAYA/SPECIAL TO CRAIN’S DETROIT BUSINESS

The Red Pop on the left comes with a 10-cent return deposit. The Ohana right next to it does not. | NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS

IT PAINS ME TO SUGGEST THAT MICHIGAN’S BOTTLE LAW IS BROKEN, BUT IT JUST IS. dent of the Michigan Soft Drink Association. “Why do we have a twoway recycling system here in the state of Michigan?” It’s maddening for consumers to go to a supermarket in Algonac and not be able to redeem a six-pack of glass bottles of 45’er IPA from Austin Brothers Beer Co. in Alpena just because that supermarket doesn’t sell that brand of beer. More often than not, those bottles get pitched in the grocery

store’s trash bin right next to the self-serve machines. The coronavirus pandemic also has shined a spotlight on the inherently unsanitary nature of Michigan’s bottle redemption system. Many stores have built bottle return centers at the front of the building but have to store the crushed cans and bottles by the loading docks in the back of the building. This requires moving what’s es-

sentially bins of trash potentially carrying actual bugs through the produce aisle. Yes, your stomach should be turning. If lawmakers have the political will to expand the bottle bill to include all recyclable beverage containers short of milk jugs, they need to pay retailers the entire sum of unredeemed cans to subsidize the cost of building and maintaining recycling centers that are detached from the retail floor space. Currently, retailers get 25 percent of the unredeemed dimes — known as escheats — to help defray their overhead costs of running an in-store bottle return operation. The remaining 75 percent gets diverted to cleaning up environmentally contaminated properties — a noble cause that has almost nothing to do with recycling or preventing the proliferation of litter. It’s kind of like Michigan’s 6 percent sales tax on gasoline — almost none of that tax goes to the actual roads. If lawmakers don’t have the will to expand, then it’s time for a wholesale change in how we recycle single-use beverage containers in Michigan. The influx of billions of dollars in federal COVID relief aid gives the state a one-time source of funding to build out a recycling infrastructure and industry that’s hobbling along, in part, because of the bottle bill. There’s an opportunity to build more community-based facilities

for bottle and can returns, make single-stream recycling universal and get the waste out of grocery stores. How is the bottle bill hurting recycling? It diverts some of the highest-value recyclable material — PET plastic and aluminum cans — away from the curbside recycling system, straining the finances of communities that end up subsidizing those operations or dropping the recycling service to save money. “You’re taking some of the most valuable commodities out of that curbside cart in a state where it’s already hard to do curbside because, frankly, a lot of our state doesn’t even have curbs,” Bajema said. The economics of recycling are already hard enough. The case for strengthening Michigan’s recycling infrastructure and culture can be made by simply going for a run down a country road or a city street. They’re often littered with non-refundable beverage containers much the way they were littered in the 1970s with Coke and Pepsi cans. That’s also a strong case for keeping the deposit law. But relegating returnables to the sticky floors of a backroom at the supermarket seems to be a very 1970s concept that has run its course. Contact: clivengood@crain.com; (313) 446-1654; @ChadLivengood

RECYCLING

To solve a very Michigan problem, an in-home can scanner BY CHAD LIVENGOOD

Returning sticky Coke bottles and smelly beer cans to the grocery store to claim a 10-cents-per-container deposit may be one of the least desireable routines of life in Michigan. But what if they could be redeemed in your kitchen? Nathan Arnold, an emergency room physician, has invented a freestanding machine that counts and crushes aluminum cans and plastic bottles after scanning each barcode. The internet-connected machine, called Nessie, then can be programmed to credit a person’s customer rewards card with a retailer for future in-store credit — without returning bags of bottles and cans to the store. Arnold thinks the machine could help eliminate a cog in Michigan’s bottle recycling. “This unloads the burden from (retailers) and from the distriburors who have to pick up (containers) from the store,” said Arnold, who works in the emergency department at North Ottawa Community Hospital in Grand Haven. Before the pandemic upended the supermarket bottle return system, redemption rates had fallen to their lowest levels over the past three decades with 88.7 percent of containers redeemed in 2019, the most recent year full data is available.

Nessie scans cans for applicable deposit, credits any account you may specify, and then crushes the container . | DALE G. YOUNG

ER doctor Nathan Arnold and a group he assembled have come up with a machine he calls Nessie. | DALE G. YOUNG

Arnold’s machine crushes a scanned can or bottle and then drops it into a bucket below. The crushed containers then can be discarded in regular residential recycling bins or at dropoff centers. Nessie’s barcode-scanning technology takes a picture of every single container and uses artificial intelligence to ensure the user is not defrauding the machine. Arnold called this feature of the machine its “anti-Newman technology,” a reference to the infamous Seinfeld eposide where Newman and

Kramer haul a truckload of cans and bottles from New York City to Saginaw to cash in the returnables. “It registers the SKU number (of each container), you have a picture of the container before and after it’s crushed and a timestamp,” Arnold said. “You can’t scam the system by putting the same one in a bunch of times.” Nessie has one limitation. The machine cannot handle glass bottles because they’re prone to shatter, Arnold said. Nessie also is programmed to limit daily returns to 250 containers per day. “The software is set up so you can’t put through 5,000 cans per day,” Arnold said. Arnold and his engineering team are on their fourth version of Nessie, which is being marketed to beverage distributors and retailers to get buy-in from the industry for a new way to handle bottle redemptions. The newest version of Nessie is

lighter and more compact. At first blush, the machine looks like an antique wringer washer on stainless steel caster wheels. Under the hood, it’s a motorized can crusher with a motherboard. “I started off with a machine that had rollers with track spikes on it to crush the can — and that was like a torture chamber,” said Arnold, a native of Clinton in Lenawee County. “And I was like, that will not pass any UL certification.” Like any cloud-connected appliance, the machine can be updated to add or remove cans and bottles that are subject to the deposit law as new beverages come on the market, Arnold said. “If Bell’s (Brewery) has another summer brew, then it’s pushed to the cloud and then pushed to all of the machines that, ‘Hey, this is now accepted,’” he said. Collabreate Solutions LLC in South Lyon is the lead mechanical engineering firm on the project. Disher, a

product design and engineering company based in Zeeland, built the prototypes of Nessie. Ventura Manufacturing, also based in Zeeland, is going to fabricate and manufacture the first 100 models of Nessie as soon as this summer, Arnold said. Arnold’s current business plan calls for manufacturing an initial order of 100 machines and selling them to hospitals, industrial businesses with large cafeteria-breakrooms and sports stadiums where canned beer is sold. From there, Arnold plans to launch a subscriber-based business model where the machine is leased to households, small businesses, schools or churches for $5 a month or $50 per year. For each can or bottle deposited, Nessie collects three cents of the 10-cent-per-container deposit. “It’s more of a tolling system,” he said. “Nobody’s going to buy the machine because it’s too expensive.”

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• 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

groups • UBS plans to open wealthcan use free of charge • Bedrock-owned buildings

UBS to open downtown Detroit office 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 Bedrock LLC

Bedrock LLC

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.

` Explain workforce housing versus workf 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.

`II don’t don’ think it’s overblown to use the word “crisis” for Ann Arbor’s affordafford able 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

Why not?

UBS to open downtown Detroit office By Annalise Frank

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. • Bedrock-ownedUBS buildings 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

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 Birmingham office space to hostcomes do- at a price.” He said willto move the downtown office out to ofortheadequate 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 a less 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: the 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.” processHeearly 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 tocas, be finalized. M a n a gCity. e m“We e n t Troy, The Detroit locationtowill have a and less other according to a news release. UBS nonprofits 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 buildtraditional, more “urban” 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 ical presence downtown reinforce 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. 7 percent increase over last year. and provide services in the city 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 op60,000 across 54 countries. 34quarter of 2017 — a 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.

`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.

PROMOTE.

October 30, 2017 | crainsdetroit.com PHOTOGRAPH BY JACOB LEWKOW FOR CRAIN’S

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

Bedrock LLC

Dandridge Floyd, 37

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.

Laura Picariello

Rep n s Sa Reprints Sales es Manage Manager Phone: (732) 723-0569 Fax (888) 299-2205 Email: lpicariello@crain.com

22 | CRAIN’S DETROIT BUSINESS | APRIL 26, 2021 Laura Picariello

Reprints Sales Manager Phone: (732) 723-0569 Fax (888) 299-2205 Email: lpicariello@crain.com

Ce eb a e you Success w h Rep n s & Recogn on P oduc s

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F om Page 1

wage grow h was 3 5 percen n March accord ng o da a racked by he Federa Reserve Bank o A an a bare y down rom he “be ore mes” where Amer cans saw subs an a wage grow h or he firs me n decades n he our h quar er o 2020 earn ngs were up 2 8 percen bare y down rom 3 percen he same quarer n 2019 Compare ha o he wage hangover n he a erma h o he Grea Recess on where wages s umb ed be ow nfla on n 2010 The pandem c has “rese ” workers expec a ons o pay sa d Susan Houseman v ce pres den and d rec or o research a he W E Upohn ns u e or Emp oymen Research n Ka amazoo “How e wages par cu ar y a he ow end have r sen over he as decade or wo and how gh abor marke s have been even be ore he pandem c s remarkab e ” Houseman sa d “Maybe our exper ence o he pandem c has rese hose expec a ons Cu ura norms ma er Our exper ence w h he generous (unemp oymen and s mu us) benefi s dur ng he pandem c pandem c has pu pressure on emp oyers o ra se wages emp oyees can make he same amoun o money or more a he McDona d s you re us no compe ve r gh now ” Wage grow h or ow-sk ed workers (3 5 percen ) s now a pary w h h gh-sk ed workers accord ng o he Federa Reserve Th s s on y he second me n more han 25 years ow-sk ed earners have seen wage grow h as h gh as h gh-sk ed earners — he firs me was n February 2020 r gh be ore he pandem c h he U S Those unw ng o ra se wages o ke y record eve s w h n he r company are see ng emp oyees ge ng poached sa d T m Dupree pres den o Troy-based s affing firm Ke y Serv ces nc s pro ess ona and ndus r a bus ness un “The average wage or gh ndus r a emp workers n M ch gan r gh now s $16 an hour” Dupree sa d “We re e ng c en s ha any wage be ow $20 an hour w cause you o ose workers They are s very suscep b e o workers ge ng a rac ed away a $16 an hour” n he gh ndus r a segmen Dupree sa d wages are up a eas 5 percen rom a year ago and Ke y s encourag ng compan es o pay ou a re en on bonus — or ns ance prov d ng a $1 000 bonus o emp oyees who s ay w h he company 90 days or 120 days O her compan es are nc ud ng con rac prov s ons s a ng he emp worker w ge firs crack a any u - me obs offered n erna y Dupree sa d “W hou some sor o ncen ve by he me an emp oyee s ar s on a Monday hey ve go ano her offer rom a d fferen company ” he sa d Garre sa d beyond r s ng pay a company s e hos dur ng he pandem c s p ay ng a ac or n re enon “We keep hear ng abou h s under one o he re en on ssue bu d ng ” Garre sa d “How emp oyers rea ed emp oyees dur ng h s d fficu me o COV D s go ng o p ay a ac or o d my peop e How we rea our s aff dur ng h s w se he one or us over he nex 10 years We were cogn zan o how we were hand ng h s Some emp oyees e rapped dur ng he me because he r op ons were more m ed Tha s no he case

Mo e G oup s “The Mo onee ” masco and he company s upda ed wo kspace o a ac new eng nee ng a en MORR GROU

anymore ” advan age Because workers have so many Shor ages s emm ng rom he op ons many are “ghos ng” on au o ndus ry shu down as year second or h rd n erv ews pro ong- have caused severe bo enecks n ng he me akes he company o ch p produc on P an s across fi open pos ons Garre sa d Nor h Amer ca and M ch gan have “Typ ca y we can find a cand aced or are schedu ed or empoda e and make an offer n wo rary shu downs hrough May weeks Now ha s ak ng c oser o a For ns ance S e an s ( ormer y mon h or s x weeks ” Garre sa d F a Chrys er) announced wou d “Peop e app y ng or ro es hen ay off sh s a s efferson Nor h ghos ng us or app y ng and ac ng p an n De ro or hree weeks n eres ed n ro es hen no o ow- s ar ng Apr 26 hen ca hem ng hrough ” back and ay off a h rd crew rom Garre be eves some o he no- May 17 hrough he week o May 31 shows are unemp oyed ob g ng he The company prev ous y d ed ha s a e s unemp oymen benefi s sys- o s 10 Nor h Amer can p an s h s em s requ remen o ac ve y seek mon h due o he shor age work Th s a ows he person o “Abou 80 percen o he au o check ha box w hou hav ng o p an s we dea w h are ay ng off accep a ro e The r reasons cou d r gh now ” Garre sa d “Hope u y be more han pay such as car ng ha opens up some oppor un es or a s ck oved one or prov d ng w h some o hose peop e because ch d care as n-person schoo ng hey are see ng ns ab y and we rema ns n flux can prov de he oppos e r gh Bu he vacc ne ro ou s hav ng now ” a eas some mpac on he abor “WITHOUT SOME SORT OF INCENTIVE, marke sa d Brenda Moragne d rec- BY THE TIME AN EMPLOYEE STARTS ON or o human re- A MONDAY, THEY VE GOT ANOTHER sources a Haven a domes c abuse OFFER FROM A DIFFERENT COMPANY.” and sexua assau — T m Dupree Pres den Ke y Serv ces nc she er n Pon ac Emp oymen prospec s have n he mean me Dupree s a so p cked up n recen mon hs she ask ng c en s o ower he r expecsa d a ons Com ng ou o he Grea “We can compe e on pay and Recess on compan es no or ous y benefi s w h Amazon or some upped he requ remen s hey wan manu ac ur ng obs so we ve been ed o see on a resume or mos obs hur ng or workers s nce he pan- They cou d afford o do ha as so dem c began ” Moragne sa d “ many were unemp oyed and desh nk because he ears are resc nd- pera e y seek ng work Th s recesng a e b w h he vacc na ons s on s d fferen Dupree sa d and or peop e are more accep ng o emp oyers are need ng o move h s new wor d we re v ng n we re he r requ remen s down hey see ng renewed n eres The s rug- wan o fi open pos ons g e sn over bu s been eas ng ” “Do we rea y need o have a cerThe cen er has wo open pos a n eve o he educa on?” Dupree ons pay ng be ween $15 an hour sa d “The ormer po c es pu n and $18 an hour ou o he or g na p ace were no des gned or he curs x was ry ng o fi as year ren marke Compan es ha w Garre a so hopes an eas ng o no re oo he r assessmen s and rehe pandem c he ps produce more qu remen s w no see as many cand da es bu h nks o her ac ors cand da es Tha s he rea y ” nc ud ng he ongo ng m croch p shor age curren y p agu ng he Con ac dwa sh@cra n com au o ndus ry w p ay o he firm s (313) 446 6042 @dus npwa sh

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CLASSIFIEDS To place your listing, contact Suzanne Janik at 313-446-0455 / sjanik@crain.com or, for more information, visit our website at: www.crainsdetroit.com/classifieds

REAL ESTATE VACANT LAND The results of recent improvements to Detroit’s Zussman Park are shown in a city photo taken earlier this month. More parks and recreation work is among improvements Detroit City Council is requesting the city undertake with its estimated $879 million in American Rescue Plan aid. | CITY OF DETROIT VIA FLICKR

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"The legislation is purposefully vague to allow (the U.S. Department of the Treasury) to come in and provide more specific guidance," said Joseph Parilla, an author of the Brookings report and fellow at the institute's metropolitan policy program. He expects that guidance to come within weeks. Details on the city's working group have yet to be firmed up, Detroit's acting chief financial officer, Jay Rising, said in a statement to Crain's. "We will engage with city council before we submit any proposal to them for a budget amendment for spending the funds," Rising said in the statement. "We are still organizing that effort and are preparing to also have community discussion." Cities have through the end of 2024 to make these decisions, unlike CARES Act funding that originally had to be used by the end of 2020. Still, it's a heavy lift: Detroit's estimated allocation equates to spending down about 80 percent of a full annual budget — a process that takes years of planning and months of City Council meetings and hearings. Plus, Parilla said, there will be pressure to spend the first batch of money quickly as workers and businesses are still hurting. Chris Hackbarth, director of state and federal affairs for the Michigan Municipal League, said there are three things the MML wants its member municipalities to think about: What revenue losses look like; the opportunity to invest in infrastructure like water, sewer and broadband; and what lasting investments a city can make. "Some may decide to have conversations with open listening tours, town halls with their residents. Some might do meetings with the chamber, rotary (club) ... but we are telling all of them it's important you engage with your community," Hackbarth said. Here are three recommendations from the Brookings report on spending strategies: GET THE BUDGET IN ORDER: Cities across the country cut spending as the pandemic's impact on the economy reduced their revenue — Detroit included. It put workers on furlough, reduced hours, halted all nonemergency demolitions and put capital plans on pause. Mayor Mike Duggan already said Detroit will use some of its federal aid to bring 900 city employees back full time from partial layoff. More budget relief is likely to come. Between fiscal 2020, 2021

and 2022, the city projects to take in $500 million less than what it expected before the pandemic. SHORT- AND LONG-TERM SUPPORT FOR RESIDENTS AND BUSINESSES: The American Rescue Plan should allow even cities that went into the pandemic with financial challenges like Detroit not just to shore up their finances, but also make what Parilla calls "down payments" for future growth. Spend on infrastructure and create programs with immediate and longterm support for workers, businesses and education, Brookings says. A challenge will be choosing investments that make a substantial difference beyond the now. The American Rescue Plan specifically allocates money to address racial inequalities, including by allowing for "'Community Navigators' to ensure equitable access to capital and technical assistance," the study says. Crain's has recently reported on the need in Detroit and the metro area for more infrastructure and support for these trusted community-based connectors between underserved businesses and funding sources. “(Detroit is) probably going to want to start there with some basics, shoring up the budget,” said Eric Scorsone, professor and director of the Center for Local Government Finance and Policy at Michigan State University. “The piece that’s really the most intriguing is where you can use it for the neg economic impact on the community … I think COVID has impacted so many different aspects of our society, so how do we use that money creatively … obviously Detroit is still rebuilding from its problems it's had 50, 60, 70 years. So can you invest that in neighborhoods and build up neighborhood infrastructure?” DO IT TOGETHER: Brookings suggests creating public-private councils with neighborhood leaders, businesses, philanthropists, nonprofits and others. Detroit City Council has already proposed the city do this, but it's yet to be seen how it pans out. There's also likely fatigue from group financial planning efforts across 2020, Parilla said. There are years to go before the federal aid gets put to use, but gears across the country are already in motion. Detroit City Council's resolution earlier this month made some dollar-specific recommendations for how the city should spend more than $100 million of the rescue plan allotment, including:

 $10 million: Establish a fund for social services for homeowners who have had their properties over-assessed in the last 10 years or more  $10 million: For the Affordable Housing and Preservation Trust Fund, to help residents being priced out of their homes  $10 million: Health department funding for well-being concerns including mental health, HIV prevention, human trafficking, children's health and more  $10 million: More funding for parks and recreation  $9.5 million: Detroit Public Library repairs  $5 million: Start a low-income bus fare program and add Wi-Fi on buses  $40 million: For the Detroit Water and Sewerage Department to replace aging water infrastructure  $3.25 million: Pollution impact mitigation  Undetermined amount: End all water shut-offs in the city Other localities around the country are a bit farther along. In Washington's King County, the top executive late last month proposed a $600 million plan more than half-funded by the new federal aid, with money for rental assistance, child care, behavioral health, jobs and economic recovery. Philadelphia's mayor proposed a budget for next year that includes American Rescue Plan dollars for repaving roads and stemming budget losses. Locally, last week Oakland County Executive Dave Coulter announced the county would bring together a group of people similar to those who served on his COVID-19 economic recovery task force from 2020, according to a news release. They will advise the county on how to spend its $244 million, representing educational institutions, philanthropy, local government, construction, restaurants, health care and other areas. In Chicago, some argue the city should use its $1.9 billion allocation almost solely to pay down debt. Detroit could pay down what it owes from bonds, but its most fearsome looming debt is its unfunded pension obligations — and the rescue funds specifically can't be used for pensions, Kass of the University of Illinois Chicago said. "The intention is for the money to be used for cities and states to, you know, build back better, go beyond just the immediate emergency needs," she said. "I think what that means will be different for every city." Contact: afrank@crain.com; (313) 446-0416; @annalise_frank

WANTED: VACANT LAND PARCEL FOR CONSTRUCTION

Seeking a vacant land parcel within a 20-minute drive of the John D. Dingell VA Medical Center at 4646 John R Street, Detroit, MI. VA proposes to construct and operate a Fisher House on the site. Fisher Houses provide a “home away from home” for the family members and caregivers of hospitalized Veterans and Active Duty Servicemembers. The ready-to-develop parcel should be a minimum of 1.25 acres, in an established neighborhood and within easy walking distance to public transportation, shopping, and eateries. The parcel must not be in a 100-year floodplain or possess any other barriers to development. Please contact Shahidat Abbas at shahidat.abbas@va.gov with available parcels in the greater Detroit area or for additional details on VA’s requirements.

MARKET PLACE BIDS WANTED

River Rouge Housing Commission Advertisement Invitation for Bidders

The River Rouge Housing Commission is requesting Invitation for Bidders for services of 300 Public Housing dwelling units, Hyacinth Court II Community Center, and its Main office. Bid documents will be available on our website (www.riverrougehousing.com) in the RFP section for you to print out on April 16, 2021 and or you can request an email from jwilliams@riverrougehousing.com. Sealed Invitations for bidders will be received for the list below by the River Rouge Housing Commission until 3:00 p.m. Wednesday, May 19, 2021. Bids received after 3:00 p.m. on May 19, 2021 will be rejected and returned unopened to the bidder. For more information, contact Jessica Williams at the above email address, our Executive Director, Eboni Nugin @ enugin@riverrougehousing.com., and or call the River Rouge Housing Commission at (313) 382-1414. Invitations for Bidders & Pre-Bid meeting schedule Thursday May 6, 2021 are as follows: a. Comprehensive Maintenance/Vacant Unit Prep @ 12:00 p.m. b. Locksmith Services @ 1:00 p.m. c. Windows/Screens Repairs & Replacement @ 2:00 p.m. d. Storm/Entry Door Repairs & Services @ 3:00 p.m. Interested Bidders may obtain Bid documents from the River Rouge Housing Commission Website: (www.riverrougehousing.com) NOTE: All AWARDED CONTRACTS WILL BE FOR TWO YEARS • All Bids must be submitted on Prescribed forms; • We are an Equal Opportunity Employment Agency (All Bid information is Due Wednesday May 19, 2021 @ 3:00 p.m.)

OBITUARIES DETROIT WALTER E. WATSON JR.

1949-2021 W-3 Construction Company Co-Founder

VISIT OUR WEBSITE:

Walter E. Watson Jr. lost his battle with cancer and passed away peacefully on April 15, 2021 at the age of 72. Walt and his Partners founded W-3 Construction Company in 1987 and it continues to be a successful premier minority owned company, providing high quality work to multiple clients in the metropolitan Detroit area. Walter leaves behind his devoted wife of 49 years, Vicki; their son, Kevin; and grandson, Shane, as well as a loving extended family of siblings, nieces and nephews. A celebration of his life took place April 24, 2021, at the James H. Cole Funeral Home in Detroit . The online guestbook is available at www.jameshcole.com

www.crainsdetroit.com/ classifieds

APRIL 26, 2021 | CRAIN’S DETROIT BUSINESS | 23

BY NICK MANES

Michigan's small business owners overwhelmingly feel their companies will survive, but general business conditions remain on shaky ground. That’s according to the results of a new survey done by New York Citybased investment banking giant Goldman Sachs as part of its 10,000 Small Business Voices project, an advocacy initiative for small business friendly policies. On a national level, 84 percent of respondents to the survey report that their business is fully open. In Michigan, 88 percent of small business owners say they’re confident in their business’ ability to survive the ongoing pandemic. The latter figure in the Goldman Sachs survey holds nearly identical to the results of a survey done around this time last year by the Small Business Association of Michigan. At the time, when the state was on the downslope of its first major surge in COVID-19 infections and business shutdowns were widespread, about 14 percent of the

state’s small businesses felt they would be unable to survive the upheaval. The Goldman survey found that three-quarters of Michigan small business owners have been given the opportunity to receive a COVID-19 vaccination and 63 percent have taken advantage of that opportunity. “Across America, it’s back to business on Main Streets as operating restrictions are eased and customers are becoming increasingly comfortable visiting their favorite local businesses,” Jessica Johnson-Cope, chair of Goldman Sachs 10,000 Small Businesses Voices National Leadership Council and owner of Johnson Security Bureau in New York, said in a news release announcing the survey results. “Even as optimism increases, the stark reality is that COVID-19 has forever changed the landscape for small businesses — in ways big and small. After a year with significant challenges, a full recovery for small businesses is not yet in sight and the reality is the majority of small business owners surveyed expect to

ISTOCK

Survey: Small business owners confident, but wary

need additional aid to maintain payroll through the summer.” To that end, small business owners credit the federal Paycheck Protection Program (PPP) that offers forgivable loans for payroll and other costs of doing business with con-

tributing to the relatively solid ground on which many feel they stand. But 84 percent of Michigan’s small-business owners report that they will have exhausted their second PPP loans by the end of June,

RESCUE

From Page 3

The single-story building, which has three wings and 130 patient/office rooms, has only been vacant for a year, so it won’t require any major renovations, Audi said. DRMM will do maintenance repairs to the boiler and refrigeration units, updates to the firm alarms and signage changes. He expects the costs to add up to less than $100,000. “The layout is great for what we’re trying to do.” The goal is to open the health clinic and day center for seniors by Oct. 1. About two months after those open, DRMM plans to begin outpatient substance abuse treatment and counseling. By the beginning of 2022, it plans to begin offering the short-term respite care for seniors. Audi projects the location will serve about 1,500 people each year. Ciena and DRMM will provide cross-referrals for seniors looking for long-term or short-term care, Audi said.

Moving into senior care Livonia has a very high population of senior citizens, Audi said, noting DRMM heard of the need for respite care in the area from St. Mary Mercy Livonia Hospital and Ciena Healthcare. The building was already set up as a nursing home, with places for socialization inside and outside, as well as a big kitchen and dining area and a fully equipped barber/beauty shop, Audi said. Seniors can get their hair done, go to the health clinic, socialize, have a free lunch that will be cooked on site, he said. And if caregivers want to go on vacation, seniors can stay for up to a month if needed, at no cost. “We know a lot of people care for their parents and they want to go on vacation,” Audi said. “They want to leave their parents somewhere safe. … We’ll take care of that person until they come back.” 24 | CRAIN’S DETROIT BUSINESS | APRIL 26, 2021

Chad Audi of Detroit Rescue Mission Ministries at the new building donated to the nonprofit. | CRAIN’S DETROIT BUSINESS

“I COULD HAVE SOLD THIS BUILDING, BUT I CHOSE TO DONATE IT TO DETROIT RESCUE MISSION FOR BETTER USE.” — Mohammad Qazi, president and CEO, Ciena Healthcare

The site is the fourth building Ciena has donated to DRMM, said Mohammad Qazi, president and CEO, Ciena Healthcare. “I could have sold this building, but I chose to donate it to Detroit Rescue Mission for better use,” he said. “Detroit Rescue Mission Ministries does an amazing job. I’m really happy and delighted that we are able to donate this building for a good use for a long time to come.” The details and framework still have to be worked out, but Ciena, a long-term and skilled nursing care provider for seniors, may provide some services at the new DRMM site free of cost to seniors that don’t have insurance coverage or just need

somewhere to stay temporarily, Qazi said. “I think (Audi) really did a good job of partnering with the community,” he said. “Whatever services we provide, whether staffing or training...there will be no bills to pay for Detroit Rescue Mission Ministries.”

Financial matters DRMM is operating on an annual budget of about $20 million for 2021, up from $18 million last year and $17 million in fiscal 2019, Audi said, with about half of its revenue from government contracts and the other half from individuals, corporations and foundations. He projects the Livonia building itself will cost about $300,000 annually to operate. DRMM plans to hire 30 or more staff to provide clinical services, outreach in the community, and substance abuse counseling, he said. The nonprofit has applied for a $2 million annual grant from the U.S. Department of Health and Human Services to help fund the outpatient

substance abuse counseling and walk-in health care clinic, including some staff from St. Mary Mercy, and a new staff position and training at the Livonia Police Department to assist with deescalation of mental health and substance abuse issues when those calls come in, Audi said. DRMM would serve as the fiduciary for the grant. “We’re bringing a good team together, experts from all fields,” including health, senior care and service to indigent populations, Audi said. “If the federal grant does not come through, we’re committed to open the new services and provide them using our own funding” on a scaled-down basis. DRMM has raised $600,000 through individual donations from anonymous donors for the project and been able to build some reserves over last year, thanks to increased donations in 2020 and $1.2 million in paycheck protection funding, he said. Securing the PPP funding enabled DRMM to conserve funds and build reserves. “In 2018, we did not have a re-

according to the Goldman Sachs survey. That compares to 77 percent nationally. Just one-quarter of Michigan’s small business owners are “are very confident that they’ll be able to maintain their current payroll without additional relief,” according to the survey. The PPP program, enacted last year as the pandemic took hold as a relief mechanism for the nation’s small businesses, saw as of April 18 nearly 10 million PPP loans had been approved totaling more than $762 billion, according to the U.S. Small Business Administration, which administers the program alongside the U.S. Department of Treasury. About 119,000 Michigan businesses have received a total of nearly $7.3 billion in loans, according to the SBA data. As of April 5, there was about $68 billion left in the allotted pool for PPP loans, according to a CNBC report. Applications are due by May 31. Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

serve the way we wanted it...for about the past two years, even during COVID, we have been building on it. It’s now $1.5 million in cash reserves.” “Despite everything over the last year, we’ve done well,” Audi said. “I think people felt they saved their money on vacation, and they were thinking of the poor people and they gave us more donations, as well as ... stimulus money.” Last year, DRMM raised about $6 million in individual and corporate gifts and foundation grants, up from about $5 million in prior years, Audi said. St. Mary Mercy Livonia Hospital has a strong interest in the service areas DRMM will offer from the new site, said David Spivey, president of the hospital and vice president of community health and well-being for Trinity Health Michigan. “So it makes sense to work with them to establish a broader continuum of care for the residents of western Wayne County.” There’s been a rise in substance abuse in Western Wayne County. It’s a critical need, along with mental health services. St. Mary Mercy operates outpatient clinics today for its residents, Spivey said, but working with DRMM at its new site provides additional community-based opportunities. “We’re looking at establishing an outpatient, psychiatric teaching clinic there, as well, through our psychiatric residency program,” Spivey said. “And we’re also looking at having a family medicine community-based teaching clinic there.” Those two services would serve as a platform to support the broader array of services provided at the site, including senior care, Spivey said. “We’re still working out the details of the plans, but we would be providing staff and physicians to participate in those outpatient clinics, again, as part of a broader array of services the rescue mission will be offering there.” Contact: swelch@crain.com; (313) 446-1694; @SherriWelch

HOME CARE

From Page 3

shut down June 30 because the new auto insurance reform law caps hourly attendant care at 55 percent of what providers were charging in January 2019. "I potentially could end up in a nursing home,” Miller said. The 55 percent cap on rates would lower the home health care agency's charges from $70 per hour for a registered nurse to $38.50, less than the market-rate pay of $40 to $45 per hour for skilled nursing, said Bob Mlynarek, co-owner of 1st Call Home Health Care. “For 55 percent, that barely covers the wage of the aide or nurse, let alone any payroll taxes, any office overhead, our accreditation, printing, copying, office rents, electricity,” Mlynarek said. “We will be out of business, to make a long story short." The fast-approaching July 1 date for the auto insurance law Gov. Gretchen Whitmer signed two years ago at the Mackinac Policy Conference has set off a last-ditch lobbying effort by medical providers and the post-acute care industry to get lawmakers to delay or change the fee schedule. “We are at a crisis at this point for access to care for these individuals who bought a policy that guaranteed they would have access to the care they needed should they be unfortunate enough to get in an auto accident," said Margaret Kroese, executive vice president for Hope Network Neuro Rehabilitation. The 2019 law did not exempt motorists critically injured years — even decades — ago from the new cost-controlling fee schedule, which includes capping most hospital charges at 200 percent of Medicare rates and subjecting group homes and brain rehab centers to the 55 percent cap. Hope Network operates brain injury rehabilitation residential facilities in Grand Rapids, East Lansing and Kalamazoo that are a post-hospitalization transition for injured motorists to relearn to walk, talk, swallow and regain cognitive skills lost in vehicle and motorcycle crashes. “They will not continue to admit these patients at that 55 percent,” Kroese said. Hope Network also operates about 16 adult foster care group homes in Coldwater, Kalamazoo, East Lansing and suburban Grand Rapids for catastrophically injured drivers to live in lieu of institutional care facilities. Those too are in danger of going under, Kroese said. "I think most of the current group homes can’t survive under the 55 percent cap,” she said. The alternative to severely disabled individuals who need highly skilled care is to move into nursing homes, though home care industry leaders doubt there are enough accredited nursing home beds in Michigan to handle the immediate influx of several thousand new patients in July. "Even if you get a bed in a nursing home and you're a (quadriplegic), oh my, you're not going to get oneon-one care, you're not going to get turned every two hours, you're not going to get skin care — and they break down and die," said John G. Prosser II, vice president and partner in Health Partners Homecare, a

at 55 (percent)," Runestad said. "I just see so many problems with the way this is being done. It's not being done in any scientific way. It's being done with just a blunderbuss approach." Hope Network's top lobbyist worries lawmakers may be inclined to let the fee schedule go into effect July 1 and then re-evaluate the cost-control measures based on the impact. "Everybody wants to wait and see how bad it is," said Joe Haveman, government relations director at Hope Network and a former Republican lawmaker from Holland. "You can't do that with people's lives."

'Not nursing home material' At 1st Call Home Healthcare, Bob Mlynarek and his two business partners — all retired firefighter-paramedics — are preparing to shutter their six-year-old business that's largely dependent upon clients with no-fault auto insurance. The company, which had $6 million in revenue last year, has 14 office administers and 180 in-home direct care workers that include RNs, certified nursing assistants (CNA), licensed practical nurses (LPN), physical, speech and occupational therapists and lower-skilled caregivers. Mlynarek said there's no way the agency can continue providing its services with a 45 percent reduction in charges. “I’m one of the smaller guys,” he said. For the higher-skilled aide a quadriplegic such as Miller requires for physical transferring, 1st Call Home Health Care charges auto insurance companies $35 an hour. The new law would cap that hourly rate at $19.25, leaving little room for paying a caregiver a competitive wage in a labor market that's already experiencing a shortage, Mlynarek said. “You’re not going to get anybody Kelley Miller, 54, has been a quadriplegic since her traffic accident 10 years ago. Kelley’s daughter Tara Miller (top), aids in her care, to work for you for the amount of which is also overseen by a full-time registered nurse. | DALE G. YOUNG money they’re going to pay,” Miller Bingham Farms-based home health nursing home insurance policies to two-thirds of the MCCA's $1.3 bil- said. “I potentially could end up in agency with more than 500 caregiv- seniors. He's spent most of his ca- lion in annual claims, MCCA Exec- a nursing home." The current hourly charges for reer going inside nursing homes. utive Director Kevin Clinton said. ers. “There is a lot of fat in those attendant care for catastrophically Prosser said his bankers are He's skeptical those facilities can aware of the new law and how it will provide the same kind of care in- rates, in my opinion,” said Clinton, injured individuals is not always whose organization's board con- what insurance companies ultihome attendant care agencies do. upend his business model. mately pay out on claims. "These are people who need sists of auto insurance companies. Without a legislative change in “When we bill $35 for a high-tech Some lawmakers were under the the fee schedule, "I'm going to close around-the-clock care, and you the doors on June 30," Prosser said. don't get that in a nursing home impression that motorists such as CNA, that doesn’t mean we’re getting $35,” Mlynarek "There's no turning around — I like you do when you have somesaid. can't send anybody into the field on body at your beck and call in the “YOU’RE NOT GOING TO GET ANYBODY “They pay us July 1 knowing that I'm only going home," Runestad said. what they want. We to get 55 percent of it." Whitmer, a Democrat, and the TO WORK FOR YOU FOR THE AMOUNT end up having to litRepublican-controlled Legislaigate — and it takes ture's sweeping changes to MichiWait-and-see approach OF MONEY THEY’RE GOING TO PAY.” years. By the time gan's no-fault auto insurance law — Kelley Miller you do that, the atHouse Bill 4486 and Senate Bill were made with promises to lower torneys get one314, identical bills introduced in rates for drivers, who pay the highthe Legislature last month with bi- est premiums in the country for Miller who were injured years be- third of it.” For Miller, changes in how her partisan co-sponsors, would set what's always been considered the fore the law change would be hourly attendant care at 200 per- gold standard of coverage for medi- grandfathered in and continue to in-home care is paid for have her nervous about how it will affect her cent of Medicare or their average cal injuries sustained in auto acci- receive the same care. “There was no grandfathering," quality of life. charges in January 2019, whichever dents. Miller doesn't let her paralysis In order to drive down insurance Clinton told Crain's. is less. The governor and Legislature's stop her from getting out of the Sen. Jim Runestad, a White Lake premiums, the new law lets motorTownship Republican and co-spon- ists begin opting out of carrying un- exclusion of a grandfather clause house often to go shopping at flea sor of SB314, said he's trying to get limited medical coverage, letting for people with existing injuries markets and attend family birthday the majority party's leadership to them off the hook for a $220-per-ve- and disabilities "essentially revoked parties. She has both caregivers with her at consider the bills with some urgen- hicle fee that pay for catastrophic their access to care," Kroese said. Runestad, who voted for the new all times to assist in those activities, care for injured motorists like cy given the July 1 deadline. law in 2019, said insurance compa- give drinks of water and ensure the "You can't have a person whose Miller. The Michigan Catastrophic nies have painted a broad brush ventilator is continuously operating. life depends on that individual on “I am quite healthy, even though an hour-by-hour basis, yank that Claims Association’s annual per-ve- about the attendant care industry person out and put them without a hicle assessment is scheduled to without acknowledging the pitfalls I’m a quad,” Miller said. “I’m not nursing home material." of residential care. home health aide — they're dead," drop from $100 to $86 on July 1. "The insurance companies say That's a result of the caps on atRunestad said. Before being elected to the Legis- tendant care for some 4,000 dis- nobody's going to die, they're all Contact: clivengood@crain.com; lature, Runestad sold long-term abled adults whose care amounts to gouging, they'll make lots of money (313) 446-1654; @ChadLivengood APRIL 26, 2021 | CRAIN’S DETROIT BUSINESS | 25

THE CONVERSATION

Busted Bra Shop owner on finding the right fit for a small business BUSTED BRA SHOP: Detroit resident Lee Padgett — a 51-year-old Navy veteran — has carved out quite the niche for herself in the retail industry. Padgett opened her first custom fit bra boutique in late 2013 in Midtown Detroit. Since then, she’s opened a second Detroit location, along with stores in Ann Arbor and Chicago. She’s set to open her fifth location on April 28 at The Village of Rochester Hills. Padgett, who was born in North Carolina and raised in Alabama before first coming to Detroit in 2001, talked with Crain’s Detroit Business about growing a small business and the current retail landscape. | BY JAY DAVIS `When you opened your first store in 2013, was branching out and opening more locations the plan all along? It was. In the back of my head it was. I kind of prepared myself for that just in case. We were over by the (Detroit Institute of the Arts). I lived upstairs. I talked with my landlord, and he asked if I wanted to open a store here. It worked for me. There were no windows or anything. I think it’s worked out pretty well. `I believe you had two investors when you got started. Has anybody else joined up with you since then? We have partners working with us now. We’ve paid off everybody who helped us before, which were a friend and a family member. We’re working with a gentleman by the name of Billy Strawter Jr. He owns Blac Magazine and (ad agency) Milo Detroit. I met Billy at (Techtown Detroit). He saw me doing an interview about failure. He said he’d been watching what I was doing and he was interested in helping. `You have four, soon to be five, locations. How do you manage them all? You don’t do it by yourself. ... I have a wonderful team I work with. I have managers in place at each store. I have a regional manager who has technically worked with us for six years, while going to school at the same time. I have a good management team, good sales teams, but we’re currently hiring at all locations. I sometimes have to check in at each store to make sure the day-to-day things are taken care of, but those ladies are pretty amazing. `How do you empower all those managers? I’m not a micromanager. I do require that people have creativity and problem-solving skills. We go through a lot of training, some team building. We take advantage of Zoom calls, but I don’t have to be a part of everything. I pretty much am, but I don’t have to be. If they have a problem, they come to me with a solution. I give them the ability to solve problems. I’m learning

` We’ve written about small businesses and hiring issues. Are you in a similar position? It’s not as easy to find people as it was five years go. We’re also dealing with more stores. We’re having issues we’ve never seen before, but we still have people who are coming aboard. There have been people who’ve gone through the hiring process who don’t show up for their first day. They get hired, they’re excited, then they don’t show up. That whole process takes time, and then we’re never able to talk to them again. I’ve had people make appointments for interviews who never show up. I’ve had people on the schedule who don’t show up. That has never happened before. I have no explanation for it.

from them all the time, too. It’s not just a one-way street. `How do you manage the Chicago location? How did that one come to be? That was the second of our stores to open. I had friends who moved to Chicago and I would go down to visit them often. I fell in love with their neighborhood and found a place to rent. I met some wonderful ladies who have helped make it work. ... So what we did, we have an apartment in Chicago a mile away from the store, so we’re able to go down frequently to help with inventory, training and redecorating. `How did you get into the lingerie business? In 2003, we had a coffee shop in downtown Detroit on Library Street, Cafe de Troit. In that store, from conversations with customers, we found out that women didn’t have a place to buy a bra in the city. I thought that was strange. We heard that on a daily basis and it stuck with me. We moved to Europe in 2006. We sold our cafe equipment. We moved back to the States, and I worked at a bra store in North Carolina. I’m a chemist by education and an entrepreneur by spirit. I learned the craft while working at the store and told my husband I wanted to move. He said, ‘You’re crazy. My company won’t let me move.’ They found a job for him in Detroit that allowed him to work remotely. That was in 2011. We packed up and moved back to Detroit. ` What’s the most fulfilling thing about running your business? People complain a lot about being an entrepreneur: you get no sleep, you’re busy. I love it. Seeing other people who love it and get something out of it means a lot to me. People love working here. They make a good wage. We’re starting to look at offering benefits. Also, the women who walk through our door really need our products. The stories we hear are joyful. It’s very difficult to make people understand that this is not a frivolous product.

`What was your revenue last year? Were they at all affected by the pandemic? In 2020, we have an increase of about 23 percent over 2019. That was making sure we stayed relevant. We put in a lot of work with social media, and knowing we’d be able to satisfy what people needed out in the world. ... They can’t go to stores, so they came to our website. I have a van with our logo wrapped around it — a big, pink van that we drive around the country. You also have people bored at home and we ship to them. ... Our online sales are up. In-person sales are tripling this year. I needed to expand to be able to take care of our customers. `Any plans for future store openings? I do have plans to continue to grow Busted. Right now we’re concentrated on growing our Ann Arbor location and opening Rochester Hills and keeping Chicago strong. There are people reaching out to me from other states. ... I need to add some upper management. I’m always planning. I’m always looking at something and trying to improve. Lee Padgett, owner, Busted Bra Shop

READ ALL THE CONVERSATIONS AT CRAINSDETROIT.COM/THECONVERSATION

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RUMBLINGS

DSO President, CEO Anne Parsons to retire in fall 2022 DETROIT SYMPHONY ORCHESTRA President and CEO Anne Parsons announced her plans to retire in fall 2022. Parsons, 63, who has led the DSO since 2004, has been undergoing treatment for metastatic lung cancer since late 2018. She is currently on medical leave to address a new treatment protocol for her cancer. DSO Vice Presidents Jill Elder, Linda Lutz and Erik Rönmark are leading the organization on an interim basis, reporting to DSO Chairman Mark Davidoff. Davidoff and DSO Director Emeri26 | CRAIN’S DETROIT BUSINESS | APRIL 26, 2021

Parsons

ta Chacona Baugh will co-chair a search committee of musicians, staff and board members to identify Parsons’ successor. Boston-based Isaacson Miller Inc. is leading the search.

Parsons said she’d been looking at her 65th birthday in November 2022 as an opportune time to retire, even before her cancer diagnosis. Moving forward with that plan will give the DSO “a good lead start, particularly given my health, and trying to just get ahead of it and make sure that whenever the successor is named, we then create a transition plan” with overlapping leadership to ensure a seamless transfer. The treatment is much harder work this time, given that it’s a very different treatment protocol, Parsons said Tuesday.

“I’m feeling really fortunate that I can spend this time focusing on my health, and it’s really paying off, I think, because I do feel like I’m turning a corner.” Parsons said, “Everyone in the DSO family has been a source of critical strength and sustenance, from our dedicated and passionate governance and staff to our extraordinary DSO musicians and music director Jader Bignamini — whose performances together have filled me with so much happiness. I can never give enough recognition for all we have accomplished together.”

Chairman Keith E. Crain Vice Chairman Mary Kay Crain CEO KC Crain Senior Executive Vice President Chris Crain Secretary Lexie Crain Armstrong Chief Financial Officer Robert Recchia G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Editorial & Business Offices 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly, except no issues on 1/4/21 nor 12/27/21, combined issues on 5/24/21 and 5/31/21, 8/30/21 and 9/6/21, 11/15/21 and 11/22/21, by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Contents copyright 2021 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is prohibited.

Moving forward together

in Detroit

Over the past year, we’ve all been challenged in one way or another by this health crisis — physically, emotionally, financially. And while questions remain about what lies ahead, we know one thing for certain: The only way to move forward is together. To that end, Bank of America remains fully committed to supporting the health and economic recovery of our clients, communities and teammates. We know that small businesses, so critical to our local economy, have been greatly impacted. Through the Paycheck Protection Program (PPP), to date we’ve delivered 478,731* PPP loans — totaling nearly $34.5 billion* in funding — to help our clients continue to operate and pay their employees. Importantly, more than 99% of those loans went to companies with fewer than 100 employees. Partnering with local nonprofits, we’ve distributed more than 27 million masks for vulnerable populations as part of our ongoing efforts to address health-related disparities accelerated by the coronavirus. We’ve offered new and expanded benefits to help our employees balance family and work, including over 3.7 million days of back-up child and adult care. That’s an investment of more than $370 million in child and adult care reimbursement. I’m so proud of the way our community has come together to help those who need it most. And I’m certain that Detroit has the power to be stronger than ever as a result.

Helping Detroit move forward: • Delivered PPP funding to over 7,666 of our small business clients in Michigan for more than $675 million in relief • Distributed 410,600 masks through our local partners including: – United Way for Southeastern Michigan – Detroit Means Business • Expanded benefits for our employees to include additional child and adult care services plus virtual medical and behavioral health consultations at no cost

Matt Elliott President, Bank of America Detroit

Go to bankofamerica.com/community to learn more about the work we are doing with our incredible partners.

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