Crain's Detroit Business, Aug. 4, 2014 by Crain's Detroit Business

20140804-NEWS--0001-NAT-CCI-CD_--

8/1/2014

6:40 PM

Page 1

www.crainsdetroit.com Vol. 30, No. 31

AUGUST 4 – 10, 2014

$2 a copy; $59 a year

Page 3 Studio apartments planned for ex-WSU pharmacy school

A $15B upgrade for utilities

For customized crafting, the key ingredient is a truck

New EPA rules stoke Consumers, DTE move to wind and gas

Lawmakers aim to put limits on limos in Detroit

DTE Energy’s coal-fired plant in Monroe is finishing a 14-year, $2 billion upgrade in its environmental controls. ASSOCIATED PRESS

Colleges and Universities

BY GARY ANGLEBRANDT SPECIAL TO CRAIN’S DETROIT BUSINESS

A Physician assistants lack places to prepare, Page 11

This Just In Bids brisk for Detroit Club, parking lot; no deals yet The Detroit Club building in Detroit and a parking lot at West Fort and Washington Boulevard generated substantial bidding at auction last week. But whether deals totaling nearly $8 million will close isn’t yet known. The 37,000-square-foot Detroit Club at 712 Cass Ave. had a high bid of $2.9 million, while the lot next door, with about 65 surface spaces and another 35 below-ground, drew a $4.9 million bid. Ryan Snoek, the Detroit real estate adviser representing owner Emre Uralli, a Florida real estate investor, said Friday negotiations were pending with the high bidder or bidders. Starting bids were $950,000 for the Detroit Club, which Uralli bought in December for $1 million, and $1.5 million for the parking lot. Uralli bought the parking lot, which was being marketed as a possible redevelopment site, in 2008. — Kirk Pinho

$15 billion wave of energy infrastructure spending is headed to Michigan, so says the head of the state’s largest electric utility. DTE Energy Co. CEO Gerry Anderson said the Environmental Protection Agency’s recent carbon emissions proposal will usher in “the largest power sector renewal” the industry has seen since the oil shocks of the 1970s led utilities to move to coal and away from oil.

“This will be the biggest investment in power generation since that period,” he said. Anderson estimates about $15 billion will be spent on changes to Michigan’s power infrastructure to meet the EPA rules, $8 billion of it coming from Detroit-based DTE, the larger of the two utilities in the state. The bulk of the spending wouldn’t begin until about five years from now, and it’s still too early to plan the details, he said.

Bonus: Teaching hospitals, ex-residents get IRS checks Settlement: Docs weren’t employees BY JAY GREENE CRAIN’S DETROIT BUSINESS

Thousands of former resident physicians in Southeast Michigan and elsewhere have been receiving federal tax refunds from teaching hospitals the past two years as part of a settlement with the IRS that acknowledged they were students and not employees subject to Medicare and Social Security, or FICA, taxes. Detroit-area teaching hospitals that include Detroit Medical Center, Henry Ford Hospital, St. John Providence Health System and the University of Michigan Health System also have received millions in dollars of tax refunds based on the amount of money they were incorrectly charged by the government for the payroll taxes from 1998 to 2005. “Many teaching hospitals had subjected their residents to FICA taxes, viewing them as employees,” said Ann Hollenbeck, a health law attorney with Honigman Miller Schwartz and Cohn in Detroit. “Back in 1998, the 8th U.S. Circuit Court of Appeals decided the University of Minnesota was not subject to the FICA tax because the residents were students. It was a mess, for years.” Many other teaching hospitals, inSee Residents, Page 20

See Utilities, Page 19

Fixing service disconnect Michigan call center jobs on the rise as companies redirect customer queries BY DUSTIN WALSH AND TOM HENDERSON CRAIN’S DETROIT BUSINESS

The humble call center is inching to a higher spot in the corporate food chain — and that is translating into a significant number of new local jobs. As service companies evaluate the cost of attracting new customers versus keeping the ones they have, some are deciding that outsourcing to places like India or the Philippines no longer makes sense. That means those big overseas call centers have new competition in Michigan. Through a mix of in-house operations and new contracts with call

center operators, Michigan is in the midst of a customer service boom. This has resulted in at least 1,300 new local jobs as companies dedicate more resources to close sales and retain clients.

Job centers Why Michigan? Local experts and call center executives say the state has the right mix of skilled labor to handle new technologies in managing customer service and tax incentives to attract new business. The August opening of S&P Data Michigan LLC in Troy is the latest in a round of new call centers cropping up in Southeast Michigan.

ISTOCK PHOTO

NEWSPAPER

DTE’s Anderson: A $15 billion tab to meet EPA rules

hospital in Michigan. U.S. News & World Report Ranking

See Call Centers, Page 18

20140804-NEWS--0002-NAT-CCI-CD_--

8/1/2014

5:45 PM

Page 1

Page 2

August 4, 2014

CRAIN’S DETROIT BUSINESS

MICHIGAN BRIEFS GR visitors turn to room rentals; how accommodating will city be? As Grand Rapids attracts growing numbers of travelers with events such as ArtPrize, brewery tours, Restaurant Week and conventions, many out-of-town guests are turning to nontraditional lodging, MiBiz reports. Jenny Lasko has been renting rooms in her home through the online platform Airbnb Inc. and similar services since 2012. Initially, many guests were tourists. But Lasko also attracts business travelers. Last month, Time magazine ran an online article that cited Grand Rapids as one of seven cities where proposed regulations on roomsharing would be cost prohibitive and a nuisance for homeowners who wish to rent out a room for short stays. The city’s proposed regulations have gone through several iterations, including calling for homeowners to pay $291 for a license to rent a room, disallowing any kind of vacation rentals and requiring owners to notify all neighbors within 300 feet of the rental situation. Grand Rapids city commissioners are expected to vote on proposed regulations this month.

MICH-CELLANEOUS 䡲

The Battle Creek-based Kellogg

Ind. bank adds to West Mich. holdings with $88.2M deal Evansville, Ind.-based Old National Bancorp continued its expansion into Michigan with an agreement to acquire Grand Rapids-based Founders Financial Corp. The deal involves stock and cash totaling $88.2 million and is expected to close in the first half of 2015. As of June 30, Founders, the bank-holding company for four-branch Founders Bank & Trust, had assets of almost $466 million, a loan portfolio of $355 million and $378 million in deposits. The bank, established in 1991, has had 78 consecutive quarters of profitability. Old National, founded in 1834, has about $10.4 billion in assets and 173 branches. In January, the company announced it was entering Southeast MichiCo. will close a plant in Columbus, Ga., and lay off more than 300 people, the Battle Creek Enquirer reported. The closure is part of Project K, under which Kellogg also plans to open a regional service center in the Grand Rapids area, resulting in Battle Creek losing 100 to 200 jobs. About 2,300 to 2,500 Kellogg employees are expected to work in Battle Creek by 2017. 䡲 Speaking of Kellogg, its Kashi brand of healthy products will return its operations to Southern California a year and a half after relocating to Battle Creek and discovering that Battle Creek and Southern California are not alike in virtually every possible metric used to compare regions. Kashi was purchased by Kellogg for $33 million in 2000. 䡲 Spring Lake-based furniture

gan by acquiring Ann Arbor-based United Bancorp Inc. (OTCQB: UBMI) in a $173.1 million transaction expected to close last week. At the time of the announcement, United Bancorp had $919 million in assets and $806 million in deposits. Old National entered the state in January 2013 when it bought 20 Bank of America branches in Southwest Michigan. Founders was advised by Grosse Pointe-based Donnelly Penman & Partners and Grand Rapids-based Warner Norcross & Judd LLP, the Grand Rapids Business Journal reported. — Tom Henderson

maker izzy+ will close a plant in Florence, Ala., by next summer and shift production to Indiana and Spring Lake, north of Grand Haven, MLive.com reported. The Alabama plant employs about 200. 䡲 The board of trustees of Mott Community College in Flint appointed Beverly Walker-Griffea the school’s first woman president, MLive.com reported. She also is the school’s first black president. Walker-Griffea, who starts at Mott on Aug. 27, is senior vice president for student services at Montgomery College in Maryland. Richard Shaink, president at Mott for 14 years, announced in January that he would retire after his replacement was found. 䡲 The $7.8 million Art Van Sports Complex, subject of a story in the

April 14 Crain’s, was to open last week in the Grand Rapids suburb of Plainfield Township, MLive.com reported. The flagship project of the West Michigan Sports Commission is expected to attract more than 75 events and 135,000 visitors in its first five years, with an annual economic impact of more than $20 million. 䡲 The Saginaw Township-based Morley Cos. plans to hire 100 customer service representatives to work in its roadside assistance center, dealer assistance and Web chat areas, Morley said in a release. In January, Morley announced it would hire 300 workers; it employs more than 1,750. 䡲 Filmmaker Michael Moore, who helped found the Traverse City Film Festival, used this year’s event

We’re like you. All business.

as a backdrop last week when he donated $250,000 to seed a nationwide program that he said will simulcast small-run movies to 300 theaters in the U.S. and Canada, The Associated Press reported. “The idea is to take what we do in Traverse City national and international,” Moore said. 䡲 The National Fireworks Association plans to hold its annual convention in Grand Rapids in September 2016, WOOD-TV reported. More than 1,000 attendees and an undetermined amount of ordnance are scheduled to gather at DeVos Place. 䡲 Under a deal reached last week with the help of a mediator, Allegan County Judge Kevin Cronin can hire a law clerk and secretary. But he can’t hire a former court employee because the county’s chief judge, Margaret Zuzich Bakker, said no. The judges also agreed to talk monthly — in the presence of an out-of-town judge, The Associated Press reported. Allegan County also is being asked to pay about $12,000 in fees charged by Cronin’s attorney. It cannot be verified that Allegan County is petitioning the state for a new three-judge panel: scissors, rock, paper. 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.

At DeVos Graduate School, you’ll not only solve business challenges, you will uncover them. After all, true leadership means having the vision to solve real business challenges. Exercise your entrepreneurial spirit— and begin applying your knowledge immediately. With schedules that ﬁt your life, Northwood is all business. Business for Life.

800.622.9000 northwood.edu/graduate

20140804-NEWS--0003-NAT-CCI-CD_--

8/1/2014

6:42 PM

Page 1

CRAIN’S DETROIT BUSINESS

August 4, 2014

Page 3

New prescription for Shapero Hall

Inside

Studio apartments slated for ex-WSU building BY KIRK PINHO CRAIN’S DETROIT BUSINESS

COSTAR GROUP INC.

Boydell Development plans to turn Shapero Hall into an apartment building with 180 units of 400 to 500 square feet renting for $560 to $700 a month.

Big building, tiny apartments. That’s what to expect if plans for the vacant 151,000-square-foot Shapero Hall, a former Wayne State University pharmacy school building near Detroit’s Lafayette Park, come together as the developers intend. A new plan for the site calls for 180 units to be ready for occupancy by the end of 2015. Eric Novack, senior project

manager for developer Dennis Kefallinos’ Detroit-based Boydell Development Co., said construction crews will soon start installing windows and fixing the roof on the Novack building located at 1010 Rivard St., south of Antietam Avenue. The developers have a building

permit to establish a multifamily dwelling and received electrical and plumbing permits in June and July, said John Roach, Mayor Mike Duggan’s communications director. The demand is there for the smaller units, which would be 400 to 500 square feet and rent for $560 to $700 per month, Novack said. “We are going to have demand for it with (the employees) Quicken (Loans Inc.) is bringing downtown and what Blue Cross Blue Shield of See Shapero Hall, Page 17

State bill could put limits on limos in Detroit BY CHRIS GAUTZ CAPITOL CORRESPONDENT

PHOTOS BY GLENN TRIEST

Chris Ramos, owner of Detroit Custom Coach, got into the fabricating business when he decided he could make more money in his shuttle business if he rented a party bus. So he decided to build one.

Take one truck, heat, bend metal ... serve Detroit Custom Coach puts wheels on business ideas BY AMY HAIMERL CRAIN’S DETROIT BUSINESS

If you based a plan for a food truck business on the recent movie “Chef,” you’d only need an afternoon cleaning out an old Ford Grumman, or something similar, and a little grit. You’d be turning out cubanos and cervezas by sundown, plus hanging out with Scarlett Johansson and Sofia Vergara. Chris Ramos just laughs. Only in Hollywood. As the owner of Detroit Custom Coach LLC, he knows a few things

about building out food trucks. For the past four years, he’s been fabricating custom food trucks — such as the newly finished Eskimo Jacks ice cream sandwich mobile — as well as turning limos and vans into rolling dens of luxury. What Ramos can tell you about food trucks is, first off, expect to spend around $50,000 buying and outfitting a rig. And that’s on the conservative side. Second, the fabrication doesn’t happen in an afternoon. “We get plenty of people who are shocked,” said Ramos, 32. “People who already own a restaurant and are trying to expand their brand or launch a new brand are much more accepting of the real prices.” Dan Gearig can identify. After

City Moments Read our new weekly Detroit-centric blog, along with blogs from Crain’s staffers, at crainsdetroit.com/blogs.

See Custom Coach, Page 21

Detroit Custom Coach plans to hire two more employees, and it expects to hire more workers early next year.

THIS WEEK @ WWW.CRAINSDETROIT.COM

If approved by the state Legislature, Detroit could regain control of regulating limousine services in the city, a move operators of limos and a ride-sharing service say will largely bar them from working inside city limits. “It would put a line around the city of Detroit,” said Nicholas Kokas, vice president of Chesterfield Township-based Brentwood’s Distinguished Executive Transportation. “The city of Detroit is choosing who you have to use, rather than you choosing.” Senate Bill 748, which was approved in June and awaits action in the House, would amend state law to require limousine operators to comply with a local vehicle-forTony Soave hire ordinance in cities with a population of more than 500,000. It amends an existing The timing of 2000 law that set the threshcampaign old at 750,000, but hasn’t been donations by Tony applicable since the 2010 cenSoave is sus showed Detroit’s populaquestioned by tion had fallen below that. limo operators, Page 20. If SB 748 becomes law, Detroit would once again be the only city in the state to regulate limos the same way it regulates taxis. There is no state law governing taxis, but the Michigan Department of Transportation considers any vehicle for hire that operates without a meter and charges customers a flat rate to be a limousine. Previously, the city required a limo picking up customers in Detroit to purchase a bond plate, often referred to as a medallion. There are 1,300 medallions available in the city, and must be purchased from a third party that owns one. Barring a medallion, the only way a limousine was able to operate in the city would be if a customer outside the city limits requested service to Detroit and then the limo driver waited until the customer was ready to return. That drives up the price and makes it uncompetitive with taxis, Kokas said.

HONKED OFF

See Limos, Page 20

RecoveryPark plants expansion plans, Page 5 Company index These companies have significant mention in this week’s Crain’s Detroit Business: Bacco Ristorante . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Beaumont Health System . . . . . . . . . . . . . . . . . . . 12 Boydell Development . . . . . . . . . . . . . . . . . . . . . . . 3 Brentwood’s Distinguished Executive Transportation . 3, 20 Central Michigan University . . . . . . . . . . . . . . . . . 12 CCM Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Checker Cab . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 City Living Detroit . . . . . . . . . . . . . . . . . . . . . . . . . 17 Consumers Energy . . . . . . . . . . . . . . . . . . . . . . . . 19 Detroit Custom Coach . . . . . . . . . . . . . . . . . . . . . . . 3 Detroit Medical Center . . . . . . . . . . . . . . . . . . . . . . 1 Dialog Direct . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Downtown Detroit Partnership . . . . . . . . . . . . . . . . 17 DTE Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Eastern Michigan University . . . . . . . . . . . . . . . . . 12 El Guapo Grill . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Garden Fresh Gourmet . . . . . . . . . . . . . . . . . . . . . . 5 Glencoe Capital Michigan . . . . . . . . . . . . . . . . . . . 18 Grand Valley State University . . . . . . . . . . . . . . . . 11 Henry Ford Hospital . . . . . . . . . . . . . . . . . . . . . . . . 1 Honigman Miller Schwartz and Cohn . . . . . . . . . . . . 1 Inzi Controls Detroit . . . . . . . . . . . . . . . . . . . . . . . 10 IRule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Jaffe Raitt Heuer & Weiss . . . . . . . . . . . . . . . . . . . 19 Kelly Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Loft Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Loomis Law Firm . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Mac Shack . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Madonna University . . . . . . . . . . . . . . . . . . . . . . . 14 Michigan Department of Transportation . . . . . . . . . 3 Michigan Healthcare Professionals . . . . . . . . . . . . 10 Michigan Public Service Commission . . . . . . . . . . 19 Michigan State University . . . . . . . . . . . . . . . . . . . 13 Millennium Medical Group . . . . . . . . . . . . . . . . . . 10 MotorCity Casino Hotel . . . . . . . . . . . . . . . . . . . . . . 4 MPI Products Holdings . . . . . . . . . . . . . . . . . . . . . . 4 Oakland University . . . . . . . . . . . . . . . . . . . . . . . . 12 Penske Automotive Group . . . . . . . . . . . . . . . . . . . . 6 RecoveryPark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Roush Industries . . . . . . . . . . . . . . . . . . . . . . . . . 10 Soave Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . 20 S&P Data Michigan . . . . . . . . . . . . . . . . . . . . . . . . 1 Truscott Rossman . . . . . . . . . . . . . . . . . . . . . . . . . 20 Uber Technologies . . . . . . . . . . . . . . . . . . . . . . . . 20 United Shore Financial Services . . . . . . . . . . . . . . 18 University of Detroit Mercy . . . . . . . . . . . . . . . . . . 11 University of Michigan . . . . . . . . . . . . . . . . 9, 11, 13 University of Michigan Health System . . . . . . . . . . . 1 Wayne State University . . . . . . . . . . . . . 3, 11, 13, 15 Wayne State University Physician Group . . . . . . . . 10 Western Michigan University . . . . . . . . . . . . . . 12, 13 Windsor-Detroit Bridge Authority . . . . . . . . . . . . . . 10

Department index BANKRUPTCIES . . . . . . . . . . . . . . . . . . 6 BUSINESS DIARY . . . . . . . . . . . . . . . . 16 CALENDAR . . . . . . . . . . . . . . . . . . . . 16 CAPITOL BRIEFINGS. . . . . . . . . . . . . . . 7 CLASSIFIED ADS . . . . . . . . . . . . . . . . 17 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 8 MARY KRAMER . . . . . . . . . . . . . . . . . . 8 OPINION . . . . . . . . . . . . . . . . . . . . . . . 8 PEOPLE . . . . . . . . . . . . . . . . . . . . . . 16 RUMBLINGS . . . . . . . . . . . . . . . . . . . 22 WEEK ON THE WEB . . . . . . . . . . . . . . 22

20140804-NEWS--0004-NAT-CCI-CD_--

8/1/2014

3:45 PM

Page 1

Page 4

August 4, 2014

CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

The

GO TO

advisors for colleges and universities The challenges are greater than ever. We have the business and legal experience to create comprehensive solutions.

We are your GO TO team.

McDonald Hopkins PLC 8PPEXBSE "WFOVF 4VJUF #MPPNĂśFME )JMMT .* t Stephen M. Gross, Detroit Managing Member

$IJDBHP t $MFWFMBOE t $PMVNCVT t %FUSPJU t .JBNJ t 8FTU 1BMN #FBDI mcdonaldhopkins.com

Carl J. Grassi, President

NEW ARRIVALS FRACTIONAL AND MANAGED BUSINESS AVIATION PROGRAMS. SERVING ALL SOUTHEASTERN MICHIGAN.

KING AIR B200

CORPORATEEAGLE.COM

Marian Ilitchâ&#x20AC;&#x2122;s commitment eases deal to reduce MotorCity Casino loan rate BY CECILE GUTSCHER BLOOMBERG NEWS

Billionaire Marian Ilitch parlayed her past willingness to boost her investment in MotorCity Casino Hotel into easier loan terms for the property located in the downtown of bankrupt Detroit. The casinoâ&#x20AC;&#x2122;s holding company gained an extra four years to Ilitch 2021 to finance $490 million of loans at reduced interest costs in negotiations last week, according to data compiled by Bloomberg. With her husband Mike, Ilitch co-owns the National Hockey Leagueâ&#x20AC;&#x2122;s Detroit Red Wings and co-founded Little Caesar Enterprises Inc., and she has pumped $80 million of her own cash into MotorCity since 2008 to help it weather an economic slump in the city and avoid breaching lending covenants, according to Moodyâ&#x20AC;&#x2122;s Investors Service. Ilitchâ&#x20AC;&#x2122;s commitment tempers the risks of lending to a company whose entire business is in downtown Detroit, a city collapsing under the weight of its own debt, said Frank Ossino, a money manager at Newfleet Asset Management LLC in Hartford, Conn., who participated in the new loans. Ossino also invests in MGM Grand Detroit, a casino owned by MGM Resorts International. â&#x20AC;&#x153;That is what got us comfortable,â&#x20AC;? said Ossino, who oversees $3 billion of loans. â&#x20AC;&#x153;Deep-pocket support that has stepped up in the past. A single casino company in Detroit without a history of support could be difficult.â&#x20AC;?

Consumer malaise Revenue at Michiganâ&#x20AC;&#x2122;s three public casinos dropped 6.5 percent in April from a year earlier, compared with a nationwide contraction of 2.3 percent, according to Moodyâ&#x20AC;&#x2122;s. Gamblers who might have looked to parlors for a lucky break during the economic downturn are avoiding casinos now, said Barbara Cappaert, a gaming analyst at Montpelier, Vt.-based KDP Asset Management Inc. â&#x20AC;&#x153;I think thereâ&#x20AC;&#x2122;s been a malaise thatâ&#x20AC;&#x2122;s come across people, thatâ&#x20AC;&#x2122;s affecting retail, restaurant and gaming, spending in general,â&#x20AC;? she said. â&#x20AC;&#x153;Unless the consumer feels really comfortable about spending, itâ&#x20AC;&#x2122;s

going to be really difficult for these markets to recover.â&#x20AC;? CCM Merger Inc., the holding company for the casino, will pay an initial rate of 4.5 percent on the loan, down from 5 percent, Bloomberg data show. The obligation was issued at a 75 basis-point discount, or 99.25 cents on the dollar, increasing the yield for lenders, and wider than the 50 basis points on the previous loan, which was taken out in April 2013. â&#x20AC;&#x153;We are pleased with the favorable response from our lenders regarding our proposed amendment and restatement of our Term B loan,â&#x20AC;? Jacci Woods, a spokeswoman for MotorCity, said by email. She declined to elaborate.

Loan ratings CCM had a $503 million balance on its previous loan and will pay down the part not covered by the new debt with cash, according to a July 22 report by Moodyâ&#x20AC;&#x2122;s. Moodyâ&#x20AC;&#x2122;s rated the new loans B2, five levels below investment-grade with a â&#x20AC;&#x153;stableâ&#x20AC;? outlook. They were graded B+, a level higher, at Standard & Poorâ&#x20AC;&#x2122;s. MotorCityâ&#x20AC;&#x2122;s ratio of debt to earnings before interest, taxes, depreciation and amortization is now more than seven times, according to Moodyâ&#x20AC;&#x2122;s. That compares with median leverage of 4.3 times for the 20 biggest U.S. gaming companies, Bloomberg data show.

Auto industry effect Detroit filed for bankruptcy in July 2013 after decades of decline, saying it couldnâ&#x20AC;&#x2122;t pay creditors while also providing basic services. Its fortunes have declined with that of the auto industry in recent decades. During the financial crisis, General Motors Co. and Chrysler Group LLC went through bankruptcies of their own. While companies have since reorganized, the city continues to cope with broken streetlights, blighted neighborhoods and overstretched emergency services. Those conditions gave pause to Sean Gleason, a gaming analyst at Octagon Credit Investors LLC in New York City. Gleason, whose firm invests in other gaming businesses, said that he turned down MotorCityâ&#x20AC;&#x2122;s loan. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re very cautious and typically donâ&#x20AC;&#x2122;t like a single property in Detroit at that kind of pricing level and declining trends,â&#x20AC;? Gleason said. â&#x20AC;&#x153;A lot of it is jobs and wage growth, and to the extent that

weighs on the city, that would impact discretionary income for gambling.â&#x20AC;?

Casino tests Ilitch Ilitch, who was born in 1933 to Macedonian immigrants, opened a takeout store with her husband in a Garden City strip mall in 1959. Ilitch thought of her husband as a Roman emperor, albeit a diminutive one, and Little Caesars was born. The original store sold 296 pizzas in its first week, according to Marianâ&#x20AC;&#x2122;s Ilitchâ&#x20AC;&#x2122;s handwritten record in a spiral notebook. She handled finances while her husband oversaw pizza-making and concocted ways to sell more pies. She started charging for pizzas after Mike, also a second-generation Macedonian, gave away dinners to the parlorâ&#x20AC;&#x2122;s first two customers. The couple had seven children while their pizza chain grew and they invested in local sports teams. Mike Ilitch owns Major League Baseballâ&#x20AC;&#x2122;s Detroit Tigers. Running a casino is much more â&#x20AC;&#x153;intense, competitiveâ&#x20AC;? than it seems and has tested everything she knows about entertainment, hospitality and finance, she said in a 2012 interview with Crainâ&#x20AC;&#x2122;s Detroit Business. Marian Ilitch borrowed through bonds and loans to buy the 75 percent stake in MotorCity in April 2005 she didnâ&#x20AC;&#x2122;t already own from Las Vegas-based Mandalay Resort Group and other investors. MotorCity opened the hotel in November 2007, adding to the 75,000square-foot casino.

â&#x20AC;&#x2DC;Hard to ignoreâ&#x20AC;&#x2122; MotorCity is producing positive free cash flow, according to Keith Foley, a Moodyâ&#x20AC;&#x2122;s analyst in New York. Thatâ&#x20AC;&#x2122;s money available to reinvest, pay down debt and reward shareholders with dividends and equity buybacks. The casino â&#x20AC;&#x153;will continue to generate positive free cash flow over the next two years that can be applied towards debt reduction,â&#x20AC;? Foley said in a July 22 rating report. MotorCityâ&#x20AC;&#x2122;s second-quarter EBITDA increased 4 percent to $29.8 million, according to a report from Deutsche Bank AG, which had forecast $29.2 million. â&#x20AC;&#x153;Marian Ilitch, a wealthy and prominent business person in the Detroit area, has on more than one occasion provided direct cash equity,â&#x20AC;? Foley said. Her support â&#x20AC;&#x153;is hard to ignore.â&#x20AC;?

PE firm acquires Rochester Hills-based MPI Products Rochester Hills-based MPI Products Holdings LLC has been acquired by Dallas-based private equity firm Wingate Partners LP. Terms of the deal were not disclosed. Certain MPI executives also gained shares in the deal, but the company declined to elaborate. Wingate acquired the fine-

blanked metal components supplier from New York City-based private equity firm Monomoy Capital Partners LP. MPI employs 20 at its corporate headquarters in Rochester Hills and 700 total across five plants in Wisconsin, Indiana, Tennessee and Mexico. It projects revenue of $175 million in 2014.

Wingate is expected to provide capital to MPI for expansion in new markets, Steven Crain, president and CEO of MPI, said in a release. Wingate also owns Port Huronbased paper manufacturer Dunn Paper Co., which it acquired in 2010. â&#x20AC;&#x201D; Dustin Walsh

20140804-NEWS--0005-NAT-CCI-CD_--

8/1/2014

5:48 PM

Page 1

August 4, 2014

CRAIN’S DETROIT BUSINESS

Page 5

RecoveryPark greenhouse grows expansion plan as well as produce BY DAVID HALL In a secluded parking lot behind an empty 70,000-square-foot industrial building off East Grand Boulevard near Weatherby Street is a 4,320-square-foot greenhouse that shelters two raised-bed gardens teeming with vegetables and herbs. These fresh greens are a small step toward RecoveryPark’s proposed large-scale urban farming development in Detroit, a 40-acre plan for an east side site. But with a pilot effort that kicked off earlier this summer, a few local restaurants are purchasing fresh produce grown at the greenhouse while the nonprofit negotiates a land purchase for the larger urban gardening plans. Bacco Ristorante in Southfield and The Root in White Lake have been serving vegetables grown by RecoveryPark since its first harvest in early June. Luciano DelSignore, chef and owner of Bacco, stocks RecoveryPark’s produce weekly. “The quality DelSignore of produce that’s ripened 20 miles down the road and served fresh the next day is a whole other world. It explodes with flavor,” DelSignore said. “I’d prefer to keep our money in our state as opposed to trying to source produce from big suppliers.” Along with high-quality produce, DelSignore said the nonprofit’s mission to create jobs for recovering adults inspired his support. The urban gardening project by RecoveryPark is an offshoot of the SHAR Foundation, and it aims to create jobs for clients of Detroit-based Self Help Addiction Rehabilitation Inc. Gary Wozniak, president of RecoveryPark, has been leading the project since its 2008 inception. And after six years of planning, the nonprofit made its first fulltime hire — 20-year organic farming veteran Michelle Lutz — to spearhead its first garden. Lutz began farming in 1994 when she co-founded the 80-acre Maple Creek Farm in the St. Clair County city of Yale. In 2011, she moved on to manage the hydroponic greenhouse at Henry Ford West Bloomfield Hospital until taking over as farm manager for RecoveryWozniak Park last April. Since then, Lutz has overseen the design and construction of the greenhouse and started growing 25 varieties of vegetables from its raised-bed gardens with the help of two part-time employees. Wozniak calls the garden a pilot project, made to gather interest from local restaurants and food producers while he negotiates with the city of Detroit, the Michigan Land Bank and the Detroit Land Bank Authority to purchase 40 acres on Detroit’s east side near Gratiot Avenue and I-94. Though the development is still in negotiations, Wozniak said, the

cilantro? Wozniak said it would take 5 Gary Wozniak tells acres of singlehis growth plans, crainsdetroit.com tier hydroponic greenhouses. /RecoveryPark But for now, there’s one greenhouse, which Wozniak said cost just under $20,000 and will draw about $1,200 in monthly revenue during its year-round operation. A property donation, private donations and grants are also part of RecoveryPark’s financial planning for the coming years. The nonprofit has been operating at a loss since its first tax filing in 2009. RecoveryPark’s latest tax filing for 2012 reported revenue of $125,000, an operating deficit of $110,641, and a net loss of $378,877. Wozniak said the 2013 filing isn’t complete, but estimates net assets to be roughly $300,000 in the green as a result of donations and grants. One of those donations was a 70,000-square-foot industrial building at 2600 East Grand Blvd., which Wozniak said has an appraised value of $405,000. The building, previously owned by Caramagno Foods Co., was donated to RecoveryPark in November 2013. Other sources of revenue for the organization include $25,000 in private donations, and a third installment of $250,000 of a $1 million grant from the Fred A. & Barbara M. Erb Family Foundation.

VIDEO

CRAIN’S DETROIT BUSINESS

DAVID HALL/CDB

RecoveryPark’s greenhouse off East Grand Boulevard is a pilot project designed to gain the interest of local restaurants and food producers as President Gary Wozniak negotiates to buy 40 acres on Detroit’s east side and expand the operation.

proposed asking price for the land is $100,000. Money isn’t a sticking point, but closing the deal is more time-consuming because of the multiple entities involved. Wozniak said he has interest from potential customers that supports building the infrastructure for the expanded garden; restaurants and food distributors have pledged more than $7 million in business once the land sale closes. Ferndale-based Garden Fresh

Gourmet, one of the largest salsa and tortilla chip producers, is among those interested in RecoveryPark’s produce. The company has 433 employees in Michigan and posted $110 million in revenue for 2013. Vice Chairman Dave Zilko said Garden Fresh manufactures 85 tons of salsa per day, which requires 4,000 pounds of cilantro daily. “We’ve told Gary if you can grow a million pounds of cilantro, we’ll take it,” Zilko said. “We pay

roughly $1 per pound of cilantro.” That’s a mountain of cilantro, but Wozniak said he believes RecoveryPark eventually can supply it. “We’re in the process of growing about 10 pounds of cilantro in our hydroponics test facility,” Wozniak said. “Garden Fresh is sending it to labs for quality testing, and we’ll see if we can maintain that quality over the next few months.” How much space would be needed to grow a million pounds of

20140804-NEWS--0006-NAT-CCI-CD_--

8/1/2014

3:45 PM

Page 1

Page 6

August 4, 2014

CRAIN’S DETROIT BUSINESS

YOUR VIP GAME DAY EXPERIENCE

PREMIUM CLUB MEMBERSHIP Access Rewards Beneﬁts

Penske moves into Spain with JV, seeks to grow with U.S. acquisitions BY JAMIE LAREAU CRAIN NEWS SERVICE

Fresh off the heels of a joint venture in Barcelona, Spain, Penske Automotive Group Inc. will continue to expand with acquisitions in the U.S. and elsewhere. “We want to expand globally where we have human capital and people to build these businesses,” Chairman Roger Penske told Automotive News. “We started that in the United Kingdom, expanded into Italy and now Spain.” Penske In early July, Bloomfield Hills-based Penske closed on a venture, to be owned half by Penske Automotive and half by Portugal’s Caetano Group, to take over “the entire BMW market for Barcelona,” Penske said. The venture will operate five BMW locations in Barcelona. The deal cost 25 million euros ($33.6 million), with Penske contributing half of that, Penske said. Spain is one of the five largest markets in Western Europe. Through June, 454,942 vehicles were sold there, up 18 percent from the year-earlier period, according to the Automotive News Data Center. “So it’s a 1 million-unit market today and growing at 15 to 16 percent a year,” Penske said. The company estimates it will realize an additional $200 million in annualized revenue this year from stores it has already added to its stable, whether through acquisitions or new stores in open points. Penske said he expects to add $500 million to $700 million in total annualized revenue in 2014, including deals already done.

BANKRUPTCIES

Visit detroitlions.com

Call 313-262-2222

The following businesses filed for protection in U.S. Bankruptcy Court in Detroit July 25-Aug. 1. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation. American and Import Auto Inc., 16737 E. 13 Mile Road, Fraser; voluntary Chapter 7. Assets: $10,000; liabilities: $164,852. Downriver Medicine Associates PLC, 46425 Southview Lane, Plymouth; voluntary Chapter 7. Assets: None; liabilities: $500,137.56. Greater Mount Tabor Nonprofit, 7345 W. Chicago Ave., Detroit; voluntary Chapter 7. Assets and liabilities not available. Koch Masonry Inc., 13384 Oak Ridge Lane, Chelsea; voluntary Chapter 7. Assets: $14,500; liabilities: $401,776.26. Mo Better Blues LLC, 78 W. Adams Ave., Detroit; voluntary Chapter 11. Assets and liabilities not available. Proper Building Services Inc., 18305 Pleasant Lake Road, Manchester; voluntary Chapter 11. Assets and liabilities not available. — Natalie Broda

“We have over $500 million in liquidity, so we have plenty of firepower,” he said. “The health of the pipeline is very good,” Penske said of the U.S. buy-sell market. He was speaking during a conference call following the release of the retailer’s second-quarter results. Net income rose 18 percent from the year-earlier quarter to $73.9 million as revenue jumped 21 percent to $4.41 billion. Penske sees many stores going on the market because family members do not want to make capital investments in them. The diversity and supply of dealerships for sale mean there is not a lot of competition with other public retail groups for the same properties. “Each of us has different markets we’re strong in, and so we would be focusing on stores where we can add value or have infrastructure in place,” Penske said.

“I can’t remember the last time I’ve been in competition with another public trying to buy a dealership.” Penske said he is looking at acquisitions in Australia to expand the company’s commercial vehicle business there. In the U.S., acquisitions have to be opportunistic in markets where Penske already has operations, he said, so as to allow the company to benefit from economies of scale. He said it is unlikely Penske will purchase a big dealership group. That would contrast with Lithia Motors Inc.’s proposed acquisition of DCH Auto Group Ltd. “With the framework agreements we have with the manufacturers on the luxury end, you’re limited with the number of stores you can have in a particular market,” he said. “So any big deals would be complicated.” From Automotive News

20140804-NEWS--0007-NAT-CCI-CD_--

8/1/2014

5:55 PM

Page 1

CRAIN’S DETROIT BUSINESS

August 4, 2014

Page 7

Schauer’s plan criticized for lack of details For months, Republicans have been dinging Democratic gubernatorial candidate Mark Schauer for not having a plan for what he would do as governor, so last week, he delivered one. It was a plan he promised would bring “tens of thousands of jobs” to Michigan. But before there was time to finish leafing through the glossy, 24page booklet, Republicans panned Schauer’s plan as “empty rhetoric,” as Emily Benavides, communications director for Gov. Rick Snyder’s reelection campaign put it. Chris Gautz The criticism in part centered on the lack of details in the plan. It includes at least two dozen proposals that call for increased spending or reduced taxes, with far fewer proposals that would generate additional revenue or cut spending to pay for his initiatives. Schauer wants to spend more on K-12 education, cut taxes for middle-class families, cut taxes for small businesses, fix the roads and increase the state’s clean energy standard to 30 percent by 2035. He also wants to reverse many of Snyder’s policies, including right to work, the tax on some pension income, the elimination of the $600 income tax deduction for each child and the rollback of the Homestead Property Tax credit. “This is the blueprint that Schauer we will use to restore the Michigan dream,” Schauer said. While the blueprint lays out what he wants to do, exactly how he would accomplish many of the proposals is lacking. On fixing the roads, Schauer said he wants to develop a bipartisan solution that requires businesses that received a tax cut under Snyder to “pay their fair share.” He doesn’t indicate how much is fair, but also said he does not want to increase the 6 percent corporate income tax, or the state’s gas tax. He said he wants to expand the state’s film incentive program, which now allocates $50 million a year to offset the cost of films, television shows, video games and other productions in the state. But he does not say how much he wants to expand it, or how he would pay for it. On education, which Schauer said is his top priority, he doesn’t say how much he would add to K-12 funding, but that he wants to conduct a study to determine the true cost of educating students in different grade levels. When asked where he would find the money to pay for these and some of his other proposals, Schauer’s answer often was to au-

dit state government and weed out unnecessary state spending. Political analysts have pointed out that many candidates in the past have said they want to root out wasteful spending in state government, but it does not end up producing the kind of savings candidates think it will. Schauer was specific on areas he thinks would spur job creation.

He said he wants to create an initiative inside the Michigan Economic Development Corp. to assist businesses looking to expand here and bring jobs from other states or countries. He also wants to establish an innovation hub that would bring together the research arm of the state’s universities and the state’s largest companies. Schauer also wants to expand microlending

Capitol B r i e fi ng s

to spur growth of high-tech companies and provide tax credits to small businesses. To be fair, when Snyder ran for governor, he was also not specific on everything he would do as governor, which Schauer and his supporters pointed out. And Snyder certainly didn’t campaign on changing the tax on some pensions, making Michigan a right-to-

work state or eliminating tax deductions middle-class families used to lower their tax burden like the $600 per child tax deduction. But Snyder ended up doing all of them and they are all points Schauer is campaigning on to reverse. Chris Gautz: (517) 403-4403, cgautz@crain.com. Twitter: @chrisgautz

Let the Giant Buy Your ADVISOR SPOTLIGHT CHRISTINA LOSIER Vice President of Employee Benefits

IT A$$ET$

Employers rely on Christina’s broad technical expertise and creative solutions in the group health and welfare benefits industry. She leads her clients through the evolving and increasingly complex task of providing benefits to employees. Her goal is to design and implement smart solutions that help her clients succeed.

535 Griswold Street, Suite 1600 • Detroit, MI 48226 • www.lovascogroup.com • 313.394.1700 A Member Firm of M Financial Group. LoVasco Consulting Group is Independently Owned and Operated.

E-waste recycling/data destruction/computer liquidation Call: 248-891-7330 or Email: info@R2Giant.com

Barbara Eckert Buchanan

In Your Corner.

Varnum is pleased to welcome Barbara Buchanan to the firm. Ŷ Represents employers in litigation involving all types of employment and labor claims. Ŷ Advises healthcare organizations in matters involving peer review activities, professional credentialing and discipline. Ŷ Counsels employers regarding employment policies, reductions in force and employment agreements.

First Tier Ranking in Labor Law – Management

Contact Barbara Buchanan at bebuchanan@varnumlaw.com

Ŷ Metro Detroit Ŷ Grand Rapids Ŷ Kalamazoo Ŷ Grand Haven Ŷ Lansing

20140804-NEWS--0008-NAT-CCI-CD_--

8/1/2014

5:45 PM

Page 1

Page 8

August 4, 2014

CRAIN’S DETROIT BUSINESS

OPINION

City needs limos as part of travel options T

he Michigan Legislature is considering Senate Bill 748 that would return regulation of limousine services to the city of Detroit, a power it lost when its population dropped below 750,000 in the last census. The bill passed the Senate in June and now awaits consideration in the House of Representatives. As Capitol Correspondent Chris Gautz reports on Page 3, that matters because the city previously has required limos to operate like taxis by purchasing a medallion from an existing owner. Because there are a finite number of medallions, passage of the bill could mean the disappearance almost overnight of limousine services and Uber, which has referral agreements with some limo operators. Arguments for the bill center on the public safety advantage city regulation could confer. But because one primary opponent is the Checker Cab Co., we have to think that the idea of limiting the competition also is appealing. One oddity in the debate is that Republican legislators have shown no interest in this issue in two previous attempts to change the law, and 17 GOP senators who voted for SB 748 also voted three years ago to prevent local units of government from regulating limousine services. Limo operators are attributing that change of heart to campaign donations made to the state Republican Party late last year by longtime donor and Checker Cab owner Tony Soave, but those fall in the category of suspicion rather than fact. A spokesman for Soave says it’s absolutely not true. Whatever the reason, the truth is that Detroit needs many transportation options, not just a few. SB 748 would reduce available options and make it even harder than it already is for out-of-town visitors and others to travel into the city. Detroit is on the cusp of many, many good things. Competition-killing regulation will not contribute to any of them.

PAs need training opportunities There are very few simple public policy issues, and health care supply-and-demand is certainly not one of them. As we report on Page 11, there is a large unmet demand for physician assistants, who can perform many tasks that doctors do and often end up in the underserved areas of primary care and family practice. The reason? Lack of clinical training rotations, in part because teaching hospitals have only so many teaching slots available and so trainee doctors and PAs are competing for them head-to-head. Broader use of PAs is considered to be one way to hold down health care costs. Perhaps incentives could be offered to make it easier for more training opportunities to be created.

MARY KRAMER Mayor, chief: A dynamic duo? Last month, Detroit’s mayor and police chief jointly announced a new plan to auction homes seized as drug houses. If police raid a house for a second time and find evidence of drug dealing, the building is seized. This move helps eliminate trouble spots in neighborhoods. And that is the advantage of having a former prosecutor as mayor. It is also the advantage of having a strong police chief. But Mayor Mike Duggan and Chief James Craig are in what might be described as a shotgun marriage. Craig was hired by, and reports to, Emergency Manager Kevyn Orr. Which leaves some wondering: What will happen when Orr leaves? For the sake of Detroit’s momentum, we all should hope that Duggan and Craig forge a strong partnership, and maybe the drug house program is a sign they are. Since becoming chief just a year ago, Craig has done some remarkable things. He ended the highly unpopular 12-hour shifts instituted by a predecessor, the first step in building morale in a depart-

ment that had seen four police chiefs since 2010. (Craig is the fifth.) Craig orchestrated high-profile raids in large apartment buildings, not so much as media hot-dogging as to send a message to residents — and crooks — that the police want to make neighborhoods safer. He increased the number of neighborhood police officers for each precinct to four. These are the go-to cops to whom block clubs and neighborhood leaders can turn, who carry cell phones and respond to text messages. More than 300 neighborhood leaders attended a community policing workshop, organized by the Detroit Police Foundation, one Saturday last month at the University of Detroit Mercy. We learned how to access crime stats in our own neighborhoods and how to be effective partners with the city’s police. In a city so burdened by crime, it was good to see residents so buoyed by what they see are tangible ways policing is making a difference in their lives. Craig is get-

ting them to trust police and anonymously share information that can help. Many of Craig’s moves are “Duggan-esque” in style. Duggan created a 29-minute emergency room guarantee as CEO of the Detroit Medical Center. He held weekly meetings with his team leaders looking at metrics and data and holding people accountable. Craig does the same thing with weekly CompStat data reviews to address hot spots in crime around the city. He holds people accountable and has shaken up leadership in the department. Duggan started office in January by reminding people in almost every public setting that the emergency manager — and not the mayor — controlled the police department. Those pronouncements have become less frequent. Maybe Duggan recognizes a good chief when he sees one. Mary Kramer is publisher of Crain's Detroit Business. Catch her take on business news at 6:10 a.m. Mondays on the Paul W. Smith show on WJR AM 760 and in her blog at www.crainsdetroit.com/kramer. E-mail her at mkramer@crain.com.

TALK ON THE WEB From www.crainsdetroit.com Re: Schauer lays out jobs plan What hollow rhetoric. No plan, no substance. Amazing how after eight years of near-bankrupt spending policies leading to brokenness and growing poverty, Gov. Snyder comes in and within months has a balanced budget and deficits eliminated. Tax and spend for the unions days are gone. Let’s keep it that way. Androcles II Reading this, I’m having deja vu all over again. Same old nonsensical promises that lost their impact a few elections ago. Promises to the special interests using the taxpayers’ dollars. Enough

Reader responses to stories and blogs that appeared on Crain’s website. Comments may be edited for length and clarity.

Re: Prop 1 backers spend $7M to win Vote “Yes” on proposal 1, so that Ford and Dow don’t have to pay taxes. Bork I used to pay this tax when I had my own business, and it was a pain. But there is nothing written to make up the shortfall to cities that need this, as the state has cut revenue sharing and continues to cut it. It will be passed to the taxpayers, and we are already picking up the tab to the latest $1.8 billion tax cut. “No” on 1. Grandslam

Re: Burnett signs DIA marketing deal Yet another reason the DIA should sell its collection now instead of wasting revenue on paying for this overkill ad campaign. 251018

Re: In shadow of planned Wings arena, small biz makes plans Mixed and diverse use is always better. There should be no attempt to try to buy out any of these businesses, from the mainstay bars to even the auto shop. The more uses in the neighborhood, the livelier and more sustainable and usable it will be at all hours. On a related note, the two old hotel buildings on Park need to stay and get reused. 269035

KEITH CRAIN: DMC Heart Hospital is a great beginning Last week, I was pleased to be able to get a tour of the new Heart Hospital at the Detroit Medical Center. It is a magnificent facility and one that all of us living in SoutheastMichigan can be very proud of. The DMC is now owned by Tenet Healthcare, one of the largest forprofit hospital operations in the country. But the hospital goes back to Mayor Mike Duggan, who, when he was CEO of the DMC, single-handedly — with the board’s approval, I might add — was able to persuade noted heart specialist Dr. Theodore

Schreiber to join the DMC, with the promise that there would be a specialized, state-of-theart facility there. Ten years later, that promise has been fulfilled. But for me, that’s just the first step. The DMC Heart Hospital should now be able to attract top-notch talent from all over the world. And with the Wayne State University medical school right next door, medical students should have the

opportunity to learn at the very best. This would seem to be a very competitive environment. But this time I don’t think we, Detroit, are competing with local hospitals but rather with places like Cleveland, Dallas or Rochester, Minn. The competition is from all over the nation, and now Detroit will be able to offer world-class medical care to patients who will no doubt come

from all over the world as well. Tenet seems to be striving to make the DMC into a legitimate national health care facility. It would seem obvious that the Karmanos Cancer Institute, which was a part of the DMC, should rejoin that institution. With a state-of-the-art, modern facility, Dr. Schreiber should be very busy recruiting staff to fill his heart hospital. Picking the right people from across the country and perhaps the world is almost a full-time job. Not unlike the football coach at Michigan or MSU.

He’s got a brand-spanking-new hospital with the latest gizmos that will keep your heart and mine healthy. Now they just need to have a list of doctors to match. It was a decade ago that Duggan and Dr. Schreiber set out on a goal of having a world-class heart facility. Even with the sale of the DMC twice, that goal was never changed. Even in a competitive health care environment in Southeast Michigan, we all can be proud of this new hospital within a hospital. It is just one more thing that Detroit has going for it today and tomorrow.

20140804-NEWS--0009-NAT-CCI-CD_--

8/1/2014

12:26 PM

Page 1

CRAIN’S DETROIT BUSINESS

August 4, 2014

Page 9

UM researcher takes on diseases and ‘Daily Show’ Last week was an interesting one, to say the least, for stem cell researcher Eva Feldman, M.D., director of the A. Alfred Taubman Medical Research Institute at the University of Michigan and director of the ALS clinic at the school’s health system. Between appointments, meetings and time in the lab, Feldman was making tweaks suggested by the National Institutes of Health on her $5 million grant Tom Henderson proposal for the organization to fund Phase 2b and Phase 3 human trials on patients with ALS, or Lou Gehrig’s disease. Feldman was also studying results of her group’s just-concluded first trial of stem cell injections in mice with Alzheimer’s disease, results that she says exceeded her expectations. If all goes well, this research could lead to approved treatments to improve cogniFeldman tive function of those suffering from the devastating disease. Wednesday night, Feldman was the star of a segment on “The Daily Show with Jon Stewart” — a segment that hilariously mocked one of the so-called stars of viral Internet content. On Thursday, the last of 15 operations on ALS patients in the Phase 2a part of the human trials — involving the injection of 8 million embryonic stem cells in the cervical region and another 8 million in the lumbar region — was performed at Emory University Hospital in Atlanta. Feldman hopes to begin the next part of the trials, which will involve 32 ALS patients, in January or February. Meanwhile, tests will continue of the 15 patients in the Phase 2a trial to determine how the injection of the stem cells slows down the progression of the disease. “So far, there appears to be a prominent signal in patients showing a progression in the disease,” she said. The first of the patients was operated on last October. Very serious stuff interrupted by the “Daily Show” segment that managed to segue between Feldman’s stem cell research and nonsensical comedy segment assertions by former Gawker blogger Neetzan Zimmerman about how important photos of breasts shot from the side are important to promoting stories. The segment included Feldman being interviewed by a reporter for UM’s student newspaper, The Michigan Daily, and concluded with a photo of her face Photoshopped on someone else’s side, um, breast. (The segment allowed for a homecoming of sorts for “Daily Show” correspondent Jordan Klepper, a native of Kalamazoo who graduated from Kalamazoo College.) “Never thought I would be on national TV in that pose,” Feldman said via email. “But it was pretty funny.” Six of the 15 Phase 2a operations were conducted at UM, three were

High

Te c h

at Harvard University and nine were at Emory. Emory and UM will be the main sites for the next 32 operations, with the NIH going to recommend one hospital on the West Coast and another on the East Coast. Feldman will need to raise matching funds of $2.5 million from philanthropies and foundations, but doesn’t expect that to be a problem. “So far, everything is encouraging. Do we know stem cells are the

answer? No. That’s why it’s called research,” said Feldman. Also encouraging? Data from the first round of injections of 50,000 stem cells into a line of mice that have inherited genes for Alzheimer’s disease. “Look at this data,” said Feldman, pointing to her computer screen. “I’m so geeked about this.” Two neurosurgeons on her team injected two groups of Alzheimer’s mice, one group with a saline solution to serve as a control, the other with the stem cells. Both those groups and a group of healthy mice were then put through three tests of cognition, including one

that required finding a platform hidden in a pool of water. Plots of performance show that the Alzheimer’s mice injected with cells performed the tests just as well as healthy mice. The Alzheimer’s mice injected with saline solution flunked the tests. “We’ve never seen data like this. It’s fabulous data that we’re just getting ready to publish,” said Feldman. “They’re as normal as normal mice. They’ve essentially gone back to normal. And the effect was durable for the four months we tested them. I mean, you can tell looking at the mice which ones got stem cells. The ones who got saline

solution just sat there in a cage. The stem cell mice are all running around.” So far, the work on mice is unfunded, but with that kind of data, Feldman isn’t concerned. “I’ll get it funded,” she said. First, though, she awaits word from the U.S. Food and Drug Administration about which large mammal to use on the next Alzheimer’s tests. “If everything goes well, in a year from now we can be talking about clinical trials on humans,” she said. This column originally appeared as a Tom Henderson blog at crainsdetroit.com

One More of Michigan’s Most Valuable Resources

GREAT leads. GREAT content. GREAT exposure.

Showcase your company’s advertising message next to your industry-speci c list. Lists sell out quickly, so reserve your position today.

Readers refer to it ALL YEAR

• Two-thirds of readers retain Crain’s Book of Lists for up to one year. • 95% reference it at least 4 times a year.

ISSUE DATE: Dec. 29, 2014 | CLOSE DATE: Oct. 31, 2014 For exclusive ad placement next to your industry list or client list, contact Marla Wise at mwise@crain.com or (313) 446-6032.

crainsdetroit.com

20140804-NEWS--0010-NAT-CCI-CD_--

8/1/2014

11:59 AM

Page 1

Page 10

August 4, 2014

CRAIN’S DETROIT BUSINESS

Medical group consolidates in Farmington Hills BY JAY GREENE CRAIN’S DETROIT BUSINESS

Millennium Medical Group, a multispecialty group practice with about 85 physicians, has consolidated 13 of its offices with 80 physicians into a 100,000-squarefoot medical hub in Farmington Hills. A division of 350-physician Michigan Healthcare Professionals, Millennium and several Michigan Healthcare specialists have moved into the two-story, 236,000square-foot Tri-Atria Building at 32255 Northwestern Highway. Millennium will maintain several other offices in Oakland and Wayne counties. Over the past several years, many physicians have been consolidating their practices either by selling to hospitals or banding together to form larger medical groups. Michigan Healthcare Professionals was formed in 2011 by the merger of four medical groups — Millennium, Oakland Medical Group, Comprehensive Medical Center and 21st Century Oncology. Oncologist Jeffrey Margolis, M.D., Michigan Healthcare’s president, said the consolidation of Millennium’s and other Michigan Healthcare physicians into a central office helps to reduce health care costs and increase quality by offering comprehensive and coordinated care to patients. Millenni-

COURTESY OF MILLENNIUM MEDICAL GROUP

Millennium Medical Group joins the trend of consolidation by combining 13 offices with 80 doctors into the Tri-Atria Building on Northwestern Highway.

um is run by President Geoffrey Trivax, M.D. Margolis said the Farmington Hills office could expand by adding another 30,000 square feet. He said other Michigan Healthcare offices in Clarkston and Rochester Hills are taking the same multispecialty approach. The practice also is looking at another centralized office in Madison Heights. “This is the future — clinical integration where you have all physicians working together as a team in the same location,” said Margolis. “It helps improve care.” For example, Margolis said one

of his primary care physician partners asked him to look at a patient who exhibited signs of a potential cancer. “He called me. I opened the door and saw that patient the same day. We are under the same roof. This is better care,” he said. In June, Wayne State University Physician Group, a Detroit-based nonprofit academic medical group, told Crain’s it plans to consolidate many of its Midtown physicians into a 153,000-squarefoot, five-story ambulatory center at 3750 Woodward Ave. The $53 million center is expected to open in 2016. The Wayne

State medical group, which includes more than 2,000 physicians, will also operate several other clinic buildings in Troy, Southfield and other locations in Southeast Michigan. Ken Lee, the medical group’s executive director and vice dean of business affairs for the Wayne State University School of Medicine, said the clinical practice consolidation also is expected to help the practice increase revenue by generating operating efficiencies and greater internal practice patient referrals. At Millennium’s new office, specialties will include internal medicine, cardiology, neurology, oncology, orthopedic surgery, physical medicine and rehabilitation, podiatry, psychiatry and urology. The medical office will have laboratory services, a diagnostic center offering magnetic resonance imaging, computed tomography, and nuclear and ultrasound imaging. The office will also house a women’s center with a breast surgeon, mammography and bone density screening services. Trivax said the new Millennium office has its own private patient entrance, complimentary valet parking, and staff to greet and guide patients to specialty departments. Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

wmich.edu/GoWest

GO WEST. PEOPLE COME HERE BECAUSE B THEY’RE LOOKING FOR SOMETHING. It’s not about packing up

the car and going to a d different town. For them it’s about discovery. What they find is a challenge— something unexpected—that opens up new frontiers. When you come here, you’ll find there are frontiers already inside you, just waiting to be found. Go West. Discover. Explore. This is one of America’s great universities. A lot of people who have become successful—skilled, happy, wealthy and influential—started by heading West. Western Michigan University. It’s your turn to GRAB THE REINS.

Roush, Inzi vow 271 jobs in return for state grants Livonia-based Roush Industries Inc. and Inzi Controls Detroit LLC will receive state assistance totaling more than $1.1 million to help create an expected 271 jobs in Southeast Michigan. The expansions were approved last week by the Michigan Strategic Fund. According to the Michigan Economic Development Corp., Roush plans to spend up to $8.7 million to expand space it leases in Allen Park as well as at multiple engineering and manufacturing sites in Livonia. It also plans to lease additional Livonia engineering space. Maureen Crowley, director of corporate communications for Roush, wrote in an email that the need for space is due to the company’s expansion into oil and gas and aerospace as well as the continued growth of its current products. Roush provides engineering, product development, prototyping, testing and manufacturing services to several industries and also manufactures automotive performance products and alternative fuel systems. It was awarded a $1 million performance-based grant on the pledge to create 210 jobs. Inzi Controls Detroit, a subsidiary of South Korea-based Inzi Controls Co. Ltd., plans to open a $4.1 million manufacturing plant in Rochester Hills. The company makes sensors and engineering plastics along with interior parts for several automakers. Inzi, which plans to create 61 jobs, was awarded a $150,000 performance-based grant. Rochester Hills is offering a property tax abatement valued at $102,000. — Crain’s Detroit Business

Michigan, Canada members named to bridge authority

Download the free Layar App Scan this p page g for interact inte interactive ractive ive cont conten content entt

Michigan and Canada have appointed members of an authority to oversee construction of the $2 billion New International Trade Crossing bridge between Detroit and Windsor. Michigan’s designees are: 䡲 Michael Hayes, president and CEO of the Midland Center for the Arts 䡲 Birgit Klohs, president of The Right Place Inc., a western Michigan economic development group 䡲 Matt Rizik, with Rock Ventures LLC Canada’s members: 䡲 Kristine Burr, assistant deputy minister of policy for Transport Canada 䡲 Genevieve Gagnon, who heads trucking company XTL Transport A third Canadian member will be chosen by the Windsor-Detroit Bridge Authority. The NITC is expected to open in 2020. — The Associated Press

20140804-NEWS--0011-NAT-CCI-CD_--

8/1/2014

10:22 AM

Page 1

CRAIN’S DETROIT BUSINESS

August 4, 2014

Page 11

REPORTER’S NOTEBOOK DIVERSITY ... AND OTHER DIVIDENDS

Chris Gautz covers business issues at the state Capitol and utilities. Call (517) 403-4403 or email cgautz@crain.com

International students help university bottom lines, worldview on campus, Page 13

Colleges and universities Chris Gautz

School budgets absorb impact of minimum wage On Sept. 1, the state’s minimum wage will rise to $8.15 an hour from $7.40. But it’s not just businesses that will pay more to employees. Some colleges and universities will feel hits to their budgets that in a few cases will cost several hundred thousand dollars, which they plan to absorb within the budgets of the departments that have student workers. And they don’t expect to reduce the hours students work or how many students they employ. “We find that student employment helps with retention of students,” Nate Hoekstra, a communications specialist for Grand Valley State University, wrote in an email. “It also provides students with work experience, and their efforts contribute greatly to the operation of the university.” Here’s how some colleges say the numbers will play out: At Grand Valley, about 1,300 students will get a raise when classes resume this fall, and it plans to hire even more students. The mandatory wage increase will cost the university about $430,000, Hoekstra said. At Michigan State University, about 7,300 of the 20,000 students working on campus will get a raise this fall, costing the university about $370,000. Central Michigan University employs almost 4,000 students, delivering a $691,000 hit to its budget. At Wayne State University, the increase in pay for the fewer than 600 student assistants will cost the university more than $107,000. The University of Michigan says it won’t be affected at all: It already pays its students more than the minimum wage, said Rick Fitzgerald, associate director of public affairs for UM. Not even in 2018, when the state’s minimum wage eventually hits $9.25 an hour. That’s because students on work study are paid $9.62 an hour, Fitzgerald said, and most departments pay their students who aren’t on work study between $9 and $10 an hour. Lawrence Technological University doesn’t employ anyone who makes the minimum wage, and Walsh College said it is not expecting the increase to have much effect at all.

ISTOCK PHOTO

When the state’s minimum wage rises to $8.15 an hour from $7.40 on Sept. 1, many colleges – which are businesses, after all – will have to adjust what they pay student employees.

LEISA THOMPSON

Why does Jay Peterson, who heads the physician assistant program at Eastern Michigan University, say “interest in the PA profession has exploded”? Upon launching in May, EMU’s program received more than 600 applications for 20 openings.

A practice takes practice BY GARY ANGLEBRANDT SPECIAL TO CRAIN’S DETROIT BUSINESS

all it the physician assistant’s paradox. Health care organizations want them and students want to be them, which seems to present the perfect picture for growth. But there’s a bump in the road of supply and demand when it comes to the PA profession, and industry professionals expect it to stay that way for some time. The reason? There aren’t enough places for PAs to get clinical rotations — essential on-the-job training required to become a medical professional. And because of the problem, universities are reluctant to either start new programs or expand existing ones. “It’s a tough dilemma,” said John McGinnity, who took over the McGinnity directorship of Wayne State University’s PA program in June and president of the American Academy of Physician Assistants in Alexandria, Va.

Lack of training slots limits the number of physician assistants, despite interest, demand Demand for efficient caregivers It’s a particularly frustrating problem for PAs and the medical profession in general, given the substantial cost savings PAs can deliver at a time when society is pushing for cuts in health care costs. Physician assistants can perform most of the same tasks as a doctor, as long as they’re under the direction of one, helping health care organizations save money as PAs earn about half the income of physicians. And PAs work across the spectrum of medical specialties. Strong areas include family practice, surgical specialties and continuous care, said Andrew Booth, director of physician assistant studies at Grand Valley State University. About 40 percent of the school’s PA

graduates go into priOW HIRING mary care or family practice. ELPING HANDS The U.S. Bureau of Physician assistant Labor Statistics pronumbers: jects the demand for Employment in 2012: 86,700 physician assistants Projected to increase by 38 peremployment in cent from 2012 to 2022: 120,000 2022, pushed upward Job openings due by an aging populato growth and replacement tion, a shortage of needs, 2012-22: doctors and an in48,900 crease in the number Median annual wage, 2013: of insured people un$92,970 der the Affordable Care Act. Not only is the high opportunity for employment luring people into the profession — PA students at the University of Detroit Mercy receive an average of five job offers before they graduate — but it’s also sweetened by the potential high wages: The median annual salary for physician assistants was $92,970 in 2013. That’s up from $86,410 in 2010, according to the BLS, and the figure climbs by about $2,000 every year.

N H

See Assistants, Page 12

20140804-NEWS--0012-NAT-CCI-CD_--

8/1/2014

10:40 AM

Page 1

Page 12

August 4, 2014

CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

Focus: Colleges and Universities

Assistants: Schools scramble to supply â&#x20AC;&#x2DC;physician extendersâ&#x20AC;&#x2122; â&#x2013; From Page 11

â&#x20AC;&#x2DC;Interest â&#x20AC;Ś has explodedâ&#x20AC;&#x2122; This has not gone unnoticed by prospective students. When Eastern Michigan University launched its program, it received more than 600 applications for the 20 spots available. Thatâ&#x20AC;&#x2122;s not unusual. The five other schools in Michigan all report receiving hundreds of applications every year for programs that have 40 or 50 openings. Grand Valley receives 350-450 applications for its program of 48 slots; Western Michigan University receives 700 for its 36 to 40 openings and has seen the number spike to as high as 1,200. The number of PA programs nationally has jumped from about 80 to 187 in the past decade, said Jay Peterson, director of Easternâ&#x20AC;&#x2122;s program, launched in May after the school spent $3.6 million on renovations to Rackham Hall, where the program is housed. â&#x20AC;&#x153;Interest in the PA profession has exploded,â&#x20AC;? he said. Some university programs have an â&#x20AC;&#x153;inâ&#x20AC;? at particular health systems. Beaumont Health System provides

slots for clinical rotations with many schools, including Wayne State and Western Michigan, and always has openings for what it calls â&#x20AC;&#x153;midlevel providers,â&#x20AC;? a category that includes nurse practitioners as well as physician assistants, said Linda Kruso, director of workforce planning. â&#x20AC;&#x153;Both are vital roles to rounding out the team to ensure weâ&#x20AC;&#x2122;re able to provide for care,â&#x20AC;? Kruso said. Beaumont has openings for 12 to 15 midlevel providers, a typical number at any given moment. An aging society pushes demand for physician assistants and nurse practitioners in two ways, Kruso said. Besides prompting more health care Kruso needs as people get older, it also leads to more doctors retiring. This is creating a big need in primary care as more doctors

Graduate School Our graduate programs change lives, starting with yours! Move up or move on in your career Earn more Advance your knowledge and skills Enjoy personalized instruction from expert professors Schedule your classes around work and family

BUSINESS t CRIMINAL JUSTICE EDUCATION t HEALTH SERVICES LEADERSHIP t HISTORY t HOSPICE NURSING t PASTORAL MINISTRY PSYCHOLOGY t TESOL

MADONNA UNIVERSITY GRADUATE SCHOOL 4DIPPMDSBGU 3PBE -JWPOJB .* t NBEPOOB FEV HSBE t HSBE!NBEPOOB FEV

wind down their practices while freshly minted doctors coming out of school gravitate toward betterpaying specialty practices. â&#x20AC;&#x153;Physician assistants and nurse practitioners are sometimes referred to as â&#x20AC;&#x2DC;physician extenders.â&#x20AC;&#x2122; They are a way of extending access to care through having teams,â&#x20AC;? Kruso said.

PHYSICIAN ASSISTANT PROGRAMS IN MICHIGAN Central Michigan University Number of open slots each year: 34 Usual number of applicants: 350-400 Year program was founded: 1998

Clinical bottleneck

Eastern Michigan University

Easternâ&#x20AC;&#x2122;s program brings Michiganâ&#x20AC;&#x2122;s PA program count to six. None of the other schools plans to increase their program size except for Grand Valley, which plans to add a 12-person program to its Traverse City regional center, with an expected opening in fall 2015. Although Grand Valley has increased the number of slots at its main program in Grand Rapids from 30 to 48 since 2007, it has no plans to further increase it. â&#x20AC;&#x153;The great limiting factor for any PA program is the availability of clinical rotation sites,â&#x20AC;? Booth said. That factor has kept Wayne State from increasing the number of students in its program, which is a perennial topic of discussion, said Stephanie Gilkey, who directed Wayne Stateâ&#x20AC;&#x2122;s PA program for 10 years until June. The school always is on the lookout for more hospitals and clinics to place students, but thatâ&#x20AC;&#x2122;s just to keep pace with its current number of students. Because health systems have only so much capacity to take on students, that means PA students end up competing for slots alongside medical students, said Amy Dereczyk, chair of the PA program at University of Detroit Dereczyk Mercy, who is under pressure from the schoolâ&#x20AC;&#x2122;s administration to increase enrollment. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;d love to increase enrollment. We probably could double it if we could prove we have enough clinical rotations,â&#x20AC;? Dereczyk said. Eastern knew it was jumping into an already crowded pool when it opened its program this year. EMU plans to increase its PA program size to 30 students next year and to top it out at 40 the next year, to make sure it doesnâ&#x20AC;&#x2122;t end up with more students than places to send them for their second-year rotations. The school also committed $1.1 million toward a new Advanced Medical Simulation Center (finished) and Human Anatomy Cadaver Laboratory (to be opened in May 2015) housed at the nearby St. Joseph Mercy Ann Arbor hospital. The lab and center are meant to give students an advantage when seeking rotations because theyâ&#x20AC;&#x2122;ll have more experience with lifelike situations. The Accreditation Review Commission on Education for the Physician Assistant Inc. in Johns Creek, Ga., is the accrediting body for university PA programs. There are 64 schools in the country that have applied or indicated they plan to apply for accreditation. No Michigan schools are on the list.

Number of open slots each year: 20 (set to increase to 30 next year and 40 in 2016) Usual number of applicants: 600 Year program was founded: 2014

Grand Valley State University Number of open slots each year: 48 Usual number of applicants: 350-450 Year program was founded: 1995

University of Detroit Mercy Number of open slots each year: 45 Usual number of applicants: 600-700 Year program was founded: 1972

Wayne State University Number of open slots each year: 50 Usual number of applicants: 400-500 Year program was founded: 1996

Western Michigan University Number of open slots each year: 36-40 Usual number of applicants: 700 Year program was founded: 1972 Source: Schools and Accreditation Review Commission on Education for the Physician Assistant Inc.

But competition is probably going to increase eventually since the trends pushing demand for PAs show no sign of letting up. Dereczyk expects more Michigan schools to seek accreditation sooner or later. â&#x20AC;&#x153;You always have rumors, but thereâ&#x20AC;&#x2122;s nothing in the pipeline. The reality is that universities are going to apply for PA programs,â&#x20AC;? Dereczyk said. She said Oakland University, which opened a medical school in 2011 and is affiliated with Beaumont, might see opportunity in such a program, and that itâ&#x20AC;&#x2122;s surprising University of Michigan, a school known for its medical program, doesnâ&#x20AC;&#x2122;t have one already. â&#x20AC;&#x153;They have a nurse practitioner program. Itâ&#x20AC;&#x2122;s curious they donâ&#x20AC;&#x2122;t have a physician assistant program,â&#x20AC;? Dereczyk said. The lack of clinical training slots has limited UMâ&#x20AC;&#x2122;s focus to training advance practice nurses and physicians, according to a statement from UM media relations. OU said it does not have a PA program in the works right now but that it could be something the school looks into in the future. â&#x20AC;&#x153;A feasibility study was done about adding a PA program and it indicated there was some concern over adequate clinical rotation space. Since then, developing a PA program has moved to the back burner,â&#x20AC;? said Brian Bierley, OUâ&#x20AC;&#x2122;s

director of media relations, in a statement. Dereczyk, who is on Easternâ&#x20AC;&#x2122;s PA advisory board, said sheâ&#x20AC;&#x2122;s not worried about the schoolâ&#x20AC;&#x2122;s new program worsening the clinical rotation situation in Michigan. Health systems tend to support local schools; Eastern has its place in Washtenaw County and UDM has its place in Wayne, she said. What she finds more frustrating is the lack of funding for PA programs despite the increasing demand for them. Medical student programs get federal funding support that PA programs do not, she said. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s demand for PAs and a projected physician shortage, yet thereâ&#x20AC;&#x2122;s not a real big push to educate us or train us. We could get out of the pipeline quicker,â&#x20AC;? Dereczyk said.

Federal funding pots Tony Miller, chief policy officer at the Physician Assistant Education Association, a lobbying organization on Alexandria, Va., said itâ&#x20AC;&#x2122;s a tricky situation. Health systems clearly want the PAs, as evidenced by the excess of job offers students receive. But they have a hard time making way for students because of the extra costs and also because medical students and others are all vying for slots, and theyâ&#x20AC;&#x2122;re all coming at the health systems in increasing numbers, too. The problem is new enough that PAEA is still looking into what exactly it thinks should be done to give students a hand. There is federal graduate medical education money that funds resident medical students. Conceivably, similar funding could support PA students, but given the budgetary mood in Washington these days, thatâ&#x20AC;&#x2122;s unlikely. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s no love in Congress to pay for any kind of education,â&#x20AC;? Miller said. Washington also does not like the idea of giving more money directly to health systems when they already receive Medicare funding, he said. â&#x20AC;&#x153;By my discussions with some officials at the federal government, thatâ&#x20AC;&#x2122;s not encouraged,â&#x20AC;? Miller said. Some schools pay stipends to health systems to defray training costs. The PAEA doesnâ&#x20AC;&#x2122;t see that as a sustainable option, though, because it feeds into tuition increases and then higher health care costs â&#x20AC;&#x201D; the very thing hiring a PA is supposed to help prevent. There is a pot of money at U.S. Department of Health and Human Services designated for PA training that, although beset by cutbacks, could be used in a way that avoids a direct handout to health systems or cause tuition spikes: Give it to students willing to travel to faraway rural areas that have shortages of health care professionals. Students who canâ&#x20AC;&#x2122;t find sites in metro Detroit could head to the Upper Peninsula to do their work, their travel and lodging costs defrayed by the financial support. â&#x20AC;&#x153;It helps to get more physician assistants to rural, underserved areas,â&#x20AC;? Miller said.

20140804-NEWS--0013-NAT-CCI-CD_--

8/1/2014

10:26 AM

Page 1

CRAIN’S DETROIT BUSINESS

August 4, 2014

Page 13

Focus: Colleges and Universities

7KH URDG WR WKH FRUQHU RIÀFH

Rise in international students boosts STARTS HERE. universities’ bottom line, diversity BY CHRIS GAUTZ CAPITOL CORRESPONDENT

The number of international students at Michigan’s universities has been rising steadily over the years, helping campus diversity and the universities’ bottom line in an era of declining state funding. A report by the Institute of International Education found there were 26,930 international students in Michigan last year, the ninth most of any state and up from 22,857 in 2008. Nationwide, there were more than 800,000 international students at American universities last year — a record high — and a 40 percent increase from a decade ago. Much of the growth in Michigan has been attributed to recruitment efforts aimed at specific countries, word of mouth and a little luck. Juan Tavares, director of international admissions and services at Western Michigan University, said WMU specifically targets countries such as Saudi Arabia, the Dominican Republic, Brazil and Iraq because the governments of those countries pay the tuition of their students. There are more than 400 students from Saudi Arabia at Western, the largest country of origin represented on campus, and it expects to have about 80 students from Iraq this fall. Western and other universities also target China, India and Iran, Tavares said, because of the large population of college-age students who come from families with the financial resources to send their children abroad to study. The efforts have paid off for WMU, ramping up its international student population from 1,114 in 2008 to 1,688, last fall. The goal is to hit 2,000 by 2015. The reason Western is growing its number of international students, Tavares said, is because one of the pillars of its strategic plan is to have a more globally engaged campus. Another reason for Western and other schools is, of course, financial. “Funding is really critical for any

KENNY CORBIN

Besides the tuition revenue that comes from international students, Ahmad Ezzeddine, a Wayne State University associate vice president, points to the diversity they bring to a campus.

A business degree from plus — “they Wayne State University bring some tuition revenue” — does more than Enrollment numbers at Michigan’s largest universities: but he also cited a provide an academic 2008 2013 richness of diverInternational Total International Total foundation for success sity they bring to MSU 4,602 46,648 7,342 49,343 a campus. — it helps open doors. Geography UM 4,990 41,028 6,059 43,710 Our graduates join a WSU 1,983 31,025 1,877 27,897 also plays a part strong network of more in Wayne State’s GVSU 283 23,892 378 24,477 number of interthan 31,000 successful WMU 1,114 24,818 1,688 24,294 national stualumni across Metro CMU 528 20,246 748 19,634 dents, he said. It EMU 227 17,213 417 19,084 had 576 CanadiDetroit and worldwide. Sources: Crain’s research and Institute of International Education an students last Whether you’re landing fall. that ﬁrst job or making university. We are not supported by While universities recruit from a your way to the the state as much as we used to be,” variety of different countries, Chihe said. “It’s bringing in a source of na is the most popular. Statewide, executive suite, there’s revenue that is significant and valu- 34 percent of all international stulikely a Wayne State Sandy Pierce, BA ’80 MBA ’87 able to the university.” dents come from China; nationalum nearby, ready Michael Boulus, executive di- wide, it is 29 percent, according to Vice Chairman, FirstMerit Corporation rector of the Lansing-based Presi- the international education report. to help. Chairman and CEO, dents Council, State Universities of MSU is one of the schools targetFirstMerit Bank Michigan Michigan, agrees on both points: ing China. In 2005, it had 43 under“The number-one benefit is the grads from China; last fall, there cultural benefit. But I won’t deny were 3,487. The reasons behind the they come with a full price tag.” growth range from the rise of the Most universities charge higher Chinese middle class who can now tuition to international students, afford to send their children whether they are charged the same abroad, liberalized visa policies higher rate out-of-state students and the lack of capacity for higher School of Business Administration pay, or a separate higher rate just education, said Peter Briggs, direcbusiness.wayne.edu for international students. tor in the office for international At Wayne State University, for ex- students and scholars at MSU. AIM HIGHER ample, tuition and fees for out-ofChris Gautz: (517) 403-4403, state and international students is cgautz@crain.com. Twitter: about $25,000 annually (depending @chrisgautz on the program) and $11,700 for instate freshmen students. At Michigan State University, tuition and fees for an in-state freshman is estimated at $13,252. For an international student, the cost is $36,018. While schools such as the University of Michigan and MSU don’t have much trouble attracting internaglobal competition, new technologies, and tional students — “We have a global reputation, so it’s not too difficult corporate streamlining require innovative for students to find us,” said James Holloway, vice provost for global thinking and leaderships abilities. and engaged education at UM — Continuing your education can be key to schools like Western have to make a strong pitch. your success. From embedded software Tavares said governments of foreign countries look at rankings engineering and psychology to computer of American colleges, like those from U.S. News & World Report, science and business administration, when making decisions about how many students they will sponsor to Lawrence Technological University attend a particular university. To make the case to these counoffers innovative degrees and fast-track tries, as well as the students, Tavares said he points to the smallcertificate programs to prepare you for er size of the university as a major selling point, compared to larger the jobs of the future. schools, such as MSU and UM. “You will be able to get to know your professors,” he said. “We don’t have huge classrooms.” Explore over 100 undergraduate, And, he said, the cost to attend master’s, and doctoral programs in Western is less than some of the Colleges of Architecture and Design, larger schools in the state and of Arts and Sciences, Engineering, those at the top of those lists. At and Management. WMU, international students pay out-of-state tuition and fees that 2014 2014 2014 this year will be $24,026, compared GREEN BEST COLLEGES AMERICA’S BEST to $36,017 for international stuCOLLEGE in the Midwest UNIVERSITIES Princeton Princeton U.S. News & dents at MSU. Review® Review® World Report® Ahmad Ezzeddine, associate vice Lawrence Technological University | 21000 West Ten Mile Road, Southfield, MI 48075-1058 president for educational outreach 800.225.5588 | admissions@ltu.edu | www.ltu.edu and international programs at Wayne State, agreed that the higher fees for an international student is a

INTERNATIONAL STUDENT ENROLLMENT

Possible is everything. Today, more than ever,

20140804-NEWS--0014-NAT-CCI-CD_--

8/1/2014

10:26 AM

Page 1

Page 14

August 4, 2014

CRAIN’S DETROIT BUSINESS

Focus: Colleges and Universities

Madonna’s new biz dean plans center to support local firms its programs, enrollment Cleamon Moorer Jr. was and mission. appointed dean of Madonna We have a little over 900 University’s School of Busistudents: domestic, interness in Livonia this sumnational and online. We mer. Previously he was an are going through a curassociate professor of manriculum change for the agement at his alma mater, undergraduate program Kettering University in Flint, where we will have four He holds two master’s debusiness majors with five grees from Benedictine Uniconcentrations. We’ll be versity and a doctorate from offering a bachelor of sciArgosy University, both in ence in business adminisIllinois. tration, accounting, hosMoorer was director of the Small Business Insti- Cleamon Moorer Jr., pitality management and tute at Trinity Christian Col- Madonna University in management information systems. Under the lege in Palos Heights, Ill., from 2008 to 2009. He is on the board B.A. degree program are concentrations in international business and of GEI Global Energy Corp. in Flint. Moorer, 37, spoke with Crain’s HR, health care management, marketing and merchandising managereporter Kirk Pinho. ment. Our goal is for each student Describe the business school and pursuing a concentration to have,

Q&A

as a core requirement, an internship with a business. We also have five graduate programs, and we allow students to do double master’s degrees. What new initiatives do you plan? We are developing the Center for Business Development and Community Vitality. It will support local small- to midsize enterprises as well as individuals that have entrepreneurial endeavors. The pillars of our center are education, engagement and entrepreneurship. It will host community events, such as guest lectures, and have panel discussions. We will do consulting and advising with local businesses, academic research as related to business development and community vitality. And in the immediate future, we

are going to develop our own peerreviewed journal called The International Journal of Business Development and Community Vitality. We’ll invite papers, and that’s going to lead to a conference in 2016. The center will also help students with internships and co-op opportunities and give us an opportunity to engage in partnerships with organizations like the Southeast Michigan Council of Governments and the Michigan Minority Supplier Development Council. What are your top goals for your first year on the job? The center is at the top. I’m also developing our Business Advisory Board and Student and Stakeholder Advisory Council. The board is looking at C-suite-level managers and upper-level managers across a number of industries for a team of about 10 to 15 who will meet quarterly to discuss trends in their industries and the preparation of our students. The council will have current students, alumni and representatives from the nonbusiness com-

munity to help us make sure we are moving in the right direction of fulfilling our vision and meeting the needs of various groups. Tell us about your business experience. I grew up in Detroit. My parents owned a collision shop on Livernois between 1977 and 2000 called C&M Collision, and as a kid I worked there. I started helping with accounting and marketing and some of the operations. From there, I worked at General Motors as an engineering intern. I got interested in information systems while at GM, and so I then went to work at Ameritech in Detroit and then Chicago. I was a global service executive while at AT&T. My clients were Merrill Lynch, Zurich North America, and I worked on the Boeing Co. transition of their headquarters from Seattle to Chicago. That’s where I got my love for consulting and training and development. I think it was born when I was doing the service executive work.

SHAPING A RESURGENT CITY AND STATE.

WE’RE SHAPING THE FUTURE OF BUSINESS IN MICHIGAN. Our award-winning programs and innovative research in cutting-edge fields help students make an impact and allow our corporate partners to thrive. Together, our talented faculty, students and alumni make University of Michigan-Dearborn a leader in business education.

Grand Valley State University is developing the talent and resources to help re-energize Detroit and Michigan. Our Detroit Center at Madison and John R supports the services Grand Valley provides in metro Detroit. In addition, our College of Education offers in-service training and graduate degree classes to teachers employed in the charter schools authorized by Grand Valley. Our charter schools staff provides advice and oversight to charter school boards and staff -- the kind of help that places Grand Valley charter schools among the state’s top performers. And, our small business and technology development service helps new and existing small businesses to succeed, creating jobs and economic stability in Detroit and everywhere in Michigan. Visit online or call (800) 748-0246 to learn more about the innovation and creativity that is Grand Valley State University.

Learn more at cob.umd.umich.edu. Grand Valley’s Detroit Center

20140804-NEWS--0015-NAT-CCI-CD_--

August 4, 2014

8/1/2014

10:27 AM

Page 1

CRAIN’S DETROIT BUSINESS

Page 15

Focus: Colleges and Universities

Goals for new Wayne State biz dean: Help revive the city, study the world Bob Forsythe officially things off until January, began as dean of the but I plan to talk with a Wayne State University lot of people this fall so School of Business Adwe can have these things ministration on July 21. for January. Our first seHe was appointed in June mester (at South Florida), to oversee the school, we had eight to 10 prowhich has about 2,400 unjects. And by the time I dergraduate and 700 gradstepped down as dean, we uate students. had about 130. Forsythe had been a That works not only professor of finance at the with helping existing University of South Florida businesses in the city, but and was business school the economic developBob Forsythe, dean from 2006-2012. He ment commission would Wayne State also was Leonard A. also have us come down University Hadley Chair in Leaderand talk to companies that ship and senior associate they were trying to get to dean at the Tippie College of Busi- expand or relocate to the city. It’s ness at the University of Iowa for 12 win-win-win because the compayears and is a co-founder of the Iowa nies get something out of it, and the Electronic Markets, a futures market students and faculty get some realfor online trading in contracts on world experience. It was not unpolitical and economic events. common that at the end of presentaForsythe, 64, holds a doctorate in tions, there are lots of business economics and a master’s degree in cards passed out. It’s not quite as economics and statistics from good as a three-month internship, Carnegie Mellon University in Pitts- but it’s almost as good. burgh and a bachelor’s degree in What do you see as the future of quantitative business analysis business education at Wayne State from Pennsylvania State University. Forsythe, who succeeds interim University? I was intrigued by this job, given Dean Margaret Williams, spoke with Crain’s reporter Kirk Pinho what’s happening in the city. Wayne about his goals for the Wayne State, to me, was one of the most atState business program, upcoming tractive positions in the country, beinitiatives and getting the busi- cause if we can get involved in reviness school more involved in De- talizing Detroit, what a great thing for our students and faculty. troit economic development. What’s business education goWhat are your first orders of busi- ing to look like? I think we have to ness as the new dean? learn as we go because the tradiThere are a couple things I’m try- tional academic education, where ing to work on pretty quickly. One we deliver the courses over a 15- to is getting the school much more in- 16-week period, that goes back to volved in economic development in the days of the monastery. That’s the city. The university certainly going to change, and that’s going has been involved. But as a school to change a lot. we’ve only been tangentially so, I think there are certain courses and it’s something we need to be that lend themselves to being delivright smack-dab in the middle of. ered well in a shorter period of time, The easy part of that is that we perhaps but not necessarily online. are producing tomorrow’s work- At South Florida, we were deliverforce, but that’s something we’ve ing a full three-credit course all day, been doing for years and years. I every day over the course of a week. don’t want to downplay that. But We had some other courses delivthe other thing I plan on doing, ered over a four-week period on two which I did quite a bit of at the Uni- nights and a Saturday morning. versity of South Florida, is meeting What are among your biggest chalwith area business leaders. Once I get to know them, the typical con- lenges in the first year on the job? I haven’t run into any yet. The facversation that I have with them ulty here, at least the members I’ve goes something like the following: “I suspect there are probably at met with, seem eager to participate. We are going to be talking with a least 15 to 20 ideas you may be thinking about that you really would like person about potentially taking to work on, but realistically, you the last two years of our undermight not get time to work on them. graduate program international. There is a former community So let’s pick a few of them, put them into the context of some of our cours- college, now called Broward College, es, then I’ll go talk with our faculty in Florida. Broward has been offerand try to identify a faculty member ing a two-year associate degree in who will work on this project with a approximately 12 locations around the world. We partnered with team of really good students. “(In this project) as a business them (at USF). They go in and offer leader, your obligation is to have the first two years, and we offer someone come out at the begin- the last two. We had a partnership ning of the course and familiarize with them in Lima, Peru. I’m talking to my former partner the students with it and provide someone that the student can call at Broward, and we are going to or email with questions. You come start exploring locations where we out with your administrative team can take the Wayne State program. That’s an exciting opportunity and critique.” I don’t expect to kick these because in all cases, Broward lo-

Q&A

cates at a school that is a bilingual university — and especially in Asia and South America, the students at a bilingual university come from families with some resources. It just correlates. We would go down and recruit 25 to 30 students per year and provide them with the rest of their undergraduate education, so typically a student would come out with a two-year degree from Broward, a four-year degree from Wayne and then a four-year degree from whatever (international) institution. I think probably in the next few months, as we get this going, you’ll be hearing an announcement from us that we’ve decided to locate our junior/senior year experience in “Fill in the Blank.” Describe the outreach you’ve made so far with the business community? My first day at work, I spent all day hosting a golf tournament. That’s a nice way to start a job. On July 23, I was at the chairman’s dinner of the Detroit Economic Club. At the DEC the other night, I was fortunate enough to sit next to Detroit Regional Chamber President and CEO Sandy Baruah. After Labor Day, I’m going to spend some time talking a little more with him about how the school can work with the chamber.

NOMINATIONS SOUGHT FOR NONPROFIT CONTEST This year’s Crain’s Best-Managed Nonprofit Contest is focused on good management practices. Applicants are asked to give examples of how they deploy their mission and resources, among other information. Applications are due Aug. 25. Judges will interview finalists in person the morning of Nov. 11. Applicants must be a 501(c)(3) with headquarters in Wayne, Washtenaw, Oakland, Macomb or Livingston counties. Applications must include an entry form, a copy of the organization’s code of ethics, a copy of the most recent audited financial statement and a copy of the most recent IRS 990 form. Previous first-place winners are ineligible, as are hospitals, HMOs, medical clinics, business and professional organizations, schools, churches or foundations. Winners will be profiled in the Dec. 1 issue, receive a “bestmanaged” logo from Crain’s for use in promotional material and be recognized at the Crain’s Newsmaker of the Year lunch early next year. For an application form, please email YahNica Crawford at ycrawford@crain.com or visit www.crainsdetroit.com/nonprofit contest. For information about the contest itself, email Executive Editor Cindy Goodaker at cgoodaker@crain.com or call (313) 446-0460.

TEXTBOOK LEADERSHIP ISN’T JUST LEARNED FROM TEXTBOOKS. Getting a master’s in business or organizational leadership administration isn’t just about the lessons you learn. It’s about the values you take away. Concordia University Ann Arbor’s Christ-centered education develops the kind of leaders businesses need now more than ever. With ﬂexible scheduling, online courses and multiple locations, CUAA makes growing those skills easier than ever before.

degree.cuaa.edu

20140804-NEWS--0016-NAT-CCI-CD_--

8/1/2014

10:28 AM

Page 1

Page 16

PEOPLE CONSTRUCTION general manager of virtual design and construction and head of

Secure-24 LLC, Southfield, a provider of cloud computing and managed hosting, has named Scott McIsaac and Sean Donaldson its first chief technology officers. Both have been with Secure-24 since 2004. Donaldson, 33, most recently was chief McIsaac infrastructure architect, and McIsaac, 32, was principal architect and director of technical services. The pair will lead Secure24’s new interdisciplinary Donaldson Technology Advisory Council, focused on the technological alignment between internal teams, communication and transparency between sales and operations, and finding efficiencies to improve cost savings and performance. McIsaac earned a bachelor’s degree in telecommunications from Michigan State University. Donaldson’s post-secondary education is primarily self-taught.

Walbridge Technologies LLC, Detroit, from chief technology officer and president, LTC Technologies, Chicago.

FINANCE Lisa White to shareholder, Tax Point Advisors Inc., Ann Arbor. She retains her title as managing director.

HEALTH CARE

O’Connell

BUSINESS DIARY

IN THE SPOTLIGHT

John Jurewicz to

Jurewicz

Jeffcoat

Rick O’Connell to executive vice president, East Group, CHE Trinity Health, Livonia, from executive vice president, West/Midwest Group. Also, Sally Jeffcoat to executive vice president, West/Midwest Group, from president and CEO, St. Alphonsus Health System, Boise, Idaho.

INFORMATION TECHNOLOGY Chakravarti Desikan to manag-

Paroly

ACQUISITIONS & MERGERS Altair Engineering Inc., Troy, announced its plan to acquire Visual Solutions Inc., Westford, Mass., makers of VisSim, a visual language for mathematical modeling, simulation and model-based embedded system development used by scientists and engineers. Websites: altair.com, vissim.com. Carbon Media Group LLC, Bingham Farms, a producer of digital content for outdoor enthusiasts, announced the acquisition of 36 digital properties from Group Builder Inc., San Marcos, Texas, including Homesteading Today (homesteadingtoday.com), the largest website in the acquisition. Website: carbonmedia.com.

CALL FOR NOMINATIONS The Association of Fundraising Professionals Greater Detroit Chapter is calling on local nonprofits to submit their organizations’ volunteers to be recognized at the National Philanthropy Day Dinner on Nov. 12 at Cobo Center, Detroit. The event is presented by Crain’s Detroit Business. Deadline for recognition forms is Sept. 8 at afpdet.org. For more information, call Rachel

MANUFACTURING Matthew Paroly to

Hietbrink

chief legal officer and company secretary, TI Automotive LLC, Auburn Hills, from senior vice president, legal officer, Nexteer Automotive Corp., Saginaw.

Mike Hietbrink to general manager and sales director, Kiekert AG, Wixom, from vice general manager. Bill Wardle to vice president of global sales and marketing, Maxion Wheels, Novi, from global vice president of sales and marketing, exteriors, interiors and sealing division, Magna International Inc., Troy.

Wardle

THE MILLER LAW FIRM Changing the Odds in our Clients’ Favor

WEDNESDAY

Automotive Supplier Counseling

Employment litigation

Commercial and business lawsuits Shareholder and partnership disputes Referral fees honored on contingency fee cases

950 West University Drive, Suite 300 Rochester, Michigan 48307

248-841-2200

millerlawpc.com

CONTRACTS I-9

Advantage,

Eastpointe, a provider of cloud-based software, announced that Kelly Services Inc., Troy, has implemented its I-9 Remote software to 4,933 locations and 2,405 users nationally. I-9 Remote streamlines remote hiring for the employment eligibility verification form. Websites: i9advantage.com, kellyser vices.com. Front Street PR, West Bloomfield Township, an online website design and digital marketing agency, launched a new website for client Michigan College Connect, Birmingham. Websites: micollege connect.com, frontstreetpr.com .

EXPANSIONS Great Lakes Psychology Group, Clarkston, opened an office at 42450 Garfield Road, Suite A, Clinton Township. Website: greatlakes psychologygroup.com.

MOVES Faurecia North America Inc. has con-

AUG. 6

WOMEN ON CORPORATE

Selling Smart Workshop. 9-11 a.m.

BOARDS SHARE WISDOM

UPCOMING EVENTS Women Run the City. 5:30-7:30 p.m. Aug. 13. Commercial Real Estate Women Detroit. Meet some of the women who run Detroit and learn about initiatives the city is promoting to build infrastructure, attract economic development and increase the quality of life for residents. Invitees include representatives of the Detroit City Council, Mayor Mike Duggan’s office, Detroit Land Bank Authority, Detroit Public Lighting Authority and Detroit Economic Growth Corp. Open only to members and their sponsored guests. Scarab Club, Detroit. $50 member or sponsored guest. Register online by Aug. 6. Contact: Nicole Franzen, (248) 2330107; email: crewdetroit@crewnet work.org; website: crewdetroit.org.

AIAG Conflict Minerals Industry Briefing III. 8:30 a.m.-4 p.m. Aug. 14. Hear

The Miller Law Firm is Recognized as a Leader in Complex Business Litigation

Schultz, (248) 579-5004, or email rachel.schultz@afpdet.org.

solidated its operations into its new North American headquarters and Seating Technical Center, 2800 High Meadow Circle, Auburn Hills. Website: faurecia.com.

NEW PRODUCTS Freudenberg-NOK Sealing Technologies, Plymouth, has developed a high-performance rod seal, HDR-2C, for extreme conditions. Website: fnst.com.

NEW SERVICES Rose Hill Center, Holly, a residential psychiatric rehabilitation facility for adults with severe mental illness, launched its Co-Occurring Rehabilitation Program for individuals with mental illness and drug or alcohol addiction. Telephone: (248) 634-5530. Website: rosehillcenter.org.

STARTUPS My Friend the Doctor, a medical navigation service for patients and families, was launched by Alan Weder, M.D., a retired internal-medicine specialist, 2030 Hill St., Ann Arbor. Telephone: (734) 474-3999. Website: mftdoctor.com.

CALENDAR Ann Arbor Spark. Learn how to close more service contracts by following a systematic approach and adapting it to fit a current business model. Geared toward entrepreneurs. Spark Central, Ann Arbor. Free. Contact: (734) 761-9317; email: alissa@ annarborusa.org; website: annar borusa.org.

ing partner, consulting services, Marvel Technologies Inc., Novi, from SAP practice manager, Infosys Technologies Ltd., Southfield.

Desikan

August 4, 2014

CRAIN’S DETROIT BUSINESS

an overview of Conflict Minerals Reporting Year 1 and information on the year ahead. The 8:30-11 a.m. session will be repeated 1-4 p.m. Automotive Industry Action Group, Southfield. $25 AIAG members, $125 nonmembers. Contact: Shannon Osburn, (248) 213-4642; email: sos burn@aiag.org; website: aiag.org.

Leadership Oakland Breakfast — The Road to Reinvention. 7:30-9 a.m. Aug. 26. With Josh Linkner, CEO, Detroit Venture Partners, on his latest book, The Road to Reinvention, MSU Management Education Center, Troy. $36. Contact: Susan Williams, (248) 952-6880, ext. 3; email: swilliams@leadershipoakland.com; website: leadershipoakland.com.

Learn from current corporate board members how to prepare for a paid board position at the Women on Board Cruise hosted by the National Association of Women Business Owners Greater Detroit. The event is 6-9:30 p.m. Aug. 7 on the Ovation Yacht at the new Detroit Port Authority dock, Detroit. Speakers include Tonya Allen, president and CEO of the Skillman Foundation; Billie Dragoo, national NAWBO president; Sue Carnell, member of the board of the Center for Exceptional Families, Oakwood Hospital & Medical Center, and superintendent, Westwood Community Schools; and Jennette Smith, managing editor, Crain’s Detroit Business. Tickets are $100 for NAWBO members, $125 for nonmembers. For ticket information, call (734) 591-7230, or visit the website nawbogdc.org. Toast + Tech Talk Session 2: Surefire Ways to Attract, Retain and Motivate Talent. 7:30-10 a.m. Aug. 26. Plante Moran LLC, Automation Alley. Second in a four-part series on topics related to the technology industry, focused on helping growing companies develop the framework and tools necessary to continue to compete and find success. Free. Detroit Athletic Club, Detroit. Contact: Dan Artman, (248) 223-3469; email: dan.artman@plantemoran.com; website: plantemoran.com.

Networking Reception with Mayor Mike Duggan. 5:30-p.m. Aug. 26. Detroit Regional Chamber. After Detroit Mayor Mike Duggan issues brief remarks, network with him and key staff members. Max M. Fisher Music Center, Detroit. $10 chamber members, $590 nonmembers (the cost of a membership). Contact: Marianne Alabastro, (313) 596-0479; email: malabast@detroitchamber.com; website: detroitregionalchamber.com.

Automation Works. 2-5 p.m. Sept. 6. Uplift Inc. Career exploration parent workshop and employee recruiting event designed to expose high school students and their parents to a fully functioning automated factory and advanced manufacturing jobs that require training beyond high school but no bachelor’s degree. Families will generate points toward prizes as they participate in invention/technology/robotic exhibits. Comau Innovation Campus, Southfield. Free. Contact: (877) 429-2370; website: up liftinc.org/automationworkz.aspx. 5th Summit on the Future of the Connected Vehicle. 7:30 a.m.-6 p.m. Sept. 11. Connected Vehicle Trade Association, Michigan Department of Transportation. Participants will include automakers; tier-one and two suppliers; hardware, software, services and communications companies; insurers; and state and federal government officials. Cobo Center, Detroit. $300 government representatives, $400 speakers and CVTA members, $500 nonmembers; all prices increase $100 after Aug. 14. $100 extra to attend Intelligent Transport System World Congress Expo and Demos, Sept. 10. Contact: Scott McCormick, (734) 730-8665; email: sjm@connectedvehicle.org; website: connectedvehicle.org.

CALENDAR GUIDELINES If you want to ensure listing online and be considered for print publication in Crain’s Detroit Business, please use the online calendar listings section of www.crainsdetroit.com. Here’s how to submit your events: From the Crain’s home page, click “Events” in the red bar near the top of the page. Then, click “Submit Your Events” from the drop-down menu that will appear, and you’ll be taken to our online submission form. Fill out the form as instructed, and then click the “Submit event” button at the bottom of the page. That’s all there is to it. More Calendar items can be found on the Web at www.crainsdetroit.com.

20140804-NEWS--0017-NAT-CCI-CD_--

8/1/2014

6:20 PM

Page 1

CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

August 4, 2014

Page 17

At Downtown Detroit Partnership, acting CEO is real thing BY AMY HAIMERL CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

Eric Larson is now officially the acting CEO of the Downtown Detroit Partnership. Larson has been helping steer the group since Dave Blaskiewicz announced in May that he was stepping down to focus on Invest Detroit, which provides gap financing for economic development in the city. Larson previously told Crainâ&#x20AC;&#x2122;s that he had no interest in becoming the permanent CEO of DDP, a 501(c)(3) nonprofit with a mission of revitalizing downtown Detroit. The email announcing his appointment called him both CEO and acting CEO. The acting title, he said, â&#x20AC;&#x153;isnâ&#x20AC;&#x2122;t an

indication of level of interest or commitment. It is an indication that all of us who seem to be engaged in meaningful ways in Detroit have lots of different activities we are tryLarson ing to balance.â&#x20AC;? In fact, there is no longer a search for a permanent CEO, he said. â&#x20AC;&#x153;Ericâ&#x20AC;&#x2122;s support has been invaluable, lending his institutional knowledge of the DDP and downtown Detroit and his immense expertise to the organization,â&#x20AC;? Cindy Pasky, chair of the DDP and founder of Detroit-based Strategic

Staffing Solutions, wrote in an email. Larson has been involved with the DDP since its inception in 1995 and has deep knowledge of movers and shakers who make up the DDP and downtown area. He spent a year as the co-managing director of Bedrock Real Estate Services LLC, where he was involved in such projects as Dan Gilbertâ&#x20AC;&#x2122;s bid to buy the downtown property for which the Wayne County jail was sited. Before that, Larson was with the Ilitch organizationâ&#x20AC;&#x2122;s real estate arm, Olympia Development, focused on planning a new hockey arena for the Detroit Red Wings. That plan came to fruition last month. Since leaving Bedrock in February, Larson has run his own shop,

Bloomfield Hills-based Larson Realty Group, and done consulting with the Gilbert organization. That work, he hopes, will help him lead DDP and implement the downtown Business Improvement Zone that landholders approved this spring. A similar effort had been rebuked, so getting that passed was significantfor Blaskiewicz, who had led the DDP since 2011. â&#x20AC;&#x153;There are lots of opportunities to make a significant impact on the downtown community,â&#x20AC;? Larson said. â&#x20AC;&#x153;The BIZ has been the top of the list, and Iâ&#x20AC;&#x2122;m very excited about getting that launched and making sure that weâ&#x20AC;&#x2122;re thoughtful about how itâ&#x20AC;&#x2122;s being delivered and what the services are.â&#x20AC;? In his career, Larson has devel-

oped, financed and managed 3 billion square feet of real estate, according to his biography on the Larson Realty website. Projects include One Detroit Center, the redevelopment of the Renaissance Center and the A. Alfred Taubman Center for Design Education, which houses the College for Creative Studies and Shinola/Detroitâ&#x20AC;&#x2122;s leather and watch manufacturing facilities. While acting as CEO of DDP, Larson will continue to run his real estate firm and consult with Rock Ventures. He also maintains his chairmanship of The Parade Co. and the Robert C. Larson Leadership Initiative, a program of the Urban Land Institute. It is named after Larsonâ&#x20AC;&#x2122;s late father, a longtime Taubman Co. executive and civic leader.

Shapero Hall: A prescription for rehab: Microapartments â&#x2013; From Page 3

Michigan is doing. We are seeing a market of younger professionals and minimalists,â&#x20AC;? he said. According to data from Washington, D.C.-based real estate information service CoStar Group Inc., the vacancy rate for the central business districtâ&#x20AC;&#x2122;s 10,551 apartment units stands at only about 1.9 percent. Austin Black II, president of City Living Detroit, a Detroit-based real estate brokerage firm, said the

new units â&#x20AC;&#x153;will definitely fill upâ&#x20AC;? because of increased interest in living downtown. But he also expressed reservations. â&#x20AC;&#x153;With microapartments, youâ&#x20AC;&#x2122;re targeting a smaller, more transient market, so people may be right out of college getting their first place,â&#x20AC;? he said. â&#x20AC;&#x153;My main concern with a microapartment trend in Detroit is if

1HHG DQ ,QYHVWPHQW 5HDO (VWDWH /RDQ"

&DOO XV /RDQ DPRXQWV DQG DERYH $GGLWLRQDO DYDLODEOH ORDQV Â&#x2021; 6%$ 86'$ /RDQV Â&#x2021; 2ZQHU 2FFXSLHG 5HDO (VWDWH Â&#x2021; /LQHV RI &UHGLW Â&#x2021; $FFRXQWV 5HFHLYDEOH Â&#x2021; (TXLSPHQW Â&#x2021; %DQN :RUNRXWV

ZZZ HFOLSVHFDSLWDOJURXS FRP 2UFKDUG /DNH 5G 6\OYDQ /DNH 0, Âł6LQFH Â´

every developer ends up doing that you are leaving out a large market of people that want to be downtown but donâ&#x20AC;&#x2122;t want a microapartment.â&#x20AC;? Jerome Huez, Black president of Detroit-based downtown residential brokerage The Loft Warehouse Inc., said small rental units â&#x20AC;&#x153;make a lot of senseâ&#x20AC;? in high-density areas if the units have easy access to public transportation, shops and entertainment. However, Huez said, â&#x20AC;&#x153;the location of Shapero Hall and the Boydell development strategy are not really supporting that model.â&#x20AC;? The site is within a few blocks of both Gratiot Avenue and Jefferson Avenue, and Novack said he is unaware of any other microapartment developments in the city. â&#x20AC;&#x153;The location is prime for the current market we are seeingâ&#x20AC;Ś Of course, you can take a quick walk on Lafayette into the city; you would be at Greektown Casino, Nikiâ&#x20AC;&#x2122;s Pizza, Locoâ&#x20AC;&#x2122;s and a number of other restaurants. You can also call Uber and they could have you there in less than a minute.â&#x20AC;? Microapartments such as those planned at Shapero Hall have also been developed in larger cities like New York City, San Francisco and Seattle, where space is at a premium. The redevelopment, which has yet to be named (â&#x20AC;&#x153;It will be distinctly Detroit,â&#x20AC;? Novack said), would bring Boydellâ&#x20AC;&#x2122;s residential real estate portfolio in Detroit to about 1,000 units, which includes about a dozen loft buildings throughout the city. Boydellâ&#x20AC;&#x2122;s development plans join a host of others for new rental units in the city, ranging from 200 to 250 units in Farmington Hillsbased Village Green Cos.â&#x20AC;&#x2122; Statler City apartments at a $35 million to $40 million development cost at Washington Boulevard and Park Avenue, to Detroit-based Roxbury Groupâ&#x20AC;&#x2122;s $22 million The Griswold with 80 units at Griswold Street

and Michigan Avenue. It would also bring new life to the eight-story Shapero Hall, which Boydell purchased from Wayne State in 2007 for $2.3 million. Two years ago, it was part of a $4.4 million city demolition plan during the administration of former Mayor Dave Bing that also included the Arnold Nursing Home on Seven Mile Road west of the Southfield Freeway (M-39). The nursing home, which sat on 13 acres and closed in 2002, succumbed to the wrecking ball; Shapero Hall was spared. â&#x20AC;&#x153;His goal was to utilize or repurpose the building, so he went at it to ensure that it got off the demolition list and we moved forward,â&#x20AC;? Novack said of Kefallinosâ&#x20AC;&#x2122; efforts to save the building. Boydell originally planned for Shapero Hall to become a hotel, but that was scrapped after residents of nearby Lafayette Park successfully blocked the rezoning that would have allowed that plan

to move forward. Novack said bridge financing and public subsidies will not be needed for the project. But he declined to disclose the redevelopment cost. In April 2002, the Eugene Applebaum College of Pharmacy and Health Sciences began moving from Shapero Hall into the then-new $66 million, 270,000-square-foot building at John R and Mack Avenue. The groundbreaking for Shapero Hall was in 1951 and it opened in 1954, according to Mike Brinich, associate director of communications for Wayne State. The building was originally named the Medical Science Building and then renamed the Health Sciences Building in 1974. It became Shapero Hall in 1984 in honor of Nate Shapero, founder of the now-defunct Cunningham Drug chain. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB

REAL ESTATE

MARKET PLACE

COMMERCIAL PROPERTIES

BUSINESS SERVICES

Ăť MOTEL FOR SALE Ăť MACKINAW CITY, MICHIGAN

BUY or SELL a BUSINESS

On Straits of Mackinaw and overlooking the Mackinac Bridge. 24 units plus living quarters. Large repeat business. Owners Retiring.

Call Steve at 231-631-6686 sdsteffes@gmail.com INDUSTRIAL PROPERTY

Dearborn Warehouse 87,000 SF 6 Truck Docks & 1 Drive-In Door 22Ft. Clear Height Call 313-506-0534

Call or email today for information on a custom advertising plan!

cdbclassified@crain.com 313.446.6068

Expert Results! Call Bill 248-505-5840 MetroSoldBusiness.com MANUFACTURING SERVICES

CKX Supplier Solutions â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘

Specializing in Chrysler Supplier Issues Production Tooling VeriďŹ cation Engineering/Sales/Purchasing Services ED&D/Prototype Tooling

Cathy Kirk

ckxllc.com 586-612-9363 cathykirk@ckxllc.com

WEDDING SERVICES

ElopeUpNorth.com DestinationsWeddingsUpNorth.com 906-643-8621

20140804-NEWS--0018-NAT-CCI-CD_--

8/1/2014

5:47 PM

Page 1

Page 18

CRAIN’S DETROIT BUSINESS

August 4, 2014

Call centers: Michigan jobs on the rise Schools on Schedule and on Budget These two things drive a school construction - schedule & budget. Precast has you covered. Our off site fabrication means your product is ready to install when the site is ready making sure the school is ready as soon as the first bell rings. Countless finish options fit any budget. Give us a call.

KENT ISD GRAND RAPIDS, MI

KERKSTRA PRECAST www.kerkstra.com

■ From Page 1

S&P Data Michigan, a subsidiary of Toronto-based S&P Data LLC, is expected to hire 420 people at its leased office space in the 156,000-square-foot Troy Officentre complex at 340 E. Big Beaver Road. The average asking rental rate at the complex is $17.45 a square foot, according to CoStar Group Inc. Dan Plashkes, CEO of S&P Data, said the firm recognized an opportunity in stateside call centers due to poor performance from overseas rivals. “In the 1990s, our customers, in my opinion, de-emphasized customer service. We don’t Plashkes think our clients’ customers like to go offshore for service; I’ve never met anyone that said they would prefer to speak to someone from India,” Plashkes said. “Not all products and services belong on shore (in the U.S.), but some do because customers are harder to keep than acquire.” S&P operates in five locations in three cities: Cleveland, San Diego and Hamilton, Ontario. This will be the sixth location, and its first in Michigan.

State recruitment The state is aiding S&P Data’s new location with a $1 million performance-based grant. The Michigan Economic Development Corp. has supported three call center openings tate with $4 million in performancebased grants since October 2013. At least six call centers have opened or been announced in the state in the past 13 months, representing more than 1,300 planned jobs. Dan Spallone, vice president of Kelly Services Inc.’s Southeast Michigan operations in Troy, said nationwide, the firm is placing an employee in a call center every 38 seconds. It also provides call center services. Spallone said demand is spurred by the recovered economy. “Obviously, an improving economy drives the demand for support and services, and that started here a few years ago with the expansion of existing call centers, and now we’re seeing new centers as well as expansion,” he said. Highland Park-based Dialog Direct, which includes marketing business Budco Holdings Inc., plans to hire 300 workers throughout the remainder of this summer. The hiring is prompted by growth in Dialog’s health insurance business, for which it handles inbound customer service and sales calls on behalf of clients. Dialog Direct is the brand name used by three marketing businesses that perform Dialog Direct’s work: Budco Holdings, Novo 1 Inc. and Dialogue Marketing Inc. The companies are portfolio holdings of Bloomfield Hills-based private equity firm Glencoe Capital Michigan LLC, which combined operations of the three under the Dialog Direct brand in January and based them out of the former Budco headquarters in Highland Park. Glencoe invested $3 million in the call center at the Highland Park site and hired 200 people last year. The latest round of hiring will bring the

CALL CENTERS FRONT AND CENTER S&P Data Michigan LLC Timeline: Plans to open a new Troy call center in mid-August. Expected jobs: 420 Incentives: The $4.4 million investment is supported by a $1 million performance-based grant from the Michigan Economic Development Corp. Molina Healthcare of Michigan Inc. Timeline: Consolidated its Midwest operations, including its call center, into a new office in Troy in May. Expected jobs: Exact number of call center jobs to be created not yet known. The company currently has 32 cell-center reps in Troy and 19 positions for the call center posted. Incentives: The $20.3 million investment was supported by a $2.3 million performance-based grant from the state. Molina is expected to create an overall total of 462 jobs. Teleperformance USA Timeline: The company, which provides customer service for wireless providers, said in March it planned to hire an additional 350 people at its Cascade Township call center near Grand Rapids. Expected jobs: 350. Teleperformance, a Utah subsidiary of a French-owned multinational company, hired 325 people upon opening the call center last year. But it closed an Ann Arbor call center in January, eliminating about 400 jobs. Pollard Banknote Ltd. Timeline: The Winnipeg, Manitoba-based company announced in December 2013 that it planned to open a call center in Michigan. The timing of the opening remains unknown. Pollard operates a lottery ticket printing plant for the state in Ypsilanti, where it employs more than 200. Expected jobs: Unknown General Motors Co. Timeline: The automaker announced in March 2013 it would consolidate its call center operations into its Warren Technical Center. About 300 call center advisers are to be located at the center. Expected jobs: 300 transferred Universal Marketing Group LLC Timeline: The Toledo-based company opened a new call center in the former Borders building in Ann Arbor late last year. It planned to invest $568,662 in the project. Expected jobs: Up to 411 Incentives: Supported by a $600,000 performance-based grant from the state. Dialog Direct, which includes the marketing business Budco Holdings Inc. Timeline: The Highland Park-based company plans to hire 300 call center workers throughout the remainder of the summer in metro Detroit and 200 at its new center in Cascade Township, which will open in September. Expected jobs: 500 Incentives: Dialog’s hiring is supported by a $550,000 performance-based grant. employee count to 900 there. Dialog Direct’s combined operations encompass 5,100 employees nationwide and garnered $200 million in revenue last year. The demand for call center services continues to expand as well. Locally, Kelly Services operates call center services for 25 clients, Spallone said. It has signed seven new contracts in 2014 for those services and is in discussions with as many as 15 new clients as well. Spallone said the rise in call centers, and call center services, locally is due to available talent. “One of the greatest challenges to call centers today is finding enough employees with the right number of behavioral and technical skills,” Spallone said. “Southeast Michigan addresses a huge need, and that’s why clients are coming to us.”

Entry-level pay Most call center jobs range in pay from $9.50 per hour to $12 per hour, but can be much higher depending on incentives and other roles, such as sales, tied to a position, according to Kelly Services. The U.S. average salary for call center employees is $35,000, according to salary site glassdoor.com. Plashkes said the evolution of customer service has changed call centers into “contact centers” and is focused on molding a new type of worker. “The future of customer care is already happening on Twitter, so our new employees need to understand the whole new language of social media as well,” Plashkes said.

“The whole process is evolving.” Mat Ishbia is president and CEO at Troy-based United Shore Financial Services, which is one of the largest wholesale mortgage underwriters in the country. He currently expanded the call center space at his headquarters from 216 seats to 270. He also plans to hire 16 more call center employees in August. Ishbia said that while some of the work is mundane, like answering routine phone calls and helping callers, most of the call center work involves drumming up business by calling on customers like mortgage brokers and banks nationwide to keep United Shore top of mind. Customers who are trying to just find out what the current status of a loan is are encouraged to use the company’s website or smartphone app, leaving the call center employees to spend more time selling. “My call center employees are highly skilled,” Ishbia said. “They’re not just answering the phone and saying they’ll have soand-so call you back.” It’s not just the available talent, but also the burgeoning business climate in the region that makes Michigan appealing for these types of jobs, Plashkes said. “Speaking of metro Detroit, we see the arrow going up,” Plashkes said. “We chose Cleveland five years ago for the same reason, and now it’s a hot city. We feel the same thing here; there’s an educated workforce and a strong reason to believe it’s only going to get better.” Freelance reporter Gary Anglebrandt contributed to this report.

20140804-NEWS--0019-NAT-CCI-CD_--

8/1/2014

6:11 PM

Page 1

CRAIN’S DETROIT BUSINESS

August 4, 2014

Page 19

Utilities: New EPA emissions rules may stoke move to wind, gas ■ From Page 1

But such a large-scale restructuring would mean everything from investments in energy efficiency to new power plants. “Compliance is going to fundamentally transform and modernize the power generation fleet in Michigan, and that’s true across the U.S.,” Anderson said. Dennis Dobbs, vice president of generation engineering and services at Jackson-based Consumers Energy, wouldn’t go as far in describing the scope of the likely investment, nor did he have estimates on how much it will cost to meet the regulations in Michigan. But he did say the EPA’s proposal puts the industry into uncharted territory. “It’s unprecedented, let’s put it that way. The EPA is stretching out further than they ever have in terms of their control,” Dobbs said.

Coal plant retirements The EPA proposed in June that power plant carbon emissions be cut 30 percent by 2030. The proposal, coupled with previous rules that aren’t friendly to coal, put natural gas front and center as the new leading candidate for a baseload fuel. A fracking-induced glut of it has soaked the markets, and natural gas produces half the carbon emissions as coal from a power plant, according to the EPA, making it a natural choice for utilities as a coal replacement. Wind is cheap and available in Michigan, making it the top choice for renewable energy power, industry executives said. Even without the new EPA proposal, utilities had reason to move away from coal. They have been adjusting their power generation arrangements to meet existing EPA rules, such as Mercury and Air Toxics Standards that utilities must meet by April of next year, unless granted extensions. At the state level, Gov. Rick Snyder in December went on the record saying Michigan should become less reliant on coal, which makes up more than half the fuel used to produce power in the state. The utilities say they are working on it. Consumers plans to shutter seven coal-fired units in 2016, leaving its five largest units in operation. DTE is also weaning itself away from coal. (See map, this page.)

Power plant shifts and upgrades Consumers signed an agreement in December to buy a 540-megawatt natural gas plant in Jackson for $155 million from private operators AlphaGen Power LLC and DPC Juniper LLC, affiliates of J.P. Morgan Chase & Co. That put on hold a previous plan to build a $700 million, 700megawatt natural gas plant in Thetford Township, near Flint. But the Thetford plan is only on hold, not dead, the company has said. Consumers sought a natural gas plant to make up for the anticipated 950-megawatt drop in production when its seven coal units are shut down. The difference between that and the Jackson plant’s 540 megawatts will be made up by market purchases in the short term. But at some point, Consumers

MICHIGAN COAL POWER PLANTS Consumers Energy 1. J.H. Campbell, Port Sheldon Township: All units to remain operational; part of 10-year, $1.3 billion investment to reduce emissions. 2. B.C. Cobb, Muskegon: Both units to be shut down in 2016. 2 3. D.E. Karn, Hampton Township: 1 Both units will remain and are part of 10-year, $1.3 billion investment to reduce emissions. 4. J.C. Weadock, Hampton Township: Both units to be shut down in 2016. 5. J.R. Whiting, Luna Pier: All units to be shut down in 2016.

3 4

6 9 10 8 7 5

DTE Energy 6. Belle River, China Township: Set to undergo environmental controls upgrades as part of $233 million overhaul to be completed by April 2016 7. Monroe, Monroe: Final touches on a 14-year, $2 billion environmental controls upgrade to be completed this fall 8. River Rouge, River Rouge: To be determined; options include retirement, switching to natural gas or environmental controls upgrades 9. St. Clair, East China Township: Set to undergo environmental controls upgrades as part of $233 million upgrade to be completed by April 2016 10. Trenton Channel, Trenton: One 110 MW unit and one 100 MW unit expected to retire in 2016; remaining 520 MW unit to stay in operation and set to undergo environmental controls upgrades as part of $233 million upgrade to be completed by April 2016 Source: Companies’ annual reports and data provided to Crain’s by Consumers, DTE

Even without the new EPA proposal, utilities had reason to move away from coal. They have been adjusting their power generation arrangements to meet existing EPA rules. almost certainly will need more capacity, Dobbs said, as the state’s economy and energy needs grow. Plus, the company’s energy purchasing contracts expire in about 10 years. Consumers made a similar deal as the Jackson one when it bought a 930 MW natural gas plant in Zeeland in 2007. “We’re going to be shutting down coal. We do believe the state will need new capacity. It’s just a matter of when and who’s going to build it,” Dobbs said. Wind is the most economical source of renewable power in Michigan, he said, but is too intermittent to be relied on alone and would have to be coupled with natural gas. “Based on how clear our crystal ball is today, which isn’t very clear, that seems to be the way forward,” Dobbs said. “If you ask me today what we’re going to build out that far, I’d say gas and/or wind.” Consumers plans to spend $7 billion over the next five years on capital investments, most of it going toward general maintenance and upgrades to existing infrastructure. No new gas capacity is expected in that time, apart from the newly bought Jackson plant. “But in five to 10 years, I do think we’re going to need new capacity and we have plans to add capacity to that space,” Dobbs said.

In pipeline: Decades of investment Michigan utilities will have to

retire “on the order of 50 percent or more” of their coal-fired generation, Anderson said. “We’ll be backfilling those retirements with natural gas and wind,” he said, but it’s too early to say by how much and where. DTE’s annual report estimates it will spend $6.7 billion on capital outlays from this year through 2018. Much of that is for regular upgrades and maintenance. The period after that is when more money will begin to flow as DTE puts its moves toward natural gas and wind into play to meet the 2030 requirements, Anderson said. The money planned through 2018 will “just begin to touch what I was describing,” Anderson said, referring to the sweeping infrastructure changes he predicts. “The vast majority will fall after that, 2018 to 2020 and beyond. These large plants at minimum will take three to four years to land on the ground.” DTE already has made moves to dial down its coal-based production. It issued an RFP in June to solicit offers to buy a natural gas plant in the Midwest. It shut down a coal-fired plant in Harbor Beach in November. As the changes occur, “we’ll be putting in place the infrastructure for the next 50 years, with improved environmental outcomes,” Anderson said. Both utilities also are part of the state’s Pure Michigan Business Connect initiative, which encourages large companies to satisfy their

purchasing needs through smaller Michigan-based companies. Their executives said they plan to continue to do as much business as possible with in-state companies. “We’re going to work hard to make sure we maximize the use of Michigan suppliers wherever we can,” Anderson said.

DTE to shutter River Rouge and Trenton first, followed by St. Clair and then Belle River, during a major push to cut coal. “Logically, Trenton Channel and River Rouge are very much on the bubble,” he said.

Shuttered plants

Since wind can only fill so much of the gap, that leaves natural gas production a leading option. Buying energy on the spot market leaves utilities in populous states vulnerable to market volatility and therefore is a less desirable option. “I can’t see us putting our eggs in someone else’s electricity basket,” Siegal said. Nuclear is another option. “There’s been talk of a Fermi 3,” he said. “But unless more nuclear comes on line, natural gas seems the logical approach.” James Neal, an attorney at Lansing-based Loomis Law Firm who represents oil and natural gas exploration and production companies, said he expects to see more natural gas plants built in Michigan. “Natural gas is plentiful and cheap. It’s by far the best hydrocarbon going, environmentally,” Neal said. Utilities are required to apply to the MPSC when planning to build new plants. No applications are pending at the moment, said Judy Palnau, media relations specialist at the commission. That suggests the utilities don’t have any immediate plans to build plants, since the application process is lengthy, and that’s before the shovels ever hit the ground. “The process takes a while. Even if you get approval, the groundbreaking and building takes years,” Palnau said. But the utilities already have made moves toward wind with more wind farms in the works. Energy production costs from wind have dropped significantly in the last six years, putting wind in the same economic viability sphere as natural gas, Siegal said. Consumers is spending $255 million to build Cross Winds Energy Park, a 105-megawatt wind farm in Tuscola County, scheduled for operation by the end of the year. In 2012, Consumers opened the $250 million, 100-megawatt Lake Winds Energy Park in Mason County. Since 2009, DTE has built about 400 megawatts of wind generation capacity, in Gratiot, Tuscola, Huron and Sanilac counties. It also has contracts to buy another 450 megawatts of capacity from thirdparty suppliers. The two utilities also jointly own — Consumers has 51 percent, DTE 49 percent — a facility in Ludington that uses stored water to release energy at peak times. The water is pumped into a reservoir at night and then released to turn turbines during the day when extra energy is needed. The Ludington Pumped Storage Plant is undergoing an $800 million overhaul that will boost output from 1,872 MWs to 2,172 MWs by 2019. “If we handle this well, it can be a very positive thing for the state,” said Anderson of the overall utility infrastructure plans.

Beyond these moves, DTE said it’s too early to say which plants will be affected by the 50 percent cut in coal-generated power. But a few plants would appear to be likely candidates for shutdowns. Its coal-fired River Rouge plant could be retired, switched to gas or retrofitted with environmental controls to keep it on coal, DTE said in a report filed with the Michigan Public Service Commission in March. The units at the River Rouge plant have been in service since the 1950s, making them among the oldest in the fleet, along with Trenton Channel and St. Clair in East China Township. DTE already has said it plans to shut down two of three units at Trenton Channel in 2016. The remaining Trenton unit and the St. Clair plant, whose units were put into service in the 1950s and 1960s, are getting upgraded to keep them running on coal. But not all upgrades are created equal. Because utilities are required to meet capacity demands and to meet tighter environmental standards at the same time, plants sometimes receive expensive upgrades just to keep them limping along for a few more years. So upgrades to older plants like the St. Clair, Trenton and River Rouge don’t necessarily mean a stamp of renewed longevity, especially when talking in the long time frame Anderson referenced. DTE’s other coal-burning plants are newer. The Belle River plant in St. Clair County was put into service in the 1980s and also has upgrades underway. That leaves the Monroe, the company’s largest, which was put into service in the 1970s. Its capacity is more than the next two largest (St. Clair and Belle River) combined, and it just underwent a $2 billion makeover to clean up its coal production. Arthur Siegal, chair of the environmental practice group at Jaffe Raitt Heuer & Weiss PC in Southfield, said the utilities’ infrastructure improvements will be significant, especially since Michigan has an older fleet of coal plants and is one of the more coaldependent states in the Midwest. The utilities, Siegal said, have to plan far in advance when it Siegal comes to capacity and building plants, and they knew the Obama administration sooner or later would be sending down more stringent regulations on greenhouse gases. “The utilities knew this was coming. They’ve been making plans for this, no doubt about it,” he said. Looking at the ages and capacities of the plants in DTE’s fleet, Siegal said it would make sense for

New energy sources

20140804-NEWS--0020-NAT-CCI-CD_--

8/1/2014

5:46 PM

Page 1

Page 20

August 4, 2014

CRAIN’S DETROIT BUSINESS

Limo: Operators say Senate bill could keep them out of Detroit ■ From Page 3

What would happen if SB 748 is passed is less clear. Detroit Mayor Mike Duggan’s office did not respond to several attempts for comment on the legislation. Melvin “Butch” Hollowell, Detroit’s corporation counsel, said there needs to be careful consideration of the bill, but that the city should have the ability to regulate limos again. He also said there should be an adjustment to the number of medallions available in the city, without saying if the Hollowell 1,300 now available should be increased or decreased. But he noted it is the same amount the city had in the 1950s when the population was around 2 million.

A matter of safety Matthew Oddy, operations manager at Detroit-based Checker Cab Co., told a Senate panel in February that when limousines fell out of Detroit’s regulation, all sorts of businesses sprouted up with people operating minivans and small cars after having them licensed by the state as limos. That is a safety issue for customers, he said, because limo operators do not have to pass a criminal background check nor have their limos inspected by the city the way taxi drivers and their cabs do. Kokas said that although MDOT does not do criminal background checks on drivers, does require proof of appropriate insurance and that insurance companies do background checks on the drivers before issuing policies.

Timing of campaign donation, Senate bill questioned Limousine owners who oppose Senate Bill 748 believe the timing is tied to a campaign donation made by Tony Soave — whose company, Soave Enterprises, owns the Checker Cab Co., which would benefit from less competition in the city. A spokesperson for Soave says that’s not so. Here’s the chronology: In September, Soave donated $90,000 to the Michigan Republican Party, followed by a $100,000 donation in December. A month later, the bill was introduced, and a month after that, it was approved in the Senate Regulatory Reform committee. It was approved by the full Senate in June with bipartisan support. This is the third attempt to change the law since 2011. In all three cases, the bills were introduced by Democrats from Detroit, with Sen. Virgil Smith authoring SB 748. The difference now is that Republicans are supporting the bill. Nicholas Kokas, vice president of Chesterfield Township-based Brentwood’s Distinguished Executive Transportation, a limousine service, who is also past president of the Livonia-based Great Lakes Limousine Association, testified against the bill in February. He noted that three years ago, the same Republican-led Senate approved a bill that gave the state the exclusive right to license limousines. After passing the Senate, the bill died in the House and never became law. But 17 of the Republican senators who voted for that bill three years ago have done an about-face and voted for SB 748. That reversal, Kokas and others in the limo indusMichael Frezell, a spokesman for MDOT, which handles the licensing of limousines in the state, said the number of limo companies has grown from 823 in 2012 to 992 now, but couldn’t say how much of that growth occurred in Detroit. “We have been seeing an increase in the limousine business,” he said. In Wayne County, there are 1,851 limos owned by 357 companies. In Oakland County, there are 1,122 limos owned by 197 companies and

try say, is evidence that Soave’s donation led to the change of heart on the issue. In a statement, Soave’s spokesperson, Kelly Rossman-McKinney, CEO and principal of Lansing-based public relations firm Truscott Rossman, said that’s just wrong. “Mr. Soave has a long history of donating to the Republican Party that goes back at least 20 years. If legislative success were linked to Mr. Soave’s political contributions, unnecessary and over-reaching regulations on metal recycling would have failed earlier this year,” Rossman-McKinney said in the statement. “To link his contributions to success or failure in the legislative arena is simply wrong. Senate Bill No. 748 is part of a package of bills being driven by the city of Detroit to address population requirements in state law. Mr. Soave was born and raised in Detroit and is a strong supporter of the city of Detroit and Mayor (Mike) Duggan.” Rossman-McKinney also said that previous contributions by Soave to the Republican Party have been similarly timed, an assertion backed up by Secretary of State records. Including the two donations last year, since 2006, Soave has made five donations to the state GOP, with four of them coming toward the end of a year. He donated $60,000 to the state GOP in September 2006 and another $100,000 in November of that year. He also donated $50,000 to the party in June 2012. Soave also makes campaign donations to many of Detroit’s elected officials and candidates. — Chris Gautz

in Macomb County, there are 441 limos owned by 97 companies. But the big picture, opponents of the bill say, is that limousine service is meant for intrastate travel, and if every city had its own licensing requirements, the industry would die because limo drivers would have to pay to get permits or a local license to drive through those cities. Taxis operate within the cities that regulate them and give them authority to pick up customers within their borders.

Kokas said the bill would also damage Detroit’s economy, because most customers of limo drivers are from out of town. If the bill becomes law, the drivers would not recommend attractions in Detroit, because they wouldn’t be able to drive them there.

The effect on Uber The ride-sharing service Uber Technologies Inc., which has been operating in Detroit since March

Opponents of the bill say that if every city had its own licensing requirements, the limo industry would die. 2013, has referral agreements with local limousine companies to use their drivers to pick up Uber customers in their limos in Detroit. The company opposes the bill. “The state bill seeks to protect the special interests of the existing transportation industry in Detroit by stifling competition of licensed limousine operators,” Uber spokesperson Lauren Altmin said in a statement. “If passed, hundreds of state-licensed limousine drivers currently serving residents of the area would no longer be able to operate in Detroit.” She said many drivers who have worked with Uber have grown their businesses and improved transportation options in the city. Kokas’ company has a referral agreement with Uber and said passage of SB 748 would leave Uber largely unable to operate in the city. Kokas said the city needs more transportation options, not fewer, given all the economic development going on in downtown and Midtown. “If you want to be part of a growing economy, you have to catch up with technology,” Kokas said. “It’s the future; people want these services.” Chris Gautz: (517) 403-4403, cgautz@crain.com. Twitter: @chrisgautz

Residents: Student docs, teaching hospitals get IRS checks ■ From Page 1

mess, for years.” Many other teaching hospitals, including DMC, sued the IRS, but for at least two years federal courts disagreed on whether residents were employees or students for tax purposes, Hollenbeck said. “The IRS finally threw in the towel in March 2010 after a decade of court battles on this issue” and granted student status to residents, but Hollenbeck only from 1998 to 2005, Hollenbeck said. The IRS then set up a procedure whereby teaching hospitals could file claims — estimated to total more than $1.2 billion per year nationally — to receive the FICA refunds and interest. But the IRS issued new tax rules in 2005 on medical residents that clearly categorized them as employees because they work 40 hours or more per week, Hollenbeck said. No hospitals have challenged that ruling. Residents and hospitals have

each paid the 2.9 percent payroll tax the past nine years, she said. Last September, DMC received a $55 million refund for the 1998 to 2005 time period, said Conrad Mallett Jr., DMC’s chief administrative officer. About $23.4 million has Mallett been paid back to 3,293 residents who signed consent letters to be part of the lawsuit. DMC recouped the remainder, he said. “It was nice to get the money back and to notify the residents they would be getting refund checks,” Mallett said. “We sent checks to those residents we could contact. We were delivering people a tax refund they were due.” Starting in 1999, DMC paid the FICA taxes and each year also filed provisional claims objecting to the taxes being withheld, Mallett said. The debate over whether medical residents are employees or students has raged for at least 40

years or more. Initially, when the Social Security Act was signed into law in 1935, medical interns and self-employed doctors were exempt from the tax, but residents were not. In 1964, Congress said interns and self-employed physicians were subject to payroll taxes. But the University of Minnesota sued the IRS in 1998 and eventually won. Hundreds of teaching hospitals also sued. In 2003, the IRS sued DMC to collect $16 million in past FICA refunds. Mallett said DMC and other teaching hospitals prevailed — at least for the disputed time period before the IRS clarified its rules. Hollenbeck said most residents have been refunded their FICA taxes and interest on the withheld amount. “They will have to pay taxes on the interest,” she said. Last month, Tom Mathew Jr., M.D., a former DMC resident, received an IRS notice of unpaid interest of $5,800. “I was a graduate resident at DMC (Huron Valley and Sinai-Grace hospitals) in 2004,” said Mathew,

now a practicing family medicine physician in Monroe, Ga. “I never got a check (from DMC). Now I get an interest notice from the IRS?” Mallett said it is possible that some residents did not receive their refund checks because they had changed last known addresses. DMC was required to notify the IRS that it had sent refund checks to the former residents. Hollenbeck said teaching hospitals, as they received their IRS refunds the past couple of years, began the tedious process of tracking down residents, many of whom had left the state in which they trained. “Finding these people to get them their money is an enormous task,” she said. “Hospitals have a certain amount of time to give the money back or they have to return the money to the state as unclaimed property.” Henry Ford has successfully tracked more than 2,000 residents and issued them refund checks, said Dwight Angell, director of media relations. He did not provide a total IRS refund paid to Henry Ford or to residents.

However, UM Health System only collected approximately $1.6 million from the IRS, which it split with 500 eligible residents, a university spokesman said. The claim period only covered the first three months of 2005. While Hollenbeck did not know the specifics of the University of Michigan, she said if hospitals did not file refund claims in time, they could be ineligible for certain FICA payments they made from 1998 to 2005. “The residents could have filed their own refund claims” for 1998 through 2004 if they had known about the IRS refund decision, said Hollenbeck. Mallett said DMC filed the claims for the residents and worked with university alumni associations and the Accreditation Council for Graduate Medical Education to get the residents’ addresses. “We hope if there are residents out there that haven’t received their checks, that they will contact us,” he said. Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

20140804-NEWS--0021-NAT-CCI-CD_--

8/1/2014

6:08 PM

Page 1

CRAIN’S DETROIT BUSINESS

August 4, 2014

Page 21

Custom Coach: Biz is fab for conversion company ■ From Page 3

building out his El Guapo Grill and The Mac Shack food trucks, he considered starting a fabrication business specializing in mobile kitchens. But that didn’t last long. He needed to focus on his own trucks and saw that the market wasn’t prepared for the actual costs. “I think the food truck business is seen as sexy from the outside,” he said. “There were a lot of inquiries and a lot of people who had aspirations of having a food truck. But they are very hard to finance, so it was difficult for us to make a truck that I was proud of and have the margins we needed to sustain and scale the business. “I think Chris can identify with the saying, ‘Just because you put a futon in a van doesn’t make it a limo.’ It’s the same thing with food trucks. You have cleanliness issues. You have sanitation issues. You can get by without some of the frills, but you have to be able to clean it well and knock your food out.” Ramos can relate. Though food trucks make up the bulk of the work keeping him and his seven employees busy right now, that’s not the norm. Mostly, people are shocked when they realize how expensive it is to get a truck rolling. Instead, DCC’s steady cash flow comes from doing mechanic work on other food trucks, vans and limos and upgrading their fleets. It’s a good line of work that allowed Ramos to turn former competitors into clients. His first business was a shuttle service called Night Moves Transportation. But when Ramos realized he could charge more to rent a party bus, he decided to build one. He had no experience, but he’s always been mechanically inclined. So that first model was bare bones by his current standards, featuring nice seats and a good sound system. But he received an almost immediate offer to buy the bus. So he sold it and built another one. Rinse and repeat. “It got really busy, so I sold my buses and started just building vehicles,” said Ramos, who grew up in Rochester. “Then people started calling and asking if we could do food trucks. Now we have gotten our swagger down, and we can build all of these things.” Recently a client hired DCC to turn a van into a rolling humidor, complete with high-end TVs and sound system. And while that was a big job, the most extravagant vehicle in DCC’s portfolio is a custom project for Jim Beam. The bourbon distiller wanted the passenger shuttle running at its distillery in Clermont, Ky., to look like an old 1930s truck delivering barrels. “It was a nightmare to do; it was such a huge project,” he said. “It might be my favorite project.” It ran Jim Beam $350,000, but it’s become such a favorite of tourists that the company now emblazons ornaments with the truck’s likeness. “It also sells these collector decanters — they are these kitschy vases in different shapes, like a house or a Christmas tree — and there is one that is our bus, which is so crazy,” Ramos said. “Our bus has been immortalized. That is one of the coolest things about our project.” At the moment, Detroit Custom

www.crainsdetroit.com EDITOR-IN-CHIEF Keith E. Crain GROUP PUBLISHER Mary Kramer, (313) 446-0399 or mkramer@crain.com ASSOCIATE PUBLISHER Marla Wise, (313) 4466032 or mwise@crain.com EXECUTIVE EDITOR Cindy Goodaker, (313) 4460460 or cgoodaker@crain.com MANAGING EDITOR Jennette Smith, (313) 4461622 or jhsmith@crain.com DIRECTOR, DIGITAL STRATEGY Nancy Hanus, (313) 446-1621 or nhanus@crain.com MANAGING EDITOR/CUSTOM AND SPECIAL PROJECTS Daniel Duggan, (313) 446-0414 or dduggan@crain.com SENIOR EDITOR/DESIGN Bob Allen, (313) 4460344 or ballen@crain.com SENIOR EDITOR Gary Piatek, (313) 446-0357 or gpiatek@crain.com WEB EDITOR Kristin Bull, (313) 446-1608 or kbull@crain.com RESEARCH AND DATA EDITOR Sonya Hill, (313) 446-0402 or shill@crain.com WEB PRODUCER Norman Witte III, (313) 4466059, nwitte@crain.com EDITORIAL SUPPORT (313) 446-0419; YahNica Crawford, (313) 446-0329 NEWSROOM (313) 446-0329, FAX (313) 4461687 TIP LINE (313) 446-6766

REPORTERS

PHOTOS BY GLENN TRIEST

Above: Jessica Jones cleans inside the new interior of a food truck at Detroit Custom Coach. Left: Seamus Coakley works in the company’s facility, where seven employees keep busy customizing vehicles of various types and doing repairs on others.

Coach’s big project is a customized Ford Transit that the automaker will take to a trade show in Las Vegas this fall. Ford recently ended production on its Econoline Van and is replacing it with the Transit starting in 2015. (This is the fullsize commercial van, not the smaller Transit Connect that has been in the Ford fleet since 2002.) For the show, Ramos is outfitting one van — which can seat between eight and 15 passengers depending on model — with four captain’s chairs, Wi-Fi, a TV and a sound system all operated by an iPad. “We are calling it a business class, which is basically going to be the private jet-type style,” Ramos said. At the trade show, Ford will demonstrate that their custom Transits make the perfect ride for executives on short trips — say, between Detroit and Chicago — or for ballers wanting to take their posse out in style. In fact, Ramos expects that customizing Transits will become the bulk of the work coming into Detroit Custom Coach. Last year, the company did $500,000 in revenue, and it’s on pace for $800,000 this year. Ramos expects that trajectory to continue as the company takes on an anticipated 10 Transit customizations a month. He is currently looking to hire

two more employees but expects to bring on more people early next year. Already the company moved into a 10,000-square-foot shop in Oak Park and has the ability to take another 20,000 square feet. Hiring has been Ramos’ main challenge because DCC does everything — from understanding city licensing around food trucks to diamond tufting for upholstery — and Ramos needs people who can jump in and learn, not just turn a wrench. “The tough thing for us is finding the staff that has the correct skill set,” he said. “We don’t have much competition, and one of disadvantages to that is you don’t have the built-in workforce.” But Southeast Michigan has also brought an unexpected advantage: companies with which to collaborate. For example, when he wanted to integrate iPad control into the vehicles, he hired iRule LLC, a 5year-old tech company based in the Madison Building in downtown Detroit. The firm specializes in turning mobile devices into control systems, whether it’s for the lights in an office building or the speakers in your living room. A friend of a friend made the introduction between Ramos and iRule, thinking that their needs might overlap, and now they are working on their second project together.

“Most of our work is national and international; we sell in more than 55 countries,” said iRule CEO and co-founder Itai Ben-Gal. “Unfortunately, having been a company that grew up in the recession, very little of our work is local. So it’s really awesome to be able to drive over to Chris or have him come here and break out a whiteboard and collaborate.” Having a local connection was what sold Eskimo Jacks owner Josh Charlip on Detroit Custom Coach. He’d been considering a gourmet ice cream sandwich truck to supplement the two event carts he runs for a while, but it wasn’t until this winter that he got serious. “I was driving in Pontiac and there was this old beat-up truck that I saw for sale on the side of the road,” Charlip said. “I bought it with no idea of what I was getting into.” It was rusted and pitted out, and it needed sinks and a freezer at minimum, work Charlip couldn’t do himself and run his other business, The Original Bagel Factory. He talked to fabricators around the country, “but it didn’t seem right,” Charlip said. “I heard about DCC, and I reached out. Chris is great.” The DCC team cleaned the truck up, installed the necessary kitchen equipment, and painted the beast — complete with towering stack of ice cream sandwiches. The rust bucket gave way to a mobile gourmand’s dream ride: a modern-looking version of an oldschool ice cream truck. “It was a cool project,” Ramos said. Amy Haimerl: (313) 446-0416, ahaimerl@crain.com. Twitter: @haimerlad

Jay Greene, senior reporter: Covers health care, insurance, energy utilities and the environment. (313) 446-0325 or jgreene@crain.com Amy Haimerl, entrepreneurship editor: Covers entrepreneurship and city of Detroit. (313) 4460416 or ahaimerl@crain.com Chad Halcom: Covers litigation and the defense industry. (313) 446-6796 or chalcom@crain.com Tom Henderson: Covers banking, finance, technology and biotechnology. (313) 446-0337 or thenderson@crain.com Kirk Pinho: Covers real estate, higher education, Oakland and Macomb counties. (313) 446-0412 or kpinho@crain.com Bill Shea, enterprise editor: Covers media, advertising and marketing, the business of sports, and transportation. (313) 446-1626 or bshea@crain.com Dustin Walsh: Covers the business of law, auto suppliers, manufacturing and steel. (313) 4466042 or dwalsh@crain.com Sherri Welch, senior reporter: Covers nonprofits, services, retail and hospitality. (313) 446-1694 or swelch@crain.com LANSING BUREAU Chris Gautz: Covers business issues at the Capitol and utilities. (517) 403-4403 or cgautz@crain.com

ADVERTISING SALES INQUIRIES (313) 446-6052; FAX (313) 393-0997 SALES MANAGER Tammy Rokowski SENIOR ACCOUNT EXECUTIVE: Matthew J. Langan ADVERTISING SALES Christine Galasso, Jeff Lasser, Joe Miller, Sarah Stachowicz CLASSIFIED SALES Angela Schutte, manager, (313)-446-6051 DIGITAL MARKETING MANAGER Jennifer Chinn AUDIENCE DEVELOPMENT DIRECTOR Eric Cedo EVENTS MANAGER Kacey Anderson SENIOR PRODUCER FOR DIGITAL/ONLINE PRODUCTS Pierrette Dagg SENIOR ART DIRECTOR Sylvia Kolaski SALES SUPPORT Suzanne Janik, YahNica Crawford PRODUCTION MANAGER Wendy Kobylarz PRODUCTION SUPERVISOR Andrew Spanos

CUSTOMER SERVICE

MAIN NUMBER: Call (877) 824-9374 or customerservice@crainsdetroit.com SUBSCRIPTIONS $59 one year, $98 two years. Out of state, $79 one year, $138 for two years. Outside U.S.A., add $48 per year to out-of-state rate for surface mail. Call (313) 446-0450 or (877) 824-9374. SINGLE COPIES: (877) 824-9374 REPRINTS: (212) 210-0750; or Alicia Samuel at asamuel@crain.com TO FIND A DATE A STORY WAS PUBLISHED: (313) 446-0406 or e-mail infocenter@crain.com CRAIN’S DETROIT BUSINESS IS PUBLISHED BY CRAIN COMMUNICATIONS INC. CHAIRMAN Keith E. Crain PRESIDENT Rance Crain TREASURER Mary Kay Crain Executive Vice President/Operations William A. Morrow Executive Vice President/Director of Strategic Operations Chris Crain Executive Vice President/Director of Corporate Operations KC Crain Vice President/Production & Manufacturing Dave Kamis Chief Financial Officer Thomas Stevens Chief Information Officer Anthony DiPonio G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) EDITORIAL & BUSINESS OFFICES: 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly, except for a special issue the third week of August, and no issue the third week of December by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Entire contents copyright 2014 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is strictly prohibited.

20140804-NEWS--0022-NAT-CCI-CD_--

8/1/2014

6:03 PM

Page 1

Page 22

RUMBLINGS Tigers garb to get Pricey in a big hurry outhpaw superstar fireballer David Price is Detroit Tigers President and General Manager Dave Dombrowski’s latest trade-deadline prize, a pickup in a blockbuster swap Thursday that sent pitcher Drew Smyly to the Tampa Bay Rays and outfielder Price Austin Jackson to the Seattle Mariners. The deal also set the Tigers’ merchandise operation into motion: The team and its retail concessionaire said Price items were expected to arrive at the team store at Comerica Park early this past weekend. Sales of Price merchandise are expected to match the rush for Prince Fielder items when he became a Tiger in January 2012, although their positional differences and Fielder’s Detroit roots will make topping him difficult. “He will be the biggest since Prince. I am optimistic he matches Prince sales, but there is the difference from a slugger to a starter who only pitches once every five days, and Prince’s ties to Detroit,” said Bob Thormeier, general manager at the ballpark for Sportservice, the team’s Buffalo, N.Y.-based concessionaire. “We will be ready to match Prince sales if the demand is there.” Among the first Price items at Comerica Park will

August 4, 2014

CRAIN’S DETROIT BUSINESS

be authentic and replica jerseys and number T-shirts. “Initially, quantities are what they can get us the fastest,” Thormeier said. Online, baseball’s digital arm that handles all e-commerce retail sales for the 30 clubs, Major League Baseball Advanced Media, had removed Price’s No. 14 jersey and ancillary items from the Rays team online store site. Price merchandise wasn’t on the Tigers online store yet Friday afternoon, but was in the works. Detroit’s authentic player-name jerseys sell on ShopMLB.com for $225.99. MLBAM splits online retail sales equally among all the teams, so the Rays will get a split of the revenue generated by Tigers fans buying David Price jerseys in Detroit livery. Sales at Comerica Park are a different story: Food, beverages and merchandise at the ballpark are handled by Sportservice, and under such deals, the team gets 30 percent to 40 percent of the revenue. Oh, and Price will get to keep the No. 14 jersey number he wore for seven seasons in Tampa because that was the now-departed Jackson’s number.

MGM Grand goes local for chocolaty turndown service MGM Grand Detroit is buying hundreds of thousands of chocolates from Clinton Township-based Sanders & Morley Candy Makers Inc. The hotel is now offering

COURTESY OF MGM GRAND DETROIT

MGM Grand Detroit guests will see locally made chocolates on their amenities tray, thanks to a deal with Sanders & Morley Candy Makers.

WEEK ON THE WEB FROM WWW.CRAINSDETROIT.COM, WEEK OF JULY 26-AUGUST 1

four varieties of Sanders chocolates for its nightly turndown service: milk and dark chocolate sea salt caramel, cookies and cream cruncher and dark chocolate mint. Chocolates are placed on a tray adjacent to the bed pillows, along with a spa menu, bottle of water, television remote and a “sleep well” card, in the casino’s 400 hotel rooms. That’s a lot of chocolate — 300,000 pieces per year, MGM said. The casino is replacing an out-of-state chocolate supplier, which it did not identify. “Sanders is such a familiar brand to people across Michigan, we are excited to share the treats with all our guests,” said Steve Zanella, MGM president. Guests can either request chocolate or leave it up to housekeeping to randomly choose a flavor.

CNN names locally made headset to hot gadget list CNN has named a 3-D headset called the Glyph, made by Ann Arbor-based Avegant Corp., as one of the 10 hottest gadgets or devices for 2014. The company has been on a roll, as Crain’s pointed out in a profile in April, two months before Avegant closed on a venture capital round of $4 million. In January, its prototype headset was one of just 40 out of thousands of products on display to win an Editor’s Choice Award at the influential Consumer Electronics Show in Las Vegas. On Jan. 22, Avegant launched a Kickstarter campaign, which went far beyond anything company officials were hoping for. They had a target of $750,000, which was hit after just 3 hours and 56 minutes and eventually surpassed $1.5 million. Avegant’s $499 headsets won’t be available until at least the end of the year. The headsets will be for video gamers, as well as for watching any video source on mobile devices, including streaming video from Netflix. Local venture capitalists think Avegant could be sold for big bucks before it sells its first headset, in large part because of the $2 billion sale to Facebook in March of a competitor, Oculus VR Inc., an Irvine, Calif.based maker of virtualreality goggles for video gamers. If so, one of those to profit will be the Detroit-based First Step Fund, which invested $50,000 in Avegant last year, well before it got on its roll.

Minimum wage backers won’t appeal ruling aise Michigan, the group behind a November ballot proposal to increase the state’s minimum wage to $10.10 an hour, said it will not appeal a ruling by the Board of State Canvassers that found the group did not have a sufficient number of signatures for the proposal to appear on the ballot.

COMPANY NEWS 䡲 Troy-based Leo Burnett Detroit will take over brand communications and exhibit promotions for the Detroit Institute of Arts under a new multiyear deal to be the museum’s creative agency of record. 䡲 An affiliate of Los Angeles-based Vicente Capital Partners’ Growth Equity Fund acquired a “significant” interest in Global LT Inc., a Troy-based provider of language and cultural training, translation and related services. Terms were not released. Jay Ferguson and Jason Beck of Vicente and Krishnan Ramaswami, an adviser to the Vicente fund, will join Global LT’s board; Global LT promoted Tom Hanson to president from senior vice president of sales and marketing. 䡲 The Kroger grocery store at West Maple and Lahser roads in Bloomfield Township is scheduled for its grand reopening Wednesday. The store’s $1.4 million renovation — with a winetasting kiosk, sushi stand and more — is part of a $137 million investment by the Kroger Co. of Michigan. 䡲 Rochester Hills-based windshield wiper manufacturer Trico Products Corp. signed a definitive agreement to be sold to Cleve-

land-based Crowne Group LLC. Terms of the deal were not disclosed. Trico will maintain its headquarters in Rochester Hills under its current management. 䡲 German auto supplier ZF Friedrichshafen AG’s supervisory board backed negotiations to buy Livonia-based TRW Automotive Holdings Corp. after two days of meetings with management, Bloomberg News reported. 䡲 Longtime local chef Matthew Baldridge, currently co-hosting the Dinner Club Pop Up at The StoreFront Gallery in Ferndale, said he is planning to open his own restaurant in Detroit and hopes to finalize a location within a few weeks. 䡲 The Detroit Institute of Music Education will hold its first class, a summer school course, Aug. 25-29 in its newly renovated space at 1265 Griswold St. 䡲 A majority share of Ann Arbor-based truck accessory manufacturer Tectum Holdings Inc. was acquired by Boston-based private equity firm TA Associates Management LP. Terms were not disclosed. 䡲 Detroit Metropolitan Airport began using 30 new automated kiosks designed to reduce passenger wait times by allowing passengers to enter information electronically instead of filling out a declaration card, AP reported. 䡲 New Jersey-based chemical company BASF Corp. announced a $10,000 gift that will benefit the Detroit River International Wildlife Refuge, AP reported.

OTHER NEWS 䡲 U.S. Bankruptcy Court Judge Steven Rhodes delayed to Aug. 21 a trial to determine whether Detroit will exit bankruptcy. He also allowed the court’s creditors to change their votes and support the city’s adjustment plan. 䡲 Detroit Emergency Manager Kevyn Orr gave May-

or Mike Duggan control of the Detroit Water and Sewerage Department, which is trying to collect $90 million in unpaid residential water bills. 䡲 Construction on the M-1 Rail project began along Woodward Avenue in Detroit, and CEO Matt Cullen said the long-delayed contract for the system streetcars should be awarded within the next two weeks. 䡲 Attorney Richard Bernstein of the Farmington Hills-based The Sam Bernstein Law Firm announced plans to seek a nomination for the Michigan Supreme Court at the state Democratic Party convention in late August, AP reported. 䡲 Michigan Department of Transportation officials will answer questions about the ongoing I-96 construction Aug. 6 in Redford Township at “meeting and listening” sessions 7:30-9 a.m. at George Matick Chevrolet, 14001 Telegraph Road, and 6:30-8 p.m. at VFW Post 345, Don Hubert Hall, 27345 Schoolcraft Road. I-96 was closed in April between Telegraph and Newburgh Road. 䡲 Detroit residents can view the number of new streetlights installed in their neighborhoods, how many lots were mowed and the number of vacant houses demolished by going to Detroit Dashboard on the city’s website, AP reported. Updates will be made at www.detroitmi.gov/Detroit Dashboard.aspx. 䡲 Newly introduced federal legislation would boost the University of Michigan’s Value-Based Insurance Design Center and its research into lowering costs of chronic disease care through preferred benefits. 䡲 Comerica Bank’s Michigan Economic Activity Index jumped 4.3 points in May to 124.0, ending a six-month streak of declines, and the Southeast Michigan Purchasing Managers Index rebounded strongly in July to a level of 60, following a sharp drop in June to 47.1.

BEST FROM THE BLOGS READ THESE POSTS AND MORE AT WWW.CRAINSDETROIT.COM/BLOGS

Report: Medicare costs slowing

“

A federal Medicare trustees report shows Medicare costs are slowing and solvency for the program has been extended another four years.

”

Jay Greene’s blog about health care, energy and the environment is at www.crainsdetroit.com/greene

Ariz. man had Lakeshore pact ties

“

Avinash Rachmale was right about one thing. … The U.S. Department of Justice has, in fact, been investigating misdeeds at the former Lakeshore TolTest Corp. of Detroit.

”

Chad Halcom’s blog on “Laying Down the Law” can be found at www.crainsdetroit.com/halcom

DBpageAD_DBpageAD.qxd 7/23/2014 4:26 PM Page 1

Your Mission. Your Story.

Your Success!

81% of Crainâ&#x20AC;&#x2122;s readers

6KRZFDVH \RXU QRQSURĂ&#x20AC; W RUJDQL]DWLRQ RU WKH RUJDQL]DWLRQ \RXU FRPSDQ\ VXSSRUWV LQ

2013

Success Story:

Crainâ&#x20AC;&#x2122;s *LYLQJ *XLGH

Year-long

Published in the Oct. 27 issue of Crainâ&#x20AC;&#x2122;s, SRVLWLRQLQJ WKH QRQSURĂ&#x20AC; W SURĂ&#x20AC; OHV in front of business owners, CEOs, presidents and top-level executives. The digital edition will be on crainsdetroit.com for an entire year

%2186 ',675,%87,21

750 distribution to wealth managers and estate/trust attorneys in Southeast Michigan

800 additional copies will be distributed at the AFP annual Philanthropy Day Dinner

take action based on what they read*

RQOLQH H[SRVXUH

90% of readers have donated to or volunteered IRU D QRQSURĂ&#x20AC; W *

â&#x153;Ś

Publication Date: Oct. 27 3URĂ&#x20AC; OH 5HVHUYDWLRQ 'HDGOLQH Oct. 1

The Ă&#x20AC; UVW QRQSURĂ&#x20AC; WV WR VLJQ XS will be featured as Â´1RQSURĂ&#x20AC; W RI 1RWHÂľ in an issue of our 1RQSURĂ&#x20AC; W 5HSRUW e-newsletter.

&RQWDFW 0DUOD :LVH DW PZLVH#FUDLQ FRP or (313) 446-6032.

Ronald McDonald House of Detroit

â&#x20AC;&#x153;

The Crain's Giving Guide promotional ad was paid for with two major donations that came to our Ronald McDonald House on that same day the guide came out. In addition to receiving WKHVH GRQDWLRQV ZH YH KDG D Ă XUU\ RI HPDLOV from individuals from companies that want to volunteer at our agency. In just two days, we saw a dramatic uptick in responses! â&#x20AC;&#x201D; -HQQLIHU - /LWRPLVN\, executive director, RMHC of SE MI

â&#x20AC;?

crainsdetroit.com/givingguide *Signet Study, Sept. 2013

Get face to face with business leaders in Southeast Michigan Sponsor a Crainâ&#x20AC;&#x2122;s Detroit Business event!

70%

of B2B marketers rate in-person events as the most effective content marketing tactic*

BeneďŹ ts:

Gain access to a wide range of audiences at one time Enhance visibility and image

Differentiate your company from competitors

Develop new relationships with customers and prospects

Showcase services and products

Boost both short- and long-term sales

Sponsorships are available for all 2014 Crainâ&#x20AC;&#x2122;s events. To learn more, contact Marla Wise at mwise@crain.com or (313) 446-6032. *SOURCE: 2014 B2B Content Marketing Trendsâ&#x20AC;&#x201C;North America: Content Marketing Institute/MarketingProfs

EVENTS C A L E N D A R | 2 0 1 4

September 50 Fastest-Growing Companies Tuesday, October 7 7:30 - 10 a.m. MSU Management Education Center, 811 W Square Lake Rd., Troy

November Health Care Leadership Summit Thursday, November 6 7:30 a.m. - 1 p.m. Shriners Silver Garden Event Center, 6RXWKĂ&#x20AC; HOG 5G 6RXWKĂ&#x20AC; HOG

40 Under 40 Wednesday, November 19 5 - 9 p.m. MGM Grand Detroit, 1777 3rd St, Detroit

For more information, visit crainsdetroit.com/eventsponsorship Events subject to change

PN Full pg_DBpageAD.qxd 7/30/2014 2:32 PM Page 1

-&5s4 /05 5"-, "#065 063 (3"%6"5& %&(3&& 130(3".4

-&5s4 5"-, "#065 :0634

1FSTPOBMJ[F ZPVS HSBEVBUF FYQFSJFODF BU .JDIJHBO 4UBUF 6OJWFSTJUZsT UPQ SBOLFE &MJ #SPBE $PMMFHF PG #VTJOFTT

(FU 4QBSUBO 3FBEZ

'VMM 5JNF .#" &YFDVUJWF 8FFLFOE .#" "DDPVOUJOH #VTJOFTT "OBMZUJDT 'JOBODF )PTQJUBMJUZ #VTJOFTT .BOBHFNFOU 4USBUFHZ BOE -FBEFSTIJQ .BSLFUJOH 3FTFBSDI 4VQQMZ $IBJO .BOBHFNFOU

'MFYJCMF QSPHSBNT BOE JOEJWJEVBMJ[FE GBDVMUZ DPBDIJOH )JHIMZ JOUFHSBUFE JOUFSEJTDJQMJOBSZ DVSSJDVMVN (MPCBM CVTJOFTT FYQFSJFODF 3PCVTU FOUSFQSFOFVSTIJQ DVMUVSF BOE SFTPVSDFT &YDFQUJPOBM DBSFFS TFSWJDFT TVQQPSU

#30"% .46 &%6 ."45&34