Crain's Detroit Business, Sept. 8, 2014 by Crain's Detroit Business

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www.crainsdetroit.com Vol. 30, No. 36

SEPTEMBER 8 – 14, 2014

$2 a copy; $59 a year

Page 3 An $8B test to coordinate Mich. Medicare, Medicaid

Money talks in the shadows Lawmakers, lobbyists quietly bypass state’s murky political spending rules

Hut! cuisine: Way to Lions’ fans hearts is ... what else? CRAIN’S MICHIGAN BUSINESS

BY CHRIS GAUTZ CAPITOL CORRESPONDENT

oney talks when it comes to politics. Oftentimes, quietly. And that’s OK by the U.S. Supreme Court, which deems money a form of free speech. As the cacophony of election-season advertising gets into full swing in Michigan, there is plenty of free speech to go around. It’s just not always clear who is doing the talking.

M Mich. cities put more mettle to the pedals, Page 17

Second Stage How diversity makes a difference, Page 11

This Just In

Entertainment prevails in state tax dispute A dispute with the Michigan Department of Treasury is ending favorably for Entertainment Publications LLC. The Troy-based company paid a tax bill of about $667,500 under protest in 2011 for 20062009 taxes. Former owner IAC/InterActive Corp. picked up about $470,400 of that under a n indemnity agreement. While the dispute was pending, Entertainment filed for bankruptcy in early 2013. Lowell Potiker, son of the company founders, bought its major assets out of the bankruptcy weeks later. Under an agreement between Treasury and the company’s attorneys at Honigman Miller Schwartz and Cohn LLP, the state agreed to refund just under $550,000. U.S. Bankruptcy Judge Christopher Sontchi signed an order calling for IAC to collect about $380,000 of the refund and Entertainment, the rest. — Chad Halcom

The laws governing transparency with money in politics have been given low grades in Michigan. Laws make unreported campaign spending possible in a number of creative ways. Who’s ultimately paying the bar tab for campaign fundraisers or, ultimately, behind issue-oriented TV ads? Voters or citizens groups often never find out because of work-arounds permitted in state finance laws.

SCOTT POLLACK

The bank with a lightning rod Ex-Im: A critical cog or corporate welfare? BY DUSTIN WALSH CRAIN’S DETROIT BUSINESS

For AlphaUSA, exporting its machined and stamped assemblies has become critical business. Livonia-based Alpha is expected to generate as much as $10 million in revenue out of its total $47 million from foreign buyers this year. Roughly half of those shipments were made possible through the Export-Import Bank of the U.S., the federal agency that finances the export of Americanmade goods and services. But increased use by some of the country’s largest corporations is causing a mixed-coalition of tea party Republicans, conservative pundits and See Ex-Im, Page 27

Paul

See Money, Page 28

CEO Paul: Deal will give Compuware a ‘freer hand’ to make changes BY TOM HENDERSON CRAIN’S DETROIT BUSINESS

The proposed deal for a San Franciscobased private equity firm to buy Detroitbased Compuware Corp. and take it private will make it easier for President and CEO Bob Paul to continue realigning the company’s various business units — and to get the rest of the shares of spinoff Covisint Corp. into stockholders’ hands. In an interview last week, Paul told Crain’s he will have more freedom to operate the company once it goes private and doesn’t have to worry about hitting the earnings estimates of Wall Street analysts every three months. “We’ll have a freer hand to accelerate the changes we’ve planned on,” he said. The $2.5 billion deal by Thoma Bravo LLC to take Compuware (Nasdaq: CPWR) private

will keep the headquarters in Detroit and management in place. It was announced Sept. 2 after all-night negotiations, Paul said. The deal is expected to close by the end of the year, pending approval from federal regulators. “The market hasn’t been kind to Compuware the last 18 months. This will give the company more patient capital. Management won’t have to answer to analysts month to month or quarter to quarter,” said Rajesh Kothari, managing director of Southfield-based Cascade Partners LLC.

Business lines As part of the ongoing realignment, Paul plans to separate Compuware into two See Compuware, Page 25

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CRAIN’S DETROIT BUSINESS

MICHIGAN BRIEFS Meijer holiday plans include hiring 4,800 for state stores Walker-based Meijer Inc. will hire 10,000 employees in the coming months to get ready for holiday shoppers, MLive.com reported. About 4,800 jobs will be in Michigan and more than 1,000 in the Grand Rapids area. Meijer expects it will need the extra help because of an increase in holiday sales and because it opened nine stores this year. Last year, the retailer announced it would hire 9,000 new employees. At its peak in 2012, Meijer hired 12,000 for the holidays. Meijer operates 213 supercenters and grocery stores throughout Michigan, Ohio, Indiana, Illinois and Kentucky and plans to expand into Wisconsin in 2015.

Consumers plans to install new meters 2 years ahead of time Jackson-based Consumers Energy Co. plans to provide updated electric meters to homes and businesses across Michigan, Energy Business Review reported. About 1.8 million electric meters and 600,000 natural gas meters will be upgraded by the end of 2017, two years earlier than initially scheduled. “We are seeing excellent performance from meters we have already installed, enabling us to

Family firms: Quirky but vital – like, well, your family Until recently, 106-year-old Irwin Seating Co. shared a trait with many family-owned businesses: It lacked a formal succession plan that detailed the transition to the next generation. The reasons were many, said Win Irwin, chairman and CEO of the Grand Rapids-based manufacturer of seating for stadiums and movie theaters. Chief among them: Irwin didn’t know whether any of his children would be joining the business. But three of his five sons eventually did. In several ways, Irwin Seating mirrors the findings of the second annual Family Owned Business Survey conducted by Grand Valley State University’s Family Owned Business Institute and supported by professors at the Western Michigan University Haworth School of Business. Of respondents to the survey, 81 percent said they lacked a formal succession plan for their companies. Family businesses also come with positive attribbring enhanced service to more customers sooner,” said Garrick Rochow, the utility’s vice president of customer operations and quality. Since the summer of 2012, more than 275,000 residents and small-business owners in West Michigan have received upgraded meters.

Designated driver may turn out to be a business model in 2 cities An erstwhile Grand Rapids elec-

utes, according to the survey, which generated 156 responses. Laurel Ofstein, an assistant professor of management at WMU, said family-owned businesses are much less likely to take on any large-scale debt as a means to growth. Rather, they “tend to grow organically.” Additionally, the report said, family-owned businesses tend to be more loyal to their communities. “When anticipating reduced earnings, the majority of family-owned businesses indicated they would most likely reduce distributions to owners and reduce salaries to family members before reducing advertising or research and development expenditures. Layoffs were found to be a last resort,” the report stated. Today, family businesses account for 57 percent of the nation’s gross domestic product and 70 percent of the world’s, according to the study. — MiBiz

trician named Chris Myers has started Beer City Runner, a weekend job running a shuttle bus between six of the city’s breweries and a bar. Myers told the Grand Rapids Business Journal that the shuttle is intended to give out-of-town visitors and casual pub crawlers a safer and cheaper way to hop from bar to bar. Myers’ 14-seat bus is known as … wait for it … “Hoptimus Prime.” The service was scheduled to launch Friday. In another initiative to bring

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mobility to microbrewing, Bay City businesswoman Ashley Anderson plans to start the Sunrise Pedal Trolley — a bicycle that can accommodate up to 15 people, The Bay City Times reported.

MICH-CELLANEOUS 䡲 Dennis Frederick and his son Brian were sentenced to a year and a day in prison in U.S. District Court in Flint after pleading guilty to making false statements about welding work that their Fenton company, Precision Metal Spinning, performed on missile engines. The engine supplier, Commerce Township-based Williams International, discovered cracks in the seams of the engines’ outer wall assembly in 2011. 䡲 Highland Park-based Dialog Direct opened its first Grand Rapids-area call center in Cascade Township, where it will employ 250, the company said in a release. The center can be expanded to more than 400 employees. Dialog Direct employs about 2,400 in Michigan. 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.

CORRECTION 䡲 An item in Capitol Briefings on Page 9 of this week’s issue about a House bill that would allow a state agency to create a rule stricter than federal standards said a hearing on the bill was set for Tuesday, but the bill was removed from the agenda after the page went to press.

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CRAIN’S DETROIT BUSINESS

September 8, 2014

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State’s $8B test to coordinate care BY JAY GREENE CRAIN’S DETROIT BUSINESS

Michigan next year will join 10 other states in a bold experiment under health care reform that will begin to manage more than $8 billion worth of care for seniors and patients with disabilities who are covered under both Medicare and Medicaid. The goal of the three-year demonstration program is to reduce costs through greater coordination of care and to improve quality and outcomes for Michigan’s most chronically ill population,

Goal: Savings, quality for Medicare-Medicaid recipients said Stephen Fitton, the state’s Medicaid director. “The integration of Medicare and Medicaid has been at cross purposes for decades, with incentives misaligned between physical health and behavioral health,” Fitton said. “We want to bring all these different domains of care together.” For example, Medicare now typically covers hospital, physician,

pharmacy and some short-term rehabilitation and long-term care, or nursing home, costs. Medicaid covers some medical, dental, pharmacy and the majority of longterm-care nursing home costs. Lack of coordination between the two programs drives up costs and lowers quality, Fitton said. Nationally, about 9 million dualeligible patients — those enrolled in

both Medicare and Medicaid — account for 13 percent of the total population in the Medicare and Medicaid programs. But they account for 40 percent of all Medicaid spendFitton ing and 27 percent of all Medicare spending for a total of $350 billion annually. Michigan and the federal gov-

Inside

Mixing a little blush wine with a little brush time, Page 6

See Test, Page 29

Company index That growling sound you hear inside Ford Field this season may not be a Lion but your stomach reacting to enhanced menu items that include (far left) a foot-long coney from Ford Field concessionaire Levy Restaurants and a Classic Cheeseburger and turkey burger from Mercury Burger Bar in Detroit. PHOTOS BY ANJANA SCHROEDER

Fancier fare, more options aim to keep fans at home field BY BILL SHEA CRAIN’S DETROIT BUSINESS

ome to Ford Field for the football, stay for the … Slow’s Bar BQ? Increasingly sophisticated local food and drink concessions are key elements of the Detroit Lions’ effort to entice fans — especially the coveted club seat and suite holders — to return to the stadium every week instead of watching games from the comfort of their couches. In an example of stadium N THE EB gentrification, Lions’ attendance a Big Boy stand consistent, even if team hasn’t been, in the secondcrainsdetroit.com level Huntington Club has been replaced this season by Bigalora Wood Fired Cucina (formerly known as Pizzeria Biga in Royal Oak, Southfield and Ann Arbor), and it features a 600pound tiled oven from Italy used to cook wood-fired Neapolitanstyle pizzas. “Consumer tastes have evolved in relation to when they go out to a public event,” said Elizabeth Parkinson, the Lions’ senior vice president of marketing and partnerships.

Lions menu: Detroit-style scarf and turf

See Lions, Page 26

These companies have significant mention in this week’s Crain’s Detroit Business: Advantage Health Centers . . . . . . . . . . . . . . . . . . 29 AlphaUSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Amway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Angle Advisors-Investment Banking . . . . . . . . . . . . 25 Angott Search Group . . . . . . . . . . . . . . . . . . . . . . 12 Ann Arbor Downtown Development Authority . . . . . . 7 Autoliv . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Belfor Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Bike Detroit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Blue Cross Blue Shield of Michigan . . . . . . . . . . . . . 4 Boydell Development . . . . . . . . . . . . . . . . . . . . . . 10 Cascade Partners . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ChemicoMays . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Computing Source . . . . . . . . . . . . . . . . . . . . . . . . 15 Compuware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Covisint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Detroit Lions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Detroit Wayne Mental Health Authority . . . . . . . . . 29 Domino’s Pizza . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Federal-Mogul . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Ferndale Downtown Development Authority . . . . . . . 6 FirstMerit of Michigan . . . . . . . . . . . . . . . . . . . . . 27 Ford Motor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 General Motors . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Government Consultant Services . . . . . . . . . . . . . . 28 Health Care Association of Michigan . . . . . . . . . . . 29 Health Management Associates . . . . . . . . . . . . . . 29 Human Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 International Automotive Components . . . . . . . . . . 22 LaFontaine Cadillac Buick GMC . . . . . . . . . . . . . . 14 LLamasoft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 MARS Business Group . . . . . . . . . . . . . . . . . . . . . 15 Meridian Health Plan of Michigan . . . . . . . . . . . . . 29 Michigan Association of Health Plans . . . . . . . . . . 29 Michigan Campaign Finance Network . . . . . . . . . . 28 Michigan Roundtable for Diversity and Inclusion . . 12 Molina Healthcare of Michigan . . . . . . . . . . . . . . . 29 MSX International . . . . . . . . . . . . . . . . . . . . . . . . 22 Orlans Associates . . . . . . . . . . . . . . . . . . . . . . . . . 12 Paint & Pour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Picasso’s Grapevine . . . . . . . . . . . . . . . . . . . . . . . . 6 Pinot’s Palette . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Plante Moran . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Plunkett Cooney . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Rockbridge Growth Equity . . . . . . . . . . . . . . . . . . . 25 Sterling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Technical Training . . . . . . . . . . . . . . . . . . . . . . . . 22 TI Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 TRW Automotive Holdings . . . . . . . . . . . . . . . . . . . 22 University of Detroit Mercy . . . . . . . . . . . . . . . . . . 15 University of Michigan . . . . . . . . . . . . . . . . . . 25, 27 Wayne State University . . . . . . . . . . . . . . . . . . . . . 25 Wheels in Motion . . . . . . . . . . . . . . . . . . . . . . . . . 19

Department index BUSINESS DIARY . . . . . . . . . . . . . . . . 24 CALENDAR . . . . . . . . . . . . . . . . . . . . 23 CAPITOL BRIEFINGS. . . . . . . . . . . . . . 9 CLASSIFIED ADS . . . . . . . . . . . . . . . . 25 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 8 LETTERS . . . . . . . . . . . . . . . . . . . . . . . 8 MARY KRAMER . . . . . . . . . . . . . . . . . 17 OPINION . . . . . . . . . . . . . . . . . . . . . . . 8

What weighs 600 pounds and works in Ford Field? It’s not a defensive tackle but a new tiled oven that Bigalora Wood Fired Cucina will use to bake Neapolitan-style pies for fans at Detroit Lions games.

PEOPLE . . . . . . . . . . . . . . . . . . . . . . 24 RUMBLINGS . . . . . . . . . . . . . . . . . . . 30 STAGE TWO STRATEGIES . . . . . . . . . . 15

THIS WEEK @ WWW.CRAINSDETROIT.COM

21 restaurants, 3 courses, 30 bucks Detroit Restaurant Week is set for Sept. 19-28. Get hungry and read more about the restaurants on this year’s menu. CDB/NATHAN SKID

WEEK ON THE WEB . . . . . . . . . . . . . . 30

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CRAIN’S DETROIT BUSINESS

Blues would pay $30M under proposed deal to resolve overbilling allegations BY CHAD HALCOM CRAIN’S DETROIT BUSINESS

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Blue Cross Blue Shield of Michigan will pay about $30 million to resolve allegations of overbilling for acute care services at Michigan hospitals, if a federal judge approves its proposed settlement later this year. The insurer admits no wrongdoing in creating a $29.99 million settlement fund for competitor insurance companies, self-insured companies and employees with co-payments who were treated at any of about 130 hospitals between January 2006 and June of this year. About $13.5 million of the funds could be set aside for contingency fees and litigation expenses for the various attorneys in the 2010 civil lawsuit, under a request before U.S. District Judge Denise Page Hood. A hearing is scheduled for November. The lawsuit is a consolidation of several that surfaced after the Michigan attorney general and the U.S. Department of Justice filed a joint lawsuit of their own over the insurer’s use of “most favored nation” and “most favored nationplus” clauses in contracts with hospitals. The more conventional mostfavored-nation agreements allegedly required only that Blue Cross get a billing rate at least equal to any other insurer. The plus agreements allegedly caused hospitals to charge the competitors more. Blue Cross and the government agencies agreed to dismiss the original DOJ case in March 2013, after Michigan Insurance Commissioner Kevin Clinton declared those clauses unenforceable and the Legislature passed two laws prohibiting such agreements with insurers. But most of the related civil lawsuits — including one filed by the Hillsdale-based Shane Group Inc. — were consolidated into one case, which the insurer now hopes to settle. “This settlement, the parties agree, is an amicable resolution reached before the court or the jury had decided the merits of either party’s legal position,” the company said in a statement about the resolution. Hood gave the deal a preliminary approval over the summer but must still review it for fairness and decide on the attorneys’ share at a hearing Nov. 12, before final approval. Up to 7 million Michigan residents and businesses could be eligible for a share of the settlement funds — anyone insured or uninsured who paid for hospital services during that period, even those covered by Blue Cross, said partner Dan Small of Cohen Milstein Sellers & Toll PLLC and Powell Miller of Rochester-based The Miller Law Firm PC, who served on the executive committee of plaintiff attorneys in the case. Fred Isquith, partner at New York City-based Wolf Haldenstein

Up to 7 million Michigan residents and businesses could be eligible for a share of the settlement funds — anyone insured or uninsured who paid for hospital services. Adler Freeman & Herz LLP and cocounsel for the companies and individuals suing Blue Cross, said the Justice and attorney general lawsuit agreement largely involved regulations governing Blue Cross, while the Shane Group settlement proposal involves financial reimbursement for companies for those who were affected. Helen Stojic, director of corporate communications for Blue Cross, said the insurer has already distributed notices informing members of the class action about the settlement deal.

The class includes: competitor insurers that covered acute care hospital services during the eightyear period, self-insured companies that reimbursed hospitals for services, and employees or individuals who made co-payments or other hospital expenses that were affected by the most-favored-nation agreements. Claims must be submitted with documentation by Nov. 16, and individual objections or requests to be excluded are due by Sept. 24. Chad Halcom: (313) 446-6796, chalcom@crain.com. Twitter: @chadhalcom

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CRAIN’S DETROIT BUSINESS

New biz mixes paint, wine; will it yield green? BY NATALIE BRODA SPECIAL TO CRAIN’S DETROIT BUSINESS

Painters take to canvas at Picasso’s Grapevine in Clarkston during a paint-and-sip session. NATALIE BRODA

Ten women sit around a large table, paint brushes in one hand, wine glasses in the other. Propped on the easels in front of them, similar works of art take shape. The women are painting the night sky as an instructor circles the room, checking in, giving tips and telling jokes.

This, explains Leanna Haun, owner of Picasso’s Grapevine in downtown Clarkston, is paint and sip. Haun opened the business in June after 20 years as a corporate controller; she explains the business as one part wine, one part paint and one part entertainment. “Right now, in Michigan, this industry is on a bull curve and it’s surging,” Haun said.

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The industry, which blends studio space with a forum for socializing and fun, was born in the South in the early 1990s and has recently caught on locally — particularly in Oakland County, where almost a dozen venues have opened in the past 10 years. “These businesses have created a different form of entertainment, mostly for adults, and I think what’s nice is that they fit so well within creative communities,” said Cristina Sheppard-Decius, executive director of the Ferndale Downtown Development Authority. Here’s how a paint-and-sip session typically works: An artist teaches an audience of up to 40 people how to replicate a canvas painting in two or three hours. The painters can bring their own food and drink. The largest business comes from private parties; many studios also welcome walk-ins or host open painting sessions. A private twoor three-hour party costs $35 to $45 per person. Some locations serve alcohol, while most work with local authorities on a BYOB policy. Before Haun opened Picasso’s Grapevine in June, she researched franchise agreements and realized everything she would pay for in a franchise fee, she could accomplish herself. The average franchise fee for a paint-and-sip business is $25,000; the franchisee also pays royalty fees to use the copyrighted paintings in a franchise library. “But it was more than that,” Haun said. “In a franchise, you need permission to do X and Y. I wanted to find the empowerment to just do Z if I wanted to.” Haun’s startup costs, including deposits and other expenses related to the purchase of her building at 12 S. Main St., though not the price of the building itself, totaled $100,000. She projects 2014 revenue of $180,000. Other business owners say there are selling points to sticking with a proven franchise structure. New Orleans-based Painting with a Twist ranked first in the paint-andsip category for Entrepreneur magazine’s “Franchise 500” this year; it has more than 120 locations in 25 states. Michelle Lewis runs two of those locations. She has a background in architecture and said she felt she needed a franchise for the logistical and technical support. She opened the 5,000-squarefoot Ferndale location at 200 W. Nine Mile Road four years ago and the 3,700-square-foot location at 33033 Grand River Ave. in Farmington two years ago. Her initial investment for both locations, including the $25,000 franchise fee, was $200,000. Linda Belford, a Michigan franchise placement consultant with Lexington, Ky.-based FranNet Consulting, predicts a 10- to 15-year longevity for the paint-and-sip industry. “Location and marketing have a lot to do with it,” she said. “Owners who are doing well have a good network with the local parks and recreation and the school districts.” Ann Arbor has three paint-andSee Next Page

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Big Ideas. Big Projects.

BIG IMPACT!

NATALIE BRODA

Leanna Haun (right), owner of Picasso’s Grapevine, teaches one of the paint-

and-sip sessions. From Previous Page

sip shops. Susan Pollay, executive director of the Ann Arbor Downtown Development Authority, said she believes shelf life comes down to the business and owner itself, and not just the popularity of the trend. “Those came and went. When we began seeing yoga studios everywhere, not everyone thought those would have legs,” Pollay said. “Now, they’re well-established parts of our community.” Lisa Ebert, a franchisee for Houston-based Pinot’s Palette, opened a Rochester Hills location in June. Her initial investment was around $150,000, including the $25,000 franchise fee; she operates out of a 3,000-square-foot location at 230 E. Auburn Road. Ebert expects to break even within the first six months of operation, and recoup her investment in less than two years. Ebert said she believes that as long as she — and her franchise — stay creative and keep the business fresh, her business will be sustainable. “There’s long-term value in going out for a night and having something to show for it,” Ebert said. “You can spend $35 on food or you can spend that on art.” Mike Patino and Dennis Spencer have a slightly different twist on the paint-and-sip trend. Spencer, trained as an artist, and Patino are co-owners of the independently owned Paint & Pour, based at 220 S. Main St. in Ann Arbor (2,000 square feet) and 111 S. West St. in Brighton (4,000 square feet). The partners view the business as a chance to not only make money but to help talented artists and art school grads maintain employment as session leaders or by creating the works of art for the participants to replicate. “They walk out of school with an art degree and into a marketing job,” Spencer said. “We see ourselves as an enabler to build off

their degree and still have a decent living.” Paint & Pour is half brick-andmortar with two standing locations and half mobile locations that travel to restaurants and bars. The Brighton location opened in August 2012, the Ann Arbor location in May 2013. Patino and Spencer said they believe the industry has long legs. “This is for people who want a different element,” Patino said. “It’s like going to a comedy club, getting drinks and walking away with a masterpiece.”

NATALIE BRODA

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CRAIN’S DETROIT BUSINESS

LETTERS

OPINION

Ex-Im Bank vital to Michigan business T

he Export-Import Bank seems an odd-duck candidate to become a political football. It fills a niche in the export business by providing insurance, working capital and direct loans largely not available elsewhere to support the export of U.S. products. But political football it is, as Republicans are divided among themselves about whether to extend the agency’s charter. There are a couple of reasons for this. One big one is that Boeing is far and away the dominant Ex-Im customer in terms of dollar amount, leading, as Dustin Walsh reports on Page 1, to charges of “corporate welfare.” But smaller businesses also are beneficiaries, accounting for about 90 percent of the total number of loans. As Walsh reports, a range of Michigan companies benefit from Ex-Im services, ranging from large corporations like Ford and Dow Chemical to much smaller companies like AlphaUSA in Livonia. This seems to us to be the wrong part of the federal government to be arguing about. Shouldn’t we focus our energy on maintaining government systems and programs that serve a useful purpose and eliminating those that do not? Ex-Im returns money to the U.S. Treasury each year and so provides needed services without penalizing taxpayers. Congress should work out a short- and long-term plan to maintain Ex-Im. It matters to Michigan businesses.

MEA should turn focus from suit The MEA was dealt a setback last week when an administrative law judge ruled that it can’t limit members’ ability to withdraw from the union to a one-month period each year. The legal decision and the union’s decision to make public its latest membership figures (around 110,000 active members) are significant developments. The legal decision followed lobbying by organized labor and pro-business groups. The groups sought to persuade teachers to stay or leave the union. It was also the first sort of legal litmus test on the state’s new right-to-work law which no longer allows forced union fees as a condition of employment The decision seems likely to be appealed through the courts. However, it seems reasonable to suppose that the MEA will need to change its provisions on timelines for opting out. The MEA might be best served by spending its time and money on making sure its members think their dues are worth paying for the benefits they receive.

Flood uncovers cities’ needs Editor: Communities across Michigan can no longer ignore the financial and personal costs of extreme weather and climate disruption that we are seeing with increasingly regularity. The recent catastrophic flooding in metro Detroit, made worse by aging and inadequate infrastructure, will cost hundreds of millions of dollars to local communities. Warren has already calculated its cost at $231 million. Oakland County’s early estimates peg the bill at $340 million. Tens of thousands of homes, businesses and public properties were damaged in metro Detroit. In Dearborn, 75 percent of city roads were shut down. For homeowners, the cost of restoring their houses can exceed $10,000 — costs many of them won’t recover even though the ancient sewers may be the cause of basement overflows.

Crain’s Detroit Business welcomes letters to the editor. All letters will be considered for publication, provided they are signed and do not defame individuals or organizations. Letters may be edited for length and clarity. Write: Editor, Crain’s Detroit Business, 1155 Gratiot Ave., Detroit, MI 48207-2997. Email: cgoodaker@crain.com The economic damages due to climate disruption will continue to increase. These catastrophic floods come on the heels of extreme ice storms that left hundreds of thousands of people in mid-Michigan without power for up to nine days on the coldest days of 2013-2014 winter. A year earlier, massive floods in Kent County caused millions of dollars in damages. The lesson: We can’t afford to

kick the can down the road. Climate change is no longer a problem for future generations — it’s here now and it’s wreaking havoc on our local communities. We must prepare and make investments in our infrastructure, and identifying funding is the first step. With cuts to revenue sharing, local communities do not have the resources necessary to do this on their own. This effort will take cooperation and collaboration on the scale we almost never see. From taking steps to reduce carbon pollution to investing in more climate-resilient infrastructure, we all have a role to play, or our families, who are still drying out their damaged homes and who have lost their dearest belongings, will have to suffer all over again. Nathan Triplett Mayor, East Lansing Board member, Michigan Municipal League

TALK ON THE WEB From www.crainsdetroit.com Re: Police handcuff fast-food wage protesters outside Detroit McDonald’s Fast food jobs are great for kids in high school and college, and the current minimum wage is fine for them. Fast food jobs aren’t really designed to support those who want to provide support for a family. MikeInMI There was an interview with a Micky D’s owner in California. He worked his way up and owns several now. Fast food can be a career. Hard work and learn the business. Trexinmichigan

Re: Pension tax bites Snyder What was the rationale of different taxes for retirees depending on the source of income? Why should the state exempt pension income while taxing other types of retiree income? This pension exemption was a special interest for one class of people, those with pensions, at the expense of those who have to save for their own retirement. An

Reader responses to stories and blogs that appeared on Crain’s website. Comments may be edited for length and clarity. across-the-board exemption of a basic level of income for all retirees is much more fair. Announcer Whose financial resources are so vast that they do not mind giving up 4.25 percent of their IRA and 401(k) savings to the state of Michigan in extra taxes? Do we not have a better use for this money? Carolyn Mazurkiewicz

Re: Bankruptcy debt plan trial Sorry bondholders. Everyone is getting a haircut, including your insured clients. The “mayhem” referenced by counsel would presumably be investor reluctance to invest in municipal bonds in the future. That may be the case, but the risk they took was exactly that: a risk. Timothy Dinan

I believe Syncora is simply stating the law. No unsecured creditor should get a preference over another. I did not see any indication they are asking for any special preference in the risks they accepted. NoSpinJustFacts

Re: Detroit, state should’ve challenged Wings arena plan Hear, hear! Navi

Re: MEDC on the hunt to spread the word about great outdoors That is great for Michigan residents, but what is being done to lure in out-of-state hunting and fishing tourism? Lowering the hunting/fishing license fees for out-of-state residents would be a good start for generating higher tourism revenue. Create some financial incentives or at least level the playing field for all of us traveling from across the nation. Hunty McFisherman

KEITH CRAIN: Welcome home … we missed you In just a few days, Detroit will begin its homecoming celebration. About 150 folks who moved away and have become successful in a variety of fields will return to Detroit to see just what’s been going on since they left. It’s an invitation-only kind of thing because the focus is on those 150 folks — not the thousands of folks still here. Crain’s Detroit Business has been part of the planning process — along with an allstar local host committee and a lot of sponsors. The folks who are returning are

coming from cities like New York, Washington, Los Angeles, San Francisco and points between. Some own companies. Some run companies. Some are in the arts or entertainment industry. Some run nonprofit organizations. The “expatriates,” as we have called them, want to know what’s going on. They understand that there is an excitement in the air, and for three

days we’ll be trying to catch that excitement and bottle it. And with any luck, they will find a way to be part of their hometown’s next chapter. It’s going to be a funfilled, educational and enjoyable few days. There are bound to be lots of surprises for our returning Detroiters. We are very excited about the people who are planning to come and just as excited about what we’re

going to be telling them. Everyone knows what has happened to Detroit during the last few decades. But not enough people realize that there is, indeed, a renaissance going on in Detroit. Still, more and more people are talking up our city. When we used to get condolences after telling someone we were from Detroit, today it’s an entirely different conversation. We’ll tell you what happened, online beginning Sept. 17, in print on Sept. 22 and in October, with a special Detroit Homecoming sup-

plement. This whole thing started with a conversation a year ago with our friend Jim Hayes, who lived in Detroit while working for Sports Illustrated from 1967-77. He ended up in New York with Time Inc. in a succession of roles, including his tenure as publisher of Fortune magazine. He’s back in Detroit and has been invaluable in ramrodding this exciting and massive project. We hope it’s the first annual Detroit Homecoming. This is just a great beginning.

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MSHDA resignation likely to delay EB-5 center nity, mostly in the area The state’s EB-5 regional center is not likely to of workplace safety. If reach its goal of landing the bill had become law, its first investment by the Snyder noted it would end of the year, due to the have kept the state from resignation last month of protecting the Great Scott Woosley, executive Lakes because the Dedirector of the Michigan partment of Environmental State Housing Development Quality has stricter stanAuthority. dards than the federal The center is focused government does regardon attracting wealthy iming the discharge of migrants who can rephosphorus to protect Chris Gautz ceive a green card for the lakes from algae and themselves and their family if they aquatic weeds. invest $1 million — or $500,000 in a One change in the new bill, high-unemployment or rural area House Bill 5731, is that it allows a — in a business that creates at state agency to create a rule that is least 10 jobs here. Woosley also served as president and CEO of the Michigan Community Development Corp., a MSHDA subsidiary set up in April to house the EB-5 center, before resigning after reports surfaced of his seeking reimbursement for expensive meals, alcohol and travel while on state business. Deputy State Treasurer Wayne Workman is serving as the acting executive director of MSHDA, and is expected this week to be appointed as interim head of the MCDC. “We want to keep (the EB-5 center) going and get a deal done in the best possible way,” Workman said. But he said he does not have the same goal Woosley did of completing a deal before the end of the year, as he is largely focused on refining the center’s business model so it can be self-sustaining and begin to hire staff. Right now, about 10 MSHDA staffers are devoting some of their work time toward the center. Woosley had taken part in a series of overseas trips to court potential investors in China, Egypt, Saudi Arabia, the United Arab Emirates and Qatar. It was on those trips that he made the expenses deemed questionable, leading to his resignation. Workman said he does not plan to take any foreign trips while he serves as acting executive director, nor are there plans for any staff to take any trips before the end of the year. In the wake of Woosley’s resignation, Workman said, MSHDA is undertaking a thorough review of its travel policies before any other trips are approved. He said the agency may contract with consultants to visit with potential foreign investors instead. Workman’s other task, and the most important during his short time at MSHDA, he said, is to ensure the agency has a new executive director in place before Dec. 1, when his contract to serve as acting executive director ends. He said he will not be a candidate for the job.

Capitol B r i e fi ng s

Wayne Workman, acting executive director of the Michigan State Housing Development Authority, said his most important task is to ensure the agency has a new executive director in place before Dec. 1. He will not be a candidate for the job. stricter than federal standards if the director of the agency determines there is a clear and convincing need to do so — and then pro-

vides a statement of facts that establish the need for the higher standards. Anna Heaton, deputy press sec-

retary for the House Republicans, said the sponsor of the bill, Rep. Joe Haveman, R-Holland, took the concerns Snyder laid out in his veto letter three years ago and tried to address them in crafting the new bill. Dave Murray, Snyder’s deputy press secretary, said the administration is continuing to work on the bill with the Legislature and is evaluating the new language. The bill is set for a hearing Tuesday before the House Regulatory Reform Committee. Chris Gautz: (517) 403-4403, cgautz@crain.com. Twitter: @chrisgautz

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If at first you don’t succeed … The first veto issued by Gov. Rick Snyder came in 2011 when lawmakers tried to prohibit the state from enacting any rule that was more stringent than federal standards. Now, lawmakers are trying again. Snyder vetoed House Bill 4326, saying then it was overly broad and some of the rules in place were requested by the business commu-

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Kefallinos has big plans for Michigan Bldg., theater Dennis Kefallinos arMile” and “Transformrived back in town reers: Age of Extinction.” cently after a lengthy Eric Novack, senior summer vacation with a project manager for Kenew property in his real fallinos’ Detroit-based estate portfolio: the Boydell Development Co., Michigan Building and said the theater portion the attached former of the building is expectMichigan Theatre. ed to be renovated as The latter, currently event space. used as a parking garage, Think events like conis where Kefallinos said certs and performances his heart was drawn of Shakespeare and the Kirk Pinho when he purchased the like. entity that owns it, Bagley Acquisi“I want to restore it back to what tion Corp., for an undisclosed price. it was,” Kefallinos said. “I’m not “I bought it for one reason,” he going to cut corners on the lightsaid pointing to the sprawling but ing, for example.” nearly empty theater and parking Is that realistic? Aye, there’s the garage and its ornate ceilings last rub. Only time will tell. week during an Kefallinos said he expects the interview and space to be in use by next sumbuilding tour. mer. “This is why I There certainly will be skeptics bought the prop- who question whether he can or erty.” will pull it off because, right or It was pretty wrong, there are some in the city easy to tell how with an ABK mentality: Anyone excited Kefalli- But Kefallinos. nos, the owner He is the owner of 2.2 millionof the Russell In- square-foot Russell Industrial CenKefallinos dustrial Center ter, which leases space to artists off I-75 and other buildings in the and manufacturers; Niki’s Pizza city, was to be in it. and Bouzouki, a strip club in The building, at Bagley and Greektown. Boydell also owns Cass avenues, is an iconic part of about a dozen loft buildings Detroit history. It was built in throughout the city. 1925 by John Kunsky and opened However, Kefallinos has been the in 1926. In more recent years, it target of criticism for delayed renowas featured in movies like “8 vations or improvements to build-

Real

Estate

CRAIN’S DETROIT BUSINESS/ANJANA SCHROEDER

Sunshine pours through the large windows in the former Michigan Theatre in downtown Detroit, now being used as a parking garage.

ings like the Roosevelt Hotel, which he bought in 2010, and Shapero Hall, a former Wayne State University pharmacy school building he purchased in 2007. (Crain’s reported last month that redevelopment is underway at that building.)

As for the Michigan Building office space, Novack said the company is kicking around the idea of marketing it to tech, media and other similar companies. The average rent at the roughly 35-percent occupied building is

$13.68 per square foot per year, according to Washington, D.C.-based real estate information service CoStar Group Inc. This column originally appeared as a Kirk Pinho blog at crainsdetroit.com.

How the Qazi family will bring medical breakthroughs to Beaumont. Medical innovation is happening all over the world. And a brand new facility at Beaumont will bring it to our community faster than ever before. Nancy Susick, president, Beaumont Hospital, Troy: “This auditorium will be a wonderful educational resource for physicians, staff and guest speakers to share information from around the world that will ultimately enhance our patient care.” Education and health have been Mr. Qazi’s passions. And his donation to Beaumont will achieve both.

Mohammad and his family are the founders of the Qazi Family Auditorium in the Troy Learning Center.

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STAGE 2 STRATEGIES How to ease the burden of mass hiring, Page 15

growing small businesses EDITOR’S NOTEBOOK Amy Haimerl is entrepreneurship editor and covers the city of Detroit. She can be reached at (313) 446-0416 or at ahaimerl@crain.com

Amy Haimerl

Strengthen the support for women in biz Let’s hear it for the ladies. The number of woman-owned businesses in this country has nearly doubled since 1997, reaching 9.1 million this year, according to the 2014 State of Women-Owned Businesses Report, commissioned by American Express Open, the brand umbrella for AmEx’s small-business services. Women are opening 1,288 businesses each day — that’s net — and generate $1.4 trillion in revenue, the fourth annual study found. But here in Michigan, we can do better. Despite a 41.6 percent gain in new woman-owned businesses, we still got beat by Georgia with its 118 percent growth, and Texas, North Carolina, Nevada and Mississippi. In fact, according to the National Association of Women Business Owners, the entire Midwest lags behind the national average. “I honestly don’t know why that is,” Darla Beggs, chairwoman of the NAWBO board, told me from her home in Texas. “But we like to think it’s because we’ve had such strong females that just kick down the fences and establish themselves. ... They knock down the doors for the rest of us.” Here in Detroit, we have some strongwilled women, too. See: Cindy Pasky of Strategic Staffing Solutions, Andra Rush of the Rush Group and Lydia Gutierrez of Hacienda Mexican Foods. We also have a strong culture of woman-owned businesses. After all, Wayne County is home to the largest percentage of woman-owned businesses in the U.S., 36.7 percent, just after Bronx County in New York. To help grow woman-owned businesses, NAWBO is making mentoring and coaching an essential part of the organization. Every NAWBO chapter offers small-group mentoring, where women in noncompeting industries gather twice a month to talk about technical issues and study business development. The organization is considering ways to help women business owners further. “Mentoring programs, coaching programs help those who weren’t raised around the kind of women I was raised around. The thing that is interesting is helping women build self-confidence,” Beggs said. To find out more about NAWBO, visit nawbogdc.org.

JOHN SOBCZAK

The diversity proportion at Southfield-based ChemicoMays is 20 percent. But at one point, said CEO Leon Richardson (in tie), “I looked up and we were taking a company picture, and I was the only individual from a diverse background in the company. I hadn’t realized it at all.”

Dedicated to differences BY GARY ANGLEBRANDT SPECIAL TO CRAIN’S DETROIT BUSINESS

ow easy is it to overlook diversity in the heat of raising a growing business?

Shockingly easy, Leon Richardson can tell you. Richardson spent 15 years building his Southfield-based chemical management company, ChemicoMays LLC, only to realize he had a very homogenous staff. “Even though we’re a minority-owned business, I didn’t have it on the forefront of my mind,” Richardson said. “I had survival on the forefront of my mind. “One day I looked up and we were taking a company picture, and I was the only individual from a diverse background in the company,” said Richardson, who is president and CEO. “I hadn’t realized it at all.” It took a “deliberate effort” to bring the diversity proportion of ChemicoMays’ workforce up to 20 percent. Richardson didn’t spend the time and effort just for good public relations. He did it because he believes a diverse staff — that includes race and ethnicity as well as class, background, education, geography, gender, professional experience, etc. — has an im-

Building diversity takes time, effort, but it makes good business sense pact on the bottom line. For example, Setting – then following Richardson ex– anti-discrimination plained that the policies now can help company’s operaavert a lawsuit later, Page 14 tions in Mexico would not have been successful without diverse talent because subtle nuances of communication are “extremely important” to the culture. “Do it because customers are diverse or suppliers are diverse. I don’t think you should do it for the sake of diversity. That doesn’t make business sense,” Richardson said. The shifting demographics of the country are also a factor. There will be no ethnic minority in the United States by 2050, according to the U.S. Bureau of Labor Statistics. As consumer demographics shift, so too does a

PREPARE OR BEWARE

company’s messaging if it wants to effectively communicate with new buyers. That played a role for Plante Moran PLLC, a Southfield-based accounting and business advisory firm, as it contemplated hiring and inclusion initiatives. “Plante Moran studied its existing and prospective markets and saw that businesses owned by minorities and women were growing at far faster rates than businesses in general. This added urgency for the company to improve its diversity mix,” said Alisha Davis, a member of the firm’s diDavis versity council. “People really want to do business with people who understand them, understand their culture and understand their language. We have to get this right, or else we’re going to lose our competitive advantage.” And that’s the key. The point isn’t to stick a diversity badge on a lapel and call it a day, but to have a deeper, broader set of collective experiences on which to base business decisions. That gives a company a competitive edge that ultimately promotes greater success. See Diversity, Page 12

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Diversity: It’s about morality, strategy ■ From Page 11

“Morally, it’s the right thing to do, but it’s also a strategic thing to do: I want to maximize the utility of the employees I have so I can get more innovation and more creativity,” said Rita Crooks, director of cultural competency and organizational development at the Detroitbased Michigan Roundtable for Diversity and Inclusion. “Research shows that when teams are diverse, the results are greater than when they’re homogenous.” So how do you go about adding diversity to your team? Here are five ways to get started.

1. Start at the top

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“It’s not an HR objective, it’s a business imperative,” said Mark Albrecht, who manages diversity practices at Troy-based Orlans Associates. “You’ll be dead in the water unless the leadership, the owner, the CEO is committed. “Don’t start the effort because employees will see right through it. They’ll think that it’s just Mark Albrecht’s HR initiative, not

Mary Smith the CEO’s initiative. They’ll say it’s HR doing its flavor of the month.” When Albrecht ran diversity programs for Handleman, the Troy-based Albrecht music distributor wanted to carry more Latino music. So the company began hiring Hispanic employees. “That helped educate us and generate a strong category of sales for us,” Albrecht said. The company’s leadership in this case included not just the C-suite, but the top 75 people. It’s important to have all departments involved, Albrecht said. After all, there’s diversity in work functions, too. If the baby boomer generation running Handleman had listened to one type of worker — its younger ones — in the years leading up to 2008, it might still be around today. That was the year the company collapsed under pressure from the digital music revolution. Younger employees had demonstrated how the iPod worked and explained its potential impact. But senior management believed such as impact was still many years off. “We weren’t ready for the change,” Albrecht said. “Senior management believed the sky wasn’t falling, but it actually was.”

2. Fish in different waters

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Starting out with friends, family and existing professional relationships is fine, but at some point that’s going to have to change. “If you only fish in the river, you’re only going to catch certain kinds of fish,” Albrecht said. Focus recruitment efforts in new places. Reach out to historically African-American colleges, for example. Check out local diversity job fairs and associations. Make sure you know the professional organizations in your industry, such as the National Society of Black Engineers. Building relationships with all of these groups leads to a more robust pipeline of talent. Albrecht is even putting diversity in Orlans’ contract with Monster.com, ensuring that job listings are posted on websites targeting various ethnicities or lifestyles, such as those serving Hispanics, African-Americans and veterans. Finally, don’t forget to use your network. Your accountants, lawyers, vendors, suppliers and thirdparty services offer a wide set of experiences and backgrounds from which to get recommendations. Additionally, seek out private peer-to-peer organizations for small and midsize business executives as a way to extend this network. These groups, such as Vistage Michigan and Entrepreneurs’ Organization, offer business owners a place to share their experiences and challenges with each other. Of course, there are still just times when you can’t seem to find anyone. Plante Moran, for example, was frustrated that its employ-

GET HELP The nonprofit Michigan Roundtable for Diversity and Inclusion in Detroit consults businesses on creating and improving diversity programs and policies, with an eye toward boosting productivity, recruiting and retention. Assessments are based on employee surveys, which often reveal a different, perhaps deeper, problem than what company executives often think it is. What seemed like a one-off complaint turns out to be a pervasive unhappiness with the workplace. “When employees are dealing with those types of issues, then they’re not doing what they get paid to do,” said Rita Crooks, director of cultural Crooks competency and organizational development. Crooks previously had a long career doing employee development directly for corporations in the automotive, banking and utilities industries. The cost for these services depends on the scope of the work and variables such as company size, industry and demographics. A business can get some bare-bones policy guidance for about $1,500. Initial calls and introductory meetings are free. More information is at miroundtable.org. ee mix had hardly budged despite working on it for years. The problem was the small pool of diversity students in public accounting. “Everyone was fighting for the same group,” Davis said. The firm began talking to students at earlier stages, first at freshman college levels, then into high school years, offering short, six-week internships so students could learn more about the profession and the firm could build relationships.

3. Involve employees When Plante Moran saw that its employees weren’t seeing the business case for embracing diversity, it set up mandatory training, managed by a specialty outside consulting firm, for everyone from new employees to partners. The firm then set up “staff resource groups” composed of employees who represented particular backgrounds and were already parts of informal groups of similar workers — much like students in college dining halls tend to gravitate toward those who are like themselves. The company gave the groups goals for recruiting, retention and developing business. “That has been huge,” Davis said. That might be too much infrastructure for a growing firm. Instead, Mark Angott, president of executive talent recruiter Angott Search Group in Rochester, suggests keeping employees aware of hiring needs — not just the posiSee Next Page

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Second Stage From Previous Page

tions being filled but the skills that are needed. “We tell them that anybody, any type of person, that’s a good fit, bring him or bring her to our attenAngott tion,” said Angott, who has a staff of 23. “We don’t hire just to hire to be diverse. We’re hoping to grow the business with the right people. That, to me, is what it’s all about.”

4. Face your diversity fears Businesses, especially small, growing ones, understandably fear new expenses — especially those that don’t initially seem to be essential. But there is little expense involved with diversity hiring. “It’s not anything more than you’re going to spend attracting people who are non-diverse,” Albrecht said. “You can invest in things to enhance it, but it’s not the sort of thing you have to take out a loan on.” This all takes some time on the front end, but so does every basic job function. Think about how you figured out invoicing in the beginning; now, it’s automatic. “Once you ramp up a bit, then the payback is proportionally more than the work put into it,” Albrecht said. More than fear, people often fear what they don’t know. It’s easier to avoid a woman wearing a hijab than worry about how to approach her. (The answer: The same as you would anyone else.) It’s an understandable human reaction, but one that’s easily mitigated through talk and appreciation. “Diversity makes people uncomfortable,” said Albrecht. “Education is the differentiator.” Richardson tackles this fear at ChemicoMays by setting a tone of levity in the company culture. “Levity helps in a lot of situations,” he said. “It takes the stress level down by having fun with everything, without being insulting. We look at race and diversity not as a serious deal or that you have to be uptight about it.” The other fear of diversity hiring is that it means work quality or productivity will suffer. It’s a common misconception that drawing from a deeper pool means scraping the bottom of the barrel. “There’s the idea that somehow building diverse workforces is tied into lack of quality; that you have

to forgo quality in order to embrace diversity,” said the Roundtable’s Crooks. This view leads companies to take a simplistic approach that misses the point. They end up trying to build numbers rather than stronger teams. “They’re not seeing the link between diversity and the bottom line,” Crooks said.

5. Don’t wait for the EEOC It takes a crisis to make most companies do something about diversity, said Chris Beltz, human resources director at Human Capital LLC in Rochester Hills, where he manages HR functions for 150 client companies. The crisis might appear as a steady trickle Beltz of talent walking out the door, or as a heart-stopping lawsuit filed by the U.S. Equal Employment Opportunity Commission. “The EEOC asks, ‘What have you done about diversity?’ and then you have to spend money on training. Generally, that’s how a company learns: the hard way,” Beltz said. “The only time my phone rings with someone in a panic is when it’s about dollars.” Sometimes leadership will step up before the EEOC gets involved, but they have to take the issue seriously. A local manufacturing company with about 100 employees asked Crooks and the Roundtable to come in and help when it discovered that a female employee felt uncomfortable in the workplace. A meeting was set with the firm’s top three executives, but only two showed up. Those who did attend treated the meeting casually, offering 30 minutes of time and platitudes such as “boys will be boys.” “But you’re not boys. You’re men,” Crooks responded. “This will be real to you when it gets to litigation.” Having a hostile culture — or simply one that makes diverse employees feel like outsiders — increases the odds that workers will leave their jobs because they don’t like the environment. Having to rehire and retrain costs time and resources that could have been saved if the leadership took office diversity seriously. “Productivity is not going to be maximized if I’m stressed out because people are mistreating me because of some visible or invisible difference,” Crooks said.

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www.michigan.dalecarnegie.com JOHN SOBCZAK

Leon Richardson on the role of levity at ChemicoMays: “It takes the stress level down by having fun with everything, without being insulting. We look at race and diversity not as a serious deal or that you have to be uptight about it.”

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Second Stage

Setting, following anti-bias policies can avert costly lawsuits BY GARY ANGLEBRANDT SPECIAL TO CRAIN’S DETROIT BUSINESS

The Detroit field office of the U.S. Equal Employment Opportunity Commission recently sued LaFontaine Cadillac, Buick, GMC Inc. in Highland Township for violating the Civil Rights Act. The suit, filed in March, alleges that employee William Tyler suffered racial slurs from co-workers and supervisors while working as an auto detailer. He was also given the dirtiest and most time-consum-

ing detailing jobs, according to the suit filed in U.S. District Court for the Eastern District of Michigan. The suit also claims “unknown persons in the department would sabotage his work by making his assigned vehicles dirty again, or locking the keys in the vehicle.” The EEOC requested a jury trial for Tyler as well as an unspecified amount of compensation and punitive damages. Kimberly Smith-Brown, EEOC director of communications in Washington, D.C., would not speak

about ongoing litigation but said the EEOC “attempted to mediate with the organization” but the attempts went nowhere, prompting the lawsuit. LaFontaine and its lawyers also would not comment on the case. Whatever the outcome, the case serves as a reminder to other businesses: Ignore diversity at your own peril. Firms commonly pay $150,000 in legal defense fees, whether a suit is brought by the EEOC or a plaintiff’s lawyer, said Michael Weaver,

attorney for Bloomfield Hills-based Plunkett Cooney PC. Plus, there is the disruption of having lawyers come into the workplace to depose employees, in the case Weaver of a trial, and the possibility of copycat lawsuits, Weaver added. As a result, he said, businesses usually opt for settle-

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ments, which start at $30,000 to $50,000. If that’s not enough reason to make a business owner reach for some heart pills, here’s one more: The commission only goes after a few cases a year, and “they go all out on those,” Weaver said. “The EEOC has unlimited resources to pursue you.” It’s also normal for these suits to want “remedial action” as well — some type of employee training program. Most companies have the right policies in place; they just don’t use them, Weaver said. Example: One worker gets terminated for a transgression while another person, who happens to be friendlier with the boss, merely gets written up. If someone in a “protected class” of worker — based on categories such as age, gender, race and religion — is wrongfully terminated, lawsuits can result. “Where most companies fall down is they don’t implement properly,” said Weaver, who advises businesses to have employees at all levels sign documents stating they understand the policies. When making decisions that affect the workforce, like reductions or disciplinary actions, Weaver recommended hiring human resources professionals or outside counsel. “You may spend a little money on the front end, but you’ll save a lot on the back end,” he said.

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14 businesses to be honored for supplier diversity The Center for Empowerment and Economic Development plans to honor 14 local companies with its inaugural 2014 Excellence in Supplier Diversity awards at an upcoming conference. The companies will be honored at the Great Lakes Women’s Business Conference awards lunch Sept. 30. The awards are designed to recognize corporations that have outstanding supplier diversity programs that result in the inclusion of certified women business owners in the supply chain. The companies to be honored, listed by award category. 䡲 Best in Class: Chrysler Group LLC, Comerica Bank, DTE Energy, Ford Motor Co., General Motors Co. and Kelly Services 䡲 Advanced: Blue Cross Blue Shield of Michigan, Dura Automotive Systems LLC, Henry Ford Health System and WellPoint Inc. 䡲 Emerging: Barton Malow Co., Herman Miller Inc., Toyota and Walbridge The Sept. 29-30 Great Lakes conference includes workshops, networking, speakers and a program for business owners to meet procurement representatives. For more information, visit miceed.org/conference14.

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Second Stage

Investing in an HR team can ease the burden of mass hiring BY GARY ANGLEBRANDT SPECIAL TO CRAIN’S DETROIT BUSINESS

Computing Source started as a run-of-the-mill computer networking business in 2001. It wasn’t until three years later that a new business angle began to unfold as the company worked to recover computer files from backup tapes for a legal client. Word about the service spread, and Computing Source was soon known as the place to get data recovered from backup tapes. Now Computing Source is fully in the litigation support business, a niche that entails helping firms manage reams of paperwork used in preparation for trials, computer forensics, printed graphics and multimedia presentations, and court reporting. CEO Mark St. Peter took the company full steam in that direction when he saw how many third-party services legal firms have to coordinate when preparing for trials. For big trials, things can get unruly as the firms share and update large amounts of sensitive informaSt. Peter tion. St. Peter figured he would offer these services under one roof. “There’s one number to call, one point of contact,” he said. Problem: Taking on all these services would require people, many more than the 20 employees Computing Source had at the beginning of 2012 when St. Peter began thinking about this plan in earnest. Unfortunately, there aren’t many people around who have dedicated their lives to making and presenting trial exhibits — a job that involves difficult subject matter and delicate courtroom situations. Showing how a doctor delivered a baby incorrectly requires skills an everyday graphic designer might not have. “By nature, it’s confrontational. There’s a lot of stress and drama. To stay neutral is hard,” St. Peter said. Beyond the sheer number of staff needed was the time frame. Computing Source would end up employing 20 people at the beginning of 2012 to 125 now. Most of that hiring was done in 2013. Solution: St. Peter took the triedand-true approach entrepreneurs know best: He worked seven days a week until the task was done. “I was never an early bird. I am now. People get emails from me now at 5 in the morning, and I’m not shutting down till 9 at night. It’s been that way for over a year.” Finding specialists ended up being the easy part. He already had people in mind from the small world of litigation support. One example was a woman with a legal and medical background who ran a business making “demonstratives” — the exhibits and graphic displays used in trials. Computing

MARS BUSINESS GROUP LLC, DBA COMPUTING SOURCE Location: Southfield Description: Litigation support services for legal firms Managing director and CEO: Mark St. Peter Founded: 2001 Employees: 125 Revenue: $4 million in 2013 Source bought her business last year and put her in charge of the department it A look at became. problem-solving by growing Another percompanies son was a sought-after trial presentation specialist, able to deftly bring up the right slide on screen even when the attorney is wandering off script during a trial. The time-consuming part came with the hiring of everyone else. Computing Source, having some pretty serious privacy and confidentiality issues to face every day, is careful about whom it hires. It runs a battery of personality and skills tests and a series of interviews, including at least one with St. Peter. At one point in August last year, Computing Source hired 40 people for a new Chicago office. It took “two solid weeks of interviewing” to bring on that many people at once. The burden wasn’t St. Peter‘s alone. Staff members had to work harder as well. Equity incentives and payouts based on growth were in place for key managers. Once the work of finding and hiring people was finished, more work was needed to get everyone on board and acclimated. When the dust cleared, revenue

STAGE 2 STRATEGIES

had doubled from $2 million in 2012 to $4 million last year. St. Peter said Computing Source is on track to hit $10 million this year, now that the plan has been fully executed. Risks and considerations: Many executives would have opted for a different approach when taking on a massive project, such as hiring outside expertise to manage it. Many a business has gotten in over its head by trying to do too much and not asking for help. The burden on staff and the distraction can overload the business. St. Peter said if he had to do it all over again, he still would do it the same way. For him, hiring is like inviting someone into a family. Expert opinion: Business owners who are taking big leaps in staff numbers should be careful about taking on more than they can handle. Eventually entrepreneurs will have to leave the hard work to a trusted human resources team, said Joseph Eisenhauer, dean of the College of Business Administration at the University of Detroit Mercy. “Trusted internal employees can take a lot of the workload off senior executive staff,” he said. Companies that deal with sensitive information can opt to form human resources departments if relying on outsiders is too uncomfortable, and that’s not a bad idea for any business that’s expecting a high level of growth. “Consider your long-term strategic plan, and if that plan is going to involve growth in personnel, then investing in a human resources team at the outset is Eisenhauer well worth the investment,” Eisenhauer said.

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

CRAIN'S LIST: LARGEST MINORITY-OWNED BUSINESSES Ranked by 2013 revenue Company Address Rank Phone; Web site

1. 2. 3.

Revenue ($000,000) 2013

Revenue ($000,000) 2012

Percent change

Local employees Jan. 2014/2013

Minority group of ownership

Bridgewater Interiors LLC

-+ ) )) /5 6& +; +

$2,179.5

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5 ) & C $ &5* + +

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684.0

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414.3

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5 +( + # 6 53 $ &5* + +

231.0

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-+ $ $ +& /5 6& +; +

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?& 5 )

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?& #>5

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James Group International Inc.

-$+ * 6 $ &5* + +

133.0

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Avis Ford Inc.

); 5 ->#) 6 53 $ &5* + +

126.1

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E+ 5 >6$ + $ &5* +

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55B $;

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100.0

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$ 5-+ ++ 56

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

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SET Enterprises Inc.

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Type of business

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This list of minority-owned businesses is an approximate compilation of the largest such businesses based in Wayne, Oakland, Macomb, Washtenaw or Livingston counties. It is not a complete listing but the most comprehensive available. Unless otherwise noted, the companies provided the information. NA = not available. B Joint venture between Faurecia North America and Rush Group, formed June 2012. C Figure represents partial year revenue. D Acquired Smith & Wesson Security Solutions Inc. July 2012. LIST RESEARCHED BY SONYA D. HILL

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September 8, 2014

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PUBLISHER’S NOTEBOOK Contact Mary Kramer at mkramer @crain.com.

CRAIN’S MICHIGAN BUSINESS Mary Kramer

Biz forum’s next issue? Term limits After right-to-work and the repeal of the personal property tax, what will the West Michigan Policy Forum do for an encore? Arguably, perhaps, the biannual forum held in downtown Grand Rapids can claim credit for two of the biggest public policy changes in Michigan’s recent history: making Michigan a right-to-work state and eliminating the personal property tax, which many businesses had grown to hate. True, other business groups have embraced both issues, some more heartily than others. But there was something about having the top dogs in Grand Rapids business circles — the “A” list — in the same room attending all the sessions to listen … and act. “It’s not just the forum itself,” said Doug DeVos, president of Amway Corp. and a past chairman of the forum board. “It’s what we do in between” in the intervening years, talking to lawmakers and assessing issues in small group meetings with business leaders DeVos around the state. “Our job is to put issues out there,” DeVos said. “Then attendees give it the level of priority and follow through. Alignment is key.” Grand Rapids-area business leaders deliberately chose an every-other-year format. This year’s forum is Sept. 2829 at the Amway Grand Plaza Hotel. Speakers include Mitch Daniels, now president of Purdue University and former governor of neighboring Indiana. Another big speaker is columnist Charles Krauthammer. But DeVos said the forum will focus on three major topics: term limits, infrastructure and talent. Term limits is a new topic for the forum. The question isn’t whether Michigan should drop term limits, DeVos said. It’s whether the rules should be changed. “Is our execution the best way? Let’s look at other states,” DeVos said. “This will be a thoughtful discussion.” And it’s key to other public policy issues, he said. Like the inability to come to grips with paying for infrastructure improvements. “I would ask lawmakers: Please think long term, please think strategically and not, getting back to term limits, the next election.” This year’s conference co-chairs are Jim Dunlap, Huntington Bank; Mike Jandernoa, 42 North Partners; Jeff Connolly, Blue Cross Blue Shield of Michigan; and John Kennedy, Autocam Medical. Details can be found at the event’s website, wmpolicyforum.com.

Joshua Duggan commutes year-round through the streets of Grand Rapids. Since 2009, the city has gone from zero miles of bike lanes to more than 50 miles, with 100 miles expected by 2016.

Spin cities TED ROELOFS

Grand Rapids among communities benefiting from being bike-friendly BY TED ROELOFS SPECIAL TO CRAIN’S MICHIGAN BUSINESS

ive Grand Rapids resident Joshua Duggan half a chance, and it seems he could persuade just about anyone to swap his or her car for a bicycle. “I am really passionate about biking because it’s fun. That’s where it starts out for me,” Duggan said. “You see people out riding their bikes, and you can smile at them and wave at them, much more than people riding in a car. “It really adds to a sense of community.” That from-the-heart speech comes as no surprise, given that Duggan, 34, commutes to work year-round by bike, sits on the board of a local bicycle coalition and hosts a biweekly ride that starts in downtown Grand Rapids. “It is just gaining momentum,” Duggan said of the changes transforming the culture of the city. In 2009, Grand Rapids had zero miles

of bike lanes. Today, it has more than 50 miles, and it expects to have 70 by next summer and 100 in 2016. Hundreds of bicycle racks have been added. So many thirsty cyclists roll into Founders Brewing Co. in Grand Rapids that the craft brewer sells special carriers for bikes to transport a 64-ounce container of beer. Cyclists can ride a 93-mile trail on an old railroad bed from Grand Rapids all the way to Cadillac. Bicycling magazine took notice, ranking Grand Rapids 41st among the top 50 bike-friendly cities in America in 2012.

Pedaling a quality of life While pleased by this shift in gears, business leaders and Grand Rapids Mayor George Heartwell say this is about more than the bike. It is the direction that smart cities are headed. All you need to do, Heartwell said, is scan the top of the list of bike-friendly communities: Portland, Ore.; Minneapolis; and Boulder, Colo.

All three are renowned for quality of life, a term encompassing everything from a city’s economic pulse, to downtown housing and nightlife, to prospects for recreation — making them a preferred destination for young workers. In Portland, it’s about a vibrant music scene, high-quality public transportation — but also more cyclists per capita than any other city in the U.S. And as Bicycling noted, it’s about a coffee shop with chairs for 25 — and racks for 26 bikes. “If you create an environment where people want to live, create public spaces that are attractive to people — those are the places people want to live,” Heartwell said. “That is what elevates those cities to the top of the list. “It is about attracting talent. The cities that attract talent are the ones that win.” A report released in August by the

Michigan Department of Transportation estimated that cycling gives an estimated $668 million boost to the state. That comes from sales of bikes and equipment, tourism money spent by Michigan residents and a reduction in health care costs. The report did not include spending from out-of-state tourism. See Bikes, Page 18

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September 8, 2014

CRAIN’S MICHIGAN BUSINESS

MSHDA to Detroit Expatriates: ‘Welcome Home. Let’s partner.’ Hopes are high that Crain’s Homecoming event is magnet that spurs inﬂuential former Detroiters to invest in opportunities that reﬂect city’s growing pride in place

The Michigan State Housing Development Authority (MSHDA) has a simple message for the dozens of prominent former Detroit residents who are attending Crain’s Detroit Homecoming, a Sept. 17–19 event designed to lure “expatriates” back to Detroit to reconnect and reinvest.

assistance during 2014, has identiﬁed the 60,000-square-foot site as a missing link in a vibrant and growing mixed-use corridor along West Vernor Highway.

“Welcome home—and we’d like to partner with you to help us reimagine Detroit,” said MSHDA ActingExecutive Director Wayne Workman.

The SBDA is teaming with MSHDA, MML, Archive Design Studio, LandUse USA and community leaders to design a new neighborhood center area on what is currently a 6.9-acre brownﬁeld site at West Vernor Highway and Livernois Avenue. The Vernor Livernois Project will become a focal point for this diverse community, providing a public square, locally oriented retail and community meeting space, as well as new employment opportunities.

“MSHDA has a long and successful history of supporting the concept of placemaking, which is creating communities where people want to live, work and enjoy,” Workman said. “We’re looking for MSHDA Acting-Executive Director Wayne Workman people who share our vision that strong public/private partnerships are one of the keys to Detroit’s rebirth.”

PlacePlans Projects Promote Pride The 2013 launch of MSHDA’s collaboration with the Michigan Municipal League, Michigan State University and Gov. Rick Snyder’s MIplace Partnership on the PlacePlans initiative is one example Workman cited that is helping Detroit and seven other Michigan cities promote viable economic development projects aimed at attracting and retaining residents and employers. Including Detroit, participating PlacePlans cities are Cadillac, Flint, Holland, Jackson, Kalamazoo, Marquette and Midland. The projects are focused on things such as increasing walking and biking trafﬁc, more downtown development, and quality public spaces like parks and urban pockets. Each project costs about $50,000. Each city is matching the MSHDA funding for PlacePlans activities. Among the PlacePlans highlights is Detroit’s $15 million Vernor Livernois Project that will support the redevelopment of a vacant and blighted property in the heart of one of the city’s strongest commercial districts. The Southwest Detroit Business Association (SDBA), one of the eight recipients of PlacePlans technical Not paid for with taxpayer funds.

Detroit’s Exciting Path Forward The PlacePlans strategy builds upon MSHDA’s legacy of investment in Detroit. From 2000–2012, MSHDA approved nearly $700 million in tax credits to support projects ranging from the rehabilitation of housing to the creation of new schools in historic buildings to the reopening of some of Detroit’s most historic office buildings. The greatest rehabilitation activity has taken place in Midtown, Grand Circus Park and the Lower Woodward Corridor. With a suddenly burgeoning startup scene and an exciting influx of young talent, Workman said many see Detroit as the new magnet for entrepreneurship. The return of influential Detroit expatriates is a valuable forum where MSHDA and its PlacePlans partners can showcase the city’s rejuvenation. More information on placemaking in Michigan is available at MIplace.org.

Bikes are parked outside Founders Brewing Co. in Grand Rapids, where riders can buy a carrier that allows a bicycle to haul a 64-ounce container of beer. TED ROELOFS

Bikes: Riding the wave ■ From Page 17

And it did not calculate the role that urban ambiance — including traits such as bike-friendly streets and trails — can play in incubating a skilled work force. Jeff Cranson, a spokesman for MDOT, said the state is committed to expanding options for walking and cycling in a number of ways: 䡲 Dedicating about 1 percent of annual revenue to bike and pedestrian facilities. 䡲 Adopting safe routes to schools, a program in which 111 schools have received nearly $18 million. 䡲 Developing 10 road and trail maps for cyclists. 䡲 Developing nationally designated bike routes, one between Marine City and Ludington and another between Sault Ste. Marie on the border with Canada and New Buffalo on the Michigan-Indiana line. “The emphasis is on mobility for all, and that means serving an increasingly diverse set of needs,” Cranson said. A 2006 survey by CEOs for Cities, a nonprofit urban advocacy organization, found that two-thirds of 25- to 34-year-olds with college degrees said they would choose first where to live, then seek a job. Among other attributes, the survey found, they look for cities that are clean and attractive, with viable downtown housing and lots of parks and green space.

‘A bike lane is just magical’ Mark Bissell, CEO of Kent County-based Bissell Homecare Inc., agrees with Heartwell that the checklist ought to include communities that embrace cycling. That could be simply getting safely from point A to B on city streets or hosting a big event like the Gran Fondo, a June group ride Bissell connected to Michigan State University that starts and finishes in downtown Grand Rapids. It drew 1,500 riders its second year. An avid cyclist himself, Bissell has supported professional cycling for years through his company,

which makes vacuums and cleaning products. The company has backed both a Tour de France team and a top domestic cycling team. Bissell recalled a regular Thursday night road ride he shared with a cycling club, a 40-mile loop that started and ended just north of downtown Grand Rapids. Along the way, he was almost giddy to note new bike lanes on a freshly paved section of road. “Having a bike lane is just magical,” Bissell said. “It makes it safer. We want to encourage more people to do it.” In the years ahead, riders such as Bissell should see many more such roads. In May, Grand Rapids voters agreed to an income tax dedicated to roads that will generate upward of $10 million a year through 2030. Bike lanes will be incorporated into the improvements. Grand Rapids-based Catalyst Partners, a building restoration design firm focused on green energy, could be a poster child for what businesses can do to encourage bike culture. It offers racks for employees to store their bikes inside, plus a shower and changing area. Company founder Keith Winn rides his bike to work, as do several other employees. In summer, his firm holds a regular 45-minute Wednesday noon ride. Winn is pleased by what he sees on these rides. “There are a lot of signs.,” he said. “There are bike racks now in front of bars and restaurants. It’s been a lot of fun to see the change over the years.” Cyclists also can tap into public transportation to ease their trips across town, as all buses in The Rapid system have bike racks on the front of the bus. That includes the new $40 million Silver Line bus rapid transit system, a 9.6-mile line linking downtown Grand Rapids with its southern suburbs of Wyoming and Kentwood. Rick Baker, president and CEO of the Grand Rapids Area Chamber of Commerce, thinks many ingredients make a place fun to live. In Grand Rapids, that includes everything from paths along the Grand River that draw walkers and joggers, to the Grand Rapids Downtown Market, to the array of craft brewSee Next Page

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CRAINâ&#x20AC;&#x2122;S MICHIGAN BUSINESS ers in and around the city. And cycling. â&#x20AC;&#x153;In just the few minutes Iâ&#x20AC;&#x2122;ve been on the phone, Iâ&#x20AC;&#x2122;ve seen several cyclists go by,â&#x20AC;? Baker said from his office downtown. â&#x20AC;&#x153;There was a guy from Jimmy Johnâ&#x20AC;&#x2122;s who delivered lunch on a bicycle. There was a young lady who looked like she was going to class. There goes another young guy on a bicycle.â&#x20AC;?

2-wheel commuters Counts of cyclists by the Greater Grand Rapids Bicycle Coalition confirm his impression. In counts conducted at three locations in the fall in successive years, the coalition tallied 437 cyclists in 2011, 511 in 2012 and 688 in 2013. A 2013 study of the 100 largest U.S. urban areas ranked Grand Rapids 12th in the percentage increase of workers commuting by bike to work from 2000 to the average number of workers during 2007-11. Ann Arbor nudged ahead of Grand Rapids in Bicyclingâ&#x20AC;&#x2122;s 2012 bike-friendly ranking, at 39th in the nation. Among the reasons: The Borderto-Border Trail, a nearly completed 35-mile paved bike path that runs through Ann Arbor from Washtenaw Countyâ&#x20AC;&#x2122;s border with Livingston County in the northwest to the border with Wayne County in the southeast. The city has more than 70 miles of bike lanes. Matt Yost, a salesman at the Wheels in Motion bicycle shop just east of Ann Arbor, has witnessed plenty of change in the decade he has been a cyclist. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m seeing lots more dedicated bike lanes on the road, and that has led to more people feeling safe using their bikes to commute,â&#x20AC;? Yost said. â&#x20AC;&#x153;When I first started, it was rare to see people cycling on days when the weather wasnâ&#x20AC;&#x2122;t perfect. Now you are seeing more people doing it regardless.â&#x20AC;? The 2011 U.S. Census Bureau American Community Survey backs him up. It found that nearly 5 percent of Ann Arborâ&#x20AC;&#x2122;s working adults commute to work on bikes, the highest total in Michigan. Traverse City is on the cycling map for other reasons, mostly tied

to the regionâ&#x20AC;&#x2122;s spectacular combination of water and land. Just east of town, mountain bikers ride the forested, hilly Vasa Pathway, a 16.7-mile mountain bike trail. Closer to town, mountain bikers ride a trail network that is part of the Village at Grand Traverse Commons, a system of loops that take riders over streams, through forests and up hills that furnish sweeping vistas of the city and Grand Traverse Bay. In November, riders from around the country converge on the region for the 29-mile Iceman Cometh Challenge, the largest oneday mountain bike race in the United States. In 2010, the event drew 4,700 riders, a fifth of them from 37 states other than Michigan, while generating an economic impact estimated at $1.5 million. In 2012 west of Traverse City, Sleeping Bear Dunes National Lakeshore opened a 4.25-mile section of paved trail that stretches from Glen Arbor to the Dune Climb in the park. When completed, the 27-mile trail will go through Glen Arbor, Glen Haven, the Dune Climb, Pierce Stocking Scenic Drive, the Sleeping Bear Dunes visitor center and Empire. As a city still in bankruptcy proceedings, Detroit has higher priorities than its bike-friendly status. More than 80 percent of roads in Wayne County are rated in fair or poor condition, which can make for tough cycling. Jim Meyers, the founder of Bike Detroit, a nonprofit bicycling advocacy organization, still sees great potential for cycling in the city. â&#x20AC;&#x153;Yeah, the roads where all the trucks go are pretty much destroyed,â&#x20AC;? Meyers said. â&#x20AC;&#x153;But there are four-lane roads that are in great condition and are so wide. â&#x20AC;&#x153;There are no cars. You can fly through â&#x20AC;&#x201D; thatâ&#x20AC;&#x2122;s the beauty of the emptiness.â&#x20AC;? The past few years, Meyers has promoted a 100-kilometer ride called the Emerald Necklace Tour through the length of the city, much of it on trails through dozens of city parks and through some of the cityâ&#x20AC;&#x2122;s virgin forests. He plans the third annual version this month. Said Meyers: â&#x20AC;&#x153;There is so much to see in this city that people donâ&#x20AC;&#x2122;t know about.â&#x20AC;?

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2013 flood a watershed moment for GR disaster preparedness BY ROD KACKLEY SPECIAL TO CRAIN’S MICHIGAN BUSINESS

City Manager Greg Sundstrom and his deputy, Eric DeLong, have decided that the smartest thing they can do after surviving Grand Rapids’ version of “The Great Flood” last year is to expect even worse. They have two priorities: people and infrastructure. “The biggest thing we learned was that we had to do a better job of preparing for disasters. We did well because we have very talented, committed people,” Sundstrom said. “But we also learned we did not have enough people trained Sundstrom to do the right things. We were relying just on brute force and determination.” The good thing about the Grand Rapids flood of April 2013, compared with the torrential rains that washed cars off Detroit-area freeways last month, was that

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there was warning. The National Weather Service said that at one point, 37,000 cubic feet of water per second was rushing down the Grand River. If an additional 3 to 4 inches of rain had fallen, bridges along the Grand would have been lost to the water. Basements of some buildings along the Grand River filled with water. A secretary looked out the window of her office on the east bank of the Grand and saw nothing but water. Volunteers in Grand Rapids were put to work filling 6,000 sandbags an hour to protect the city’s wastewater treatment plant. Sundstrom opened the city’s Emergency Operations Center for the first time since Sept. 11, 2001. He and his team followed the emergency disaster plan that was in place and met twice daily with people from nearby municipalities, DTE Energy Co., Consumers Energy and the U.S. Army Corps of Engineers. The Grand River finally crested 3 feet over flood stage in the worst flooding the city had seen since 1904. But Grand Rapids’ storm of the century didn’t come close to the wreckage left behind by floods in

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the Detroit area. “We had very little street flooding. At the peak, we had 20 to 30 streets closed out of 600,” Sundstrom said. DeLong said city officials have used the time since the 2013 flood to put more than 100 senior managers and senior technical employees through multiple levels of federal emergency training. The list of those trained included city executives, administrators and other key staff from departments ranging from police and fire to the city clerk’s office to the Grand Rapids Public Library. Sundstrom said that when the next disaster hits, the city will use its Incident Command System, as the police and fire departments do in cases such as a hostage situation. City officials also have spent the past 16 months improving the first line of defense against a flood: Grand River flood walls and the city’s stormwater system. DeLong said at least $4.9 million worth of repairs and upgrades are planned for the flood wall along the Grand and to protect the city’s wastewater treatment plant. Sundstrom said the city should be able to pay for all of the infrastructure work, although DeLong said they are unsure how much that will cost. They are not expecting to apply for state or federal grants. Then there’s the matter of how much preparation is too much. The city could build 10-foot-high walls along the banks of the Grand River, but then no one could see the river, and all that would accomplish is handling the water coming from upstream. And it would do nothing to handle street flooding akin to what Detroit saw. Like most in Michigan, Grand Rapids’ sewers are built for a 25year, 24-hour storm — which isn’t even close to what Detroit had to cope with. Grand Rapids does have the advantage of having fewer highways that are underpasses or tunnels than Detroit, places where floodwaters would be trapped. The Grand Rapids Stormwater Oversight Commission has been established to look at the design of the entire stormwater system to see whether it can handle water in place and not send it to the Grand River. Sundstrom said they are also looking at emergency flood management measures on the Grand River, such as placing a temporary flood wall on top of the flood wall that is already there. As for federal mandates, Sundstrom said Grand Rapids might want even higher standards than those mandated by the Federal Emergency Management Agency. “For the last decade, we have been in discussions with FEMA about how high our (flood)walls should be. Those discussions relied on 100year-old data from the last significant flood that we had,” he said. “Now, we have new data.”

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Mich. cities plan record bond sales to fund pensions, health benefits BY CHRIS CHRISTOFF BLOOMBERG NEWS

Michigan municipalities, facing a year-end deadline to borrow for retirement costs, plan record bond sales to pay for workers’ health care and pensions. Macomb County plans a $270 million sale of municipal debt, its biggest ever, to finance retiree health care costs, while Kalamazoo is considering a historic $100 million bond offer for similar expenses. Bloomfield Hills plans to borrow a record $17 million for pensions. The law allowing the practice expires Dec. 31, although a bill to extend it a year is pending. U.S. states and cities are struggling with how to pay for promises to workers after the recession ravaged their finances. Yet few communities see debt as the answer — sales of revenue-backed pension bonds have tallied $356 million this year, data compiled by Bloomberg show. Interest rates close to five-decade lows are making it more attractive to pursue the risky strategy of investing borrowed funds in financial markets. “We can’t afford to wait,” said Peter Provenzano, Macomb County finance director. “Timing the market is difficult. You could sit on the sidelines and miss out on an opportunity.” Investing borrowed cash to pay for health expenses is a new twist

in Michigan, where 284 municipalities owed a combined $12.7 billion in unfunded liabilities for retiree medical care, according to a 2013 Michigan State University study. About half didn’t require employee contributions. Issuing debt for retirement costs sometimes draws criticism because it can indicate a lack of will to raise taxes or reduce benefits. From the issuer’s standpoint, the time of the sales dictates the success of pension bonds, according to a July analysis by the Center for Retirement Research at Boston College. Reinvested proceeds must earn more than it costs to service the debt, which is typically taxable. Because of stock market gains after the recession that ended in 2009, the majority of pension bonds have generated positive returns as of February, according to the center. That’s a reversal from mid-2009, when the financial crisis left most of the deals in the red. The analysis is complicated because many of the securities have 30-year maturities. “You really don’t know until that end date of the bonds how it turns out,” said Jean-Pierre Aubry, assistant director for state and local research at the center. Borrowing for retirement costs works when coupled with benefit changes, said John Axe, a bond attorney in Grosse Pointe Farms. Axe said he represents six municipalities that are considering bor-

rowing for the expenses, although he declined to identify them. Macomb County is paying half the recommended $30 million annual expense for current and future health care costs and won’t be able to afford the premiums by the mid-2020s, Provenzano said. The bond plan assumes an average annual return of 7.5 percent and will allow the county to keep up with projected cost increases, he said. Money from the issue will be invested over the course of a year to adjust to market swings, he said. The county has a AA+ grade from Standard & Poor’s, its secondhighest level. Kalamazoo may sell as much as $100 million of debt to partly finance $188 million of retiree health care liabilities. A city panel recommended the bonds and negotiations with retirees and unions to lower medical costs. The city pays $6 million annually from its $50 million general fund toward retiree health care. If investment returns fall short, the city would renegotiate with employees for savings, said Finance Director Tom Skrobola. Without revenue from borrowing, the city won’t keep up with rising medical costs and demands for other city services, he said. “We’ve had great success with bargaining, but it’s not enough,” he said. “It has to be a combined approach.”

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Monthly

September 8, 2014

CRAIN’S DETROIT BUSINESS

Japan

WHERE MICHIGAN DOES BUSINESS Amway Co. Based: Ada Operations: Headquarters in Tokyo Employees: 350 Products: Beauty, nutrition and home products such as Nutrilite vitamins and supplements, Artistry cosmetics, Amway Home products, XS energy drinks, Atmosphere air treatment systems and eSpring water treatment systems Top executive: Mark Beiderwieden, Amway Japan president

Autoliv’s facility in Atsugi

Autoliv Inc. Based: Auburn Hills Operations: Facilities in Kasumigaura, Atsugi, Taketoyo and Higashihiroshima Employees: 1,501 Products: Airbags, seat belts, steering wheels and inflators Top executive: Brad Murray, president of Autoliv Japan Clients: Toyota, Honda, Nissan, Mazda, Mitsubishi, Suzuki, Subaru, Daihatsu, Isuzu

ith a nominal GDP of $4.9 trillion, Japan had the third-largest world economy in 2013. Its high-tech oriented economy continues to produce innovations in the consumer electronic goods industry, and the country is the world’s third-largest auto market. Japan’s major exports include motor vehicles, semiconductors, iron and steel products, auto parts and plastic materials. Its major export partners are China (18.1 percent), the U.S. (17.8 percent) and South Korea (7.7 percent). The country’s manufacturing industry took a significant hit in 2011 after a 9.0 magnitude earthquake and the resulting tsunami. In the last two years, the economy has made a recovery; reconstruction in the Tohoku region is ongoing. The country is instituting a consumption tax change from 8 percent to 10 percent next year. Stores and service providers are required to include the consumption tax in the prices for goods and services. Over time, the tax increase is meant to pay down the fiscal deficit, which is expected to be 8.2 percent of GDP in 2013.

Operations: Headquarters in Tokyo, branch office in Osaka and 300 independent franchise stores across the country Employees: 400 full time, 5,000 part time Top executive: Scott Oelkers, president and CEO More information: In late 2013, Domino’s Pizza Enterprises, based in Brisbane, Australia, purchased a 75 percent stake in Domino’s Japan. DPE, led by CEO Don Meij, now has 1,500 stores in Australia, New Zealand, Netherlands, France, Belgium and Japan.

Federal-Mogul Corp. Based: Southfield Operations: A manufacturing facility in Yokohama and administrative/sales offices in Yokohama and Nagoya. Products/services: Systems protection products, sales Employees: 200 Top executives: Tomoyuki Okubo, vice president of sales for Japan, Federal-Mogul Powertrain

Ford Motor Co.

A worker at Belfor’s Tokyo facility

Belfor Holdings Inc. Based: Birmingham Operations: Office in Tokyo Employees: 35 Products: Commercial and industrial fire-, smoke- and water-restoration services, document and data recovery, mold remediation, electronics and machinery restoration; environmental services. Top executive: Naoto Takigawa, managing director More information: After the Japan Tsunami 2011, Belfor Japan worked on many recovery projects, including a Mitsubishi Paper Mills plant based in Hachinohe. Within two months, the main machinery, including a paper machine and a coater, were restored and started up; the recovered mill had excess electric power capacity to supply to the surrounding community.

Domino’s Pizza Inc. Based: Ann Arbor

Based: Dearborn Operations: Japan headquarters in Tokyo, a product program center in Hiroshima and a development center in Aichi, along with 55 dealerships across the country. Imports, sells, repairs, insures and maintains Ford vehicles and develops and sells automotive parts and accessories. Employees: 160 Products: Ford Explorer, Ford Fiesta, Ford Focus, Ford EcoSport, Ford Kuga, Ford Mustang, Lincoln MKX and Lincoln Navigator Top executive: Toshio Morita, managing director More information: Ford sold about 3,500 units in Japan in 2013.

General Motors Co. Based: Detroit Operations: Office in Tokyo Employees: 40 Products/services: Import, sales and service of Cadillac, Chevrolet products, brand management of ACDelco products Top executive: Sumito Ishii, managing director

International Automotive Components Based: Southfield Operations: Operates plants in Kanagawa, Kyushu and Nagoya, along with technical

Crain’s World Watch report showcases companies that are leaders in global markets and those that are expanding. Each World Watch features a different country. If you know of a Michigan company that exports, manufactures abroad or has facilities abroad, email Jennette Smith, managing editor, at jhsmith@crain.com.

JAPAN

COMING UP October: Canada November: Brazil

Tokyo

Chiba

and Venezuela

Osaka

Yokohama Nagoya

centers in Nagoya and ShinHiroshima Yokohama Employees: 450 Products: Instrument panels, console and glove boxes and door trims for all Japanese original equipment manufacturers Operations: Production site in Gunma; fluTop executive: Brian Pour, vice president id-carrying systems site in Nagoya; sales ofof IAC North Asia fice for fuel tank systems and pump and More information: IAC entered the Asian module systems in Yokohama market in 2006 when its majority shareholdEmployees: 139 er, Wilbur Ross, acquired Mitsubishi BeltProducts: Armatures, pumps, pump moding Kaseihin. ules Top executive: Shin Kurihara, plant manager; Hideyo Okada, site manager; Michiaki Based: Ann Arbor Sasaki, president Operations: Office in Tokyo Clients: Nissan, Mitsubishi, Honda, MazEmployees: 20 da, Suzuki, Toyota and internal TI cusProducts: Supply chain design software tomers and services Top executive: Misao Sasaki, CEO of LLamasoft Asia Clients: Mitsubishi Hitachi Power Systems Ltd.

LLamasoft Inc.

MSX International Inc. Based: Detroit Operations: Office in Tokyo Employees: More than 40 Products: MSXI’s Retail Network Solutions provides vehicle manufacturers with training for dealers, content development and delivery in sales and after market. It also provides technical training academy management, assessments of dealer competencies, audits, process improvement coaching and warranty services. Top executives: Soichiro Nagai, operations manager; John Bos, general manager; Xavier Vandame, vice president of MSXI Asia-Pacific Clients: Audi, BMW, Peugeot Citroën, Jaguar Land Rover and Renault

Technical Training Inc. (TTi Global) Based: Rochester Hills Operations: Five offices, in Tokyo, Toyohashi, Hiroshima, Yokohama and Chiba Employees: 39 Products: Training for the automotive industry. This includes technical, sales and other types of training. Top executive: Yasu Kanno, TTi Japan

TI Automotive Ltd. Based: Auburn Hills

TRW’s tech center in Yokohama

TRW Automotive Holdings Corp. Based: Livonia Operations: One plant in Miyoshi City (Hiroshima prefecture) to manufacture and deliver steering systems, and four sales and customer engineering offices in Toyota, Utsunomiya, Hiroshima and Yokohama. Yokohama is also the headquarters and TRW’s technical engineering center that develops and tests products and does application engineering. Employees: 215 Products: Steering systems, safety systems and components, airbag sensors, tire pressure monitoring systems, driver assist systems and braking systems Top executive: Yoshihiro Nakane, representative director Compiled by Natalie Broda

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comb-OU Incubator. For owners of startup or early-stage growth-based businesses seeking funding. With Mike Brennan, business commercialization and capital investment adviser,

Macomb-OU Incubator. MacombOU Incubator at Velocity Collaboration Center, Sterling Heights. Free. Contact: Joan Carleton, Brennan (586) 884-9324; email: macinc@oakland.edu; website: oakland.edu/macombouinc.

Chrysler Day. 11:30 a.m.-1:30 p.m. Adcraft Club of Detroit. Luncheon presentation with Ralph Gilles, senior vice president, product design, and CEO, motorsports, Chrysler Group LLC. San Marino Club, Troy. $25 junior and student members, $35 members, $45 nonmembers. Contact: Melanie Davis, (313) 872-7850; email: mdavis@adcraft.org; website: adcraft.org.

WEDNESDAY SEPT. 10 Rochester Regional Chamber of Commerce Business Exchange Luncheon. 11:30 a.m.-1:30 p.m. With featured speaker Howdy S. Holmes, CEO and president, Chelsea Milling Co., Chelsea, the company popularly known for Jiffy mixes. Cherry Creek Golf Club, Shelby Township. $25 preregistration (online before event). Contact: Sheri Heiney, (248) 651-6700; email: info@rrc-mi.com; website: rrc-mi.com.

Talent Town Hall — Digital Law 2.0. 11:30 a.m.-1 p.m. Auburn Hills Chamber of Commerce. Explore the legalities pertaining to employee use of technology and social media, and the pros/cons and privacy concerns of companies that have employees access the corporate network using their own devices. The program qualifies for 1.0 credit hours through the HR Certification Institute. Crowne Plaza Auburn Hills, Auburn Hills. $35 members, $40 nonmembers. Contact: Rebecca Wiles, (248) 853-7862; email: rwiles@auburnhillschamber.com; website: auburnhillschamber.com.

nected Vehicle Trade Association, Michigan Department of Transportation. Participants will include automakers; suppliers; hardware, software, services and communications companies; insurers; and state and federal government officials. Cobo Center, Detroit. $400 government representatives, $500 speakers and CVTA members, $600 nonmembers; $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.

Government Contracting 101. 9 a.m.noon. Procurement Technical Assistance Center of Schoolcraft College. Find out what it takes to sell goods and services to state and federal governments, and about services and support the PTAC can provide. Jeffress Center. Schoolcraft College, Livonia. $45. Contact: Carrie Vroman, (734) 4624438; email: inforeq@schoolcraft.edu; website: ptacsofmichigan.org.

FRIDAY SEPT. 12 Automation Alley 14th Annual Awards Gala, 6-11 p.m. Automation Alley. Honoring Southeast Michigan’s technology industry in award categories including member of the year, educational program of the year and entrepreneur of the year. MotorCity Casino Hotel, Detroit. $175 members and finalists, $200 nonmembers, $1,500 table of 10. Contact: (800) 427-5100; email: info@automationalley.com; website: automationalley.com.

UPCOMING EVENTS How the Destruction of the Dollar Threatens the Global Economy and What We Can Do About It. 11:30 a.m.1:30 p.m. (plus 1:35 p.m. book signing)

Sept. 15. Detroit Economic Club. With Steve Forbes, chairman and editor-in-chief, Forbes Media, presenting a controversial argument about why a return to a sound dollar and a new gold standard are vital to the future of the global economy. Forbes is co-author of How the Destruction of the Dollar Threatens the Global Economy and What We Can Do About It. Westin Book Cadillac, Detroit. $45 DEC members, $55 guests of members, $75 others. Contact: (313) 963-8547;

Exceptional Leadership. Delivered.

email: info@econclub.org; website: econclub.org.

Munro & Associates Inc. Benchmark Innovation Center Tour. 1-3 p.m. Sept. 17. Engineering Society of Detroit. Participants will tour a facility of consulting engineering firm Munro & Associates Inc. Body panels and components from the automotive, aerospace, heating, ventilation and air-conditioning, home appliance and other industries will be on display. With Sandy Munro, design prophet and CEO. Munro & Associates, Troy. $25 ESD members; nonmembers can join for $60 (a 40 percent discount) and attend the tour for free. Contact: (248) 3530735 ext. 222; website: esd.org.

Changes in the Media. 5:30-8 p.m. Sept. 17. The Association for Women in Communications Detroit Chapter. With Carol Cain, Detroit Free Press business and politics columnist and host of “Michigan Matters” on WWJ-TV62; Debbie Kenyon, senior vice president and marketing manager of CBS Detroit Radio; and Christy Strawser, digital director, CBS Local. CBS Studios, Southfield. $25 WIC members, $35 nonmembers, $15 fulltime students; $5 more on day of event. Contact: (866) 385-1784; email: info@womcomdetroit.org; website: womcomdetroit.org.

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Professional Development Seminar: Building Brand Value. 7:30-10 a.m. Sept. 19. Marketing & Sales Executives of Detroit. With Tim Smith, president and CEO, Skidmore Studio, on creating and building strong value for a company’s brand. Smith will talk about how Skidmore moved back to the city to rebrand itself. Skidmore Studio, Detroit. $35 MSED members, $45 nonmembers. Cancellations accepted through Sept. 15. Contact: (248) 643-6590. website: msedetroit.org.

Toast + Tech Talk Session 3: Driving Growth and Delivering Value — Strategies to Maximize Your Firm’s Worth. 7:30-10 a.m. Sept. 23. Plante Moran PLLC, Automation Alley. Third 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. With panelists from Detroit Venture Partners, Hi-

tachi Business Finance, Silicon Valley Bank. Plante Moran, Detroit. Free. Contact: Dan Artman, (248) 223-3469; email: dan.artman@plantemoran.com; website: plantemoran.com.

Quality for Emerging Technologies. 7:30 a.m.-7 p.m. Sept. 24, 7:30 a.m.-3:45 p.m. Sept. 25. Automotive Industry Action Group. Learn how companies are assuring quality, reliability and customer satisfaction in electronics and software products; directed at automotive suppliers and customers. Suburban Collection Showplace, Novi. $250 AIAG members, $300 nonmembers. Registration deadline: Sept. 10. Contact: Shannon Osburn, (248) 213-4642; email: sosburn@aiag.org; website: aiag.org.

CALENDAR GUIDELINES

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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 “Detroit Events” in the red bar near the top of the page. Then, click “Submit Your Entries” 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.

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CRAIN’S DETROIT BUSINESS

PEOPLE

BUSINESS DIARY Township, has been awarded a contract to build leak test systems for Livonia-based A123 Systems LLC’s battery assembly plants in the U.S. and China. Websites: itc-leaktest.com, a123systems.com.

EXPANSIONS Altair Engineering Sdn Bhd, a wholly owned subsidiary of Altair Engineering Inc., Troy, has selected Kuala Lumpur, Malaysia, as its new regional headquarters to spearhead its expansion plan in Southeast Asia. The new office also will serve as Altair’s training and technical support center for the region. Website: altair.com. Air Center Inc., Troy, a provider of assembly tooling and compressor sales and service, has opened a new office at 200 S. Executive Drive, Suite 101, Brookfield, Wis. Website: teamair center.com. Cricket Wireless LLC, Alpharetta, Ga., has opened dealer-owned stores at 14621 W. Eight Mile Road, Detroit, and 208 North Avenue, Mt. Clemens. Telephone: (313) 397-3757, (586) 741-8270. Website: cricketwireless.com.

NEW SERVICES Jervis B. Webb Co., Farmington Hills, a provider of material-handling services, has upgraded its WebbView integrated baggage-handling control system for airports. The improved WebbView includes an enhanced graphic interface, mobile application and dashboards that can be customized. Website: daifukuwebb.com. Altair Engineering Inc., Troy, and Al-

tair Partner Alliance announced that the 3-matic STL by Materialise NV, Leuven, Belgium, a rapid prototyping and additive manufacturer, is now available to Altair’s HyperWorks users, allowing them to modify designs directly on STL, scanned and computer-aided design data in preparation for 3-D printing. Website: altairalliance.com. Atlas Oil Co., Taylor, has launched a new online customer portal that will become available to customers in phases throughout the rest of the year. The AtlasAnytime portal gives customers access to all their documents and information as well as a calendar of account activity and up-to-theminute reports, among other enhancements. Website: atlasoil.com.

Farms, from regional account executive.

Auburn Hills, Kellie Goines, Detroit, Dawn Jinsky, Southfield, and Robert Kouza, Ann Arbor, to partner, from associate; Rachel Keller, Southfield, and Christa LaBrosse, Detroit, to partner, from senior associate; Michele McHale, Southfield, to partner, from principal; and Mike Merkel, Southfield, to partner, from associate.

CONSULTING

HEALTH CARE

COMMUNICATIONS Melissa Flynn to regional sales manager of Michigan for Comcast Spotlight, the advertising sales division of Comcast Corp., Bingham

Marianne

Fey

to senior director, DWH LLC, Detroit, from executive vice Fey president, global director, McCann Erickson, Birmingham.

FINANCE

STARTUPS Core Cycle has opened at 6716 Orchard Lake Road, West Bloomfield Township. Telephone: (248) 990-2925. Website: corecycl.com.

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

Ane McNeil to regional chief human resource officer, Saint Joseph Mercy Health System, Pontiac, from vice president of human resources, St. Joseph Mercy Oakland, PontiMcNeil ac. Michael Judd to manager of information technology, MedNetOne Health Solutions, Oakland Township, from internal IT and infrastructure manager, gloStream Inc., Troy.

LAW Leslie Wasen

Tang

dent and CEO, Huron Community Bank, East Tawas. David Tang to China practice director, Baker Tilly Virchow Krause LLP, Southfield, from China business manager, Rehmann Financial, Farmington Hills. Kellie Becker to partner, Plante Moran PLLC, Clinton Township, from senior manager. Also, Lisa Cantu, Becker

Business

Stein partner,

Strobl & Sharp PC, Bloom-

Gerald Wasen to chief lending officer, Lotus Bank, Novi, from presi-

field Hills, from partner, Plunkett Cooney PC, Bloomfield Hills.

MEDIA Stein

Mike Juliano to director of sales,

Greater Media Detroit, Ferndale, from director of sales, Entercom Communications Corp., Boston.

SERVICES Lisa Crawford to vice president, Diversified Industrial Staffing Inc., Troy, from recruiting manager.

Computers

Engineering / Technology

IN THE SPOTLIGHT Crain Communications Inc. has hired Irma Clark as director of corporate marketing and communications and Heather Krentler as director of regional human resources. Clark, 48, most recently was director of marketing planning and research at Comcast Clark Business, a subsidiary of Comcast Corp. Before that, she was marketing manager at Crain’s Detroit Business, where she led a team in the redesign of crainsdetroit.com, the launch of reporter blogs, new integrated social and multimedia advertising programs, and other initiatives. In her new role, Clark will, among other things, lead Krentler corporate marketing and communication strategies. She will report to the company chairman, Keith Crain. Krentler, 34, formerly was director of talent at Ignite Social Media, Birmingham, and talent director at Organic Inc., Troy. Clark holds a bachelor’s degree in marketing from Davenport University. Krentler has a master’s in human resources from Central Michigan University and a bachelor’s in marketing from Oakland University.

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Compuware: Praise for deal that would take IT firm private â&#x2013; From Page 1

clearly defined businesses: the highmargin-but-shrinking mainframe support business, which accounts for a majority of revenue; and the fast-growing, low-margin cloudbased business. The cloud business, known as APM, has become Compuwareâ&#x20AC;&#x2122;s focus in recent years. APM stands for application performance management. This is marketed to large companies to help them monitor their numerous IT applications in real time. Before the announcement of the sale, Paul had planned to split Compuware into two corporate entities with separate management teams, including separate CEOs. He told Crainâ&#x20AC;&#x2122;s that still could happen, or the two could be operated as distinct units under the Compuware umbrella, depending on how the new owner wants to proceed. Another planned move that Paul now will accelerate is the spin-out of the stock Compuware owns to its current shareholders. Covisint (Nasdaq: COVS), which provides cloud-based data storage and information sharing for the health care and auto industries, had been one of Compuwareâ&#x20AC;&#x2122;s business units before its initial public offering last September. Eighteen percent of the stock was sold off to investors then, with Compuware retaining the rest. Last weekâ&#x20AC;&#x2122;s deal with Thoma Bravo requires Compuware to parse out the rest of the Covisint stock within 60 days and before the sale closes. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s nothing difficult about

getting this done,â&#x20AC;? Paul said. â&#x20AC;&#x153;We can get this done fairly easily toward the end of September. The worst case is we may push it out till early October.â&#x20AC;?

In praise of the deal Overall, the proposed deal to take Compuware private has been praised by local investment bankers, private equity executives, professors of finance at the University of Michigan and Wayne State University and at least one of the companyâ&#x20AC;&#x2122;s institutional investors. They say that Thoma Bravo has a track record of helping its IT companies grow their top and bottom lines and that the deal should lead to more jobs at the downtown Detroit headquarters. In addition, one likely longerterm outcome could well be the reemergence of Compuware as a public company, a path that is the circle of life for many kinds of companies. â&#x20AC;&#x153;This is about the best buyer Compuware could have hoped for,â&#x20AC;? said Erik Gordon, a professor in the Stephen M. Ross School of Business at UM. â&#x20AC;&#x153;This is a private equity firm that understands software companies.â&#x20AC;? â&#x20AC;&#x153;The deal will allow Compuware to scale and expand operations to serve a larger base of customers,â&#x20AC;? Kothari said. Kevin Prokop, a managing partner in Detroit-based Rockbridge Growth Equity LLC, called Thoma Bravo â&#x20AC;&#x153;a world-class firm and a growth-

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Kevin Marsh, a partner in Birmingham-based Angle Advisors-Investment Banking LLC, said he wouldnâ&#x20AC;&#x2122;t be surprised if Thoma Bravo eventually takes Compuware public again after growing the business and its margins. â&#x20AC;&#x153;They are in the business of growing and building companies. They arenâ&#x20AC;&#x2122;t a slash-and-burn firm,â&#x20AC;? Marsh said. â&#x20AC;&#x153;Theyâ&#x20AC;&#x2122;re in the business of growing companies and then selling them. With the size of this transaction, that may very well mean taking it public again.â&#x20AC;? Since Elliott launched its bid, and even after it made peace with Compuware, rumors involving a slashand-burn plan had swirled intermittently. The most prominent was that Boston-based Bain Capital Partners LLC would be part of a deal to fold Compuware into Houstonbased BMC Software, which would have cost Detroit a company headquarters and meant the loss of many of its more than 3,000 jobs. â&#x20AC;&#x153;The important thing was that we didnâ&#x20AC;&#x2122;t sell it to a strategic buyer, so the headquarters and operations will remain intact, in Detroit. A sale to a strategic buyer usually means a pretty dramatic job loss,â&#x20AC;? Paul told Crainâ&#x20AC;&#x2122;s moments after the deal was signed. Said UMâ&#x20AC;&#x2122;s Gordon: â&#x20AC;&#x153;With a strategic buyer, thereâ&#x20AC;&#x2122;s usually a real bloodbath.â&#x20AC;? Sudip Datta, the interim chair of the department of finance in the

business school at Wayne State, also thinks Compuware will become a public company eventually. â&#x20AC;&#x153;Thoma Bravo will take it private for a couple of years at least, and then theyâ&#x20AC;&#x2122;ll likely see if they can take it public again,â&#x20AC;? Datta said. â&#x20AC;&#x153;They may align the assets of Compuware with assets of other companies they hold to build a bigger company.â&#x20AC;? Thoma Bravo is the successor firm to Golder Thoma and Co., established in Chicago by Stanley Golder and Carl Thoma. In 2008, it became Thoma Bravo in recognition of partner Orlando Bravo. According to the firmâ&#x20AC;&#x2122;s website, the company pursues a buy-andbuild strategy of investing in companies and working with existing management. On its website, the company lists 23 portfolio companies, most of them IT-based. It has made more than $7.5 billion in investments. Compuware was founded in 1973 by Karmanos, Allen Cutting and Thomas Thewes. It went public in 1992 and moved its headquarters from Farmington Hills to Campus Martius in Detroit in 2002. It is widely assumed by industry analysts and the local real estate industry that the headquarters building is for sale, with Compuware looking for a sale and leaseback arrangement. Paul has declined to comment on that topic. Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

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oriented investor that thinks it can help Compuware grow.â&#x20AC;? â&#x20AC;&#x153;Thoma Bravo tends to back management teams, and the fact that theyâ&#x20AC;&#x2122;re buying Compuware is a testament to the job Bob Paul has been doing,â&#x20AC;? said Prokop, referring to the cost cutting and restructuring that the CEO has been leading since company co-founder and former Executive Chairman Peter Karmanos Jr. retired in March 2013. That cost cutting was in response to a takeover bid launched in December 2012 by New York Citybased Elliott Management Corp., an activist hedge fund. The Elliott bid was dropped after Compuware sold some noncore business units, enacted layoffs in other underperforming units and gave Elliott representation on the board of directors. Elliott, which is Compuwareâ&#x20AC;&#x2122;s largest shareholder, has told Thoma Bravo that it will support the deal. Jesse Cohn, a portfolio manager at Elliott who spearheaded its bid for Compuware, issued a comment by email. The deal, Cohn said, â&#x20AC;&#x153;reflects the successful conclusion of a multiyear process to create value for Compuware shareholders. This has been a significant endeavor. â&#x20AC;Ś Credit goes to Bob Paul and his team for their tireless efforts.â&#x20AC;? The deal will pay stockholders $10.92 a share, a 17 percent premium above the closing price of $9.35 on the Friday before the deal was announced.

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CRAIN’S DETROIT BUSINESS

Lions: To keep the seats full, it helps to keep their stomachs full ■ From Page 3

“People want to consume similar food to what they’d eat at home or when they go out to a dining establishment.” Fancy food, craft beers and cocktails is a tool being used across the National Football League to keep the best seats full. While the Lions have maintained relatively stable attendance in recent years, thanks in part to a team roster populated with star players, the NFL as a whole has only recently come out of an attendance dip that mirrored burgeoning television ratings. Across professional sports, teams have been bolstering the socalled game-day experience that promises an enjoyable overall time at the ballpark even if the team on the field is struggling. NFL teams are faced with the dilemma of getting fans to buy tickets to attend games while also protecting TV ratings, which fuel the advertising revenue that networks use to pay the league enormous broadcast rights fees to air games. The Lions — who open the 2014 season tonight at home against the New York Giants — say winning football is their best strategy to accomplish both goals, but they also hedge against the vagaries of wins and losses by investing in stadium hospitality and entertainment. “Our primary focus is winning football games. We also know people can view football games in a variety of ways — in their homes and at restaurants, bars and casinos,” Parkinson said. “We’re competing against the popularity of the NFL. We have to create a singularly different experience. They can stay at home and watch the game, but we want them to come invest their money at Ford Field.” That experience in recent years has included adding notable metro Detroit food and drink options atop the usual stadium fare of hot dogs and nachos. “Unique food and beverage service is a component of our strategy,” said Parkinson, a former Michigan Economic Development Corp. CMO now in charge of the Lions’ marketing, promotions, corporate partnerships, community relations and digital media, and she works closely with broadcasting, guest services and youth football. New this year at Ford Field is the Breadstick Bar and Bistro on the second level. It seats about 100, and includes a full bar and local food, including Great Lakes Coffee, which trained the baristas. “We expect it to become a destination,” said Ben Manges, the Lions’ director of corporate communications. The eatery will be open during the week, too. While some of the local food options are available to the general stadium crowd on the main concourse, most are in the second-level Huntington Club that is for the buyers of the 7,000 club seats and 132 suites. It’s those fans that spend more to attend games that are the most coveted by NFL teams, and get the most attention via perks, unique experiences, and concessions. Along with Bigalora, among the local choices in the Huntington

Club and the North Club are Slow’s, Zingerman’s gelato and deli food, Russell Street Deli, Corridor Sausage Co., Mercury Burger Bar, American Coney Island, Treat Dreams ice cream, and Sugar House craft cocktails. Some of those are available elsewhere inside Ford Field, as well. Suite holders can order all-Detroit food packages, too. “We don’t expect that this will be for all 65,000 fans. Maybe only 2,000 fans will want to get a Zingerman’s gelato, but how nice for those 2,000 fans who don’t have to travel to Ann Arbor to get it,” Parkinson said. The new options already have shown promise: Ariel Millan, head chef at Mercury, said the stand moved 360 to 370 burgers during the Lions’ Aug. 22 preseason game. The mainstays at the stand — it has a staff of four and its kitchen actually is larger than the Corktown eateries’ kitchen — are black bean burgers and California turkey burgers, along with its signature tater tots. It sources all of its vegetable toppings from Eastern Market, Millan said. The food stands and restaurants are a joint investment between the Lions and their stadium concessionaire, Chicago-based Levy Restaurants. Joe Nader, Levy’s executive chef and food czar at Ford Field, likened the local food culture to the music scene, and that makes it easier to select area restaurants to bring into the stadium. “We all go out and support each other. We’re all friends. We have such a rich food culture growing in Detroit,” he said. “We’re able to bring all of these flavors in.” In the planning stages, likely for next season, is to bring in Mexican food from Southwest Detroit. “That’s our goal. We’d like to fill that niche,” he said. Levy’s own Ford Field kitchen this season is offering a foot-long Dearborn Sausage Co. hotdog topped with Detroit-style coney sauce, cheddar cheese, onions and French fries for $15. Alternatively, there is a $7 “Barry Sanders Fresh and Fit Meal” that offers a turkey sandwich on whole grain bread, carrots, juice and a trading card of the Hall of Fame running back. NFL clubs over the past five years have begun to emphasize the game-day experience, including higher-end and local foods, for fans, said Haynes Hendrickson, president of Haddonfield, N.J.based Turnkey Sports & Entertainment Inc., which measures brand effectiveness and values of pro sports teams. “It’s certainly full-blown now,” he said. “They’re coming to be entertained beyond the play on the field. If I’m going to invest eight hours, they’ve got to entice me.” Premium seat holders and season-ticket holders generally are the target of efforts to improve the in-stadium experience. That’s because fans have come to expert more than the game, Hendrickson said. “The consumers’ definition of premium has continued to evolve,” he said. “Teams are trying to add value, to make it more

and more desirable to come to games.” Concessions aren’t the only enticement being employed by the Lions. The team last year introduced a sponsored pregame tailgate party near the stadium’s Gate A entrance on Brush Street, replete with five food trucks, picnic-style eating and music. “Every game for us is like throwing a party for your best friends,” Parkinson said. The Lions this year are among the NFL clubs to offer “experience” options via the official team mobile app. Season-ticket holders get points for buying the tickets, and they can spend those points on in-stadium experiences, Parkinson said. Those include a visit by team mascot Roary to the app user’s seat during the game, pregame field passes, or participating in the “fan tunnel” through which players run onto the field during pregame introductions, she said. The service is available through the Lions’ official app, and was created by Pittsburgh-based YinzCam, a developer of live in-venue mobile apps for sports teams. Sports teams and wireless providers are keenly aware of fan desire for uninterrupted service on their mobile devices: More than 400 antennas, new servers and other infrastructure were installed at the 65,000-seat stadium by Verizon Wireless between August and December 2012. The Lions offer free public Wi-Fi service for Verizon Wireless customers during games. Additionally, the Lions are in the process of taking eight defined empty spaces under the bowl of the concourse and selling them to corporations as “Fan Caves.” The first to be sold was to Microsoft, which is adding Xbox game consoles, seating and decorative wall graphics. The team was in talks to sell another space to Kraft Foods. “It’s still a blank canvas in a lot of areas,” Manges said of the stadium’s interior. This season the stadium’s Lot 5 parking lot, north of the stadium, has been turned into a team-sponsored tailgate area. The Lions are selling a season pass for the lot, which can handle RVs. “We want to get people within the perimeter of our stadium earlier,” Manges said. Sports teams say they are cognizant of the investment fans make to leave their homes to attend games, which includes the cost of the tickets, parking, merchandise and concessions, in addition to hours of their time. “That’s an investment and we don’t take that investment lightly,” Parkinson said. “It’s not only the play on the field but how they’re treated at Ford Field. We can’t guarantee the team is going to win, but we can guarantee that fans are treated in an extraordinary, hospitable way.” Bill Shea: (313) 446-1626, bshea@crain.com. Twitter: @bill_shea19

LON HORWEDEL

Lions defensive lineman Ndamukong Suh collides with quarterback Chad Henne of the Jacksonville Jaguars during an Aug. 22 exhibition game at Ford Field, where the team has sold out every regular-season game for the past three seasons.

QUITE SIMPLY THE TOP. NOW OPEN. MAKE YOUR RESERVATIONS TODAY ON OPENTABLE OR CALL: 313.782.4313 2 WASHINGTON BLVD., DETROIT, MI 48226 LOCATED ON THE 25TH FLOOR OF THE CROWNE PLAZA DETROIT DOWNTOWN (FORMERLY THE HISTORIC PONTCHARTRAIN HOTEL)

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Ex-Im: Bank called â&#x20AC;&#x2DC;crony capitalismâ&#x20AC;&#x2122; and critical to business â&#x2013; From Page 1

associations to call for an end to the agency, calling it â&#x20AC;&#x153;corporate welfareâ&#x20AC;? and â&#x20AC;&#x153;crony capitalism.â&#x20AC;? These groups say the bankâ&#x20AC;&#x2122;s programs may support U.S. exports, but also dually create foreign competition, saying Ex-Im harms U.S. businesses more than it helps. But local bank officials and manufacturers tell Crainâ&#x20AC;&#x2122;s that the elimination of Ex-Im puts Southeast Michigan exports and jobs at risk. Ex-Imâ&#x20AC;&#x2122;s charter expires on Sept. 30 unless the U.S. Congress reauthorizes the bankâ&#x20AC;&#x2122;s funding. The U.S. House of Representatives is reportedly seeking a reauthorization of the bank, but only for months â&#x20AC;&#x201D; a stopgap measure to get the politically charged entity through the mid-term election season.

Critical financing? Ex-Im Bank provides insurance, working capital loans and direct loans for export of U.S. products as part of its portfolio. The bank and its users say its programs are essential in keeping the U.S. competitive in the global marketplace. For instance, Alpha is expected to insure $4.2 million in export shipments in 2014. Itâ&#x20AC;&#x2122;s insured approximately $9.1 million since it started using Ex-Im three years ago. The insurance provides a guarantee of the cost of goods from Alpha, in case the foreign buyer doesnâ&#x20AC;&#x2122;t pay â&#x20AC;&#x201D; something Alpha canâ&#x20AC;&#x2122;t get from other banks. It does not insure weather-related incidents that could delay or damage shipment.Ex-Im supports Alphaâ&#x20AC;&#x2122;s exports to Ride Control Mexicana S. de RL de CV, a Mexican supplier without a lender in the U.S., as well as others. â&#x20AC;&#x153;Local banks wonâ&#x20AC;&#x2122;t touch these deals and we donâ&#x20AC;&#x2122;t have feet on the ground to deal with foreign banks,â&#x20AC;? said Doug Johnson, controller for the family-owned supplier. â&#x20AC;&#x153;Without Ex-Im, weâ&#x20AC;&#x2122;d be reluctant to ship to customers who arenâ&#x20AC;&#x2122;t the Detroit 3.â&#x20AC;? Ex-Im also supported a $20 million working capital loan to Sterling Heights-based Mag Ias LLC in 2011 to support $100 million worth of sales to China, Brazil and India. Without the loan, it would have turned business away, the company said in a press release.

Critics Mike LaFaive, director of the fiscal policy for Midland-based conservative think tank Mackinac Center for Public Policy, said that despite its benefits to some small businesses, the government shouldnâ&#x20AC;&#x2122;t play a role in private market exports. â&#x20AC;&#x153;If a company claims they couldnâ&#x20AC;&#x2122;t find financing without Ex-Im Bank, one would question whether they should be in the export business if a private bank isnâ&#x20AC;&#x2122;t willing to take that risk,â&#x20AC;? LaFaive said. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s simply not the proper role for any level of government to provide this type of export encouragement; it distorts the market place, unfavorably.â&#x20AC;? LaFaive is not alone. Much of Ex-Imâ&#x20AC;&#x2122;s criticism extends to financial risk to the taxpayer and the use of its programs by large U.S. corporations.

WHERE THE MONEY GOES The top 25 Ex-Im users in Michigan since 2007: Ex-Im * Exports supported by Disbursements Ex-Im disbursements 1. Ford Motor Credit Co., Dearborn $850,000,000 $7,300,000,000 2. Dow Chemical Co., Midland $103,218,370 $133,291,620 3. Hess Industries Inc., Niles $80,100,000 $70,000,000 4. Mag Ias LLC, Sterling Heights $72,000,000 $125,000,000 5. Energy International Corp., $70,160,267 $104,240,267 Canton Township 6. United Solar Systems Corp., $67,500,000 $100,000,000 Auburn Hills 7. Graceland Fruit Inc., Frankfort $59,955,311 $88,955,311 8. DMK International LLC, $45,217,991 $86,630,000 Macomb Township 9. Shape Dynamics International Inc., $45,000,000 $70,000,000 Muskegon 10. Tooling & Equipment International $43,170,914 $43,170,914 Corp., Livonia 11. Dcomco Inc., Midland $37,109,998 $52,744,643 12. Cherry Central Cooperative Inc., $35,150,588 $35,150,588 Traverse City 13. Ghafari Associates LLC, Dearborn $31,500,000 $60,000,000 14. Cooperative Elevator Co., Pigeon $30,457,031 $30,457,031 15. Bandit Industries Inc., Remus $28,181,247 $28,181,247 16. Mercury Manufacturing Co., $25,513,791 $25,513,791 Wyandotte 17. Anderson Global Inc., Muskegon $25,162,858 $25,162,858 18. Morbark Inc., Winn $22,846,326 $22,846,326 19. B&P Process Equipment $22,500,000 $80,000,000 and Systems LLC, Saginaw 20. Epic Equipment & Engineering Inc., $21,600,000 $24,000,000 Shelby Township 21. Custom Biogenic Systems Inc., $16,550,015 $16,550,015 Bruce Township 22. Mill Steel Co., Grand Rapids $14,428,215 $3,828,215 23. Pointe Scientific Inc., $14,233,350 $14,233,350 Canton Township 24. Cayman Chemical Co. Inc., $13,500,000 $22,700,000 Ann Arbor 25. Rex Materials Inc, Fowlerville $13,079,802 $13,079,802 * Disbursements include insurance, working capital loans and direct loans ON THE WEB: A list of the top 50 bank users in Michigan

Ex-Im is supported by U.S. taxes, but its default rate, as of March 31, was 0.2 percent and has generated $2 billion through fees over the past five years, which is returned to the U.S. Treasury. But use of Ex-Im programs by some of the countryâ&#x20AC;&#x2122;s largest manufacturers isnâ&#x20AC;&#x2122;t as cut and dry.

Big business boost The largest user of Ex-Im services is Boeing Co., to the tune of more than $6.6 billion this year alone, which subsidizes foreign buyers of its planes. In fact, 26 percent of commercial aircraft sales to foreign buyers were backed by the Ex-Im Bank between 2008 and 2013, according to a September report by Airways magazine. U.S. airline companies and unions argue that the bank is financing plane purchases for airlines that compete directly with U.S. carriers. According to Airways, airlines from United Arab Emirates, India and South Korea with access to private-market capital received more than $3 billion in distributions from Ex-Im between 2004 and 2013. Lee Moak, president of the Air Line Pilots Association, told Congress in a June committee meeting on Ex-Im financing that aiding foreign competitors, which are often government owned, is harming U.S. airlines. â&#x20AC;&#x153;This financing is often well be-

low market rates and can result in an economic advantage of more than $3 million per airplane per year,â&#x20AC;? Moak told Congress. â&#x20AC;&#x153;In an already hyper-competitive marketplace, this advantage gives foreign airlines a significant economic leg up over their U.S. counterparts.â&#x20AC;? The largest user of Ex-Im bank since 2007 locally is Ford Motor Credit Co. Ex-Im has provided $850 million in loans to foreign buyers for Ford products. U.S. Rep. Justin Amash, RGrand Rapids, introduced legislation in 2012 to end Ex-Im Bank and is supporting not reauthorizing its charter at the end of the month. â&#x20AC;&#x153;At its core, the Export-Import Bank is a mechanism for wealth redistribution from ordinary Americans to the politically connected and wealthy,â&#x20AC;? he said in June on social media. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s time to end corporate welfare and ?end ExIm?.â&#x20AC;? Jim DeMint, president of the conservative think tank Heritage Foundation, called the agency a â&#x20AC;&#x153;big government mistake,â&#x20AC;? because it disproportionately supports large corporations over small business, in a widely distributed editorial earlier this month. Larger companies do receive larger sums of Ex-Im authorizations individually than small businesses, which may be an indicator of the amount of exports than favoring one over the other. Of its $140 billion portfolio cap, Ex-Im approved a record high 3,413

small business authorizations in 2013 â&#x20AC;&#x201D; which represented about 90 percent of its total authorizations, according to the bank. But David Lochner, president of FirstMerit Michigan in Southfield, said while Ex-Im is under fire, its programs remain beneficial in aiding small- and middle-market business in export growth. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s easy for us to facilitate trade without having to do our own risk assessment of each foreign bank that our clientsâ&#x20AC;&#x2122; customers may use as a line of credit,â&#x20AC;? Lochner said. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re in the solutions business, and these tools enable, sometimes, very powerful and creative solutions; and open up many more export markets for Michigan-based companies.â&#x20AC;? FirstMerit Corp. is a delegated lending authority for Ex-Im that underwrites exports, similar to Alphaâ&#x20AC;&#x2122;s, shipping to financially unstable countries.

Role in Michigan Linda Lim, professor of strategy with a focus on the influence of domestic politics at University of Michigan, said Ex-Im Bank was designed to aid in the exports of capital-intensive products, like Boeing, not small manufacturers. â&#x20AC;&#x153;There is a case for Ex-Im in aiding highly capital intensive, risky and technologically innovative large companies; they are facing international competition where

their governments perform the same subsidies,â&#x20AC;? Lim said. â&#x20AC;&#x153;Subsidies for anyone that wants to import donâ&#x20AC;&#x2122;t make sense. If there is a market failure (for small business lending for exports) â&#x20AC;Ś create some incentives for financial markets to lend to small business exporters.â&#x20AC;? Nevertheless, exports continue to play a larger role in the stateâ&#x20AC;&#x2122;s economy. The Detroit-Warren-Dearborn region registered $53.9 billion in goods exports in 2013, ranking the metro area fifth in the nation, according to data released last week by the U.S. Department of Commerce. Goods exported from metro Detroit represented 72 percent of all Michigan exports last year and supported 288,967 jobs. However, Ex-Im only supported 4 percent of exports in the state â&#x20AC;&#x201D; something naysayers have pointed out. Lawton King, public affairs spokesperson for Ex-Im Bank, said while Ex-Im may only support a small number of U.S. exports, itâ&#x20AC;&#x2122;s essential for those businesses. â&#x20AC;&#x153;There are about 60 export credit agencies around the world, all vying to support their companies and their jobs. If Ex-Im were to disappear, itâ&#x20AC;&#x2122;s not like the others would close shop,â&#x20AC;? King said. â&#x20AC;&#x153;Without Ex-Im, U.S. business is instantly less competitive.â&#x20AC;? Dustin Walsh: (313) 446-6042, dwalsh@crain.com. Twitter: @dustinpwalsh

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Money: How lawmakers, lobbyists work around finance laws ■ From Page 1

“So much of campaign spending is off the books,” said Rich Robinson, of the Michigan Campaign Finance Network. He said more transparency is necessary for the public to be able to see cause and effect when it comes to public policy. Two years ago, a State Integrity InvestiRobinson gation done by the Center for Public Integrity, Global Integrity and Public Radio International gave Michigan and seven other states failing marks — an “F” on its corruption risk report card. The state ranked 44th nationally and received an “F” on 10 of the 14 individual metrics, ranging from political financing to lobbying disclosure to legislative accountability. Steve Linder, a partner at the Sterling Corp., a Lansing-based Republican communications company, said he considers some of those failing grades to be an “A” in his book. He disputes the notion that a lack of transparency equates to corruption. “You can’t demonstrate a correlation,” Linder said. “Where’s the corruption?” Linder said he believes the more speech, the better in politics. Plus, money can’t always translate into voter influence, Linder said. Republican businessman Dick DeVos spent $35.5 million of his own money in 2006 trying to unseat then-Gov. Jennifer Granholm — only to lose by 14 percentage points. Here are the ways lawmakers and lobbyists work around Michigan campaign finance laws.

Open bar In Michigan, lawmakers cannot accept free booze from lobbyists, but many of them do. So how do they get away with it? It’s pretty easy, actually. Those providing the free booze just bill the lawmaker for the cost of the party, then donate the same

HOW LOBBYISTS’ MONEY TALKS Lobbyist Governmental Consultant Services Inc. Kelley Cawthorne James H. Karoub Associates Wiener Associates Michigan Health and Hospital Association Public Affairs Associates LLC Muchmore Harrington Smalley and Associates Michigan Education Association Michigan Credit Union League Kheder Davis and Associates Inc. Michigan Legislative Consultants Inc. National Federation of Independent Business Blue Cross Blue Shield of Michigan Capitol Affairs Inc.

2013 spending $1,629,864 $1,093,296 $986,264 $589,324 $531,717 $484,832 $472,575 $424,874 $384,834 $374,305 $368,511 $338,754 $337,340 $333,189

Source: Michigan Campaign Finance Network

amount to the lawmaker’s cam- people would wine and dine all the time and everybody would be dopaign account. Take the example last year of Sen. ing it,” he said. Dave Robertson, chairman of the Senate elections committee. He had a fundraiser, like dozens of other Campaign masterminds know lawmakers each year, at the office of the Michigan Beer & Wine Wholesalers, that if you use magic words in two blocks away from the state your campaign ads, you can make your donors disCapitol. Several appear. months after his From 2000 to fundraiser, his 2012, Robinson campaign was found $85 million billed worth of TV ads $875.36 for that went unrea “food ported because expense.” the ads were purThen, on chased by issue June 11, advocacy groups. the orgaThe ads never tell nization viewers to “vote donated for” or “vote $875.36 to against” any parhis camticular candidate, paign. so the donors for Linder said that those ads do not there is an exhave to be dispense to fundraisclosed under state ing and that the Steve Linder, law. The ads are real story is how Sterling Group meant to educate much lawmakers raise from these events — not how voters, but they typically educate much was spent putting them on. viewers about all of the terrible And, he said, lawmakers are not so things one of the candidates in the easily swayed on issues just be- race is said to have done. “The biggest beneficiary of dark cause they are given something. Some just stop in to pick up free money was Jennifer Granholm,” food before heading home or to Robinson said. The state Democratic Party, he start their day. “If wining and dining worked, said, spent $20 million in her two gubernatorial races that did not have to be reported, or the donors identified, because they were issue ads. The only way it’s known the money was ever spent is by looking at the contracts and receipts at the individual TV stations, which Robinson does. Linder opposes making the donors behind issue ads known, he said. Those individuals should be able to speak their minds and not live in fear of retribution if they donate to such a group “I don’t believe in transparency there,” he said. But Robinson said the rise of dark money in state politics is the most serious problem that lawmakers should address, because the public has no idea where this money is coming from. There are limits in place for “hard money” that is given directly to candidates. For those seeking statewide office, the most an individual can give that candidate is $6,800. But that same person could create his own political action committee and give 10 times that

Campaign spending

you “ Just because took a

lawmaker out to dinner doesn’t mean anything. It means you got to have a conversation.

”

amount, or $68,000, to that candidate. The same donor then could start a nonprofit organization to run issue ads about his preferred candidate’s opponent and spend and collect an unlimited amount of money to do so — and never disclose the donors. “There are easy ways to get around contribution limits and disclosure,” Robinson said. “We should have contribution limits and have full transparency.” The fact that it’s so easy to get around the rules, Linder said, is all the more reason that there should be no campaign donation limits at all. “Let them give unlimited amounts to candidates and have it all disclosed,” Linder said.

Donor disclosure In election years in Michigan, the public and political opponents basically have two chances to see who is donating to candidates for state office before voting begins. Candidates are required to file campaign finance reports just 11 days before an election. For the August primary, that meant candidates had to report campaign spending and donations by July 25. Before that, the most recent time they had to make any information public was Jan. 31. In Colorado, by contrast, candidates have to file quarterly reports as well as monthly reports starting six months before an election and biweekly reports starting two months before an election. So while the public may not have much time to see who is donating to a Michigan campaign before an election, sometimes the public doesn’t see it at all — at least until after the election. That’s because for some campaigns, the punishment, a maximum fine of $1,000, is worth paying to keep opponents from seeing how much a candidate has raised. Of the 935 statewide, judicial and legislative candidates in the August primary, 33 filed campaign finance reports late, and some still have not filed. “Clearly, you had candidates giving the middle finger to the state,” Robinson said. During Rep. John Olumba’s time in office, he has filed more campaign finance statements late than he has on time. In 2010, the Detroit lawmaker missed three of four deadlines. In 2012, he missed all four deadlines. Because Olumba had so many past-due statements in 2012, he missed the House swearing-in ceremony on the first day of session in 2013. That’s because he was at the Department of State office down the street from the Capitol submitting his missing records and paying a $4,000 fine for his four late statements. He then had to be sworn in separately once he arrived. Lawmakers have to file all of their campaign finance paperwork, as well as a sworn statement saying they have submitted everything required prior to taking office, or they are guilty of a misdemeanor. Olumba has since missed two deadlines this year for his House campaign account, but when he

ran for the Senate this summer, he signed a statement saying he would not raise more than $1,000 during the campaign, negating the need to file any campaign finance reports. But he even filed that statement late and still has a $140 fine outstanding. His own PAC, the Truth Hope Righteousness Olumba Majority Fund, has missed every reporting deadline since Olumba started it in 2011.

Personal financial disclosure Michigan is one of just three states that do not require officeholders and candidates to file statements of their personal financial holdings. This helps guard against selfdealing, Robinson said. This way the public can see whether a lawmaker is pushing a tax break for an industry that he or she has a financial stake in or if the lawmaker is sponsoring a bill that could benefit a company in which the lawmaker has a large holding of stock. Members of Congress and congressional candidates have to file statements disclosing their business interests and stock holdings. So do candidates in 47 other states. Michigan, Idaho and Vermont are the only states that do not require candidates to list businesses in which they have an ownership stake and a range of how much they have invested in stocks. But Linder said he has not seen an instance where such disclosure made a difference and is typically used against a candidate by showing how rich or poor they are. “A lot of it is just prurient,” he said.

Lobbying There is more transparency in lobbyist spending in Michigan, although spending totals aren’t delineated in much detail. The biggest lobbying firm in the state last year, according to Robinson’s group, was Lansing-based Government Consultant Services Inc., which spent $1.63 million (see table, this page.) It has to report that amount to the state, as well as break down how much was spent taking lawmakers out to dinner, which in 2013 totaled $38,000. It also has to specify which lawmakers were taken out to eat if the cost of the food was more than $58 in a month or $350 for the year. The rest of the money GCSI spent in 2013, totaling $1.6 million, is simply listed as “all other lobbying expense” with no other details. “There’s really no accounting for what the lobbying is for,” Robinson said. “All of that is lost in a big outline. You know the dimensions of a black box, but you don’t know what’s happening in the black box.” Linder said the amount of money spent has to be taken in context. “Just because you took a lawmaker out to dinner doesn’t mean anything. It means you got to have a conversation,” he said. “I don’t think any system can be set up to get you to the bright light that you are looking for.” Chris Gautz: (517) 403-4403, cgautz@crain.com. Twitter: @chrisgautz

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Test: Making Medicare, Medicaid work together ■ From Page 3

ernment hope to achieve 1 percent in savings the first year and 2 percent the second, Fitton said. Eventually, if the pilot program works, all 220,000 dual-eligible patients in Michigan could be covered. “We have been clear. Our interest is not just in short-term cost savings,” Fitton said. “We are committed to having this demonstration improve patient care and outcomes and move people out of institutions. We are confident this will significantly reduce costs over the long run.” Starting Jan. 1 and phased in over six months, eight Medicaid health maintenance organizations and four regional community mental health authorities will be responsible for coordinating care for an estimated 110,000 patients in 25 of the state’s 83 counties. The geographic area of this dualeligible population encompasses 15 counties in the Upper Peninsula, eight in Southwest Michigan, and Macomb and Wayne counties in Southeast Michigan. The Medicaid HMOs, acting under contracts as independent care organizations or ICOs, and community mental health authorities, acting as prepaid inpatient health plans or PIHPs, will subcontract with a variety of providers to form care coordination networks. These networks — which will include nursing homes, federally qualified health centers, hospitals, home health agencies and physicians — will attempt to coordinate care, reduce duplication of services and improve the quality of care and life for dual-eligible patients.

‘Care Bridge’ coordination Unlike the 10 other state pilot projects, Michigan’s dual-eligible demonstration program uses what is being called a “Care Bridge” to coordinate medical, long-term and behavioral health care between the ICOs and PIHPs. The Care Bridge combines electronic health record systems and care coordinators employed by the ICOs and PIHPs that work together to ensure patients are cared for effectively, said Susan Yontz, director of the integrated care division in the Michigan Department of Community Health. “It is a challenge because it is something new,” Yontz said. “The ICOs are used to providing physical (medicine), and some have long-term-care experience as well. Now they will work with PIHPs on the behavioral side.” Eileen Ellis, managing principal with Lansing-based Health Management Associates, said the dual-eligible pilot in Michigan is different from those in the other states because it wanted to keep its historic contractual separation of medical, long-term-care and behavioral Ellis health services. Other states have contracted with single prepaid health plans to manage medical, behavioral and long-term care, Ellis said. “There was a big delay in getting agreement with (Medicare) on the

Michigan model … because the feds wanted to make sure the Care Bridge concept will result in meaningful care coordination with the physical, behavioral and longterm care,” she said. In Southeast Michigan, Community Health selected six health plans and two regional mental health authorities for the pilot program to care for about 62,000 dualeligible patients. For Wayne and Macomb counties, the health plans or ICOs are Molina Healthcare of Michigan, HAP Midwest Health Plan, AmeriHealth Michigan Inc., CoventryCares of Michigan Inc., United Healthcare Community Plan Inc. and Fidelis SecureCare of Michigan Inc. The regional mental health authorities or PIHPs are the Detroit Wayne Mental Health Authority for Wayne County and Macomb County Community Mental Health for Macomb County. In Southwest Michigan, Meridian Health Plan of Michigan and CoventryCares are the ICOs and Southwest Michigan Behavioral Health the PIHP for the counties of Barry, Berrien, Branch, Calhoun, Cass, Kalamazoo, St. Joseph and Van Buren. In the U.P., the ICO is Upper Peninsula Health Plan LLC and the PIHP is Northcare Network in Marquette. “The key to whether this is successful or not will be the communication and data sharing between the care manager on the physical side and the care manager on the behavioral side,” Ellis said. “The Medicaid HMOs are also not used to seeing someone in a nursing home,” she said. “There is a difference in illness and frailty and disability. Developing a good care team that coordinates co-occurring behavioral and medical issues will be a key.” Stephen Harris, CEO of Troybased Molina, said treatment plans will be determined using technology and care coordinators employed by health plans, nursing homes and mental health agencies. “We have two home programs already in place to address the dual-eligible” patients, Harris said. “We have been covering a similar population with Medicare Advantage’s special-needs program” for several years. For example, Molina’s Transitions of Care program ensures patients discharged after a hospital or nursing home stay comply with medications and physician instructions. The plan’s Community Connector program sends a case worker to a member’s home to evaluate safety issues. Harris said planning and contracting are on schedule to go live with dual-eligible patients in Southeast Michigan on May 1. “We don’t know how many we will cover. It is too soon to tell because the opt-out rate (for dual-eligible patients) is pretty high in some states,” Harris said. Ellis of Health Management Associates said the state estimates that each of the six plans in Southeast Michigan could cover up to 7,000 to 8,000 dual-eligible patients. Patients can enroll voluntarily in the demonstration program starting Jan. 1 for Southwest Michigan and May 1 for Southeast Michigan. Patients eventually will be auto-enrolled unless they opt out

through Community Health. Sean Kendall, vice president of business development at Detroitbased Meridian, said Southwest Behavioral has been collaborative in jointly developing the Care Bridge coordination system with Meridian. “We are testKendall ing our system to make sure it is working as desired and there are no barriers to care,” Kendall said. In Southwest Michigan, he said, Meridian projects to cover about 8,000 dual-eligible patients after an estimated 25 percent of patients opt out. Meridian will share coverage of about 21,000 lives with CoventryCares. Kendall said Meridian expects to hire about 100 personal-care and community-care coordinators, including nurses and social workers, to help patients in their homes after they are discharged from a nursing home or hospital. “We are engaging them at home and as a part of the care plan,” he said. “We want to make sure the home is safe and they have services to avoid a readmission or decline in health.” David LaLumia, CEO of the Lansing-based Health Care Association of Michigan, said nursing homes are spending millions of dollars to buy and upgrade their electronic health record technology to exchange data with health plans and physicians. “We need to be part of the LaLumia clinical record to coordinate care,” LaLumia said. “This is a huge change, and nursing homes are increasing the pace” in installing electronic records. LaLumia said care coordination will help ensure that patients are not readmitted to hospitals or nursing homes once they are discharged. “Nursing homes are sending nurses back for clinical skills improvement, especially in gerontology,” he said. “Health plans want people (physicians and nurses) who are available at nursing facilities 24/7.” Jeff DeLay, COO of the Detroit Wayne Mental Health Authority, said the mental health agency expects to have initial contracts with the six health plans in place by the Tuesday deadline. “It is a challenge. We have agreed to a framework on the contracts, excluding the funding,” until those final numbers become available, DeLay said. Under the contracts with Community Health and the health plans, the mental health authorities are responsible for Medicare inpatient and outpatient services and physician services for behavioral health. DeLay said planning for the Care Bridge coordination is on track. “The real benefit will happen at the consumer level,” he said. “Our case managers will work with ICOs’ care managers to come up

with a treatment plan, which is where the benefits will come in.” Joe Ferguson, CEO of Detroitbased Advantage Health Centers, a federally qualified health center with five locations, said health centers primarily see Medicaid and uninsured patients. “Of the 20,000 to 25,000 patients, 7 percent are Medicare and maybe 2 percent are dual-eligible patients,” Ferguson said, adding that AdFerguson vantage Health has signed a contract with Molina to cover the patients. Ferguson said Advantage Health is expanding its behavioral health services to accommodate greater demand for mental health services in the Medicaid and dualeligible population.

‘Huge change’ in reimbursements LaLumia said nursing homes were concerned about adequate payment by health plans. More than half the 430 Medicare-certified nursing homes in the state are in the dual-eligible program. “This is a huge change in how home health and nursing homes get paid,” he said. “We wanted to make sure nursing homes continue to get paid the Medicaid rate, and the state has done that. We are being reimbursed by days of care. We feel we can reduce length of stays.” Dave Waymire, a spokesman for the Lansing-based Michigan Association of Health Plans, said reimbursement levels for the dual-eligible patients appear adequate. “Adequacy of rates is always a concern,” Waymire said. “We need adequate rates to provide quality, timely services to beneficiaries, but we also recognize the goal of reducing costs overall.” Meridian’s Kendall said the payments to health plans from the state will be full-risk contracts, meaning the monthly payments will be fixed and the plans must manage all care services within that payment. The per-member monthly rates actually will be a blended fee from the Centers for Medicare and Medicaid Services for Medicare and prescription drug benefits and Medicaid payments from Community Health. In turn, Kendall said, most health plans are paying providers, including nursing homes and physicians, on a mixed fee-for-service model, with some bonus payments for meeting quality standards. While nursing homes won’t initially receive quality incentives as will the health plans, said LaLumia of the Health Care Association of Michigan, health plans will send patients to nursing homes that have high quality scores. “We want to be good partners with health plans and help them achieve those indicators,” he said. “We think eventually, nursing homes will be rewarded and eventually there will be quality money for nursing homes.” Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

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CRAIN’S DETROIT BUSINESS

RUMBLINGS

WEEK ON THE WEB FROM WWW.CRAINSDETROIT.COM, WEEK OF AUG. 30-SEPT. 5

The RenCen suits up for the big game he signature element of Detroit’s skyline is wrapped and ready for some football. The Renaissance Center is covered with a massive GMC advertising wrap for the Detroit Lions’ appearance on ESPN’s “Monday Night Football” broadcast tonight. (More on the Lions, Page 3.) The graphic work was done by Rochester Hillsbased i.M. Branded, which is co-owned by Roger Penske’s Bloomfield Hills-based Penske Automotive Group. GMC is the official truck of the National Football League; the intent of the wrap is to get the brand in front of the “Monday Night Football” audience — the games averaged 13.6 million viewers last season — when ESPN does shots of the city during the game. i.M. Branded, a dba for Automotive Media LLC, designs, manufactures and installs custom vinyl graphic wraps and images for buildings and vehicles. The wrap is about 280 feet tall and 125 feet wide. It’s a perforated vinyl window film applied to the exterior of glass that allows people inside the building to still see through the windows, said i.M. Branded President and founder Jim Whitehead. From inside the building, the view is similar to looking through a screen door. The RenCen wrap was designed and printed over about 50 hours nonstop on the firm’s 2,400-pound HP Latex 850 printer, a $250,000 machine that uses eco-friendly ink, Whitehead said. It’s the largest wrap to ever adorn

the RenCen, he said. It took five i.M. Branded staffers a week to install the wrap, which will be lit at night and will remain up through September.

COURTESY OF LINDA SOLOMON

On her talk show, Meredith Vieira will feature the art of local photojournalist Linda Solomon (right).

Pictures of Hope to be featured on talk show The Pictures of Hope campaign organized by Birmingham-based celebrity photojournalist Linda Solomon will be featured on journalist and game show host Meredith Vieira’s new daytime talk program, “The Meredith Vieira Show.” The segment, set to air locally on WXYZ-Channel 7 on Sept. 17, will feature Solomon’s celebrity photos and her work with children on the Pictures of Hope campaign, in its eighth year. Through the campaign, Solomon and sponsor Chevrolet give children in select homeless shelters each a digital camera to record their hopes and dreams. Those pictures, taken this year by children in 14 shelters across the country, including the Shelter of Flint,

COURTESY OF I.M. BRANDED

The Renaissance Center will tout ESPN’s telecast of the Detroit Lions’ season opener through month’s end.

will be turned into holiday cards that will be sold by the shelters through linda solomonphotography.com/ picturesofhope beginning in late September. Each box sells for about $25, with proceeds to the shelters.

UM to manage Wayne County examiner office

Snyder, Duggan share honor in Politico magazine

he University of Michigan agreed to manage the operations of the Wayne County Medical Examiner’s Office as part of an effort to improve service. The Wayne County Commission approved a three-year, $16.7 million contract for the office; under the agreement, Wayne County will continue to appoint the chief medical examiner, and the office’s operations will remain in Detroit.

Detroit’s rescue squad. That’s what politics and government magazine Politico calls the team of Michigan Gov. Rick Snyder and Detroit Mayor Mike Duggan in its “Politico 50” list of the thinkers, doers and dreamers “in this age of gridlock and dysfunction.” Despite their different politics — Duggan, the Democrat who became mayor in January, and Snyder, a first-term Republican — the men believe they can turn around the city “and they’re demonstrating a very un-Washington type of cooperation to get there,” the magazine says. Snyder said he and Duggan are aligned when it comes to getting the city’s finances and population back on track. “We’re scorecard kind of guys,” Snyder told Politico. Read the full report at politico.com.

Red Cross to consolidate operations in Michigan Details are sketchy, but the American Red Cross has confirmed that it plans to consolidate its Michigan operations. Sources say the consolidations could affect the Southeast Michigan chapter and affiliates in Ann Arbor and Monroe. The Red Cross declined to comment on how many jobs will be eliminated, saying it is still developing plans. But consolidations will begin in the coming months, it said in an emailed statement to Crain’s. The moves are aimed at meeting the growing demand for services and making the best use of donor dollars, the nonprofit said. The goal “is to increase our services, not through the addition of more paid staff but by adding more volunteer leaders and involving them in more ways,” the Red Cross said. Three years ago, the American Red Cross of West Michigan consolidated its chapters. And in February, the Red Cross closed its national blood-testing lab in Detroit, eliminating 118 local jobs, amid a national trend of declining demand for blood. The blood services unit and affiliates offering disaster relief and health and safety courses both operate under the Red Cross national umbrella.

ON THE MOVE 䡲 Ann Arbor-based

Busch’s Fresh Food Market appointed Mike Brooks president and CEO. Brooks, 48, had been president and COO of Burtonsville, Md.based software company iControl. He succeeds John Busch, 62, who led Busch’s for 31 years and is now company chairman.

COMPANY NEWS 䡲 Three months after announcing a definitive agreement to merge operations into a single health system — Beaumont Health — officials for the new eight-hospital nonprofit system announced they closed the deal. State Attorney General Bill Schuette said he had no objections to the $3.8 billion merger. 䡲 Federal-Mogul Holdings Corp., the Southfield-based auto supplier and aftermarket parts producer controlled by longtime Wall Street investor Carl Icahn, said it plans to split its two business units into two publicly traded companies. The separation will occur through a tax-free distribution of shares from its aftermarket parts division, which it renamed FederalMogul Motorparts in May, to current Federal-Mogul shareholders, the company said. 䡲 Cooper Standard Holdings Inc., the Novi-based fluid systems and sealing supplier, said it agreed to purchase an additional stake in its Chinese automotive sealing joint venture, Huayu-Cooper Standard Sealing Systems Co. Ltd., for $60 million, giving it 95 percent ownership. The deal is expected to close in the first quarter of 2015. 䡲 The Henry Ford will gain a national television presence this month with the launch of its first show on CBS. “Innovation Nation,” which launches Sept.

27 on Saturday mornings, will share the stories of past, present and future innovators and their dedication to bringing their inventions to life. 䡲 The Detroit Medical Center was awarded a $10 million grant by the Centers for Medicare and Medicaid Services to test a primary care and preventive health care program at four of its hospital emergency departments: Harper University Hospital, Detroit Receiving Hospital, Sinai-Grace Hospital and Children’s Hospital of Michigan. 䡲 The Detroit Creative Corridor Center and Wixombased ArtServe Michigan Inc. announced 25 winners of $15,000 in micro-grants, each up to $1,000, to put toward the cost of installations for the upcoming Detroit Design Festival. More than 500 designers and 25,000 attendees are expected at the Sept. 23-28 event. 䡲 Virgin Atlantic Airways Ltd. said it will add five daily U.S. flights, including a new route to Detroit, following last year’s investment by Delta Air Lines Inc., Bloomberg News reported. Detroit, a major hub for Delta, will get a daily service from London.

OTHER NEWS 䡲 Detroit’s bankruptcy trial began with CFO John Hill testifying that imposing higher taxes wouldn’t be a good way to take the city out of bankruptcy and attorneys for bond insurer Syncora Guarantee telling U.S. Bankruptcy Judge Steven Rhodes that the city must pay 75 percent on its debt to be fair. 䡲 The University of Michigan’s Mobility Transformation Center announced that industry partners — among them Honda, Nissan, Delphi, Verizon and State Farm Mutual Automobile Insurance — plan to each commit a total of $1 million over three years to support the center and its programs promoting the use of networked driverless vehicles, AP reported. 䡲 Detroit-area labor activist Robert Davis pleaded guilty in a federal case in which he was accused of stealing $125,000 from the financially struggling Highland Park public schools while serving on the school board, AP reported. The charges carry up to two years in prison for embezzlement and tax fraud. 䡲 Former Detroit Mayor Kwame Kilpatrick is asking an appeals court to throw out his corruption conviction, alleging a conflict involving his attorneys and

testimony of federal agents, AP reported. He is serving a 28-year prison sentence after a jury last year convicted him of two dozen crimes. 䡲 Kenneth Flaska, a former partner and litigator at Bloomfield Hills-based Dawda, Mann, Mulcahy & Sadler PLC, was sentenced to more than five years in federal prison for illegally obtaining nearly $2.8 million that belonged to his firm or clients. The FBI said the money fueled Flaska’s extravagant lifestyle, including a 31-foot sailboat. 䡲 Detroit police detained more than two dozen protesters at an east-side McDonald’s who blocked traffic as part of a national protest to push fast-food chains to pay their employees at least $15 an hour, AP reported. 䡲 An undisclosed buyer purchased the Alfred J. Fisher Mansion in Detroit’s Palmer Woods neighborhood for $1.6 million. A spokesman for the Keego Harbor-based Bedford Group said the Aug. 22 sale of the 16,500-square-foot site was the largest sale price for a city home in recent memory. 䡲 Speaking during Labor Day festivities in Detroit, Vice President Joe Biden criticized corporate pay and told union members that they deserve a “fair share” of any improvement in corporate profits, AP reported. 䡲 KC Crain pleaded no contest Sept. 4 to a charge of domestic violence and was sentenced to eight months of probation by Bloomfield Hills District Court Judge Marc Barron. Barron told Crain that if the probationary period is successful no criminal conviction will result. The sentence is a result of a June 29 arrest on the domestic violence charge. Crain is a group publisher at Detroit-based Crain Communications Inc. and executive vice president/director of operations for the company. 䡲 The Michigan Education Association should allow members to resign at any time and stop enforcing an annual one-month opt-out window, a state labor judge ruled, relying on the state’s right-to-work law, AP reported. 䡲 Republican Gov. Rick Snyder maintained his longrunning financial advantage over Democratic challenger Mark Schauer, reporting an $869,000 lead at the latest campaign finance deadline. Snyder had nearly $2.9 million in the bank as of Aug. 25; Schauer had about $2 million.

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