Crain's Detroit Business, May 19, 2014 issue by Crain's Detroit Business

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www.crainsdetroit.com Vol. 30, No. 20

MAY 19 – 25, 2014

$2 a copy; $59 a year

Page 3 Meet 3 finalists who want to drive new transit agency

THE TOP-COMPENSATED CEOS: 2013 hese five CEOs rose to the top in an analysis of return on equity of the companies they run. According to figures tracked by Loomis Sayles via Thomson Reuters Baseline data, these five companies in 2013 tracked the highest ROE

performance (the amount of net income returned as a percentage of shareholder equity). Compensation figures include bonuses, stock awards and other compensation. 䡲 See Page 25 for more data highlights.

Reviews on wage hike bill: Too much, not enough BY CHRIS GAUTZ

Ziebart avoids getting rusty, adds products, franchises Real estate movers do some moving of their own Health Care Doctors plug away at switch to e-records, Page 11

This Just In Blaskiewicz to leave DDP to focus on Invest Detroit

NEWSPAPER

David Blaskiewicz is leaving as president of the Downtown Detroit Partnership. No date has been set, but he hopes to have a replacement for the economic development Blaskiewicz nonprofit in place by the end of June. Eric Larson, who runs the eponymous Larson Realty Group in Bloomfield Hills, has been rumored as a possible replacement but said: “I will not be replacing Dave. I enjoy what I’m doing now.” Blaskiewicz said he wants to devote more time to his other job as president of Invest Detroit, an affiliate of Business Leaders for Michigan that provides funding for development projects, including two investment funds for startups, the First Step Fund and the Detroit Innovate Fund. “The real motivation for me is this is a big moment in time for both the DDP and Invest Detroit,” Blaskiewicz said. “They both need so much attention, it’d be a disservice to keep managing both.” — Tom Henderson

CAPITOL CORRESPONDENT

Timothy Wadhams Masco Corp.

50.8%

37%

Company 12- Change in month return compensation on equity from 2012

Rodney O’Neal Delphi Automotive

49.8%

Change in compensation from 2012

Company 12month return on equity

-9.9%

Alan Mulally Ford Motor Co.

32.5%

Prashant Ranade Syntel Inc.

31.9% 10.7%

Company 12- Change in month return compensation on equity from 2012

18.4%

Company 12- Change in month return compensation on equity from 2012

David Wathen TriMas Corp. Change in compensation from 2012

22%

-7.0%

Company 12month return on equity

Highest-paid execs earned their keep “The prime objective for executives at publicly traded companies Top compensated is to deliver shareholder value, If bringing higher stock prices to CEOs, Page 23 both in near-term and long-term shareholders and outperforming Top compensated non-CEO executives, performance. And if compensation the markets are key goals for comPage 24 is a byproduct of delivering sharepany CEOs, then the highest-paid holder value, then these CEOs have bosses in town have earned their earned theirs,” said David Sowerby, chief money. market strategist in the Bloomfield Hills ofBy all major metrics, the performance by fice of Loomis Sayles & Co. LP. CEOs in metro Detroit stood out in 2013, acSee Execs, Page 25 cording to experts in executive compensation.

BY TOM HENDERSON

CRAIN’S DETROIT BUSINESS

CRAIN’S LISTS

The state Senate worked in bipartisan fashion Thursday, approving a substantial hike to the minimum wage, but in a way that left many unhappy and the bill’s fate uncertain. Senate Bill 934 would increase the minimum wage to $9.20 an hour, up from $7.40, by 2017. It raises the tipped minimum wage from $2.65 to $3.50 an hour. Can a new And it includes minimum wage stepped in- bill amend a law creases along that doesn’t the way begin- exist? Page 28 ning Sept. 1 and ties future wage hikes to inflation. Most Republicans voted for the bill because doing so was seen as a way to block a much larger increase contained in a proposed ballot measure that seeks to raise the minimum and tipped minimum wages to $10.10 an hour. But they are now hearing from business groups who say the version approved Thursday is heading in the wrong direction. “It goes too far, too fast,” said Rich Studley, president and CEO of the Michigan Chamber of Commerce.

MAKING CENTS

See Wage, Page 28

State’s solar surge powers Nova Consultants’ growth BY JAY GREENE CRAIN’S DETROIT BUSINESS

ROBERT CHASE

Nova Consultants Inc. had $3 million in annual revenue when President Sunil Agrawal saw a future in solar energy during the Granholm administration. Last year, Nova’s revenue totaled $12 million.

Sunil Agrawal, president of Novi-based engineering and environmental company Nova Consultants Inc., saw a major opportunity to grow his business in October 2008 when then-Gov. Jennifer Granholm signed the state’s new renewable energy bill. Nova had been an engineering company with $3 million in annual revenue that focused mostly on environmental and construction management services. But Agrawal, an immigrant from India who came to Detroit via Canada in 1987, realized his company had the engineering expertise and in-

terest to take on solar projects that were on the cusp of exploding because of the new law. In 2008, the state approved the renewable energy bill that required utilities, including DTE Energy Co. and Consumers Energy Co., to generate at least 10 percent of their retail sales from renewable energy. Some 96 percent of renewable energy in Michigan is supplied through wind power. In 2009, Nova submitted an RFP for a DTE Energy solar project for 60 kilowatts in Scio Township. Thirty-five companies submitted proposals, 10 were selected for review and Nova won the bid. “DTE Energy gave us the opportunity and

CELEBRATE THE 2014 CLASS OF 20 IN THEIR 20s

See Nova, Page 26

JUNE 12

THE GARDEN THEATER DETROIT • 5–9 P.M.

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CRAIN’S DETROIT BUSINESS

MICHIGAN BRIEFS Too much Cherry Fest? Officials scale back on use of city park Because some people in Traverse City thought 17 days worth of the National Cherry Festival is just too festive, festival officials will trim two days off the time they were scheduled to use a popular park along Grand Traverse Bay. The Traverse City Record-Eagle reported that the decision comes after some city commissioners said this summer’s festival is too long, too expensive for the city and an unnecessary infringement on city parks over the Fourth of July. The festival still will run July 5-12. Last year, the Traverse City City Commission approved a limit on the number of summer festivals in an area of the city called “Open Space.” The decision followed debate about whether festivals were occupying the area for too long during the busy tourist season.

Wixom-based network to air games of Red Wings’ GR affiliate The Grand Rapids Griffins of the American Hockey League signed a three-year agreement with Wixombased Michigan Entertainment Sports to televise a minimum of 40 games a season over the next three seasons, MLive.com reported. The Griffins are the minor-league affiliate of the Detroit Red Wings.

Benton Harbor as golf paradise: A path for Detroit? Benton Harbor’s emergency manager is gone, its budget is balanced, and the city of 10,000 is preparing for the Senior PGA Championship on May 22-25 at its $60 million public golf course. As Detroit wrestles with its bankruptcy, Benton Harbor totters into stability after four years of under its own emergency manager. Benton Harbor now has a streamlined government under the watch of a state-appointed advisory board. With a half-billion-dollar private development — anchored by the Harbor Shores golf course — plus cash from its largest business, Whirlpool Corp., the city hopes to overcome its reputation for haplessness. Benton Harbor mirrors Detroit’s decline from might to blight. As with Detroit’s riverfront and Midtown districts, Benton Harbor’s boosters are The TV schedule will be released after the release of the AHL schedule in August. Most broadcasts will be road games. Michigan Entertainment Sports President Peter Schinkai said his network hopes to appear on all major cable systems in Michigan, Ohio and northern Indiana in the next three years.

MICH-CELLANEOUS 䡲 The Grand Rapids-Wyoming market ranks third on Forbes magazine’s list of the “Best Mid-size Cities for Jobs,” up from eighth in 2013 and 10th in 2012. The market had 410,200 jobs last year and has

banking on investment in a targeted area to revive the city. The Harbor Shores plan features houses priced up to $1 million on a golf course with a spectacular view of Lake Michigan. Parts of the sprawling course — its 18 holes take seven miles to walk — were built on polluted factory sites. A dowdy beach was overhauled with $2 million from Harbor Shores Community Redevelopment, the developer. “People who golf have money,” said Jeffrey Noel, president of Harbor Shores and spokesman for Whirlpool. “People who have money talk to other people who have money, who you hope, over time, will invest in Benton Harbor. A golf course is a way of telling the story.” — Bloomberg News

enjoyed job growth of 9.7 percent over the past five years. Ranking factors were recent growth trends, midterm growth, long-term growth and a market’s momentum, using data from the U.S. Bureau of Labor Statistics. Ranking first on the list: Boulder, Colo. 䡲 The Grand Rapids-Wyoming area ranked sixth in the U.S. for the largest percentage growth in nonresidential construction from 2011 to 2014, according to a report from CareerBuilder and Economic Modeling Specialists International. During that period, nonresidential construction jobs grew 18 percent. 䡲 Cascade Township-based Mill Steel Co., a supplier of flat-rolled

steel, plans to spend $16.1 million to expand into Indiana, MLive.com reported. In a statement released to the media in Indiana, CEO David Samrick cited that state’s right-towork law, simplified regulatory environment and low tax rates in the decision. 䡲 Jackson-based Consumers Energy will provide $100 a month for its employees who live in that city’s downtown, MLive.com reported. Under the Jackson Anchor Initiative, businesses promote living, buying and innovating downtown. Initiative officials often point to Midtown Detroit as an example of how this type of program can succeed.

䡲 The state is seeking a subpoena against AmeriGas Partners LP after consumer complaints tied to pricing, the Traverse City Record-Eagle reported. Attorney General Bill Schuette said more than 400 complaints about high propane prices have been made statewide. 䡲 Billy Sims, the former Detroit Lions running back who now runs a chain of barbecue restaurants, is in talks with Bay County and state officials to establish a milk powder processing plant that would ship to Asia, The Bay City Times reported. 䡲 Albion-based Caster Concepts has purchased Rockford, Ill.-based Modern Suspension Systems and will relocate operations to Michigan. The company did not disclose the purchase amount. 䡲 Missy Langdon of Fruitport won Pure Michigan’s love letter contest for her poem titled “A Michigander’s Ode to the Mitten.” It starts: “My Great Lake State with waters blue, to you belongs my love most true. Each season has beauty for us to behold, even in winter — so bitter and cold.” So savor this poem, amid your gloom, now that Michigan Briefs has run out of room. Find business news from around the state at crainsdetroit .com/crainsmichiganbusiness. Sign up for the Crain’s Michigan Morning e-newsletter at crainsdetroit.com/emailsignup.

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Transit chief hopefuls down to 3 RTA board to vote on finalists Wednesday Candidates to head the new Regional Transit Authority, from left: Albert Martin, Brian Marshall and Michael Ford.

BY BILL SHEA CRAIN’S DETROIT BUSINESS

The next CEO of the fledgling Regional Transit Authority of Southeast Michigan must navigate metro Detroit and Lansing’s often inscrutable political universe while also captaining the effort to persuade voters in four counties to approve a new transit tax in 2016. Oh, and the new CEO also must persuade four transportation agencies that jealously guard their money and autonomy to play nicely together.

The RTA’s nine-member board is scheduled to vote Wednesday on the organization’s next top executive from a pool of three finalists winnowed by a committee last Fri-

day from a batch of seven applicants. Whoever is chosen will lead a transit agency for Wayne, Oakland, Macomb and Washtenaw

As real estate moves, so do the brokers BY KIRK PINHO

See Brokers, Page 30

JOHN SOBCZAK

Daniel Baker, president of Ziebart Corp., says the company has repositioned itself as the car industry has evolved.

Ziebart repairs sales with new products, franchises BY CHAD HALCOM CRAIN’S DETROIT BUSINESS

ew products, new franchising markets and a strong spring season could bring Ziebart International Corp. to a record year of auto aftermarket accessory business — much of it overseas. The Troy-based accessories, glass repair, rustproofing, remote starter and protection coating installment company reports April sales were 13 percent ahead of a year earlier, and the company is now in 32 countries after landing new master franchise agreements for Poland and Kazakhstan in the past year. A new auto paint protection film, called Z Shield, launched last fall after two years in development and has reached about 30 service locations, as Ziebart continues to train franchisees on the new product. Its U.S. footprint, which has held steady at

Garden Fresh burger: A center of attention, Page 5 Company index

See Transit, Page 29

New shine to bottom line

CRAIN’S DETROIT BUSINESS

Local commercial real estate sales and lease deals are getting signed more quickly as the market recovers. Also getting signed: a handful of prominent real estate brokers and executives to new roles in the industry. Some of the moves in recent months are tied to new brokerage brands entering the marketplace. Others are midcareer professionals looking for a new challenge. The latest example was the announcement last week that, after 29 years with Bloomfield Hills-based Kojaian Management Corp., David Haboian left the company and joined Southfield-based Redico LLC as senior vice president of Haboian operations. Haboian said his move was simply for a career change. “It was nothing more than a change of pace, to try something different,” Haboian said. “I’m in my mid-50s, so if I didn’t make a change, I probably wouldn’t. It was just time to move on.” Haboian will oversee Redico’s building operations and management for its portfolio; at Kojaian, he was responsible for leasing the company’s buildings as executive vice president of brokerage. Haboian will take over some of the duties of Jim Jonas, executive vice president of operations and leasing at Redico. Jonas will con-

counties that took more than 40 years to successfully create. The three finalists are: 䡲 Albert Martin, former director of the Detroit Department of Transportation and the Southeast Michigan Transportation Authority (the forerunner to the Suburban Mobility Authority for Regional Transportation) bus systems, and a former deputy commissioner of the Connecticut Department of Transportation. 䡲 Michael Ford, CEO of the Ann Arbor Transportation Authority since 2009, and a transit consultant before that. 䡲 Brian Marshall, a transit consultant who resigned as CEO of the

Inside

around 100 locations in 21 states since a Corpus Christi, Texas, franchise opened two years ago, is on the grow again with a new franchise opening last week in Spokane, Wash., and a new location for a current franchisee coming to Canandaigua, N.Y. Daniel Baker, president of the parent company’s U.S. franchisor, Ziebart Corp., said the Z Shield vinyl film fills a demand for clear coating to prevent rock chips and other projectiles from damaging a car’s paint. The Ziebart product follows up on a Scotchgard paint protection film that Minnesota-based 3M Corp. rolled out several years ago, but Baker said Ziebart went for some improvements in its version. “This is a similar idea, but we didn’t want to change the appearance or the color of people’s cars when it’s applied. Customers can feel strongly about that,” he said. “So unless you’re about 4 feet

These companies have significant mention in this week’s Crain’s Detroit Business: 7 Greens Detroit Salad . . . . . . . . . . . . . . . . . . . . . 21 AgriSight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Auto One . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Avison Young . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Axis Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Bay Area Family Physicians . . . . . . . . . . . . . . . . . . 11 Blue Cross Blue Shield of Michigan . . . . . . . . . . 6, 12 Burtek Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . 4 CBRE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 CHE Trinity Health . . . . . . . . . . . . . . . . . . . . . . . . 14 Citizen Yoga . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Clean Energy Coalition . . . . . . . . . . . . . . . . . . . . . 26 Colliers International . . . . . . . . . . . . . . . . . . . . . . 30 Consumers Energy . . . . . . . . . . . . . . . . . . . . . . . . . 1 Dorey-Reagan & Associates . . . . . . . . . . . . . . . . . 25 DTE Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Farbman Group . . . . . . . . . . . . . . . . . . . . . . . . . . 30 FarmLogs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Ford Motor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Garden Fresh Gourmet . . . . . . . . . . . . . . . . . . . . . . 5 General Motors . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 GloStream . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Great Fresh Food . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Hayman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Henry Ford Health System . . . . . . . . . . . . . . . . . . . 12 Hi-Lex Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Huron Capital Partners . . . . . . . . . . . . . . . . . . . . . 10 Jones Lang LaSalle . . . . . . . . . . . . . . . . . . . . . . . . 30 Kojaian Management . . . . . . . . . . . . . . . . . . . . . . . 3 Loomis Sayles . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Marcus & Millichap Real Estate Investment Services . 30 McLaren Health Plan. . . . . . . . . . . . . . . . . . . . . . . 16 McNaughton-McKay Electric . . . . . . . . . . . . . . . . . 26 Medical Network One . . . . . . . . . . . . . . . . . . . 11, 13 Michigan Chamber of Commerce . . . . . . . . . . . . . . 1 Michigan Health Connect . . . . . . . . . . . . . . . . . . . 12 Michigan Orthopedic Services . . . . . . . . . . . . . . . . 13 Michigan Restaurant Association . . . . . . . . . . . . . 25 Michigan Suburbs Alliance . . . . . . . . . . . . . . . . . . 29 Newmark Grubb Knight Frank . . . . . . . . . . . . . . . . 30 NoJo Kicks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Nova Consultants . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Patriot Solar Group . . . . . . . . . . . . . . . . . . . . . . . . 26 Physician Alliance . . . . . . . . . . . . . . . . . . . . . . . . 11 Priority Health . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Punch Bowl Social . . . . . . . . . . . . . . . . . . . . . . . . 21 Raise Michigan . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Redico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Regional Transit Authority of Southeast Michigan . . 3 Renaissance Ventures Capital Fund . . . . . . . . . . . 21 Small Business Association of Michigan . . . . . . . . 25 TPC Michigan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Transportation Riders United . . . . . . . . . . . . . . . . 29 United Physicians . . . . . . . . . . . . . . . . . . . . . . . . . 12 University of Michigan Health System . . . . . . . . . . 12 Valentus Specialty Chemicals . . . . . . . . . . . . . . . . 10 Valley City Sign . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Wayne State University . . . . . . . . . . . . . . . . . . . . . 25 The Z . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Ziebart International . . . . . . . . . . . . . . . . . . . . . . . 3

Department index BANKRUPTCIES . . . . . . . . . . . . . . . . . . 4 BUSINESS DIARY . . . . . . . . . . . . . . . . 18 CALENDAR . . . . . . . . . . . . . . . . . . . . 20 CLASSIFIED ADS . . . . . . . . . . . . . . . . 21 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 8

See Ziebart, Page 27

OPINION . . . . . . . . . . . . . . . . . . . . . . . 8 OTHER VOICES. . . . . . . . . . . . . . . . . 8, 9

THIS WEEK @ WWW.CRAINSDETROIT.COM

Take one tablet ... Crain’s new Web-based news reader lets you scan news and blogs on your iPad or notebook device. To learn more about the app, click on the link on our home page at crainsdetroit.com

PEOPLE . . . . . . . . . . . . . . . . . . . . . . 19 RUMBLINGS . . . . . . . . . . . . . . . . . . . 31 WEEK ON THE WEB . . . . . . . . . . . . . . 31

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Burtek looks to add customers with Votaw, begin hiring BY CHAD HALCOM CRAIN’S DETROIT BUSINESS

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Burtek Enterprises Inc., the Chesterfield Township-based defense and aerospace contractor bought out of receivership by Wynnchurch Capital Partners LP two years ago, is looking for overlapping business with new affiliate Votaw Precision Technologies Inc. — and could be hiring again soon. Burtek last week announced that local platform company Burtek Holdings Inc., formed when Wynnchurch Capital bought the assets of Burtek Inc. out of receivership in 2012, has also acquired Santa Fe Springs, Calif.-based Votaw. Terms were not disclosed. “This is part of a longer-term strategy that bringing the two companies together, we can offer the capabilities of both companies to each other’s customers,” Burtek CEO Jeff Daniel told Crain’s. Wynnchurch, a Rosemont, Ill., private equity firm with offices in Bloomfield Hills, acquired Burtek Inc.’s assets for $9 million after several months in receivership. Since then, Burtek has added at least 33 new customers on a strategy of diversifying outside of defense into the aerospace and energy industries, Daniel said. New customers since 2012 have included Spirit Aerostructures, Siemens AG and Mitsubishi International Corp. The growth has allowed Burtek to maintain revenue and approximately 140 employees in Chesterfield as defense budgets shrank amid federal budget sequestration, Daniel said. New customers could account for 30 percent of total revenue in 2014. “And that’s just organic growth, outside of any opportunities from the Votaw acquisition,” he said. “We have done that by diversification, and our backlog is now the largest it’s been in three years.” As a result, Daniel said, Burtek expects to start hiring again by the third or fourth quarter this year for skilled trades, machining, welding and other employees. Votaw does significant business in spaceflight hardware, he said, although several of its engineered product lines “complement” Burtek. “This combination brings together over 70 years of experience, customer focus and performance excellence,” Wynnchurch Managing Partner Terry Theodore said in a statement. Burtek reported annual revenue of $45 million and 214 workers before a committee of banks led by Pittsburgh-based PNC Bank NA with $13.9 million of combined debt sought a receiver in federal court. The Votaw acquisition closed April 30.

BANKRUPTCIES The following business filed for protection in U.S. Bankruptcy Court in Detroit May 9-16. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation. D&D Products LLC, 19 N. Hamilton St., Ypsilanti, voluntary Chapter 11. Assets and liabilities not available. — Bridget Vis

Huntington grows presence in state with 13 BoA branches TOM HENDERSON CRAIN’S DETROIT BUSINESS

Columbus, Ohio-based Huntington Bancshares Inc. (Nasdaq: HBAN) continues to build its presence in Michigan, announcing last week it has bought 13 branches in the state from Charlotte, N.C.-based Bank of America Corp. This follows a deal announced in April for Huntington to buy 11 BoA bank branches in Michigan. “With this announcement, Huntington has committed within the past four years to increase our Michigan branch network by more than 120 new locations,” said Stephen Steinour, chairman, president and CEO of Huntington, in a news release. The newest purchase involves 11 locations in the Monroe and Flint markets and single locations in Holland and Muskegon. Only the Holland and Muskegon branches and one Monroe branch overlap within two miles of Huntington’s existing branch network.

Huntington (Nasdaq: HBAN) will buy about $500 million in deposits. The deal is expected to close in the second half of 2014. No loans are included in the purchase. The two BoA deals will add about $1 billion in deposits for Huntington. Huntington’s expansion in Michigan began in 2009 with the acquisition of the deposits of Warren Bank and continued with the 2012 acquisition of Dearbornbased Fidelity Bank. Also in 2012, Huntington announced an exclusive partnership to locate Huntington branches within Michigan Meijer stores, with 40 open so far and more than 40 others planned by 2020. Overall, the acquisitions and expansion will grow Huntington’s workforce in Michigan from about 1,500 in 2011 to more than 2,000 by the end of this year. Huntington is also ranked as the No. 1 small-business lender in the state by the U.S. Small Business Administration.

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Garden Fresh to fork over $700K so it can stuff enough of new burgers BY KIRK PINHO CRAIN’S DETROIT BUSINESS

Most burgers can be made on a grill in just a few minutes, but Jack Aronson and Dave Zilko’s burger business strategy took about 2½ years to reach serving temperature for the masses. Now their time and $6 million investment appear to be paying off as their Jack’s Special Grilled stuffed chicken burgers have hit the shelves in Michigan and on the East Coast, and the 26-employee parent company, Clinton Township-based Great Fresh Food, fights to keep up with the unexpected level of demand. To address that, Great Fresh Food plans to invest $700,000 in new equipment for its 20,000square-foot building south of Hall Road between Groesbeck Highway and North Gratiot Avenue. It also plans to add a second production shift “within a couple weeks” with 15-18 employees, Zilko said. The equipment includes another $400,000 burgerstuffing machine and a $300,000 packaging machine, said Zilko, vice chairman of Aronson’s Ferndale-based Garden Fresh Gourmet, one of Zilko the nation’s leading salsa and tortilla chip producers. The company has 433 employees in Michigan and had $110 million in revenue in 2013. The packaging is currently done by hand. “Are we straining? Yeah, because the orders are so big,” Zilko said. “It’s a startup and we have some big, big accounts that have come in. Initial orders are bigger than we thought they would be. When you’re involved in a startup, you don’t have your work well perfected just yet.” The burgers started hitting the shelves last month in all 203 stores of Walker-based Meijer Inc. stores and in 56 Costco stores. They are also carried in 188 BJ’s Wholesale Club on the East Coast. Zilko said he met last week with Shop Rite, which has about 260 stores in New York, New Jersey, Pennsylvania, Delaware and Connecticut, about adding the product to its shelves. “I’ve been showing these to people for really about a year and a half, and I can honestly say I’ve never gotten a more enthusiastic response,” he said. Zilko expects the burger line — which has stuffing options of spinach and three cheese; apple wood smoked bacon and cheddar; roasted red pepper and mozzarella; and pepper jack cheese — to generate $10 million to $15 million in revenue annually starting next year. That’s possible, said Gary Karp, executive vice president of Chicago-based food market research firm Technomic Inc. — if the burgers appeal enough to consumers. “If you’re in Meijer, if you’re in Costco, you’ve got good exposure

COURTESY OF GARDEN FRESH FOOD

Dave Zilko on the new line of stuffed burgers: “I can honestly say I’ve never gotten a more enthusiastic response.”

and distribution, and that alone is a big plus,” Karp said. “But where the rubber meets the road is consumer use — and repeat — that builds a regular business.” The convenience factor comes from all the ingredients being stuffed inside, so consumers don’t have to purchase things like spinach, red pepper, bacon and other ingredients separately, Karp said. Meijer stores carry packages of two 4.5 ounce patties; Meijer ordered up to six cases of six packages per store, according to Zilko. Costco stores carry packages of eight 4.5-ounce patties; it ordered a total of 86,000 patties, Zilko said. Aronson, founder of Garden Fresh, and his wife, Annette, are majority owners of Great Fresh Food. Jack Aronson and chef Brian

Polcyn, owner of Forest Grill in Birmingham, developed the burgers’ stuffing options, Zilko said. After a trip to Germany in 2012, Aronson and Zilko returned to the U.S. dreaming of developing a line of stuffed hamburgers inspired by some of the high-pressure pasteurizing technology they saw overseas. It was an expensive investment for the two machines they bought, which sell for $1.96 million each. There are only about 100 in the world, and Great Fresh owns the only two in Michigan, Zilko said. “They perfectly form a meatball and slam it into a patty,” Zilko said. Zilko said Great Fresh Foods hopes to have beef hamburgers, both stuffed and unstuffed; stuffed beef and stuffed chicken meatballs; and grilled chicken breasts on the shelves in the next year. Things look bright for the product line, Karp said. “I think there is a good chance that this will get some good traction,” Karp said. “They are good businesspeople, so they’ll know how to do promotion to get the trial, and at the end of the day, consumer preference will determine what the real success of this will be.” Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB

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CRAIN’S DETROIT BUSINESS

Hidden-fees ruling against Blues opens door to lawsuits under stay

BOSTON RED SOX VS DETROIT TIGERS

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BY CHAD HALCOM CRAIN’S DETROIT BUSINESS

It’s “game on” once more for 35 self-insured businesses looking to recoup alleged hidden fees in past reimbursements to Blue Cross Blue Shield of Michigan, now that a federal appeals court has upheld a $6 million-plus judgment for Hi-Lex Controls Inc. The Litchfield-based maker of window regulators with an automotive design center in Rochester Hills obtained the judgment last July before U.S. District Judge Victoria Roberts in Detroit, in the first of many lawsuits through Grand Rapids-based Varnum LLP to go to trial. The other companies’ cases were put under a stay after Blue Cross appealed the Hi-Lex decision, and it was not immediately clear who was due next in court after the 6th U.S. Circuit Court of Appeals ruling last week ended the stay. Partner Perrin Rynders at Varnum, who is handling the litigation against Blue Cross in Detroit, said one lawsuit from Kalamazoobased Burroughs Corp. and its employee benefit plan was about two weeks away from trial when the stay was imposed last summer. That case is also before Judge Roberts, along with at least 10 of

U.S. District Judge Victoria Roberts had found that Blue Cross used a deceptive practice to hide fees and surcharges that were rolled into claims. the other Varnum lawsuits. “So in that case we were ready to go to trial. But what remains to be seen now is whether the Blues is willing to go to trial on a case where all the key questions have already been answered in the Hi-Lex case,” Rynders said. “We have not had a chance to confer with Blue Cross counsel since the decision.” Administrative services contracts allow self-insured employers, retirement funds, unions and other organizations to use Blue Cross’ network and administrative services to process insurance claims. Other self-insured employers to sue Blue Cross between 2011 and last fall over fees in their contracts include Detroit-based Wade Trim Inc., Adrian Steel Co., Baker College and Magna International of America Inc., the Troy subsidiary of Ontariobased Magna International Inc. Roberts found that Blue Cross had used a deceptive practice to

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hide fees and surcharges that were rolled into claims billed under administrative services contracts with self-insured businesses and local governments. This included concealing four fees in billing statements to Hi-Lex for employee benefit claims — a network access fee, a contribution to the Blues’ contingency reserve, a retiree coverage surcharge and an “other-than-group fee” that helped subsidize its Medigap coverage plan for senior citizens. The insurer has said previously that its Hi-Lex contract language is identical to an agreement it maintained for self-insured Calhoun County. In that case it was able to get a 2011 judgment for $1.14 million overturned by the Michigan Court of Appeals. “Blue Cross Blue Shield of Michigan is disappointed in the decision in federal court, which runs contrary to state court rulings over the same contract language,” Blue Cross Director of Corporate Communications Helen Stojic said in a statement last week. “We are reviewing the decision for appeal. The access fees under dispute enabled Hi-Lex to receive substantial discounts in hospital services, which resulted in millions of dollars of savings in hospital costs for Hi-Lex.” The insurer had also received a $1.03 million judgment from 2011 in favor of Midland County reversed on appeal last year; the state appeals court also sided with the Blues in claims on behalf of the Genesee County Road Commission, the city of Saginaw, Cass County and Tuscola County. In the Hi-Lex case, Roberts had found the Blues were losing thousands of customers in the early 1990s when proposing the various fees, until it adopted a practice in late 1993 of rolling them into the category of hospital charges and not detailing them within the contracts. Blue Cross could challenge the Hi-Lex decision either by seeking a rehearing before the three-judge panel that ruled last week, petitioning for the entire federal circuit bench in Cincinnati to hear it, or by asking the U.S. Supreme Court to take up the case. “I would suggest that (a Supreme Court hearing) is unlikely. The Supreme Court does like to hear cases that resolve … a difference of standards imposed by different appellate circuits,” Rynders said. “There is an issue here with different standards, under either (standard) we prevail, so I don’t think this case is ripe for that.” Chad Halcom: (313) 446-6796, chalcom@crain.com. Twitter: @chadhalcom

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Advice to GCs at Crain’s summit: Understand organization’s goals How can in-house attorneys develop their own careers and navigate the C-suite? By taking the time to truly understand an organization’s goals. Attorneys at Crain’s General and In-house Counsel Summit on May 13 offered these and other lessons from the trenches and the boardrooms at the annual networking and educational event. Hosted at the Westin Book Cadillac Detroit, the summit drew about 300 people. Keynote speaker Mary Ann Hynes, senior counsel at the Dentons law firm in Chicago, reflected on her career and her status as the first woman to hold a general counsel title at a Fortune 500 company. “Don’t be confused; notoriety is not the same as leadership,” Hynes said. “Lawyers are usually riskaverse, but leaders consider the risk and reward of a decision.” In 1979, Hynes was the first woman to be general counsel at a Fortune 500 company, CCH Inc., a Riverwoods, Ill.-based provider of information services and software for tax, accounting, legal and business professionals. She went on to hold general counsel positions at companies in multiple industries. She was the first female officer of Sundstrand Corp., now UTC Aerospace Systems. Hynes said the best way a new general counsel can lead from his

Keynote speaker Mary Ann Hynes: “Lawyers are usually risk-averse, but leaders consider the risk and reward of a decision.”

AARON ECKELS

or her post is to understand the needs of the company. She urged the room to attend C-suite strategy meetings and ask questions. “Are you holding yourself back?” she asked. Hynes’ talk comes at a pivotal moment for women in general counsel roles. There are now 105 women holding the post at Fortune 500 companies, according to a September survey by the Washington, D.C.-based Minority Corporate Counsel Association. That’s 21 percent of all general counsels in the country. The pattern holds in Michigan. There are three women general counsels among the state’s 16 Fortune 500 companies, or 18.7 percent,

the same ballpark as nationally. Also along the lines of leadership development was a panel discussion for in-house counsel called “Learning to Speak Business.” Knowing your company’s industry was the first strategy for how general counsels can evolve into trusted business partners. The speakers — Robert Kurnick Jr., president of Penske Corp./Penske Automotive Group Inc. and former partner at law firm Honigman Miller Schwartz and Cohn LLP; Vanessa Williams, vice president, chief legal counsel and global privacy officer at IHS Automotive; and Kim Yapchai, assistant general counsel and director of group legal affairs and corporate

ethics at Masco Corp. — discussed their top 10 strategies for how the audience of general counsels could become better business partners. “Lawyers that understand a business and its strategy are more effective in their roles,” said Michelle LeBeau, managing shareholder for the metro Detroit office of Ogletree, Deakins, Nash, Smoak & Stewart PC, who moderated the panel. Knowing an industry, Williams said, takes researching the industry’s key players, the culture of the industry and where it is headed. Reading trade publications is one way Yapchai said she learns about the industries that Masco’s diverse range of businesses are in. Kurnick said he recommends general counsels know the competitive landscape of the industry and how a company peer-ranks its competitors — as well as its revenue drivers. That tip led into the second strategy for how general counsels can be better business partners: Understanding the business objectives and goal of the company for which they work. Yapchai gave an example from her time at Ford Motor Credit Co., where she had to change the advice she was giving for how to handle people with cars in default after she learned the company’s goal was to lower the number of cars it

took back. Instead of repossessing the vehicles, she said she began to look at a range of other options to keep people in their cars. To learn about where Masco’s companies are headed, Yapchai said she listens to earnings calls. Kurnick said he invites his company’s general counsel to be a part of as many meetings as possible to learn and understand Penske’s goals and objectives. Another challenge faced by general counsels: Not being “Doctor No” due to their role of mitigating risk, LeBeau said. Yapachi said her job is to translate what the law allows the company to do to reach its goals, instead of having executives ask if they can do x, y or z and her repeating “no.” However, Kurnick cautioned not to forget a general counsel’s job is to be a lawyer, and to never put the best legal recommendations aside when providing advice. Tuesday’s event was held in partnership with the Michigan chapter of the Association of Corporate Counsel and the State Bar of Michigan-Business Law Section InHouse Counsel and in cooperation with the Oakland County Bar Association and the Society of Corporate Secretaries & Governance Professionals. Title sponsor of the event was Ogletree, Deakins. Reporting by Dustin Walsh, Bridget Vis and Daniel Duggan.

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CRAIN’S DETROIT BUSINESS

OTHER VOICES

OPINION

Gilbert deserves Placemaker title P

oliticians with packed schedules often make a podium appearance at civic events, then quietly leave through a side door. Not so last week when the Michigan District Council of the Urban Land Institute presented Dan Gilbert its annual Placemaker Award. The room at the Westin Book Cadillac Detroit was brimming with VIPs. Mayor Mike Duggan, who joined his predecessor, Dave Bing, at Gilbert’s table, spoke before dinner — and stayed. Duggan said he first met Gilbert when Gilbert was honored as Crain’s Newsmaker of the Year in 2007. Though Gilbert was flirting with the downtown move then, it would be three years before Quicken Loans moved. Duggan said Gilbert’s speech was memorable in part because he closed by saying, “Who’s coming with me?” Since then? About 12,000 employees and a handful of other investors followed Gilbert’s lead. The ULI honored Gilbert for what he has done in four years: buying 50 downtown properties encompassing 8 million square feet, investing $1.3 billion and making downtown a more vibrant, lively and attractive place to be. He joins past “placemaker” honorees who have had an impact on downtown: Edsel Ford II for creating Campus Martius Park through the Detroit 300 celebration and Peter Karmanos Jr. for creating the Compuware headquarters downtown. “There’s something special going on here,” Gilbert told the largely suburban crowd last week. “Beyond a blip … you can’t make these bets on a spreadsheet.” We’ve seen this before: successful businesspeople becoming civic leaders. Roger Penske did it. Others before Gilbert have, too. But for the scope and speed with which his Detroit investments are taking hold, Gilbert deserves the title: “Placemaker.”

Wage bill good compromise Michigan workers may get a pay boost, thanks to Republican lawmakers. No, that’s not a typo. Republicans in the state Senate led the charge to boost the minimum wage to $9.20 an hour by 2017. If passed into law, the measure potentially would short-circuit a petition drive that would drive the wage even higher — to $10.10 — as well as apply to tip-based employees to boot. That latter effect would cripple many restaurants and hospitality venues. The Senate measure is a good compromise. There’s a growing disconnect between the highest earners at the top of the scale — just look at the Crain’s list of top-compensated execs on Page 23 — and the average worker. The Senate proposal is a reasonable alternative to crippling an entire industry in Michigan.

View from ‘up north’: Detroit deserves a lift Michigan lawmakers some of the city’s prized to ignore these realities and turn have an opportunity to artwork to fund the re- its back on this historic opportumake history in the comstructuring plan — a nity? ing days and significantly short-sighted move that In the other direction, we outaccelerate the state’s ecowould strip away assets staters love Detroit when it comes nomic comeback by supfrom one of the city’s to the Tigers, Lions and Red porting a proposal to help prized public treasures. Wings, so we should show that levthe city of Detroit emerge That’s akin to Traverse el of enthusiasm and support to from bankruptcy. City selling some of its wa- help this once-great city get back But this plan — nothterfront open space to fill on its feet. ing short of remarkable, a budget Like it or not, Doug Luciani given the extraordinary hole. How around the nasupport from private business, would that go over tion and the foundations, Detroit city pension- with local resiglobe, the forers and others — will be an oppor- dents? tunes of Detroit tunity lost of the highest proporThen there’s the are tied to the futions if our legislators can’t get “bad precedent” ture of Michipast generations of party politics, argument: If we gan. While other dated stereotypes and possibly bail out Detroit, parts of Michiworse. what about all the gan have grown Some of the arguments against other municipaliin stature and state support for this restructur- ties that need monclout in the ing are so hollow they don’t even ey? That’s an obmidst of Depass Civics 101. “Why should out- stacle always troit’s troubles, state residents send their tax dol- trotted out to block Doug Luciani, Traverse City Area the Motor City — lars to Southeast Michigan?” is solutions to deep Chamber of Commerce warts and all — one of them. and complex probis still most idenWell, simply, that’s how state lems. The federal government’s tified with the Wolverine State government operates. For decades, rescue of General Motors was un- across the U.S. and around the the more-populous southern parts precedented, but it saved thou- world. If economic and political of Michigan sent a disproportion- sands of Michigan jobs and pre- storm clouds continue to hover ate amount of tax dollars to north- vented the collapse of an American over Detroit, it will remain overern and out-state Michigan to fund business icon. The “bad prececast across most of Michigan. roads, bridges, schools, parks and dent” excuse is a crutch for those In late April, Doug Rothwell of other state services. For example, who won’t work toward creative Business Leaders for Michigan Southeast Michigan residents are remedies to extraordinary circumvisited Traverse City and assured proportionately contributing more stances. a group of northern Michigan’s to the Pure Michigan campaign There are also historic and ecobusiness people that Detroit has than residents up here — while nomic aspects to this issue that our region reaps huge benefits shouldn’t be overlooked in our indeed turned the corner and that from this highly successful prisoner-of-the-moment mindset. real economic revival is happentourism strategy. You don’t hear The people of Detroit helped build ing. A new group of leaders is Southeast Michigan complaining northern Michigan’s tourism in- charting a new course for the city, about that. dustry in the 1950s, ’60s and ’70s — and it’s time to bury decades of mismanagement and mistrust. When Kalkaska Public Schools and continue to fuel it today. Polls show the residents of closed in the mid-1990s after the Southeast Michigan remains district ran out of cash, southern inextricably tied to much of Michigan support the Detroit reMichigan lawmakers could have northern Michigan’s manufactur- structuring plan and are ready to looked the other way and said ing sector, as our small and mid- invest a relatively small portion of “Hey, not our problem!” Instead, sized operations crank out compo- state dollars toward this much the Legislature went to work and nents for the auto industry. The larger bankruptcy exit strategy. The question for lawmakers came up with a better method to people of southern Michigan help fund Michigan’s public schools. consume our region’s vast agri- standing in the way is simple: It’s a system that needs reviewing cultural output, their world-class What excuse will you reach for the again, but the point is the state learning institutions educate our next time there’s a tough problem came together to work toward a so- graduates, and their cultural at- to solve? Doug Luciani is president and lution instead of pointing fingers tractions are enjoyed by folks and assigning blame. across the state and beyond. Is it CEO of the Traverse City Area Some want Detroit to auction off really in our region’s best interest Chamber of Commerce.

Like it or not, around the nation and the globe, the fortunes of Detroit are tied to the future of Michigan.

KEITH CRAIN: Our military veterans deserve better care All you have to do is take a close look at the U.S. Veterans Affairs health care system to realize you don’t want government running any health care system, much less one for veterans of our armed forces. It seems to me that there is a better solution than trying to fix our busted veterans hospital system. Most ailments that affect our veterans are the kinds of medical issues everyone faces. Why don’t we just give our vet-

erans a medical insurance card that would be good anywhere in our health care delivery system? They could use any doctor or hospital. For specific maladies veterans face that are difficult for a general hospital or doctor to handle, we probably need the VA. But rather than try to fix a system that is definitely busted, why

not let our veterans have a choice between a VA hospital and the local hospital? Considering how many billions of dollars we spend on our VA hospital system, we could let the civilian medical system take care of veterans and the VA pay the bill. I bet it would be a lot more efficient for the veterans, and it would save the

taxpayers lots of money. I have always felt that the VA system should be for very specific ailments that are simply beyond the scope of a normal medical system. But it also seems rather redundant to duplicate routine facilities that already exist. We have the best health care system in the world. I am not convinced that we are offering our veterans the same level of medical coverage they would have if they simply took advantage of our exist-

ing health care delivery system. It has been an embarrassment for the nation when the recent revelations were exposed about the inadequacy of our VA hospitals. How many of those veterans could have been adequately treated in a local hospital without having to wait for a VA system to fit them in? Let’s try and alleviate the crowding of our VA hospitals. Let’s try and make government smaller but more efficient and do a better job serving our veterans.

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OTHER VOICES: Policies in Michigan must aid kids of color are far, far below the na- less likely to live in higher-income for children. These two steps will As the economy continues to Should a child’s skin coltional average index for neighborhoods than African- no doubt help children of color. recover, it’s important to focus on or matter in 2014? Many African-American kids. American kids anywhere in the well-intentioned people Yet often, policymakers seem policies that will help those families Only Mississippi and Wis- country. would say, “No, kids are more intent on punishing low-in- trying to overcome enormous barriconsin were ranked lower. kids, no matter what their As jobs dried up and the auto income and impoverished families ers. Raising the minimum wage, Let’s be clear. The intent dustry suffered, beginning a decade than creating transportation sys- fully restoring the state’s Earned color, heritage or backis not to measure the suc- ago, unemployment rose more dra- tems that connect the parents to Income Tax Credit and increasing ground.” cess or failure of the chil- matically among African-Ameri- jobs, helping communities flour- child care subsidies for very lowThey would be wrong. dren. It measures the can workers than others. A study ish by restoring revenue sharing, income workers are all positive In fact, as a new Annie E. chances they have, the op- by the Economic Policy Institute and growing the workforce with steps that will help low-wage workCasey Foundation report portunities, to succeed. It last year found Michigan’s African- needed investments in education ers support their families. points out, the opportuniGilda Jacobs measures our success or American unemployment rate was and access to higher education. Inties and conditions for chilWe all have too much at stake to dren in Michigan vary dramatically failure as communities and as a the highest in the country. stead, they have concentrated on be color-blind to the “Race for Reby race/ethnicity. “Race for Results: state to offer them. The governor and lawmakers ending support for struggling fam- sults” findings. It appears that the Great Reces- have taken positive steps to im- ilies with children, cutting federal Building a Path to Opportunity for Gilda Jacobs is president and All Children” creates an index, bro- sion took its toll more deeply in prove the quality of life in Michi- dollars for food aid, disinvesting CEO of the Michigan League for ken down by race/ethnicity, using communities where many chil- gan by expanding Medicaid for in education and ending child Public Policy, a state-level policy in12 milestones kids need to reach to dren of color live. In fact, African- uninsured adults and to make abuse/neglect prevention pro- stitute dedicated to economic opporbecome successful adults. It finds American kids in Michigan are preschool more widely available grams. tunity for all. that Asian/Pacific Islander and white children are more likely to reach those milestones than Hispanic/Latino, American Indian or African-American children, in that order. In Michigan, opportunities for white and African-American children — the two largest groups — are below their national peers, while the other racial/ethnic groups compare favorably with their national peers. Why is this important? By 2018, children of color will be the majority in our country. By 2030, the majority in the labor force will be people of color. By midcentury, no single racial group will be a majority. As the report notes: “The price of letting any group fall behind, already unacceptably high, will get It’s never been easier to save your business money. Replace old incandescent exit signs higher.’’ with LEDs, and you can save up to 95% on energy costs. An energy management system In Michigan, one in three children is a child of color, and one in that turns lighting equipment off during downtime can save you a lot. And installing six in Michigan is African-Ameria programmable thermostat to automatically lower heating and raise air conditioning can. Opportunities for AfricanAmerican children in Michigan

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TIME RUNNING OUT TO ENTER COOL PLACES TO WORK Crain’s biennial Cool Places to Work in Michigan awards return this year, and again Crain’s is working with Best Companies Group of Harrisburg, Pa. The competition has two parts: one questionnaire for employers, another for employees. The results will determine who qualifies for Cool Places designation. Best Companies supplies all participating companies with an employee feedback report based on employee responses to the 72question survey. The report can help company executives identify strengths and weaknesses in their company culture and practices. To be considered for Cool Places to Work, companies must register at coolplacestoworkmi.com by May 23. Other important dates, samples of the surveys and other information are on the website. Once registered, companies will be invited to participate in the surveys. Businesses and nonprofits can apply. Applicants must have a minimum of 15 employees working in Michigan and have been in business at least one year, among other criteria. Companies pay a fee based on company size to Best Companies to cover survey costs. The cost ranges from $610 to $895 for online surveying, and $765 to $1,660 for paper surveying.

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Farm IT firm to replant in larger Ann Arbor space BY DUSTIN WALSH CRAIN’S DETROIT BUSINESS

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Farm data startup AgriSight Inc., better known as FarmLogs, is expanding into a larger space in Ann Arbor. The software firm, whose product provides agriculture data to farmers, signed a lease in the Kerrytown Market and Shops building at 410 N. Fourth Ave. The firm plans to move from its space at 201 E. Liberty St. by July 1. AgriSight will take over the entire second floor, with 5,812 square feet of space, it said in a release. The move is to accommodate new employees. AgriSight plans to hire more than 10 by the end of 2014, bringing its total to more than 20, the company said. The Kerrytown building “is an attractive location for us in the downtown Ann Arbor area, and we are excited to have a new home for our growing team that is building the data-driven future for farming,” Jesse Vollmar, CEO and co-founder, said in a statement. AgriSight received funding from Andreessen Horowitz in Menlo Park, Calif., and Start Fund, set up by social media investor Yuri Milner. It also raised $5 million in two rounds of investment, with Huron River Ventures in Ann Arbor, Hyde Park Venture Partners and Hyde Park Angels in Chicago and Drive Capital in Columbus, Ohio, participating. Vollmar, 25, was named a Crain’s 20 in their 20s award winner this month.

Huron Capital launches specialty chemicals company Detroit-based Huron Capital Partners LLC has formed its newest platform company in partnership with Ray Chlodney, a veteran of the specialty coatings industry. The company is called Valentus Specialty Chemicals Inc. Huron plans to invest in regional coatings companies and roll them into Valentus. The company’s headquarters will depend on where upcoming acquisitions are located. In a news release, Huron said it plans “to build a company with technically advanced and environmentally friendly reactive coating solutions serving a variety of end markets and geographies.” The specialty-coatings market is estimated at $18 billion annually. The investment comes from Huron’s $500 million Huron Fund IV LP. Huron partner Jim Mahoney said Huron can spend up to $100 million in platform companies. Chlodney has spent more than 30 years in the specialty chemical industry and has held executive positions at PPG Industries, Lilly Industries, Bayer Corp. and Benjamin Moore Paints. — Tom Henderson

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CHE TRINITY’S ACO ARCHITECT New leader Gilfillan brings background in health care model that stresses value over volume, Page 14

People 䡲 Paul LaCasse, D.O., president and CEO of Botsford Health Care, received the 2014 American Hospital Association Grassroots Champions Award for his leadership in creating community activity in support of Botsford Hospital’s mission to deliver high-quality health care One recipient LaCasse was chosen from each of the 50 states. 䡲 Valerie Parisi, M.D., dean of the Wayne State University School of Medicine, was elected the 35th chair of the American Board of Medical Specialties board of directors at its April 24 meeting in Washington, D.C. She previously was the board’s chairelect and has been Parisi a member of the ABMS board and executive committee since 2009. 䡲 Prashant Mahajan, M.D., professor of pediatrics and emergency medicine at the Wayne State University School of Medicine and division chief and research director of pediatrics and emergency medicine at Children’s Hospital of Michigan, was elected chairmanelect of the Mahajan American Academy of Pediatrics’ executive committee section on emergency medicine. His term begins in November and will run through October 2016. 䡲 Morris Magnan, clinical nurse specialist at the Barbara Ann Karmanos Cancer Center and chairman of its nursing evidence-based practice research committee, received the Nightingale Award for Nursing Excellence in education and research from the Oakland University School of Nursing, which honors highly skilled and caring individuals who play vital roles in the health care delivery system. 䡲 Steven Kalkanis, M.D., a neurosurgeon and medical director of the Center for Cancer Surgery at Henry Ford Hospital, was appointed the hospital’s chairman of the department of neurosurgery and co-director of the Neuroscience Institute. He previously was vice chairman for operations in the department of neurosurgery, co-director of the Hermelin Brain Tumor Center and co-director of the intra-operative MRI surgical program. 䡲 Basel Khatib, M.D., pediatrician at Oakwood Hospital-Dearborn and owner of Dearborn-based Basel Khatib M.D., PC, was named the Centers for Disease Control and Prevention’s Childhood Immunization Champion for Michigan, based on his efforts to promote childhood immunization, which include meeting with families to educate them about vaccines, writing articles for local papers and offering vaccines free to families who cannot afford to pay for them.

A healthy dose of data

Dennis Ramus, M.D., uses a tablet to enter patient information as part of the electronic health records system at Bay Area Family Physicians in Chesterfield Township. The seven-physician practice went electronic back in 2006.

Physicians face challenge to share electronic health records, meet impending federal regulations JOHN SOBCZAK

BY JAY GREENE CRAIN’S DETROIT BUSINESS

ennis Ramus, M.D., is ahead of the curve when it comes to the use of electronic health records. His sevenphysician Bay Area Family Physicians in Chesterfield Township installed a NextGen Healthcare EHR system in 2006. But even Ramus and his partners expect to struggle this year to meet a new federal rule that requires, in part, sharing of electronic records with specialists and hospitals that have different electronic record systems. Thousands of Michigan physicians face similar challenges to meet “meaningful-use” incentive program regulations. Meaningful use is defined by a tiered system; providers that use electronic records to improve quality and efficiency earn different levels of certification. For example, stage one systems are used internally, stage two systems are shared with multiple other providers, and stage three systems show documented improvement in patient outcomes. Physicians, hospitals and others must meet all three stages to receive a total incentive of $44,000 over five years from Medicare and $63,750 for qualified Medicaid providers. But many physicians have delayed purchasing EHR systems. Reasons include high cost, technical complications, practice disruption and resistance to change office routines. Another complication to doctors, and others: Some systems aren’t fully compatible with each other.

E-record report card Starting Jan. 1, physicians who don’t meet the meaningful-use requirements by Dec. 31

PERPETUATING PRACTICES FOR PROFIT Troy-based gloStream evolves from IT firm to help small medical practices remain independent, Page 13

face a 1 percent cut in Medicare reimbursement. The payment cuts are cumulative for each year a physician is not certified, for up to a 5 percent deduction. In 2013, only 48 percent of office-based physicians in Michigan have installed a basic electronic health record system, compared with 25 percent in 2010, said MPRO, a Farmington Hills-based quality improvement organization. Nationally, basic EHR adoption also is about 48 percent, up from 17 percent in 2008, said the federal Office of the National Coordinator for Health IT. “We were one of the first adopters of EHRs. We hired a Chrysler process engineer to help us convert what we did on paper to EHRs. We also hired an office manager (a former naval officer) who knew about information technology. It was fortunate because it is very hard for the average physician to figure out,” said Ramus, chairman of The Physician Alliance, a 2,300-member physician organization closely affiliated with St. John Providence Health System in Warren. Bay Area Family met meaningful-use stage one criteria in 2011, Ramus said. Meaningful-use stage one criteria includes electronically capturing patient information in standardized format, tracking key clinical conditions and using that information to discuss care with patients.

Sharing outward This year, physicians will have first crack at

meeting meaningful-use stage two criteria. The most significant difference between stage one and stage two is showing a practice can communicate and share data with other physicians and hospitals not in the practice’s immediate network. One of the 17 requirements also states that physicians must use computerized physician order entry systems, including e-prescribing, on 30 percent of their patients. The initial standard was 80 percent of patients. “If meaningful-use one was algebra, (meaningful-use two) is calculus,” Ramus said. “You have to coordinate with outside physicians, hospitals and communicate with specialists,” and there are problems with that because most EHRs don’t communicate directly with each other, he added. Under stage two requirements, providers also must meet criteria that include e-prescribing, exchange of laboratory results and transmission of patient care summaries that will assist in coordinating care between unaffiliated providers, facilities and different EHR systems. Despite the growth of health information exchanges in Michigan, Ewa Matuszewski, CEO of Rochester-based Medical Network One PC, said there still is a major gap in communication through EHRs. Mainly, it centers on the ability of non-hospital-employed physicians and those not closely affiliated with hospitals to exchange EHR data with other providers through health information exchanges. “Health systems can do that internally for physicians, but we are not that far along in moving that information outside of those closed systems,” she said. But Doug Dietzman, executive director of See Records, Page 12

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Records: Physicians face challenge ■ From Page 11

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Grand Rapids-based Michigan Health Connect, the largest of several health information exchanges in the state, said most independent physicians should be able to use Michigan Health to meet meaningful-use stage two regulations. “If an (EHR) vendor doesn’t help them meet meaningful-use two, we can help them comply,” said Dietzman. “Not a lot of physicians are coming to us yet because the certification period just started. Our services are set up to be able to do that for Dietzman them.” Current guidelines and requirements for EHRs cover the years from 2011 to 2021. Dietzman said most Medicarecertified EHRs with 2014 software updates should be equipped to meet stage two requirements. This year, Michigan Health Connect agreed to merge with Great Lakes Health Information Exchange. The two organizations would include more than 2,000 physician provider offices and 100 of the state’s approximately 117 hospitals. Mike Williams, M.D., president of Bingham Farms-based United Physicians PC, a 2,400-member physician organization, said the ability of physicians to interconnect with hospitals and physicians on different EHR systems is a major barrier to meet federal requirements. “The market will demand that physicians share information. That will drive the use of EHRs — more than meaningful use,” Williams said.

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Despite four years of financial incentives, Williams said, there is a wide gap between physicians who have simply installed EHRs and those who use them well. Then there are those who have not installed them at all. “We have some on both ends in our physician organization,” said Williams. “Some doctors just don’t see meaningful use, at this time, really helping their patients. It is expensive, time-consuming and the payoff isn’t there yet.” Jack Billi, M.D., associate vice president for medical affairs at the University of Michigan Health System in Ann Arbor, said many independent physicians are putting off EHR installation because of office hassles. Physicians say “I will lower my head and continue to do my paper record; I know incentive money out there that I will leave on the table, but this is so big a transformation that I can’t get my head around it,” said Billi, a board member of the Michigan State Medical Society who heads up its committee on quality, efficiency and economics. Williams said United Physicians has strived hard to help physicians interconnect with other EHRs to conduct population health management and share medical records for referral purposes. Williams said United’s 2,400 physicians use 70 EHRs with vary-

KEY TERMS IN E-RECORDS Meaningful use. In the electronic health records business, this term describes how well providers use EHR technology to improve quality, safety and efficiency. The three stages of meaningful use. Stage one, stage two and stage three certification is earned as EHR systems capture data and share internally (stage one), share information with multiple providers (stage two), and prove positive patient outcomes due to EHR (stage three). ing levels of effectiveness in connecting with other systems. “It would be much easier if there were five or six EHR vendors” selling products, Williams said. To help physicians and hospitals with vendor-related problems in meeting meaningful-use rules, the Centers for Medicare and Medicaid Services will grant providers a one-year “hardship exception” if their EHR vendor fails to help physicians meet the deadline. R. David Allard, M.D., chief medical information officer with Henry Ford Health System, said Henry Ford’s implementation of Verona, Wis.-based Epic Systems’ EHR is nearing completion this year for its five hospitals, 1,000-physician medical group and 12 private practices. “Meaningful-use two is a difficult set of criteria. We won’t meet it until next year,” Allard said. Like a school project, Allard said, completing your practice’s part of the project is only one piece of the puzzle, he said. The other participants also must do their parts for the project to be complete, he said. “The larger systems have more infrastructure and resources to set up the (electronic) interfaces,” he said. “It is more difficult for independent physicians to make the connections.” Because of the complexity and costs, Matuszewski said, many physicians are still using patient disease registries instead of EHRs to track patients on their visits, chronic diseases, medications used, lab records and other medical facts. Disease registries are collections of medical data on individual patients within a practice. They can be used to set up tasks or to ensure that medical staff members ask certain questions.

Costly upgrades More than 80 percent of physicians said they use some form of electronic data sharing, which includes an EHR or data registry, up from 42 percent in 2008, after financial incentives began to flow to doctors and hospitals under the 2009 stimulus bill, said the National Ambulatory Medical Care Survey. “The barrier is as before — cost,” Matuszewski said. “It is not just buying an EHR (that can cost more than $40,000 per physician in upfront costs to install). It is paying the annual maintenance fee, training is huge and creating the templates for all the physicians is very costly,” she said. Ramus said the individual EHR cost per physician was $30,000 to $50,000 for hardware, software and initial setup. Bay Area has re-

ceived $38,000 per physician in financial incentives from Medicare, with another $6,000 expected for meaningful-use two compliance, for a total of $308,000, he said. “The payments were heavily front-end loaded, which is good for the doctors,” he said. “We spent $250,000 to $300,000 for the entire system.” But to maintain and staff its EHR, Bay Area spends about $100,000 a year. “We have many demands for data (from private payers and Medicare),” said Ramus, who also is a certified public accountant. “The unfortunate thing is, so many physicians are behind the curve.” However, Billi said, patient data can now be exchanged through UMHS, St. Joseph Mercy Health System and participating medical groups and physicians. But exchanging patient data to unaffiliated providers through health information exchanges, which are designed to allow for connections across EHR platforms, “is not there yet,” he said.

Physician education Mike Madden, CEO of The Physician Alliance, said education of physicians, mostly specialists, is a main task of physician organizations because EHRs can highly disrupt normal work flow. “We know there is a significant concern about meaningful-use two,” Madden said. One of the key projects for the Physician Alliance is tracking 35 data elements from participating physicians to make sure the data is valid and the systems are operating efficiently. The Physician Alliance also merges the claims data and disease registry data of physicians, monitors the performance of physicians, and transmits the data to Blue Cross Blue Shield of Michigan as part of the physician group incentive program, which financially rewards doctors for hitting quality and cost saving targets. The incentive program proves more than 40 initiatives by which physician organizations can earn bonus payments. Based on Blue Cross’ PGIP program, United Physicians has 1,384 physicians who participate. Of that amount, Madden 301 of 416 primary care physicians, or 72 percent, use an EHR and 584 of 968, or 60 percent, of specialists use one, he said. Over the next several years, said John Vismara, United’s vice president of information technology, EHRs will be used more often to participate in managed care contracts, prove quality performance and communicate with other providers. “It will be less about meaningful use and more about participating in a network and staying in business,” Vismara said. Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

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GloStream evolves to help medical practices remain independent BY JAY GREENE CRAIN’S DETROIT BUSINESS

GloStream CEO Mike Sappington said talks with physicians during the last eight years the Troy-based software management company has been in business have made it clear that many of his clients want to remain independent practitioners. To avoid having to sell their practices to a hospital or merge with a larger medical group, Sappington said, an increasing number of physicians are asking gloStream for help on the business side of managing their offices. “There is a lot of pressure on smaller practices on how they can stay independent with decreasing revenue and increasing regulations,” Sappington said. “They are asking for help. They don’t want to have to sell to a hospital system.” During the past 18 months, gloStream has transformed from a pure information technology and consulting firm — helping physicians install and use Medicare-certified electronic health records — to a performance management company. Besides its gloStream EHR system, Sappington said, the company provides revenue cycle management to help practices maximize billing and collections, as well as a range of services that include workflow analysis, practice optimization and meaningful-use consultation. “We now have 40 practices and 120 physicians participating” in gloComplete, gloStream’s practice management service, Sappington said. “Half of the groups are in Michigan.” Sappington said practices are saving 10 percent to 30 percent in expenses. He declined to provide revenue for gloStream but said the company projects it will grow by 30 percent this year and hire another 15 to 20 account managers. The company has 40 employees, mostly account managers that support practices, and 65 software developers based in India. “Physicians are enjoying the cost savings, and practice managers enjoy the help,” Sappington said. “The groups are saving money, and it is more profitable for us.” One of the unusual aspects of gloStream’s new business model is that practices are not at financial risk by using its services, Sappington said. “We have a partnership model. Practices don’t have to lay out a lot of capital. We are at risk financially,” Sappington said. “Our job is to help them grow their practices, simplify their lives and help them remain independent.” Ewa Matuszewski, CEO of Rochester-based Medical Network One PC, said gloStream’s approach is sound because EHRs should be “married with practice management systems.” Matuszewski Matuszewski said practices sometimes have difficulty in translating medical information in

EHRs — the actual services rendered — into practice management billing systems. “You should be able to close the loop (to get the billing and coding correct) before a patient leaves the office,” she said. Matuszewski said Medical Network One tries to help its more than 800 physicians improve billing and collecting. The group also provides doctors with access to tools to help them with their disease registry and patient information portals. “We are trying to identify gaps

Our job is to help them grow “ their practices, simplify their lives and help them remain independent.

”

Mike Sappington, gloStream

in patient care and using the data to shrink those gaps,” she said. Jim Long, practice administrator with Flint-based Michigan Or-

thopedic Services, said the 14physician practice has been using gloStream’s EHR the past six years. The group so far has re-

ceived two payments under meaningful-use financial incentives. Long said gloStream’s decision to assist physicians on the practice management and billing side will help practices save money. “Some practices need expertise in running their businesses. With all the regulatory changes with EHRs and ICD-10 (international classification of diseases), you need to keep an eye on accounts receivables,” Long said. Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

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New CHE Trinity CEO set to test lessons learned in Medicare job BY BETH KUTSCHER CRAIN NEWS SERVICE

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When Richard Gilfillan, M.D., unexpectedly left his post as director of the Centers for Medicare & Medicaid Services Innovation Center last June, health care leaders feared that his departure would slow the shift to a health care model that emphasizes value over volume. But Gilfillan hopes that by moving as CEO of Livonia-based CHE Trinity Health, a Catholic provider that is one of the nation’s largest not-forprofit systems, he can use that model to reshape how U.S. health care is delivered. “When I left Gilfillan CMS, my goal was to be part of the health care delivery system transformation that was going on,” Gilfillan said. “Population health is something our ministry has been interested in for 150 years. It was a natural fit.” Gilfillan is No. 1 on Modern Healthcare’s ranking of the 50 Most Influential Physician Executives and Leaders. It’s the second time he has topped the list. Modern Healthcare is a sister publication of Crain’s Detroit Business. William Conway, CEO of Henry Ford Medical Group and executive vice president and chief quality officer of Henry Ford Health System in Detroit, was ranked No. 42. As the Innovation Center’s first leader, Gilfillan was instrumental in ushering in new payment and delivery models, such as Medicare accountable care organizations and bundled payments. He set the tone for new programs that coordinate care for enrolled patient populations seeking to reduce costs while improving patient outcomes

and satisfaction. After three years at the helm, Gilfillan shifted to the provider side, taking the reins in October at the newly merged CHE Trinity Health. That merger brought together more than 80 hospitals from the former Catholic Health East and former Trinity Health in a deal that closed last May. The system had started laying the groundwork for managing the health of enrolled populations before Gilfillan’s arrival. But under his leadership, it is accelerating those efforts in each of its markets. CHE Trinity is aiming to reinvent how it cares for its patients. Among Gilfillan’s goals is to have a Medicare Shared Savings Program accountable care organization in each of the system’s markets by Jan. 1. It currently has five ACOs that have been approved and implemented, with 11 more applications in process for January. An ACO is a network of doctors and hospitals that shares financial and medical responsibility for providing coordinated care to patients through a primary care physician, in hopes of limiting unnecessary spending. CHE Trinity also is extending its population health program to cover its 87,000 employees in its self-insured health benefit plan and is building similar valuebased programs, including bundled-payment models with private insurers, to serve other patients.

A hospital newcomer Although he’s new to hospital operations, Gilfillan brings insurance expertise that could help CHE Trinity expand its ACOs, launch the health program for its 87,000 employees and begin accepting bundled payments. Bundled payments are reimbursement for “episodes of care,” defined

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as the clinically related services a patient needs for a specific diagnostic condition, from the first symptom until treatment is complete. CHE Trinity has set a three-year objective to achieve $300 million in savings through merger cost efficiencies, with a goal of $80 million in the first year — a target it already has surpassed. “We’re well ahead of that at this time,” Gilfillan said. The system’s changes in care delivery are occurring as CHE Trinity engages in the tough job of integrating its two legacy systems, said Kevin Holloran, an analyst at Standard & Poor’s who covers notfor-profit health systems. That includes melding cultures while achieving economies of scale. In October, S&P lowered the long-term and underlying rating on the stronger Trinity Health bonds while raising the rating for Catholic Health East debt so that both organizations share the same credit rating. Moody’s Investors Service made a similar move. The ratings agencies will be watching to see how the two former systems execute their megamerger and what the new system’s projected capital expenditures look like as it carries out ambitious expansion plans. Some observers were surprised that CHE Trinity didn’t select someone from its inner circle to lead the system. “An organization the size of CHE Trinity often has massive bench strength, and it’s kind of unusual that they would go outside the organization,” Holloran said. But the appointment of an outsider to the top post could be a sign that the board wanted to create a new system that’s more than the sum of its parts. “Perhaps that sends a message to everyone that ‘we’re not CHE, we’re not Trinity Health,’ ” Holloran said.

Roots in family medicine Gilfillan earned his medical and undergraduate degrees at Georgetown University and started his career as a family physician at the Georgetown University Community Health Plan. He later moved to Massachusetts, where he helped found a community health center and family medicine practice. His first position on the insurance side was as medical director for Medigroup Central HMO, a Blue Cross of New Jersey managed-care plan. Gilfillan was thinking about value-based models when he was in medical school in the 1970s, talking about health maintenance organizations and the “triple aim” goals of better patient experience, improved population health and reduced costs. “I went into health care because I was always interested in figuring out how to get great health care to people,” he said. While Gilfillan is new to hospital operations, he brings expertise that the system didn’t have before, said Rick O’Connell, executive vice president of CHE Trinity Health and

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president of the Trinity Health division. Before the Baltimore-based CMS, Gilfillan was CEO of Danville, Pa.-based Geisinger Health Plan and executive vice president of insurance operations for Geisinger Health System. Earlier in his career, he was senior vice president for national network management at Coventry Health Care and also held positions at Independence Blue Cross. “We’re getting someone with a whole new set of eyes,” O’Connell said. “He came from the payer side, so his ability to understand how payers think has been a gift in and of itself.”

‘The acceleration we need’ Trinity Health had been setting up clinically integrated networks in its markets before the merger. It’s now building relationships with insurers, O’Connell said. Gilfillan’s arrival has “given us the acceleration we need to move forward in that direction.” Some skeptics question the overall prospects for success of ACOtype population health management, noting that the first years of the Medicare ACO program have shown mixed results. They also point out that many hospitals and physician groups did not do well financially in managing enrolled patient groups under HMO capitated (meaning the medical provider is given a set fee per patient regardless of the treatment required) payment in the 1990s and that those efforts triggered a backlash over restricted access to care. But Gilfillan said the Medicare ACO programs and CHE Trinity’s population health management initiatives are different from those earlier efforts because of the greater emphasis on measuring and optimizing the patient experience. “I think everyone realized that we needed to start from the perspective of the patient,” he said.

Former CMS administrator Don Berwick, M.D., said he recruited Gilfillan to the Innovation Center because he respected the work he did at Geisinger Health Plan. At the Innovation Center, “Dr. Gilfillan had the job of establishing a brand new organization in a highly controversial political environment,” said Berwick, currently running for the Democratic nomination for Massachusetts governor. “... He was elegant and very resilient in dealing with these potentially very demanding influences.” Gilfillan developed the ACO program and the bundled-payment initiatives. He also recruited the people to lead the different Innovation Center programs. The office space he designed for the Innovation Center was an open floor plan, with low partitions between work areas to encourage interaction. “Rick was always driven by a vision he called ‘true north,’ where incentives for providers are aligned with the outcomes we want to see — higher-quality and lower-cost care,” said William Shrank, M.D., who was the Innovation Center’s director of research and rapid-cycle evaluation and is now chief scientific officer and chief medical officer at CVS Caremark Corp. “His clarity of purpose stimulated the Innovation Center to launch a wide array of new payment models. I think they all have Rick’s fingerprints as we move away from rewarding volume and toward rewarding value in the delivery of health care.” Nearly four years later, Gilfillan’s key programs face growing pains. Many provider networks that participated in the Medicare Shared Savings and Pioneer ACO programs failed to achieve savings. In the Pioneer program, nine of the 32 original participants dropped out after the first year. Of the 23 remaining providers, only nine saved money. Gilfillan acknowledged that providers want more clarity on how

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the transformation to accountable care should work. The challenge includes having to work simultaneously under both value-based payment and fee-for-service, with conflicting incentives. That may slow the shift to the new model. “I think there continues to be uncertainty around timing and direction,” Gilfillan said. Still, insurers and providers are moving rapidly to risk-bearing payment models, and organizations that don’t adapt will be left behind, S&P’s Holloran said. Once the Affordable Care Act was passed, he said, “it was a symbol that the stars and the moon and sun are actually aligned. As an industry, everyone knows we can do better.” Berwick said that bundled and capitated payment models are challenging old habits for health care industry leaders and that Gilfillan is well-positioned to show others the way forward. “We’re still in a very important era of expedition,” Berwick said. “It’s not an easy one. I think Dr. Gilfillan represents the new model of clinical leadership and organizational leadership for change.” From Modern Healthcare

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CON Report The following are selected filings for a certificate of need submitted to the state April 15-May 12. Letters of intent 䡲 Providence Hospital and Medical Center, Southfield: Add one cardiac catheterization lab into space on the hospital’s first floor; $5.7 million. 䡲 University of Michigan Health System, Ann Arbor: Replace one fixed MRI scanner in renovated space with a new MRI, patient changing room and space for future MRI expansion; $10 million. Applications received 䡲 Vibra Hospital of Southeastern Michigan – DMC Campus, Detroit: Begin operation of a 28-bed, long-term, acute care hospital in the Rehabilitation Institute of Michigan through a five-year lease; $6.4 million. 䡲 Marycrest Manor, Livonia: Add 43 nursing home beds from three Heartland Health Care Centers nearby to increase the number of beds to 98; $9.2 million. 䡲 Regency at Canton, Canton Township: 10-year lease of space to accommodate the addition of a 28bed wing to a 113-bed facility; $3.8 million. 䡲 Heartland Health Care Center-Ster-

ling Heights, Sterling Heights: Relocate 43 beds from Sanctuary at the Abbey into newly constructed space attached to the center; $5.2 million. 䡲 Romeo Nursing Center, Romeo: Acquire all 35 beds at the nursing center by Trilogy Healthcare of Romeo LLC and replace all 35 at a new site in Romeo; $2.9 million. Decisions 䡲 Garden City Hospital, Garden City: Prime Healthcare Services to acquire Garden City Hospital, its clinical services and 323 acute care hospital beds; $76 million. Conditionally approved. 䡲 Regency at Royal Oak, Royal Oak: 15-year lease of a newly constructed 120-bed facility; $9 million. Disapproved. 䡲 Madison Surgery Center LLC, Madison Heights: Renovate and open a freestanding outpatient facility with one operating room; $2.1 million. Conditionally approved. 䡲 Surgical Center of Southfield LLC, Southfield: 10-year lease and renovations to open a new, freestanding surgical outpatient center with one operating room; $1.9 million. Conditionally approved. — Bridget Vis

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CRAIN’S DETROIT BUSINESS

Health Care

McLaren turns to federal exchange for small-biz health plans BY JAY GREENE CRAIN’S DETROIT BUSINESS

McLaren Health Plan is phasing out its small-business group commercial point-of-service health plan in the open market to meet client demand for a hybrid-type plan. McLaren is eliminating the plan over the next year to reduce losses

and meet demand for a point-of-service benefit plan on the insurance exchange, said CEO Kathy Kendall. A point-of-service plan combines a traditional HMO benefit package with a limited provider network and an out-of-network benefit option (such as a preferred provider organization) that offers greater

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choice of hospitals and physicians — but typically brings higher outof-pocket costs. About 10,000 people employed by businesses with two to 50 employees are covered in Flint-based McLaren’s commercial point-ofservice plan that will be phased out at the end of their policy peri-

od, the last one ending June 30, 2015, Kendall said. “There is a lot more interest from employers in the exchange,” Kendall said. “What many small employers are doing is they are giving employees a stipend, a small amount of premium” to purchase health insurance on the exchange.

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Kendall said McLaren’s new Rewards plan offers a narrow provider network that further lowers costs. Some 3,500 people have enrolled this year, she Kendall said. “If you use a certain segment of physicians and hospitals, you have no copayment, no deductible, and there is no co-insurance,” said Kendall, who said McLaren has partnered with four-hospital Oakwood Healthcare in Dearborn for its narrow network. “You can also choose to use our (full) network of 33,000 physicians, hospitals and other providers and pay the normal deductible or copay,” Kendall said. Officials for Health Alliance Plan and Priority Health say they are not changing their commercial pointof-service plan strategies. Scott Norman, Priority’s vice president of sales and client services, said the Grand Rapids-based insurer is projecting increases in its point-of-service plans over the next several years because employers are looking for lower-cost options. “Because of the (Affordable Care Act), PPO plans are seeing large rate increases,” Norman said. “POS plans are popular, especially in Southeast Michigan, because employers believe it is a most costeffective way to continue to deliver benefits to employees.” Norman said Priority has looked at offering a limited provider network as an option. “The challenge with narrow networks is that it is a ‘gotcha moment’ for members,” he said. “The perception is they are buying something they don’t understand.” Norman said very few smallbusiness clients have expressed interest in dropping their plans and moving to the public exchange. “Almost 70 percent of clients are extending their current plan,” Norman said. “That has stunted the marketplace and private exchanges. ... The jury is still out about going to the exchange for small employers.” Kendall said another reason McLaren, which has about 144,000 members, eliminated its off-exchange POS plan is to cut losses. Over the past three years, McLaren Health Plan’s profit dropped to a net loss of $172,000 last year from net income of $14.8 million in 2012 and $23.9 million in 2011, according to the Michigan Office of Financial and Insurance Services. Driving McLaren losses in 2013 was a $7.4 million hit on commercial business. McLaren lost $3.3 million in its new Medicare HMO plan but generated net income of $11 million on its Medicaid plan. Kendall said McLaren expects to improve efficiency this year after it installs a new claims computer system, which will enable members, employers and providers to review claims online, saving staff time for other duties. Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

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TPC Michigan sold; new owner plans to invest $1M in Dearborn golf club BY BILL SHEA CRAIN’S DETROIT BUSINESS

The TPC Michigan in Dearborn, which had been in receivership, has a new owner that said it will invest $1 million in the private golf club. Dallas-based ClubCorp Holdings Inc., the nation’s largest golf and business club owner and developer, bought the par-72, 6,966-yard, Jack Nicklaus-designed course, along with TPC Piper Glen in Charlotte, N.C., in April for $6.8 million. ClubCorp said it paid $3 million of that for TPC Michigan. ClubCorp bought the Dearborn course from San Diego-based Heritage Golf Group LLC. Heritage Golf Group bought TPC Michigan in 2007 for an undisclosed sum from its original developer, PGA Tour Golf Course Properties, but reportedly ran into financial difficulties with it a few years later. Heritage Golf Group failed in 2011 to restructure financing with GE Capital, the primary lender on the TPC Michigan and TPC Piper Glen acquisition, and the courses defaulted, Golfweek reported earlier this month. A court-appointed receiver was put in place to oversee operations and facilitate a sale, the magazine said. Tampa, Fla.-based National Golf & Resort Properties Group brokered the sale with ClubCorp, GE Capital and Heritage Golf Group. TPC Michigan had been listed for

COURTESY OF MARCUS & MILLICHAP

ClubCorp Holdings bought the TPC Michigan course in Dearborn from Heritage Golf Group. A court-appointed receiver has been overseeing operations.

$3.25 million, and Piper Glen was listed for $4 million. The courses sold as a portfolio on April 29. TPC Michigan, which opened in 1990, operates as a Tournament Players Club course under a license from the Ponte Vedra Beach, Fla.-based PGA Tour. The TPC chain of public and private golf courses is designed for major tournaments and large crowds. TPC Michigan hosted the PGA Tour’s Senior Players Championship from 1991 to 2006. TPC Michigan and TPC Piper Glen are the eighth and ninth courses bought in the past year by ClubCorp, the company said. That expands its club holdings to 160 clubs in 25 states, the District of Columbia, Mexico and China. In Michigan, ClubCorp also owns Oak Pointe Country Club in Brighton and the Skyline Club in

Southfield. Among its notable holdings is Firestone Country Club in Akron, Ohio, ClubCorp’s largest revenue producer at $26 million last year, according to the company’s 2013 annual report. ClubCorp (NYSE: MYCC) had $61.1 million in operating income on $815 million in total revenue last year. In other area golf course news, National Golf & Resort Properties Group brokered the sale of the Monroe Golf and Country Club by its members to Cary Campbell and his investment group, East Lansing-based Northern Property Consulting Co. LLC. A price was not disclosed, but the deal included assumption of existing debt and a cash down payment. The sale closed last week. Bill Shea: (313) 446-1626, bshea@crain.com. Twitter: @bill_shea19

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CRAIN’S DETROIT BUSINESS

BUSINESS DIARY

give your business the

ACQUISITIONS & MERGERS

EXPANSIONS

AccessPoint LLC, Novi, and Advance Employment, Lansing, merged to form

Domino’s Pizza Inc., Ann Arbor, is

one human resources outsourcing, recruiting and staffing firm. The corporate name will be AccessPoint. and will be headquartered in Novi. The Advance Employment team will operate out of Lansing. Websites: access pointhr.com, advanceteam.com.

CONTRACTS Casadei Steel Inc., Sterling Heights, was awarded the structural steel and miscellaneous-metals contract to construct the Quicken Data Center for Bedrock Real Estate Services, Detroit, for the project’s general contractor, Turner Construction Co., Detroit. Website: casadeisteel.com. Meritor Inc. , Troy, and Brakes India Ltd. , Chennai, India, signed a licensing and technology assistance agreement for the manufacture and sale of Meritor ELSA air disc brakes in India. The agreement expands on an existing licensing agreement for Bframe hydraulic disc brakes, air drum and air disc brakes. Website: meritor.com. Bobby Detroit LLC, Detroit, a design, event and brand consulting firm, signed an agreement with Eastern Market Corp., Detroit, to curate the artisan vendor assortment at its new Sunday Street Market. Website: detroiteasternmarket.com.

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Identity Marketing & Public Relations LLC, Bingham Farms, added to its client portfolio Atlas Oil Co., Taylor, and Carbon Media Group LLC, Bingham Farms, a producer of digital content for outdoor enthusiasts. Website: identitypr.com.

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NEW PRODUCTS Carhartt Inc., Dearborn, and New Holland Brewing Co., Holland, Mich., announced the fall 2014 launch of Carhartt Woodsman-Barrel-Aged Pale Ale, a brew crafted to celebrate Carhartt’s 125th anniversary and pay tribute to the people who wear the brand. Websites: carhartt.com, newhollandbrew.com.

STARTUPS Hummingbird Spa LLC is opening at 1420 N. Rochester Road, Rochester Hills. Telephone: (248) 759-5152. Website: hummingbirdspausa.com. The Detroit Arsenal of Democracy museum opened at 22960 Industrial Drive West, St. Clair Shores. Telephone: (586) 776-1976. Website: detroitarse nalofdemocracy.org.

DIARY GUIDELINES Email news releases for Business Diary to cdbdepartments@ crain.com or mail to Departments, Crain’s Detroit Business, 1155 Gratiot Ave., Detroit, MI 482072997. Use any Business Diary item as a model for your release, and look for the appropriate category. Without complete information, your item will not run.

Media Sponsor Crain’s Detroit Business Video Underwriter Evolution Media

Business Leadership:

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opening its 11,000th store, in Brantford, Ontario. Website: dominos.com. Detroit Elevator Co., Ferndale, is expanding its residential elevator business to address an increase in requests. Website: detroitelevator.com.

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Lisa & Brian Meer

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Bronze Level Sponsors Eugene Applebaum/Arbor Investments Group Hadas & Dennis Bernard Penny & Harold Blumenstein Butzel Long Couzens Lansky Dakkota Integrated Systems LLC General Motors Corporation Globe Midwest/Adjuster’s International – Carl Gross Greenleaf Trust Nancy & James Grosfeld The Ideal Group Inc. Gilda & John Jacobs Midwest Health Plan MotorCity Casino Sue Ellen Eisenberg & Associates PC Talmer Bank and Trust Tri-County Beverage Wayne Industries Copper Level Sponsors 1-800-LAW-FIRM Advance Packaging Technologies Amerisource Industrial Supply Nora & Guy Barron Beztak Companies Broder Sachse Real Estate Services Broner Glove & Safety Clark Hill PLC Dr. Raymond A. Cleary Detroit Jewish News Dickinson Wright PLLC Ferrous Processing and Trading Goldman Sachs & Company Grand Steel Products Inc. Group Five Management Co. Honigman Miller Schwartz and Cohn LLP Jewish Federation of Metropolitan Detroit Linda & Thomas Klein Law Oﬃces of Kristen Gross PC Maddin, Hauser, Roth & Heller PC Oakland University Nancy & Ronald Rechter Title Connect LLC Wayne State University School of Business Administration Lori & Steven Weisberg Contributing Sponsors Agree Realty Corporation Ajax Paving Industries Inc. Barris, Sott, Denn & Driker PLLC BDO USA – Stephanie Rosenbaum Berger Realty Group Inc. Best Homes Title Agency

Calvin Klein Furniture Camp Tanuga Elder Automotive Group EuroAmerica Design Beth Gotthelf & Steven Miesowicz Jill & Lee Hurwitz Ira Kaufman Chapel JP Morgan Chase Lawrence Technological University Erica Peresman & David Jaffe Production Tool Supply Co. Pulse220 Leah & Daniel Rosenbaum Harriet & Norman Rotter Neil Sherman Josette & Dr. Joel Silver Tama, Budaj & Raab PC CPAs Denise & Michael Tobin Supporting Sponsors Alerus Retirement Solutions Amherst Partners LLC Benzinga Best Block Company BIG – Burns Investment Group Inc. Barbara & Douglas Bloom The Bottle Crew Brooks Financial Burton-Katzman Development Co. Ellyn & Jon Davidson Suzi Dell & Jodi Neff Randall Denha, Esq. Judy Greenwald GTA Professional Staffing Helene & Art Indianer Joelson, Rosenberg, Moss, Cohen, Warren & Drasnin PLC Just Baked Jeffrey Kaftan Alan J. & Sue Kaufman Linda & Dennis Kayes Linda & Dr. Bernard Kole Law Offices of Jorin G. Rubin PC Level One Bank Beverly & Arthur Liss Cheryl Margolis Merrill Lynch – Lisa London Michigan Humane Society Motor City Technology Muchmore Harrington Smalley & Associates Inc. OmniSource Corporation Pagac & Company PC Susie & Norm Pappas Lakes Urgent Care L. Brooks Patterson PublicCity PR Simmons & Clark Jewelers Judy & Lewis Tann Telemus Capital Partners LLC Douglas Thal David Victor Fran Victor & Bill Harder Weber & Olcese PLC As of 5/8/14

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PEOPLE CONSULTING

Solotorow

DiCicco

Laurie Solotorow to director of philanthropic services, Neithercut Philanthropy Advisors LLC, from associate director of operations, the Baldwin Center Inc., Pontiac. Also, Ronald DiCicco to managing director, from vice president and senior relationship manager, Huntington National Bank, Birmingham.

ENGINEERING Jay Ruby to senior consultant and consultant group leader, Soil and

Volunteers of America Michigan, Southfield, has appointed Greg Fronizer CFO. He succeeds Joe St. Angelo, a contracted CFO who was with the organization for a year. Fronizer, 46, most recently was vice president of Fronizer finance and administration at Evangelical Homes of Michigan, Ann Arbor. He also has worked for Easter Seals Michigan and Ann Arbor Spark. Fronizer earned a Bachelor of Science in business administration from Miami University, Oxford, Ohio, and an MBA from the University of South Florida, Tampa. John Capuano to

Materials Engineers Inc., Ply-

Ruby

senior vice president and portfolio manager, U.S. Trust, Bank of

mouth Township, from president and consultant to the design and construction community, Rubycon Structural LLC, Birmingham.

FINANCE James Schmitz to development officer, Northwestern Mutual, Troy, from managing director, PNC Wealth Management, Troy.

SERVICES

IN THE SPOTLIGHT

America Private Wealth Management, Troy, from

Capuano

vice president and investment specialist, J.P. Morgan, Birmingham.

Magdalena Marriott to assurance principal, Rehmann,

Troy, from assistant corporate controller, Zions Bancorporation, Salt Lake City, Utah.

Chestnut

Kathuria

Tom Chestnut to senior vice president, global food division, NSF International Inc., Ann Arbor, from vice president, global food division. Also, Chandana Kathuria to senior vice president and chief information officer/lean program leader, from vice president and chief information officer.

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PEOPLE GUIDELINES Announcements are limited to management positions. Email them to cdbdepartments@crain.com or mail notices to Departments, Crain’s Detroit Business, 1155 Gratiot Ave., Detroit, MI 482072997. Releases must contain the person’s name, new title, company, city in which the person will work, former title, former company (if not promoted from within) and former city in which the person worked. Photos of at least 250 dpi are welcome, but we cannot guarantee they will be used.

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May 19, 2014

CALENDAR TUESDAY MAY 20 Autofacts Industry Outlook Seminar. 8 a.m.-5 p.m. PricewaterhouseCoopers LLP. Gain insight into trends affecting the global automotive industry from industry executives, Autofacts automotive analysts and professionals in PwC’s automotive practice. With keynote speaker Glenn Stevens, MICHauto and strategic development, Detroit Regional Chamber. Detroit Athletic Club, Detroit. Free. Contact: Meghan Bested, (313) 394-3209; email: meghan.bested@us.pwc.com; website: pwc.com.

WEDNESDAY MAY 21 Motorsports Marketing. 5-9 p.m. Marketing & Sales Executives of Detroit. With Bud Denker, senior vice president of Penske Corp. and chairman of the Chevrolet Detroit Belle Isle Grand Prix, on Penske Corp.’s commitment to Detroit and the marketing aspects of the Grand Prix. Management Education Center, Troy. $45 MSED members, $65 others. Contact: Cheryl Dry, (248) 643-6590; email: meetings@ meeting-coordinators.com; website: msedetroit.org.

The Power of Email Marketing. 8-10 a.m. Better Business Bureau. With Kim Schott, owner, Schott Cultural Consulting, on how to use email marketing to attract and keep visitors on a website and social media sites. Free. Better Business Bureau, Southfield. Contact: Lisa Dilg, (248) 799-0326; email: ldilg@easternmichiganbbb .org; website: bbb.org/detroit.

CRAIN’S HONORS 20 IN THEIR 20S

SME HOSTS BIG M MANUFACTURING CONVERGENCE

Join Crain’s Detroit Business 5-9 p.m. June 12 at The Garden Theater, Detroit, for 20 in their 20s, honoring 20 metro Detroiters in their 20s whose creativity and entrepreneurial spirit is contributing to a new energy in Southeast Michigan. In addition to the presentation of awards and a strolling dinner, the evening will feature “Three Takes on the City from Past and Present 20s,” moderated by Craig Fahle, host of “The Craig Fahle Show” on WDET 101.9 FM; “Reshaping Local Politics,” presented by Bryan Barnhill, chief talent officer, city of Detroit, 20s class of 2014; “What Happens After the Media Declares Your Restaurant Will Save Detroit,” Phil Cooley, co-owner, Slows Bar BQ, class of 2007; and “How Social Entrepreneurship Helps Detroit,” Veronika Scott, founder and CEO, The Empowerment Plan, class of 2013. Tickets are $35 for 20s alumni, $45 for other guests, and $40 each if purchased in groups of 10 or more. Preregistration closes at 5 p.m. June 9. If space is available, walk-in registration will be $55. For ticket information, call Kacey Anderson at (313) 446-0300, email her at cdbevents@crain.com, or visit crainsdetroit.com/events. Join the conversation with #cdb20s.

Join the Society of Manufacturing Engineers for its Big M Manufacturing Convergence, 7:30 a.m.-10 p.m. June 9; 8:30 a.m.7:30 p.m. June 10, 8:30 a.m.-6 p.m. June 11 and 8:30 a.m.-2 p.m. June 12 at Cobo Center, Detroit. Featuring manufacturing plant tours, seminars, dinners and other events, the conference will focus on the entire manufacturing process from design to production, quality and sustainability, including innovations that can impact the process. Tickets for the full conference are $575, half off for students; prices for individual events range from $50 to $250. For ticket information, call Christine Longroy, (313) 4253137; email the SME at service@sme.org; or visit bigmevent.com.

THURSDAY MAY 22 How to Leverage Mobile Technology to Grow Your Business. 6:30-8:30 p.m. South East Michigan Entrepreneurs Association, New York Life. Learn how to use mobile technology to grow a business. With Rodney Johnson, founder and CEO, Luminous Mobile. Southfield Town Center, Southfield. $15. Contact: ZaLonya Allen, (248) 4913146; email: administrator@semea .info; website: semea.info.

UPCOMING EVENTS The Meaning and Long-term Impact of Philanthropy. 11:30 a.m.-1:30 p.m. June 5. Inforum. Fifty-second annual meeting. With keynote speaker Andrew Plepler, global corporate social responsi-

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bility and consumer policy executive, Bank of America; Craig Fahle, host, “The Craig Fahle Show,” WDET 101.9 FM; Romy Gingras Kochan, founder and president, Gingras Global LLC; Donna Murray-Brown, president and CEO, Michigan Nonprofit Association; Amy Peterson, co-founder, Rebel Nell; Vivian Pickard, president, General Motors Foundation, and director, corporate relations, General Motors Co.; and Amanda Van Dusen, principal, Miller, Canfield, Paddock and Stone PLC. Detroit Marriott Renaissance Center, Detroit. $40 Inforum members, $55 nonmembers, $700 table of 10, $25 students. Contact: (877) 633-3500; website: inforummichigan.org.

The Road to Reinvention. 11:30 a.m.1:30 p.m. June 5. Adcraft Club of Detroit. With Josh Linkner, CEO, Detroit Venture Partners, discussing innovation, creativity and success. Program will look at the transformation underway in Detroit. The Reserve, Birmingham. $35 Adcraft members, $45 nonmembers, $25 student and junior members. Contact: Clarence Young, (313) 872-7850; email: cyoung@ad craft.org; website: www.adcraft.org.

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May 19, 2014

Report: Renaissance Venture fund attracts out-of-state biz BY TOM HENDERSON CRAIN’S DETROIT BUSINESS

The Renaissance Venture Capital Fund has invested $22.4 million in venture capital firms around the U.S., with the caveat that they at least consider deals in Michigan. It did a lot more than just consider: Those firms and their partners in deals have invested $472.5 million in 23 companies in the state, most early stage and high-tech, according to a report to be released Monday. That means a return of about $21 for every $1 invested by the Ann Arbor-based fund, a fund-of-funds VC investing primarily in other VC firms. When Renaissance started raising money in 2008 — it has about $110 million in two funds — the goal was to be able to show a 10-1 multiple on investments. Renaissance has committed about $80 million to its VC partners, with the money being drawn down as needed, usually over a six- to eight-year period. So far, $22.4 million has been drawn down. “We had a belief that Michigan should be a center for venture capital and innovation,” said Chris Rizik, Renaissance’s president and fund manager. “The experience of

the first five years confirms everything we’ve hoped. “We were confident that once we introduced venture capitalist firms around the country to what was going on in Michigan, they’d want to invest here. And we were right.” Renaissance has invested in 16 VC funds, 11 of them headquartered out of state. Since getting funded, four of those firms have opened up offices in Michigan and a fifth is expected to do so soon, said Rizik. Of the money those 16 firms invested in state companies, about $90 million came from in-state firms and about $380 million from out-of-state firms. Rizik said the investments have led to more than 400 new jobs, with an annual wage of about $85,000. Renaissance has also co-invested with its VC partners in three direct investments in companies — Ann Arbor-based ArborMetrix Inc.; Ann Arbor-based Swift Biosciences Inc.; and Fidelis SeniorCare Inc. of Schaumburg, Ill., which has a Michigan subsidiary, SecureCare of Michigan. Renaissance Venture was the brainchild in 2007 of Sam Valenti III, the president and CEO of Valenti Capital LLC and executive chairman of TriMas Corp., both in Bloomfield Hills. Valenti was on the board of the or-

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ganization then called Detroit Renaissance, now Business Leaders for Michigan. A co-founder of the Michigan Venture Capital Association in 2002, Valenti thought it would make sense to get corporate members of Detroit Renaissance to invest in a for-profit fund of funds and become early customers for emerging technologies. Investors included Detroit-based DTE Energy; Detroit-based Blue Cross Blue Shield of Michigan; Walker-based Meijer Inc.; Dearborn-based Ford Motor Co.; Dearborn-based AAA Michigan; Jackson-based CMS Energy; Columbus, Ohio-based Huntington Bank; Monroe-based La-Z-Boy Inc.; Rockfordbased Wolverine Worldwide; Farmington Hills-based Atain Insurance Cos.; the Midland-based Herbert H. and Grace A. Dow Foundation; the Battle Creek-based W.K. Kellogg Foundation; and the Detroit-based McGregor Fund of Wayne State University. “The impact on Michigan is significantly higher than we projected,” said Valenti. “The fund is proving what we believed all along — that Michigan is a very attractive state in which to invest and to start a business.” Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

MARKET PLACE

Page 21

New tenants to bring yoga, salads, sneakers to The Z BY SHERRI WELCH CRAIN’S DETROIT BUSINESS

Three new retailers will join Denver-based Punch Bowl Social in Bedrock Real Estate Services’ new 10-story parking garage in Detroit’s central business district. They’ll bring designer sneakers, salads and a yoga studio to the retail space in the garage known as The Z, given its zigzag from the corner of Broadway and East Grand River Avanue to the corner of Library Street and Gratiot Avenue. The tenants are: 䡲 NoJo Kicks, a retailer of luxury and rare collectible sneakers, tailored jeans and custom hats, set to open June 23. 䡲 7 Greens Detroit Salad Co., a new “farm-to-fork” destination owned by longtime Detroit chef and caterer Kelly Schaefer, which will offer make-your-own salads with homemade sauces, soups, granola and sweets. It is set to open in August. 䡲 Citizen Yoga, a second location for founder Kacee Must, who opened the first studio in Royal Oak in August 2013. She and business partner Bryan Lively, vice president of retail at

COURTESY OF BEDROCK REAL ESTATE SERVICES

Three tenants are moving into the street-level space inside The Z, a 10-story parking garage.

Madison Heights-based Moosejaw Mountaineering, expect to open the Detroit studio this fall. After these leases, only 8,000 of The Z’s 34,000 square feet of retail and restaurant space will remain vacant. Bedrock said in a news release that it expects to announce remaining tenants in the coming months. Opened in January, The Z features the work of 27 international mural artists and 1,300 parking spots. The art is a collaboration between Bedrock and gallery Library Street Collective. As Crain’s reported in March, the Detroit location for food and entertainment venue Punch Bowl Social is its third behind sites in Denver and Portland, Ore. It’s to open in November. Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch

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CRAIN'S LIST: TOP-COMPENSATED CEOS Ranked by fiscal 2013 compensation Rank

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.

Name Company

Total compensation 2013/2012

Salary 2013/2012

Bonus 2013/2012

Stock awards 2013/2012

Nonequity incentive/ retirement 2013/2012

Other compensation 2013/2012

Option awards 2013/2012

Company's net income 2013/2012

John Plant

$24,466,286 $26,203,477

$2,014,615 $1,974,230

$0 $0

$4,646,455 $4,797,674

$12,765,300 $14,998,900

$623,225 $607,094

$4,416,691 $3,825,579

$970,000,000 $1,008,000,000

Alan Mulally

23,204,534 20,955,806

2,000,000 2,000,000

1,960,000 1,325,000

10,912,488 6,824,998

3,920,000 2,625,000

662,050 680,809

3,749,996 7,499,999

7,155,000,000 5,664,000,000

TRW Automotive Holdings Corp.

Ford Motor Co.

■ To retire July 1, 2014. COO Mark Fields to succeed.

Richard Dugas

13,928,859 9,059,004

1,200,000 1,200,000

0 0

4,500,011 4,500,009

8,200,000 3,349,500

28,848 9,495

0 0

2,620,116,000 206,145,000

Rodney O'Neal

12,018,049 13,341,273

1,248,142 1,211,100

500,000 0

7,685,494 9,190,800

2,366,936 2,594,339

217,477 345,034

0 0

1,301,000,000 1,160,000,000

Matthew Simoncini

10,802,368 10,140,574

1,245,208 1,182,500

0 0

6,859,832 6,329,938

2,415,000 2,420,063

282,328 208,073

0 0

431,400,000 1,282,800,000

Timothy Wadhams

9,638,334 7,033,907

1,000,000 1,000,000

0 0

2,459,946 2,040,072

2,460,000 2,040,000

319,748 142,315

3,398,640 1,811,520

272,000,000 (76,000,000)

PulteGroup Inc.

Delphi Automotive plc

Lear Corp.

Masco Corp.

■ Retired Feb. 14, 2014. Succeeded by Masco Group President Keith Allman.

Patrick Doyle

9,548,617 9,160,034

870,694 840,769

0 0

2,585,580 1,686,172

2,321,826 2,094,400

379,491 3,047,031

3,391,026 1,491,662

143,000,000 112,400,000

Gerard Anderson

9,147,821 9,683,833

1,218,269 1,200,000

0 0

5,470,600 4,469,640

2,324,708 3,886,683

134,244 127,510

0 0

668,000,000 610,000,000

Daniel Akerson

9,071,309 11,102,808

1,700,000 1,700,000

0 0

7,302,206 9,332,659

2,833 0

66,270 70,149

0 0

3,770,000,000 4,859,000,000

Joseph Welch

8,907,994 8,768,195

977,686 932,260

723,308 1,558,266

1,790,870 1,722,440

4,084,320 3,292,684

538,739 458,274

793,071 804,271

233,506,000 187,876,000

James Verrier

8,146,556 3,195,780

870,000 520,159

0 0

4,849,270 1,534,080

2,106,918 954,614

320,368 186,927

0 0

624,300,000 500,900,000

David Dauch

American Axle & Manufacturing Holdings Inc.

6,330,397 1,033,333 0 4,235,175 873,333 21,500 ■ Succeeded Richard Dauch in September 2012.

1,750,002 979,013

3,430,673 2,293,634

116,389 67,695

0 0

94,500,000 367,700,000

Roger Penske

5,105,569 4,909,336

1,200,000 1,200,000

0 0

3,600,000 3,500,000

0 0

305,569 209,336

0 0

244,200,000 185,500,000

Robert Taubman

4,573,656 10,292,972

875,500 850,000

0 0

2,234,932 7,703,119

1,422,688 1,700,000

40,536 39,853

0 0

189,368,000 157,817,000

Timothy Leuliette

4,448,249 17,046,075

1,167,250 450,000

0 1,000,000

0 14,989,157

2,842,800 495,413

438,199 111,505

0 0

690,000,000 100,000,000

Carl Camden

4,031,479 3,298,293

1,000,000 992,500

0 0

1,594,400 968,250

1,274,000 1,148,300

163,079 189,243

0 0

58,900,000 50,100,000

David Wathen

3,801,400 4,091,800

710,500 700,000

165,000 0

2,227,600 2,710,800

546,400 567,400

151,900 113,600

0 0

80,070,000 36,300,000

Douglas Stotlar

3,790,125 4,602,735

798,086 773,087

0 0

2,300,591 2,293,016

546,582 1,425,000

144,866 111,632

0 0

99,200,000 104,546,000

Charles "Chip" McClure Jr. Meritor Inc.

3,248,583 704,419 0 770,015 948,451 5,118,695 1,184,500 0 1,750,023 1,694,139 ■ Resigned in May 2013. Succeeded by Director and interim CEO Ivor Evans in August 2013.

825,698 490,033

0 0

(22,000,000) 52,000,000

Mark Malcolm

3,051,009 3,441,966

Ivor Evans Meritor Inc.

Domino's Pizza Inc.

DTE Energy Co.

General Motors Co.

■ Retired Jan. 15, 2014. Mary Barra succeeded.

ITC Holdings Corp.

BorgWarner Inc.

Penske Automotive Group Inc.

Taubman Centers Inc.

Visteon Corp.

Kelly Services Inc.

TriMas Corp.

Con-way Inc.

0 0

378,004 377,999

1,794,366 1,304,940

38,639 37,026

0 882,001

(20,275,000) 18,032,000

2,790,377 517,667 0 0 ■ Became CEO in August 2013.

0 0

1,292,666 0

967,391 0

12,653 0

0 0

(22,000,000) 52,000,000

Edward Christian

2,592,970 1,567,348

902,006 873,727

0 0

913,270 0

650,000 575,000

127,694 118,621

0 0

15,273,000 17,925,000

Prashant Ranade

2,523,341 2,131,662

725,518 553,412

42,900 42,366

1,178,560 922,400

552,176 491,693

24,187 121,791

0 0

219,658,000 185,543,000

Jeffrey Edwards

2,429,411 4,229,102

800,000 153,846

0 170,492

416,223 0

562,104 0

93,470 6,723

557,614 3,898,041

47,900,000 102,800,000

Daniel Coker

2,413,706 1,639,078

530,400 510,000

550,000 470,000

573,000 285,750

355,000 317,000

38,746 56,328

366,560 0

33,820,000 24,321,000

Tower International Inc.

Saga Communications Inc.

Syntel Inc.

Cooper-Standard Holdings Inc.

Gentherm Inc.

840,000 840,000

Top compensation for CEOs at publicly held companies in Wayne, Oakland, Macomb, Washtenaw and Livingston counties for companies' fiscal 2013. Incentive plan/retirement column is total of nonequity incentive-plan compensation, nonqualified deferred compensation and change in pension value. NA = not available. LIST RESEARCHED BY CRAIN'S STAFF

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C RAIN’ S DETROIT BUSINESS

CRAIN'S LIST: TOP-COMPENSATED NON-CEO EXECUTIVES Ranked by fiscal 2013 compensation Rank

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.

Total compensation 2013/2012

Salary 2013/2012

Bonus 2013/2012

Stock awards 2013/2012

Nonequity incentive/ retirement 2013/2012

Other compensation 2013/2012

Option awards 2013/2012

William Clay Ford Jr.

$11,955,829 $14,836,013

$2,000,000 $2,000,000

$560,000 $375,000

$5,092,491 $3,184,990

$1,120,000 $4,007,519

$1,433,341 $1,768,505

$1,749,997 $3,499,999

Mark Fields

10,170,578 1,537,500 996,000 8,854,065 1,385,833 1,301,250 ■ To succeed Alan Mulally as CEO in July 2014.

3,637,492 1,000,994

2,604,000 3,939,170

145,591 126,823

1,249,995 1,099,995

Timothy Manganello

7,987,416 11,756,097

3,696,084 6,380,383

2,700,000 3,375,000

1,257,999 774,464

0 0

Name Company executive chairman and president Ford Motor Co. and William and Lisa Ford Foundation COO Ford Motor Co.

executive chairman BorgWarner Inc.

333,333 1,226,250

0 0

■ Retired as CEO January 2012; remained executive chairman until retirement April 2013.

Kevin Clark

6,716,766 5,200,187

800,000 800,000

500,000 600,000

4,327,101 2,987,875

984,000 664,000

105,665 148,312

0 0

Stephen Girsky

6,389,584 5,446,304

600,000 600,000

0 0

5,757,077 4,811,291

1,542 435

30,965 34,578

0 0

James Spencer

6,243,494 5,337,954

690,833 586,262

0 0

4,531,259 3,595,941

861,000 546,970

160,402 608,781

0 0

Karl-Thomas Neumann

5,808,330 0

684,029 0

0 0

3,698,075 0

75,754 0

1,350,472 0

0 0

Steven Lunn

5,277,091 923,854 5,454,594 922,755 ■ Retired Feb. 28, 2014.

0 0

2,069,708 1,439,280

1,906,568 1,904,762

376,961 40,120

0 1,147,677

Daniel Ammann

5,261,881 4,789,665

750,000 750,000

0 0

4,481,562 4,007,056

1,844 799

28,475 31,810

0 0

Mary Barra

5,233,140 4,943,487

750,000 750,000

0 0

4,446,504 3,906,484

0 258,558

36,636 28,445

0 0

CFO and executive vice president Delphi Automotive plc

vice chairman, corporate strategy, business development and global product planning General Motors Co. executive VP, operations; president, Delphi Latin America Delphi Automotive plc executive VP; president, Europe General Motors Co.

executive VP and COO TRW Automotive Holdings Corp.

president General Motors Co.

executive VP, global product development, purchasing and supply chain General Motors Co.

■ Became CEO January 2014.

Robert O'Shaughnessy

5,075,423 3,366,844

700,000 700,000

0 0

1,550,015 1,550,008

2,800,000 1,116,500

25,408 336

0 0

Jeffrey J. Owens

5,004,552 4,638,611

619,258 528,600

0 0

3,238,308 3,010,321

779,962 974,351

367,024 125,339

0 0

James Ellinghausen

4,958,258 2,766,229

525,000 525,000

0 0

1,400,001 1,400,002

2,100,000 837,400

933,257 3,827

0 0

Joseph Cantie

4,772,073 4,650,675

650,961 636,923

0 0

1,450,868 1,499,276

889,650 930,100

401,486 388,882

1,379,108 1,195,494

Steve Meszaros

4,714,596 6,200,065

500,000 484,325

0 0

0 3,038,351

1,290,168 706,037

2,924,428 1,799,383

0 171,969

David Joseph II

4,602,357 0

336,111 0

75,000 0

3,122,004 0

580,000 0

489,242 0

0 0

Joseph Hinrichs

4,409,949 4,097,155

853,750 782,917

126,800 0

1,745,994 682,493

963,200 1,500,218

120,206 381,527

599,999 750,000

Raymond Scott

4,209,079 4,974,865

818,172 804,100

0 0

2,219,401 2,219,494

992,327 1,807,611

179,179 143,660

0 0

Terrence Larkin

4,191,397 4,828,891

818,172 804,100

0 0

2,219,401 2,219,494

992,327 1,659,285

161,497 146,012

0 0

Bob Shanks

4,089,621 5,181,838

772,500 700,000

0 227,500

1,745,994 818,988

889,339 2,471,303

81,789 64,048

599,999 899,999

Robin Adams

3,898,112 5,476,716

216,667 635,812

0 0

1,826,765 3,057,009

1,240,000 1,430,000

614,680 353,895

0 0

0 175,000

1,867,397 2,647,434

829,150 548,553

150,082 65,933

0 0

0 4,000,000

0 6,874,007

2,030,000 4,201,202

155,822 141,916

0 627,000

executive vice president and CFO PulteGroup Inc.

executive VP and chief technology officer Delphi Automotive plc

executive VP, human resources PulteGroup Inc.

executive VP and CFO TRW Automotive Holdings Corp.

VP and president, electronics product group Visteon Corp.

senior VP, leasing Taubman Centers Inc.

executive VP and president, the Americas Ford Motor Co.

executive VP and president, seating Lear Corp.

executive VP, business development, general counsel and corporate secretary Lear Corp. executive VP and CFO Ford Motor Co.

vice chairman, executive VP and chief administrative officer BorgWarner Inc.

■ Retired April 30, 2013.

Jeff Vanneste

3,530,262 3,968,821

Richard Dauch

3,367,640 1,181,818 17,844,125 2,000,000 ■ Died August 2013.

Harmon Smith

3,364,245 2,163,474

625,000 601,923

0 0

1,000,009 600,005

1,724,375 953,800

14,861 7,746

0 0

Mel Stephens

3,268,605 3,886,975

645,349 634,250

0 0

1,712,929 1,712,925

782,718 1,418,056

127,609 121,744

0 0

senior VP and CFO Lear Corp.

co-founder and former executive chairman American Axle & Manufacturing Holdings Inc.

executive VP, homebuilding operations and area president, Texas PulteGroup Inc. senior VP, communications, facilities and investor relations Lear Corp.

683,633 531,901

3 Incentive plan/retirement column is total of nonequity incentive-plan compensation, nonqualified Top compensation for non-CEO executives at publicly held companies in Wayne, Oakland, Macomb, Washtenaw and Livingston counties for companies' fiscal 2012. deferred compensation and change in pension value. NA = not available.

LIST RESEARCHED BY CRAIN'S STAFF

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May 19, 2014

Page 25

Sources: Severstal weighs options for Dearborn plant BLOOMBERG NEWS

OAO Severstal, the Russian steelmaker controlled by billionaire Alexey Mordashov, said it is considering “a range of strategic options” for its North American unit amid reports the business may be sold. The review could even result in a sale of its Dearborn plant, sources say. “No decision has yet been taken as to which, if any, such (strategic options) might be pursued,” the Cherepovets-based company said in a regulatory statement last week. Severstal, whose North American operations are based in Dearborn, is assessing offers for its plants in Dearborn and Columbus, Miss., people familiar with the matter said May 10, asking not to be identified because the deliberations are private. The bidders include Pittsburgh-based U.S. Steel

The North American operations of Russian steelmaker OAO Severstal are based in Dearborn.

COURTESY OF SEVERSTAL NORTH AMERICA

Corp., whose Great Lakes Works operates in Ecorse and River Rouge, and number more than two, these people said last week. Spokeswomen from U.S. Steel and Severstal declined to comment. The U.S. sites have total annual capacity to produce 5.2 million metric tons of steel. The Russian company has invested more than $2 billion in the assets since 2004.

Companhia Siderurgica Nacional has made an approach for the assets, for which Severstal may receive as much as $1.5 billion, according to a May 9 report in the Wall Street Journal. A spokesman for Sao Paulo-based CSN declined to comment. Severstal advanced 7 percent in trading last week to $8.82 in London trading, the highest since Jan. 24.

“A deal closed at $1.5 billion would boost Severstal’s market capitalization as it would mean that its American assets have a higher valuation in terms of multiples compared with the parent company,” Kirill Chuyko, the Moscowbased head of equity research for BCS Financial Group, said Tuesday.

Changes in North America Severstal North America, the Dearborn-based U.S. subsidiary of Severstal, replaced nearly all of its senior management last year in an attempt to create “profitable, sustainable growth,” CEO Saikat Dey said. Dey replaced former CEO Sergei Kuznetsov on Sept. 3, 2013, and a flurry of management changes followed. Within weeks, nearly all of it top management had been replaced, including its CFO and

three vice presidents. Dey said the changes reflect the company’s shift in priorities. The old team “was focused on building new assets, investing in Dearborn and maintaining an automotive business; doing the M&A and the divestment,” he said. “That was probably the right team. Now we face a different challenge … a change in focus.” Dey said late last year that the new direction of Severstal is focused on higher-margin, or valueadded, products thanks to the investments in North America. “We believe, we have the potential to make these assets more profitable,” Dey said. “All it takes is good driving.” Severstal North America will also focus on “cash discipline” and quality, Dey said. Crain’s Detroit Business contributed to this report.

CEOs: Compensation numbers say, ‘These execs have delivered’ ■ From Page 1

The share price of the companies headed by the highest-paid CEOs was up an average of 40.3 percent for the year, compared to 29.6 percent for the S&P 500 and 30.1 percent for the S&P 1,500. In addition, return on equity, a measure of net income returned as a percentage of shareholder equity, also beat the S&P averages. The average 12-month ROE of the companies tracked in the Crain’s List of Top-Compensated CEOs was 22.3 percent, compared to 15.9 percent for the S&P 500. “These CEOs have delivered, whether you look at what the stock price has done, return on equity or earnings. Companies here have outperformed those nationally,” he said. “They have outperformed the market as a whole, in every metric. You connect the dots between performance and compensation, whether you’re a CEO or you’re a PGA professional. If you don’t make the cut on the PGA Sowerby tour, you don’t get paid,” said Sowerby. (See data highlights box on this page) The highest-compensated local executives got paid well, though, perhaps surprisingly, less than in 2012.

The biggest CEO earners The top 25 execs in 2013 were paid a total of $189.9 million, which is off 39 percentage points from the $311.2 million that the top 25 were paid in 2012. But that 2012 number was driven in large part by two things: One was a reward in compensation for executives for what was a fantastic bull market and a sharp run-up in stock prices. The other was an outlier in the form of compensation for Brett Roberts, the CEO of Credit Acceptance Corp. of Southfield. In 2012, his board of directors

THEY MADE MONEY THE OLD-FASHIONED WAY ... According to various measurements, local CEOs outperform national benchmarks — if company performance is the yardstick. David Sowerby of Loomis Sayles & Co. LP used data from Thomson Reuters Baseline to develop the following data highlights: 䡲 As of Dec. 31, 2013, the share price of the companies headed by the highest-paid CEOs was up an average of 40.3 percent for the year, compared to 29.6 percent for the S&P 500 and 30.1 percent for the S&P 1,500. Seventeen area companies beat both S&P averages 䡲 The three-year growth in share price was up 56 percent for local companies, compared with 47 percent for the S&P 500 and 48 percent for the S&P 1,500. Twelve state companies beat both S&P averages. 䡲 Net income for the local companies was up 23 percent in 2013, compared to 4 percent for both the S&P 500 and the S&P 1,500. Seventeen local companies beat the S&P averages. 䡲 Three-year net income was up 16 percent for local companies, compared to 7 percent for both the S&P 500 and the S&P 1,500. Thirteen companies beat the S&P averages. 䡲 Return on equity for the S&P 500 in 2013 was 15.9 percent, with return on equity for the S&P 1,500 at 15.4 percent. The local companies averaged 22.3 percent, with 13 local companies beating both of the S&P averages. 䡲 Revenue at area companies was up 7 percent in 2013, compared to flat growth for the S&P 500 and 5.3 growth for the S&P 1,500. Eleven companies beat both S&P averages. — Tom Henderson initiated a 15-year performance plan for him that could reward him with $53.3 million in stock awards. Whether they eventually were collected or not, for accounting purposes, they were listed as 2012 compensation. Roberts is not in the top 25 this year, nor are nine others from the top 25 of 2012. If you compare what the top 25 CEOs were paid in 2013 with what those same 25 executives were paid in 2012, the decline in compensation is much less, off 2.66 percentage points from $195.1 million. Roberts’ pay total of $54.2 million in 2012 was more than double the $26.2 collected by John Plant of TRW Automotive Holdings Corp. Plant took over the No. 1 spot in 2013 despite a drop in pay to $24.5 million, which included $4.6 million in stock awards and $12.8 million in nonequity incentive and retirement compensation. Alan Mulally of Ford Motor Co. moved up a spot to No. 2 in 2013, his overall pay of $23.2 million including $10.9 million in stock awards and $3.9 million in nonequity incentive and retirement compensation. He has announced

he will retire July 1. The other 13 who repeated as members of the top 25 were: Richard Dugas of PulteGroup Inc.; Rodney O’Neal of Delphi Automotive plc; Matthew Simoncini of Lear Corp.; Timothy Wadhams of Masco Corp. (who retired in February of this year); Patrick Doyle of Domino’s Pizza Inc.; Gerard Anderson of DTE Energy Co.; Daniel Akerson of General Motors Co. (who retired in January); Joseph Welch of ITC Holdings Corp.; Roger Penske of Penske Automotive Group Inc.; Robert Taubman of Taubman Centers Inc.; Timothy Leuliette of Visteon Corp.; Charles McClure Jr. of Meritor Inc. (who resigned in May 2013); and Jeffrey Edwards of CooperStandard Holdings Inc. Sudip Datta, a professor of finance and interim chairman of the department of finance in the School of Business Administration at Wayne State University, said that, for the most part, compensation mirrored company performance last year. “In general, the total compensation for most of the firms is consistent with net income change. It was what you’d expect,” he said. There were exceptions to the net

income-salary correlation. James Verrier of BorgWarner Inc. saw his total compensation climb from $3.2 million to $8.1 million. Part of his increase was in stock awards for previous performance, which went from $1.5 million to $4.8 million, and a boost in nonequity incentive and retirement compensation, which went from $954,614 to $2.1 million. David Dauch’s compensation at American Axle and Manufacturing Holdings Inc. went from $4.2 million to $6.3 million while his firm’s net income fell from $367.7 million to $94.5 million. He had increases in his base salary from $873,333 to just more than $1 million; in stock awards from $979,013 to almost $1.8 million; and in nonequity incentive and retirement compensation from $2.3 million to $3.4 million. Simoncini’s compensation rose from $10.1 million to $10.8 million while net income for Lear fell from 1.3 billion to $431.4 million. And Edward Christian’s compensation at Saga Communications Inc. went from $1.6 million to $2.6 million while net income dropped from $17.9 million to $15.3 million. Paul Reagan, a senior lecturer in the School of Business Administration at Wayne State and a principal in the Birmingham-based compensation consulting firm of Dorey-Reagan & Associates LLC, said CEO compensation in 2013 continued three trends that emerged during the recovery of the Great Recession: a moderation in both base salary and cash incentive payments and a growth in compensation driven by stock awards.

Pay for performance “Companies are willing to provide their executives with the means to participate in the continued resurgence of the equity markets via stock grants and stock option awards,” Reagan said. “These grants are not only a means of compensation — they also serve to promote shareholder interests by more closely establishing the executives

as shareholders themselves.” Total base salaries for the top 25 CEOs in 2013 was $26.1 million, down 7 percent, or $2 million, from 2012. Plant had the highest base salary, just more than $2 million. Cash bonuses were off 50.6 percent to $3.9 million. Mulally had the highest bonus, almost $2 million. Reagan said executives can expect in coming years to see their base salaries remain low compared to prerecession salaries, for bonuses to remain constrained and for stock awards based on defined targets — set by the board — to continue to serve as a big carrot. Last year, stock awards totaled $78.4 million, off $77.4 million, or about 50 percent from 2012, but that decline is an anomaly; award totals in 2012 were something of an outlier, reflecting the big rise in stock prices. Stock awards in 2012 were up 201.9 percent from 2011. Mulally had the largest stock award, more than $10.9 million. He continues to reap the benefit of keeping Ford out of bankruptcy during the recession and for what is generally regarded as a highly successful stint in his nearly eight years at the helm of the automaker, although Ford was something of a relative underperformer in 2013. Its share price gain was 19.2 percent and revenue growth was 3.4 percent, both below local company averages and national averages. Return on equity was 32.5 percent, which was above both local and national averages, and earnings growth was 14 percent, below the local average but above the national average. “We saw an incredible story at Ford,” said Reagan, taking a longer-term view of Mulally’s reign. “Rarely do you see that kind of performance by a CEO. It gives you faith in executive performance. It really does.” Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

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CRAIN’S DETROIT BUSINESS

2014 UPCOMING

PARTNER EVENTS Coming Up from the Troy Chamber TNT—Troy’s Night on the Town This event is going to be dynamite! Experience three of Troy’s finest restaurants all in one evening—The Capital Grille, Ocean Prime and McCormick & Schmick’s Seafood & Steaks. Restaurants will provide a sampling of tasty hors d’oeuvres and a cash bar. A VIP Reception is available at an additional cost, 5-5:30 p.m., at Ocean Prime. The reception will include cocktail tasting and is limited. May 29 • 5:30-7:30 p.m. Tickets: $25 Registration: 248-641-8151 or theteam@troychamber.com CEO Series Luncheon featuring Mat Ishbia, CEO, United Shore Financial Services Mat Ishbia will speak about how lessons in business and basketball have helped him make United Shore Financial Services (USFS) one of the nation’s leading residential mortgage lenders and one of the nation’s Best Places to Work. He will explain why USFS stresses a work/life balance and why the 1,200+ person team headquartered in Troy is comprised of “thumb pointers, not finger pointers.” Event partner: Central Michigan University Global Campus June 24 • 10:30 a.m.-1 p.m. Somerset Inn, 2601 W. Big Beaver Rd., Troy Member: $28 • Non-Member: $38 Table of 8 with Recognition: $210 Registration: 248-641-8151 or theteam@troychamber.com MSED Monthly Meeting—Annual Automotive Roundtable Luncheon: “Managing Growth in Innovation” At this event, you will hear a candid, off-the-record discussion from a panel of experts in the field, representing both automotive OEMs and suppliers. Panelists include Steve Kiefer, vice president of global powertrain, General Motors Co. and Doug Grimm, chairman, president & CEO, Grede Holdings. Moderator: David Versical, director of editorial operations, Automotive News June 11 • 11 a.m.-1 p.m. Somerset Inn, 2601 W. Big Beaver Rd., Troy MSED Members: $45 • Non-Members: $60 Registration: msedetroit.org or call Meeting Coordinators at (248) 643-6590 Coming Up from the Southfield Area Chamber of Commerce SouthÀeld Area Chamber Golf Outing Join us for a day filled with relationship building, golf and opportunities to promote your business. June 23 • 11 a.m.-1 p.m. Plum Hollow Country Club, 21631 Lahser Rd, Southfield Members: $130 • Non-Members: $150 Registration: southfieldchamber.com/golfouting OCN Regional Mixer This joint Chambers of Commerce event features members from the Greater Farmington Area, West Bloomfield Area, Southfield Area, Chaldean American, Asian Pacific and the Michigan Hispanic Chambers of Commerce. June 25 • 6-8 p.m. Hilton Garden Inn, 26000 American Dr., Southfield Members: $10/$15 at the door • Non-Members: $25 Registration: www.southfieldchamber.com CEED Microloan Programs As one of the first micro lenders in the country since 1984, CEED provides more than capital assistance. Clients receive no-cost tools and resources to build and maintain a successful business. Programs such as the Small Business Detroit Microloan Program, Washtenaw County Microloan Program and Oakland County Microloan Program give access to financing up to $50,000. Funds may be used for equipment, inventory, supplies and some working capital. To learn more and register for an upcoming loan orientation, visit miceed.org

For more local events, visit Crain’s Executive Calendar at crainsdetroit.com/executivecalendar

May 19, 2014

Nova: Company also rises with the sun ■ From Page 1

trusted us with an $18.5 million project. They supported us bigtime,” Agrawal said. “Solar is now 75 percent of our business.” After 23 projects with DTE totaling 11 megawatts and more than 14 projects with 1.8 megawatts for a growing number of private solar projects, Nova posted revenue of $12 million last year and projects more than $14 million this year, Agrawal said. Nova also provides ongoing maintenance services for eight solar projects with 515 kilowatts of power, he said.

Sunny business forecast For DTE, Nova conducts feasibility studies of potential solar sites and calculates what size solar array can be supported in each area. DTE then decides whether or not to pursue the project. If DTE goes ahead, Nova does the engineering work, procurement and construction. DTE then manages the ongoing operation. Some of Nova’s exclusive projects with DTE include Ford Motor Co.’s Wayne Assembly Plant, General Motors Co.’s Detroit-Hamtramck Assembly Plant, Blue Cross Blue Shield of Michigan’s downtown Detroit parking garage and an 80kilowatt solar array at DTE’s own parking area in Detroit. Tony Tomczak, DTE’s director of supply chain management, said Nova has met the engineering and generation expectations of the state’s largest utility supplier of solar power. Nova is completing four projects and plans two more, he said. Agrawal said Nova’s designs and installation process have created 30 percent more power than DTE required as a minimum for each project. Tomczak said DTE works very closely with Nova to generate “the best efficiencies we can out of the panels.” When DTE completes its planned solar projects, the Detroit-based utility will have 15 megawatts of owned solar power generation and 7 megawatts of customer-owned solar. In contrast, Jackson-based Consumers Energy projects about 6 megawatts of solar power for its projects by 2015. But Michigan legislators have not yet committed to continuing investing in solar, wind or other renewable energy sources past 2015, when the state’s renewable energy mandate ends. So far, utilities that include DTE and Consumers Energy have spent $2.3 billion on wind, solar, biogas and other renewable energy power sources and are nearing their 10 percent goal. The Michigan Legislature has started to hold hearings on extending the legislation, although most observers in Lansing don’t believe any bills will be approved until next year. A work group commissioned earlier this year by the Michigan Public Service Commission is studying ways to improve customerowned solar projects through utility companies and whether to initiate community solar projects. A report is expected in July. Sean Reed, founder and executive director of the Ann Arbor-

based Clean Energy Coalition, said Nova Consultants fills a valuable role in Michigan to elevate solar power as a technology. “Solar hasn’t taken off in Michigan as in other parts of the country,” he said. “It is a tough go for many companies in the industry to make it work. Nova is a great example for other companies because there is high value for utility-scale arrays.” Clean Energy is a nonprofit organization that helps bring together many types of companies in the renewable energy industry to expand the marketplace and lower costs for solar and other renewable technologies, Reed said.

Solar supply chain Agrawal said Nova’s solar contract with DTE and its growing number of smaller commercial contracts have helped to create a supply chain of 50 to 60 subcontractors in the solar installation and manufacturing industry in Michigan. “There are a number of companies working in the solar manufacturing in Michigan, but we had to go out of state when we first started” with the DTE contract, Agrawal said. For example, when Nova was working on the initial Scio Township project in 2010 for DTE, Agrawal said his company had to purchase solar racking parts from suppliers in Arizona. Racking helps to secure the solar panels to the posts. “It was very expensive to ship (the components). We decided to design some of our own (solar components) and looked for local suppliers to give them the business,” said Agrawal, who estimated Michigan companies may have created 200 jobs over the past several years to meet the solar demand. Agrawal said Nova has doubled its staff to 40 since it received the DTE contract. While most wind components that include blade, towers and turbines are manufactured outside of Michigan, Tomczak said, Michigan-based companies project much of the construction work for wind power generation. “From DTE’s perspective, the jobs created and sustained for wind is much more than solar,” Tomczak said. DTE estimated that wind projects employ up to 100 workers during construction and another 10 people on-site during operations. DTE estimates there have been 15

to 20 jobs created in the solar construction and engineering fields through DTE’s solar program. Randy Czubko, president of Valley City Sign, said the Grand Rapidsbased manufacturing company produced mounting structures and posts for Nova’s solar panel projects at the Ford and GM plants. “Ford and GM had special requirements. They didn’t want to bury the posts in the black top (parking lot) so we created the cement ballasts to hold the panels down,” Czubko said. The solar component work for Nova was the first of its kind for Valley City Sign, but Czubko said the company also is seeing a growing business for companies wanting stand-alone solar-illuminated signs. “It’s an excellent application for solar,” he said. “It costs thousands of dollars to run a (power) line out to a sign. We can engineer a sign with a solar panel to charge the batteries with LED lights, and the customer can save money.” Mark Ferda, renewable energy account manager with McNaughton-McKay Electric Company, which has warehouses in Madison Heights and Ann Arbor, said the company expanded into solar seven years ago and has been growing its electrical distribution business at a 15 percent annual clip. “We supply all of Nova’s projects with DTE and do in excess of $1 million a year with residential and small commercial projects,” Ferda said. McNaughton-McKay sells solar panels, brackets, inverters and connectors and wires for the systems. “The price of materials has come down by 50 percent since we started,” Ferda said. “That has helped to stimulate growth, but if we lose the 30 percent federal tax credit in 2015 … our business will drop 50 to 75 percent.” Adam Parr, account manager with Albion-based Patriot Solar Group, said his company began manufacturing roof and ground mounted structures for solar panels originally in 2005. “We work in Michigan with Nova, but we do quite a bit of work in New Jersey and Massachusetts, where there are higher renewable portfolio standards and higher tax incentives,” Parr said. “The tax incentives and state mandates really help to bring down the cost for these projects.” Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

WEBINARS TOPICS: SMALL-BIZ FUNDING, TALENT STRATEGY Small businesses looking for insight on the topics of access to capital and new supply chains can join Crain’s for a free webinar May 22 at noon. Speakers for the webinar will be Mike Cope, senior vice president for smallbusiness banking in Michigan at Comerica Bank, and Trevor Pawl, managing director of the Michigan Economic Development Corp.’s Pure Michigan Business Connect program. To register, go to crainsdetroit.com/webinars. The series will continue May 28 at noon, with a webinar discussion on creating a talent strategy and keeping a startup culture as a business grows. Speakers will be Debbie Shapiro, founder of HR Connections, and Charlie Moret, president and CEO of Invest Michigan. Many of the speakers from the webinar series will host roundtable discussions on July 24 at the Crain’s Salute to Entrepreneurs event at 7:30 a.m. in Dearborn at The Henry hotel. To register, go to crainsdetroit.com/events.

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CRAIN’S DETROIT BUSINESS

May 19, 2014

Ziebart: Shaking off rust

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FREE WEBINAR: Register at crainsdetroit.com/webinars

■ From Page 3

away from it, you can’t see the film.” Ziebart reports about 400 locations worldwide, and Baker said global systemwide sales were $135 million in 2013. With the strong April bump (winter months are typically slow for coatings sales), 2014 sales are up about 7 percent year-to-date — meaning they could top $140 million this year, a record since Baker became an officer of the company. Ziebart Corp., including U.S. stores, reported just under $9 million revenue in 2011, including about $3.7 million of royalty income from nearly 90 U.S. franchise locations, according to a franchise disclosure document. U.S. stores report an average of about $780,000 annually in singlestore sales. “As the car market has changed, we have frequently had to reposition ourselves within it,” Baker said. “But it’s not so much that we need to rebrand as it is that we just need to reintroduce the brand.” Ziebart owns and operates 12 U.S. locations in the metro Detroit, Cleveland, Chicago, Pittsburgh, Minneapolis and Columbus, Ohio, areas, Baker said, for about 100 total corporate employees. All other locations are franchises, with sometimes-differing demand for its products. Saudi Arabian service centers, for example, have seen aggressive sales in rustproofing due to sandstorms, while Baker estimates that rustproofing, along with treatments to reduce road noise inside vehicles and some detailing services, account for only about 20 percent of sales companywide. Founded as a rustproofing shop in 1959 by the late Kurt Ziebart, the company adopted a franchising business model early on but expanded it after Ziebart sold the business in 1963 to Roger Waindle, a corrosion studies expert who renamed it Ziebart Process Corp. The company signed its first international licensing agreement in 1965 for a franchise in Canada, then a Japan licensing deal in 1969. International service locations accounted for 30 percent of sales as recently as the mid-2000s, Baker said, but became a majority of revenue after North American product sales contracted in the last recession. Ziebart International has been employee-owned through an employee stock ownership plan since the 1990s. International markets remained the majority of sales even through the economic recovery, while domestic service was rebounding along with U.S. auto sales, mainly due to more new license agreements. Fast economic growth and increased car ownership in emerging international markets, along with differences in climate affecting product demand, have also contributed to growth overseas. David Zoldowski, owner of Brighton-based aftermarket glass and accessories company Auto One Inc., said his company is still too small to target overseas growth like Ziebart. Auto One has 16 locations, 14 in Michigan and two in In-

diana, of which 12 are franchises. But he also said demand for certain products is a growth driver. The company is seeing high singledigit growth in aftermarket truck accessory sales, he said, and some strong demand for tonneau covers along with a spring season boost in glass repair service. “As the vehicles become more computerized, getting into the electrical circuits of the vehicles is getting more challenging. So interface modules are becoming a demand item,” Zoldowski said. “It used to be a quick little job making a 4-pin connection to hook up trailer lights, but today with LED lighting and other changes, the wires going to the back of the vehicle are multitasking now. So we’ve had to have new modules that can connect to the factory equipment.” International locations are licensed through an individual Ziebart master franchise license holder in each country, and the service centers are required to buy their products from the parent company in Troy. A franchise fee is $25,000, and the company estimates the total upfront investment in a Ziebart franchise ranges from $172,000 to $331,000. This includes more than $100,000 for inventory and other costs paid to the franchisor. Over time, Ziebart has diversified from its rustproofing roots into several other aftermarket services — detailing, glass repair, diamond gloss paint protection, remote starters and other accessories. Some of the changing product mix has been a reaction to the market. Baker said rust protection accounted for 80 percent of sales in the late 1980s, but it began falling off after the Detroit OEMs began offering new manufacturers’ warranty protection against rust. The demand has picked up again in recent years, Baker said, as automotive prices continued to climb and new longer-term financing packages became available, so original owners are more likely to keep their cars much longer than those warranties last. Today, Ziebart offers 29 different products, including Z Shield paint protection, across its various stores and “processing centers” — car dealers, body shops and others that also offer its services. The company has occasionally looked at branching out into retail product sales at auto parts stores, but Baker said that would clash with its strategy of business development through new franchises and processing centers. “It can be very tempting to want to put our name on some glass cleaner or a truck cover for overthe-counter sales, and build our business,” he said. “But because we have been focused for so long on exclusivity agreements with our licensees … and (on) equating the brand with a professional-quality installation, we didn’t want to compete with that and with our own licensees in the over-the-counter market.” Chad Halcom: (313) 446-6796, chalcom@crain.com. Twitter: @chadhalcom

presents:

CYBERSECURITY: Understand the Risks, Reduce Your Exposure

June 5 • Noon - 1 p.m.