Crain's Detroit Business, Dec. 15, 2014 issue

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www.crainsdetroit.com Vol. 30, No. 50

DECEMBER 15 – 21, 2014

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Page 3 How TriMas sees dividing itself as a growth formula Can you strike VC gold twice?

Sooch aims to find out St. John Providence Park plans Livingston expansion Social Media and Marketing

City schools coalition will hit books in a hurry Snyder wants panel’s input early in ’15

BY KIRK PINHO CRAIN’S DETROIT BUSINESS

How companies can build a brand they’ll ‘like,’ Page 11

This Just In

Two hands is all you need to count the number of publicly financed schools in Detroit with Michigan Educational Assessment Program scores above the state average, in spite of more than two decades of experimentation that included increasing competition for students with charter schools.

Now, Gov. Rick Snyder and Mayor Mike Duggan are looking to a

DAVID HALL/CDB

In an interview with Crain’s, Gov. Rick Snyder said he wants recommendations for improving Detroit schools – public and charter alike – by the first half of next year.

broad coalition — including business, teachers unions, nonprofit and civic leaders — to see if they can agree on ways to solve overcapacity issues while ensuring that

COMMUNITY BENEFITS PACTS Community benefits agreements are legally binding pacts between communities and developers that guarantee things like jobs, wages and local contracting development in exchange for grants, tax abatements, property transfers or other assistance from local governments.

House Bill 5977 would make illegal local ordinances that require developers to enter into community agreements with employment or wage conditions.

more schools that remain are actually delivering better results.

With the city’s historic municipal bankruptcy squarely in the rearview mirror, Snyder and others are turning a greater focus toward repairing Detroit’s vast network of publicly financed schools run by 14 different operators: Detroit Public Schools, the Education Achievement Authority and a dozen different charter school authorizers. Although fixes to a host of problems won’t be easy, Snyder and others hope the Coalition for the Future of Detroit Schoolchildren, announced last week, can provide viable recommendations to mend the city’s education woes — and provide them fast.

Bill aimed at CBAs may also negate abatements

See Schools, Page 21

BY CHAD HALCOM

Westborn Market to add store in Plymouth DAVID HALL/CDB

CRAIN’S DETROIT BUSINESS

Westborn Market, a familyowned grocer with stores in Dearborn, Livonia and Berkley, is adding a fourth in Plymouth that is expected to open next summer.

The company plans to move into the former U.S. post office at 860 Penniman Ave. Westborn signed a lease last week, said Mark Malcolm, president and CEO of Tower International Inc. He, along with his wife, Patty, bought the historic building from the U.S. Postal Service this year, coinciding with the post office’s relocation to a smaller space nearby.

The nearly 11,000-squarefoot building was constructed in 1936.

— Laura Cassar

No issue next week, but news will be a click away

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Crain’s will not publish an issue until the Book of Lists on Dec. 29.

But we’ll have plenty to report and to say until the next regular issue Jan. 5.

Visit crainsdetroit.com.

How did the D become a garden of eatin’? hen Dave Kwiatowski (above left) and Marc Djozlija opened Wright & Co. this summer, they were in the shallows of a growing dining wave now crashing over Detroit. In the past year, more than a dozen restaurants have opened, from big players such as HopCat Detroit and Punch Bowl Social (left), to local entrepreneurs, such as Antietam and Selden Standard.

But can the Motor City handle all of these new neighborhood joints and temples to seasonal fare and quality ingredients? Will palates be fickle? Will restaurants cannibalize each other?

Find out how local restaurateurs perceive Detroit’s burgeoning restaurant scene.

W

S E E S T O R Y, P A G E 1 8

A bill that bars local governments from attaching local job hires, contracting or employee wages to tax incentives or local development approvals is dead for now, but it is expected to be reintroduced early next year.

House Bill 5977 is aimed primarily at heading off a pending community benefits ordinance proposal in Detroit, but it likely would have ramifications far outside the city.

That’s because local governments routinely attach job requirements to tax abatements, and the bill as proposed would no longer allow that. Some believe it also would negate agreements already in place.

That’s the position of Tim Wolff, manager of rural Isabella County village Lake Isabella, who said he believes the proposal would also effectively cancel a 2010 village council resolution creating guidelines for industrial tax abatements.

Wolff said the village of 1,700 people used those guidelines to benefit Isabella Pellet LLC based on four criteria, one of which is the number of jobs that pay at least 125 percent of the federal poverty level for a family of three.

Isabella Pellet, which makes animal bedding and home heating fuel for stoves from sawmill waste, is expected to grow to 25 jobs and currently employs 18-20 people, See Pacts, Page 19

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CRAIN’S DETROIT BUSINESS

MICHIGAN BRIEFS Ski industry hopes to repeat last winter’s strong season Although the first snow that came in November is long gone, ski hills throughout Michigan have taken advantage of the early cold snap to begin their season and build momentum for the months ahead.

Crystal Mountain Resort near Traverse City is one of the resorts that launched ahead of schedule, opening some slopes before Thanksgiving, its earliest in more than 15 years, CEO Jim MacInnes said.

Ski hills typically plan to open by the first of December, Mickey MacWilliams, executive director of the Clarkston-based Michigan Snowsports Industries Association, told MiBiz. Last year, Michigan’s ski hills saw nearly 2.4 million visitors — making it one of the best seasons on record in the state.

Generate energy from cows?

There’s methane to this madness A large farm in the West Michigan community of Coopersville plans to start producing electricity from manure produced by its 3,000plus dairy cows, MLive.com reported. Electricity generated will be used by the farm and sold to Jackson-based CMS Energy Corp.’s Consumers Energy unit.

The company involved is Sustainable Partners LLC, which has a similar power-generating operation in

Stryker to pay $80M to end inquiry of subsidiary Kalamazoo-based Stryker Corp. faces stiff penalties, including $80 million in fines and settlements, related to allegations that a subsidiary distributed a device used in knee replacement surgery without approval from the U.S. Food and Drug Administration, reported Modern Healthcare, a sister publication of Crain’s Detroit Business.

OtisMed Corp., a Stryker subsidiary, and former CEO Charlie Chi pleaded guilty to distributing knee replacement surgery cutting guides despite the FDA’s rejection of an application for marketing clearance. A federal judge fined the company $34.4 million and ordered $5.16 million in criminal forfeithe West Michigan community of Lowell and also is known by the name Spart. (Of course, it is.)

MICH-CELLANEOUS 䡲 In August 2013, Crain’s Michigan Business reported that Mark Sellers, owner of the Grand Rapidsbased Hopcat bar chain and board chairman of the traveling museum exhibit company Premier Exhibitions, planned to sell artifacts from the shipwreck of the Titanic to a Florida investment firm. But in a filing with the U.S. Securities and Exchange Commission, Sellers indicates he is no longer selling to the Armada Group, The Associated Press reported. 䡲 The Grand Rapids-Wyoming metropolitan statistical area ranks fourth in the nation for the

ture. OtisMed also agreed to pay $40 million in a separate but related civil settlement.

OtisMed will be excluded from participation in Medicare and Medicaid for 20 years, the U.S. Department of Justice said. In a statement, Stryker noted that the criminal conduct occurred before Stryker’s 2009 acquisition of OtisMed. Surgeons used the device, the OtisKnee orthopedic cutting guide, to help them make accurate bone cuts in patients before implanting artificial knee prostheses. Justice said none of the company’s claims about the tool were evaluated by the FDA before they were used in ads and other promotional materials.

“strongest jobs prospects” for winter, according to the Manpower Employment Outlook Survey. The outlook takes the percentage of employers expecting an increase in hiring activity and subtracts the percentage of employers expecting a decrease, the Grand Rapids Business Journal reported. 䡲 Growth in West Michigan’s industrial sector slowed last month, according to the monthly survey of industrial purchasing managers

by Brian Long, director of supply management research at Grand Valley State University. Long told MLive.com that “the comments from survey participants continue to highlight the problem of finding enough qualified workers.” 䡲 Calgary, Alberta-based Enbridge Inc., which was responsible

for a 2010 oil spill into the Kalamazoo River, will pay about $6.8 million to settle a class-action lawsuit, the Kalamazoo Gazette reported. A federal judge still must approve the settlement. A pipeline leak

spewed more than 800,000 gallons of crude oil in July 2010, resulting in one of the costliest onshore oil spills in U.S. history. 䡲 Toledo-based ProMedica plans to open a full-service hospital in Lenawee County’s Adrian Township, The Daily Telegram of Adrian and The Blade in Toledo reported. The hospital, which would replace ProMedica Bixby Hospital in Adrian and Promedica Herrick Hospital in Tecumseh, will have up to 80 acute care beds, an emergency department, surgical capabilities, cancer and women’s health centers, and an inpatient psychiatric unit. Work is to start in 2016.

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.

CORRECTIONS 䡲 In a story on an investment in Moguldom Media Group LLC in the Dec. 8 issue, the name of one of the company’s websites was misspelled. The correct name is Madamenoire.com. Also, the City National Bank that Moguldom does business with is in Florida, not New York, and the total budget for the film division is $3 million. The story inaccurately said the company would invest up to $3 million in an individual film. 䡲 An article on Page 3 of the Oct. 27 issue should have said the Southfield-based Farbman Group represented Wells Fargo in the sale of the Bloomfield Park foreclosure rights to Redico LLC and PCCP LLC. The story incorrectly stated that Farbman had not been involved in the sale.

The error was due to incorrect information provided to Crain’s.

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CRAIN’S DETROIT BUSINESS

December 15, 2014

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TriMas, Cequent aim to divide and grow Spinoff by mid-2015 is the goal

BY CHAD HALCOM CRAIN’S DETROIT BUSINESS

A spinoff of TriMas Corp. to current shareholders would be based in Michigan, possibly Oakland County, and looks to grow to $1 billion in revenue if the deal to create

it is completed.

Bloomfield Hills-based TriMas (NYSE: TRS) announced last week that it was spinning off Cequent Group, which makes a broad range of towbar and trailer accessories and accounts for about $614 billion of the company’s $1.47 billion in revenue over the last 12 months.

Despite the large revenue loss, TriMas is expected to benefit because its remaining businesses in engineered aerospace, energy and packaging are higher margin and less cyclical. Cequent businesses have an 8 percent operating mar-

COURTESY OF ST. JOHN PROVIDENCE PARK HOSPITAL

Having already seen significant growth in Livingston County, St. John Providence Park Hospital expects to break ground on a medical center between Howell and Brighton next fall.

See TriMas, Page 20

Sooch aims to duplicate at Gemphire the golden touch she had at ProNAi

BY TOM HENDERSON CRAIN’S DETROIT BUSINESS

M

ina Sooch, who raised the largest round of venture capital in state history in April for Plymouth Township-based ProNAi Therapeutics Inc., is at it again, hoping to raise another big chunk of venture capital for another early-stage drug company, Northville-based Gemphire Therapeutics Inc. When the year began, Sooch was president and CEO of ProNAi. As it ends, she has the same titles at Gemphire. The company was formed as a Delaware C corp last month to bring to market gemcabene, a drug licensed from Pfizer Inc. In September, Sooch left ProNAi as part of its plan to go public early next year. To prepare for life as a public company, ProNAi recruited a veteran of publicly traded biotechs, Nick Glover, as president and CEO. He had been president and CEO of YM BioSciences Inc., a developer of cancer drugs that traded on the New York and Toronto stock exchanges before being acquired

by Gilead Sciences Inc. for $510 million last year.

ProNAi’s quick ascension from being a long-struggling pharmaceutical company to the hottest biotech company in the state grew out of a presentation last December at the annual meeting of the American Society of Hematology of results of phase-two U.S. Food and Drug Administration human trials of a cancer drug with the working name of PNT2258.

BY JAY GREENE CRAIN’S DETROIT BUSINESS

St. John Providence Park Hospital in Novi is flexing its muscles a bit in fast-growing Livingston County with plans to build a 60,000square-foot, $17 million outpatient medical center between Howell and Brighton.

Since Providence Park opened in 2008, CEO Peter Karadjoff said, the hospital has looked at expanding into Livingston and has increased its market share by 5 percent the past six years.

“We have seen significant growth in patients from Livingston County seeking our services,” Karadjoff said. “Doctors and patients have said they want increased access to the hospital and its Karadjoff services.”

Besides a number of private urgent care centers and physician offices, St. Joseph Mercy Health System and the University of Michigan Health System also operate a number of medical facilities in Livingston County, which has a population of nearly 200,000. Patients also gravitate to Genesys Hospital in Grand Blanc and Sparrow Hospital in Lansing.

The Providence medical center, slated for groundbreaking in the fall of 2015 with a grand opening in late 2016, is about 24 miles west of Providence Park on I-96 off Exit 140 at Latson Road.

The outpatient center, which includes the purchase of a 14.5-acre parcel, will include space for 25 physicians, urgent care, physi-

THIS WEEK @ WWW.CRAINSDETROIT.COM

“It can respond to its market in more and in different ways, as opposed to being a part of the family that has to have its management decisions made for the benefit of the whole.”

The new company doesn’t yet have a name, but likely would continue to use in some way the Cequent name that oversees more than 20 brands of trailers, hitches, roof racks and other accessories.

The new company also plans to keep growing via a mix of new

Back under the microscope

Providence Park plans to expand in Livingston

See Providence, Page 20

gin, while postseparation TriMas margins are expected to be about 15 percent, the company said.

TriMas Chairman Sam Valenti III said Cequent should Valenti benefit, too.

“Not being bound by its highermargin neighbor means that Cequent can begin to do things in a more direct way,” Valenti said.

See Gemphire, Page 20

Inside

Utilities take a shine to more solar energy projects, Page 4

Company index These companies have significant mention in this week’s Crain’s Detroit Business: Amplifinity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 BBG North America . . . . . . . . . . . . . . . . . . . . . . . 15 Bedrock Real Estate Services . . . . . . . . . . . . . . . . 18 Brose North America . . . . . . . . . . . . . . . . . . . . . . 14 Butzel Long . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Chartreuse Kitchen . . . . . . . . . . . . . . . . . . . . . . . . 18 Chevrolet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Coalition for the Future of Detroit Schoolchildren . . 1 Consumers Energy . . . . . . . . . . . . . . . . . . . . . . . . . 4 Coquent Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Denso . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Detroit Public Schools . . . . . . . . . . . . . . . . . . . . . . 1 Detroit Regional Chamber . . . . . . . . . . . . . . . . . . . 19 Detroit Symphony Orchestra . . . . . . . . . . . . . . . . . 21 DTE Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Education Achievement Authority . . . . . . . . . . . . . . 1 El Barzon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Entertainment Publications . . . . . . . . . . . . . . . . . . . 7 Excellent Schools Detroit . . . . . . . . . . . . . . . . . . . 21 Ford Motor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Gemphire Therapeutics . . . . . . . . . . . . . . . . . . . . . . 3 Gold Cash Gold . . . . . . . . . . . . . . . . . . . . . . . . . . 18 HopCat Detroit . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Ignite Social Media . . . . . . . . . . . . . . . . . . . . . . . 12 Isabella Pellet . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 JDRF Metro Detroit/Southeast Michigan . . . . . . . . 12 McClary Bros. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Michigan Association of Public School Academies . 21 Michigan Future . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Michigan Municipal League . . . . . . . . . . . . . . . . . 19 Michigan Public Service Commission . . . . . . . . . . . 4 Midtown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Omega Tool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Peas & Carrots Hospitality . . . . . . . . . . . . . . . . . . 19 ProNAi Therapeutics . . . . . . . . . . . . . . . . . . . . . . . . 3 Punch Bowl Social . . . . . . . . . . . . . . . . . . . . . . . . 18 Red Hook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Renaissance Venture Capital Fund . . . . . . . . . . . . . 6 St. John Providence Park Hospital . . . . . . . . . . . . . . 3 St. Joseph Mercy Health System . . . . . . . . . . . . . . . 3 Selden Standard . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Stik.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Tanner Friedman . . . . . . . . . . . . . . . . . . . . . . . . . 11 Techstars Mobility . . . . . . . . . . . . . . . . . . . . . . . . . 6 TriMas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 University of Michigan Health System . . . . . . . . . . . 3 The Whitney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Wright & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 YMCA of Metropolitan Detroit . . . . . . . . . . . . . . . . 10

Department index BANKRUPTCIES . . . . . . . . . . . . . . . . . . 7 BUSINESS DIARY . . . . . . . . . . . . . . . . 16 CALENDAR . . . . . . . . . . . . . . . . . . . . 16 CLASSIFIED ADS . . . . . . . . . . . . . . . . 17 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 8 MARY KRAMER . . . . . . . . . . . . . . . . . . 8

Mina Sooch has joined co-founders Charles Bisgaier (left) and David Lowenschuss in getting Gemphire Therapeutics Inc. off the ground.

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OPINION . . . . . . . . . . . . . . . . . . . . . . . 8 OTHER VOICES. . . . . . . . . . . . . . . . . 8, 9 PEOPLE . . . . . . . . . . . . . . . . . . . . . . 16 RUMBLINGS . . . . . . . . . . . . . . . . . . . 22 TOM HENDERSON

Oh, deer: What have you done to your office?

Well, this will teach us to ask readers to send photos of the holiday decorations in their office. See what we were sent, crainsdetroit.com/holidaydecor

WEEK ON THE WEB . . . . . . . . . . . . . . 22

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December 15, 2014

CRAIN’S DETROIT BUSINESS

DTE, Consumers poised to propose community solar projects next year

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Consumers Energy Co. and DTE Energy Co. are expected to propose new community solar projects starting in 2015, although officials for the two largest utilities in Michigan say they can’t yet be precise on the amount of renewable energy they will generate.

In a filing with the Michigan Public Service Commission in late November, Jackson-based Consumers Energy said it intends to submit an amended renewable-energy plan to the commission by Jan. 23. The filing proposes up to 10 megawatts over three years through unspecified community solar pilot projects.

Detroit-based DTE, which had its two-year renewable-energy plan approved last December, is also expected to submit a community solar plan in 2015, following a commission-ordered solar work group report.

This year, DTE has been studying how to add large-scale community solar to its blend of renewable-energy projects. Depending on customer demand, DTE could add more than 22 megawatts of energy in community solar projects over the Harwood next few years, said David Harwood, DTE’s director of renewable energy.

Earlier this year, the commission work group report said DTE and Consumers easily could double their collective 28-megawatt solar power customer programs by at least 50 megawatts over the next 18 months.

The work group suggested DTE and Consumers could do so by expanding their customer-owned solar projects and add community solar for customers unable to participate in rooftop solar.

A community solar program, an alternative to rooftop solar panel systems, allows customers, investors and utilities — or a combination — to build large solar panel arrays on neutral sites to share power generation and cost savings.

DTE officials have said the utility plans to produce 2 percentage points — or 22 megawatts — of its state-mandated 10 percent renewable-energy production through solar. Consumers plans to produce 0.7 percentage points — or 6 megawatts — of its 10 percent mandate from solar.

State law approved in 2008 — Public Act 295, the Clean, Renewable Efficient Energy Act — requires DTE and Consumers to generate at least 10 percent of power from renewable energy by 2015.

Harwood said DTE has yet to complete its community solar plan and could file in June or earlier. It held several customer focus groups this year to discuss various methods, including customer tariffs, to fund development of community solar projects.

A community solar program allows customers, investors and utilities to build large solar panel arrays on neutral sites to share power generation and cost savings.

ISTOCK PHOTO

“Large-scale community solar projects are the way to go because that is where you get the economics,” said Harwood, noting that solar is still three to six times more expensive than wind power.

“We want to choose the program that has the least cost to customers.

This program is self-funded. (Customers) sign up for the new tariff rate, either in upfront payments or continual payments, which would be offset by a credit that would give them the benefit (of produced) energy on their bills.”

Any community solar project, Harwood said, would be much larger than the recently announced 1-megawatt solar farm planned with the city of Ann Arbor at Detroit Metropolitan Airport.

In a statement to Crain’s, Consumers Energy confirmed it plans to build on its pilot solar projects by developing a community solar program over the next several years.

Brad Klein, senior attorney with the Chicago-based Environmental Law & Policy Center, said the Consumers plan is a good start. He said more details are necessary to determine whether the plan sufficiently rewards customers for their investments.

“Ten megawatts is pretty small in relation to Consumers’ overall (renewable-energy production), but it is something to build on,” Klein said.

Since 2008, Consumers Energy generates Klein about 900 megawatts of renewable-energy power, the vast majority coming from wind turbines. DTE will produce about 950 megawatts of renewable energy by the end of 2015, also primarily from wind power.

A new report indicates solar power continues strong growth this year, with a 41 percent increase to 1,354 megawatts of installed solar power in the third quarter, according to the Solar Energy Industries Association’s U.S. Solar Market Insight Report. With costs dropping, solar now represents 36 percent of new power capacity, with the bulk provided by utility-owned projects.

Klein said DTE and Consumers

are far behind their peers in developing both residential rooftop solar and community solar projects.

He said a great deal of public interest exists for solar.

“Consumers (and DTE are) trying to respond to that,” Klein said.

“The solar market around the country is growing in leaps and bounds. Michigan has the ingredients to be a very successful solar state. There needs to be stable policy support to help this industry get a foothold and achieve its potential with job creation, strong grid and cleaner environment.”

John Quackenbush, chairman of the Public Service Commission, said the commission has recommended DTE and Consumers Energy take a hard look at community solar. He said the commission has not ordered any utility to develop community solar.

“My view is that we have this 10 percent by 2015 requirement, and we are going to meet that,” he said.

“It has been done almost all with onshore wind (94 percent).”

Energy legislation introduced this year and next will set a higher standard, Quackenbush said.

“There is an opportunity in that law to address all the issues, maybe add a clean-energy standard to develop renewables,” he said.

Quackenbush This year, several energy bills have been introduced in the state Legislature — including House Bill 5968, which would require utilities to provide 19 percent of total electric power through renewable energy by 2022. The bipartisan bill also would require utilities to add 4.5 percent higher renewable energy than the previous three-year period.

The bills, proposed by Reps.

Scott Dianda, D-Calumet; John Kivela, D-Marquette; and Frank Foster, R-Petoskey, appears to reflect Gov. Rick Snyder’s energy policy. In previous statements, Snyder has said he might favor requiring utilities to produce 20 percent of their total power through renewables over a 10-year period.

Jay Greene: (313) 446-0325, jgreene@crain.com.

Twitter: @jaybgreene

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December 15, 2014

CRAIN’S DETROIT BUSINESS

Techstars sets Detroit launch; Ford, others fund startup plan

BY TOM HENDERSON CRAIN’S DETROIT BUSINESS

Techstars is coming to Detroit.

The Boulder, Colo.-based organization, which provides seed money and mentoring for promising startup technology companies, is accepting applications for a Detroit operation it will launch next year, thanks to $2 million in funding from Ford Motor Co., Verizon Telematics and Magna International Inc. Techstars Mobility, Driven by Detroit hopes to help commercialize 30 transportation-related startups over the next three years in a re-

gion where, despite a rich history of manufacturing, startups in recent years have been dominated by information technology, smartphone app and biotech companies.

In addition to funding, Ford, Verizon and Magna will each provide mentors for the program.

“This is a very, very cool moment,” said Bill Ford, Ford’s executive chairman, at a news conference in Dearborn last week. “I have volunteered to be one of the first mentors from Ford. I can’t wait to work with these entrepreneurs.

“For me, not only does this resonate with the rebirth of the city of

HOW TO SIGN UP Applications will be accepted for the program through March 15 at techstars.com/program/locations/ mobility. The boot camp begins early in the summer and concludes Sept. 10.

Detroit, but it’s an injection of new thought into the auto industry,” he said. “I want to use Techstars as a catalyst to drive the region forward.”

Ford said he envisioned a broad range of potential technologies

coming out of the program, with possibilities including pollution control, ride sharing, smart parking, vehicle-to-vehicle communications and big data.

Over the next three years, 10 startups a year will participate in an intensive three-month boot camp in downtown Detroit. Techstars cofounder David Brown said he expects that the first field of 10 will be whittled down from more than 1,000 applications from around the world.

“To do a program in Detroit and with Ford and our other sponsors is very exciting for us,” he told Crain’s

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last week before flying in from Boulder. “We felt for a long time that with Detroit enjoying its renaissance and with a great startup community, this was a place we had to be.”

Each company will receive $120,000 in funding, intensive training and help with customer acquisition and executive recruiting. At the end of the three months, graduates get to pitch for funding to angel investors and venture capitalists at what’s billed as a Demo Day. Detroit-based Fontinalis Partners, Detroit Venture Partners and Ann Arbor-based Renaissance Venture Capital Fund will provide investment capital.

Chris Rizik, Renaissance Venture’s CEO, said he had approached Techstars six months ago about making an investment in its fund and found out Bill Ford had been talking to its founders about an operation in Detroit. Renaissance is a fund of funds that invests in instate VC firms and out-of-state VC firms willing to do business here.

“That got us really excited about investing in their fund. The thought of mobility-related companies is great for Detroit. And it’s great for us. We can make a profitable investment and develop new companies at the same time,” he said.

Ted Serbinski will be managing director of Techstars Mobility.

Serbinski, a transplant from Silicon Valley in 2011, had been a partner at Detroit Venture Partners and is a member of this year’s class of Crain’s 40 under 40.

He said a location for Techstars hasn’t been chosen. “We’ll be in downtown Detroit, for sure. We’ve looked at some of Dan Gilbert’s buildings, and we’ve looked at other buildings, but we’ll definitely be downtown.”

Serbinski has already recruited Jake Sigal to be one of his mentors, and Sigal’s success will be a model for the first class of startups. Sigal founded Livio Radio in 2008 to get apps for iPhone and Android into cars, sell a Bluetooth Internet kit for cars and sell devices to allow drivers to access Internet radio accounts from their cars.

Last year, he sold the company to Ford.

“I’m really honored to be part of this, especially having grown a company and sold it to Ford. It’s so exciting,” Sigal said.

Techstars was launched in Boulder seven years ago by four venture capitalists — Brown, David Cohen, Brad Feld and Jared Polis — to provide seed money, mentorship and equity capital to tech startups.

Techstars has since expanded to Boston, Seattle, New York, San Antonio, Chicago, London and Austin, Texas, with generic programs. In 2012, it started its first sponsored program, the Nike Accelerator in Portland, Ore., and early this year launched the Disney Accelerator in Los Angeles.

According to Techstars — whose website is www.techstars.com — 377 active companies got their start though the accelerator, with another 58 companies having gone on to be acquired and 48 having failed. The average company got $1.9 million in funding.

Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

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December 15, 2014

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Entertainment Pubs cuts staff, turns focus to digital

BY DUSTIN WALSH CRAIN’S DETROIT BUSINESS

Entertainment Publications LLC, the beleaguered Troy-based coupon book publisher, is still banking on a digital strategy to save it.

But experts say it may be harder to solve the core problem: “coupon fatigue” on the part of customers.

The company terminated perhaps as many as half of its employees last week, with some employees saying they were told the move was necessary to move the company away from printed books to online services.

Digital dynamics Entertainment Publications plans to flip-flop its mostly print coupon business over the next three years.

“Over the next few years, we expect to go from a company that is majority print and minority digital to a company that’s majority digital and minority print,” said Steve Lemberg, COO. The plan is to phase out print coupon books in several small markets, Lemberg said. The paper books will continue in major markets, such as Detroit, for as long as possible, he said. He declined to discuss in which markets the book will be eliminated.

To aid in the strategy, Entertainment Publications last year acquired two digital companies — Raisy and Promocaso.

California-based Raisy designed a Web-based portal for schools and community group fundraisers.

Promocaso, meanwhile, designs a tailored promotions mobile app.

“These acquisitions are something we believe will help us out going forward,” Lemberg said.

“Technology is making us more efficient and is strengthening what we’re doing as a company.”

Entertainment offers a print coupon book and digital subscription for $19.99.

Current deals include a 25-percent-off coupon at Roma Café in Detroit and 50 percent off an eightsquare pizza at Buddy’s Pizza locations.

The company also recently launched an updated mobile app, which is free to download in the Apple App store and Google Play store.

The app allows users to search deals in their geographic region.

Entertainment also plans to announce a nationwide contract in Canada where a large charity will use its mobile app to raise funds in the coming months, Lemberg said.

This isn’t the first time Entertainment Publications has pushed toward a digital presence.

In 2003, it was acquired by New York City-based USA Interactive, now known as IAC/InterActiveCorp in a $360 million deal. IAC/InterActiveCorp owns Citysearch, Urbanspoon, Dictionary.com, The Daily Beast and other Web companies.

That acquisition offered Entertainment Publications places to advertise a link to Entertainment.com to buy its Entertainment coupon book.

It also launched a digital subscription, allowing a purchaser to go online to pick and choose discount offers from Entertainment’s database.

The company expected digital business to represent 50 percent of its revenue by 2007, up from 10 percent in 2003.

Lemberg declined to discuss the current revenue mix for Entertainment Publications. IAC/InterActiveCorp hasn’t owned Entertainment Publications since 2013.

Lowell Potiker, head of La Jolla, Calif.-based HSP EPI Acquisition LLC, bought the company for $17.5 million after it filed Chapter 7 bankruptcy in April 2013.

RetailMeNot, which provides online coupons to more than 70,000 retailers and brands, launched a $191 million initial public offering in July 2013. Its shares surged to as high as $43.60 in March of this year.

But revenue has waned for RetailMeNot and others as consumers suffer from market oversaturation and fatigue from the onslaught of offers.

“We’re at the point of coupon exhaustion,” Kimberly Opiatowski, a former analyst for New York-based Vertical Group, told Bloomberg in August. “These companies have had such explosive growth rates. Across the market, there’s some (selling) off going on and investors are taking a closer look here.”

Potiker is the son of the company’s co-founders, who founded Entertainment Publications in 1962 as Sports Unlimited.

Coupon competition The digital coupon space is competitive with large players such as Groupon, Coupons.com and RetailMeNot. Detroit-based fine dining restaurant The Whitney placed coupons in the Entertainment books but changed its strategy in the past few years, said Patrick Liebler, Whitney executive director.

Entertainment’s book provided less control than Groupon and LivingSocial, Liebler said.

“Entertainment books are yearlong programs with a one-size-fitsall offer and long expiration windows, so no chance to react or target what business you need and when,” Liebler said. “I can run a Groupon targeted geographically for a set offering — i.e., weekday dinner or brunch or tea — with a tight redemption period to support business when we need it.”

Liebler also said social media, such as Facebook and its own website, have made it much easier for the restaurant to reach its clients without the use of coupons.

And that’s the crux of the issue for online coupon firms. The technology that lent itself to the rise of online couponing has made it a fickle business.

Termination forward Entertainment Publications terminated as many as 48 out of 59 outside sales representatives and as many as 50 percent of employees in other departments, according to two former employees who spoke to Crain’s last week on the condition of anonymity.

When Entertainment filed bankruptcy, it had 667 employees in North America. Of those, 225 were in Troy, according to a federally required layoff warning notice filed with the state.

Lemberg said those numbers are incorrect, but declined to confirm an exact number of terminations or provide an overall company

headcount.

Mashi Frankel, an outside sales rep in San Diego, was let go after 18 years with the company. Frankel called her termination “an awful experience,” but said it wasn’t a complete surprise.

“The customer service is terrible and has been suffering for years and we struggled to sell the (coupon) books,” Frankel said. “After my termination, they wanted their 12-year-old computer back, but they didn’t ask for the box of coupon books I have. They can’t sell them, so why take them back?”

Lemberg declined to talk about sales, but said 2015 is expected to be a good sales year for the company.

“Look, we’re very proud of what we’ve done, basically saving the company from Chapter 7, and we wish we could have kept everyone we brought back last year,” Lemberg said. “We’re sorry for that, but we’ve got a great product … next year is going to be a great year.”

Entertainment Publications sells the coupon books in 118 markets across the U.S. and Canada for more than 70,000 merchants, Lemberg said. The company retains 80 percent of its merchants, yearover-year, Lemberg said.

The company generated $95.29 million in 2012, according to its bankruptcy petition last year, down from $131.14 million in 2011.

Dustin Walsh: (313) 446-6042, dwalsh@crain.com.

Twitter: @dustinpwalsh

Adam M. Linkner

In Your Corner.

®

Varnum welcomes Adam Linkner to the firm.

■

General business law

■

Startup law

■

Antitrust/competition law

BANKRUPTCIES The following businesses filed for protection in U.S. Bankruptcy Court in Detroit Dec. 5-11. Under Chapter 11, a company files for reorganization.

Chapter 7 involves total liquidation.

Birmingham Cosmetic Surgery PLLC, 30603 Southfield Road, Southfield, voluntary Chapter 11. Assets and liabilities not available.

Capital Contracting Co., 6336 Millett Ave., Sterling Heights, voluntary Chapter 7. Assets and liabilities not available.

— Dustin Walsh

Contact Adam Linkner at amlinkner@varnumlaw.com

■

Metro Detroit

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Grand Rapids

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Kalamazoo ■ Grand Haven

■

Lansing

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December 15, 2014

CRAIN’S DETROIT BUSINESS

OPINION

Community contract bill deserves burial A

bill that would have forbade local communities from requiring developments to enter into employmentbased community agreements died in the Legislature last week, and that’s a good thing.

House Bill 5977 was so sweeping that it left even opponents of Detroit’s proposed community benefits agreement looking askance because of its deep incursion into local control. (See story, Page 1.)

It didn’t help that its sponsor, state Rep. Earl Poleski, RJackson, seemed uncertain about the ramifications of the bill, including whether it would wipe out existing tax abatement agreements across the state that include promises of job creation.

Poleski’s immediate goal was to stop the Detroit ordinance, but it would be a mistake to believe that it’s appropriate for the state to pass a law against every local decision a majority of legislators don’t agree with.

Fond farewell to Dingell, Levin U.S. Rep. John Dingell and U.S. Sen. Carl Levin said their farewells to Congress this week, taking their 94 years of experience with them.

The two are Democrats to the core, but also are among some of the dwindling numLevin Dingell ber of federal legislators who remember an era when political differences on some issues did not rule out compromise and consensus on others.

The lack of thought and sometimes sheer hatefulness that seems to dominate what passes for political discourse these days has not brought us better governance.

So a salute and a thank you to both men, and a hope for a return to more productive political times.

Happy holidays; we’ll be posting This is Crain’s last regular edition of the year, and so we’d like to wish all of our readers happy holidays. (We return on Jan. 5, but will be reporting the news at crainsdetroit.com throughout.)

2014 is ending on at least one happy note — the return of the city of Detroit to local control and reorganized finances.

There is still much to be done, but that can be the subject of New Year’s resolutions!

MARY KRAMER Focus on IT training brings jobs So what’s the Next Big Thing for Detroit?

Fixing education, for starters. Kirk Pinho looks at how civic and business leaders have formed a coalition to figure out how to make sense of the patchwork quilt of publicly financed K-12 schools in Detroit.

For the most part, the majority of schools continue to fail children.

But for Detroit to be sustainable, it will need good schools and good jobs.

That’s where programs like “Detroit Deleting the Digital Divide” come in.

Alicia Jones has been focused on training under-employed people for IT jobs. She’s had an interest since she was an Oak Park school board member, and later running an after-school program.

Today, she leads Harmony Point computer training center and its Deleting the Digital Divide program focused on training Detroiters for IT jobs.

In 17 weeks, she claims, the program can help students achieve

one or more of an alphabet soup of recognized technical certifications.

Now, she says she has a state grant to train 800 Detroiters. So she’s looking for employers willing to take on the graduates for real-world jobs. Some alums from a pilot program are already working at the Geek Squad, OnStar and the city of Detroit, she says.

“We train people that some other programs screen out,” Jones told me. “We take people who were labeled untrainable. They go from under-served, under-appreciated to middle class in 17 weeks.”

Her bigger vision is to add community technology centers “in the ‘hood” in schools, rec centers and other places where people without cars can access the training.

She “bootstrapped” the program with $480,000 from family, friends and supporters. Bedrock, the real estate arm of Dan Gilbert’s empire, gave her a break on the rent at Chrysler House in downtown Detroit. TechTown supplied a

small grant.

Now Jones wants to be part of Detroit’s revival and train hundreds of city residents for IT work.

Employers who are interested can contact Jones or COO Tony Ingram at (313) 920-0190.

There are other IT programs in town, too.

Grand Circus, for example, is a training institute a couple of blocks up the street from the Chrysler House that has benefitted from venture capital investments.

Seattle-based Code Fellows LLC plans to open a Detroit location in 2015 to help meet demand for Web and mobile developers.

It seems there is plenty of room for all kinds of programs tied to technical training tied to the Web. Timing is everything. A focus on IT — training for a spectrum of skills — can boost jobs in the city — and Detroiters can be part of that surge.

Mary Kramer is publisher of Crain's Detroit Business. Catch her take on business news at 6:10 a.m.

Mondays on the Paul W. Smith show on WJR AM 760 and in her blog at www.crainsdetroit.com/kramer.

E-mail her at mkramer@crain.com.

OTHER VOICES We must grow Chinese investment Gov. Rick Snyder and This investment is the his Michigan Economic tip of the iceberg of what Development Corp. team Michigan could attract are recently back from with the right vision and their fourth trade misleadership. The Asia Socision to China. Building a ety (www.asiasociety.org) connection with the econhas projected that the Chiomy that, according to nese will invest more than the International Mone$1 trillion around the globe tary Fund has surpassed over the next decade. the U.S. to become the There has been an influx Tom Watkins world’s largest, makes all of Chinese money into the the sense in the world.

U.S. over the past several years, inMichigan has done well attract- creasing from about $58 million in ing automotive-related investment. 2000 to $14 billion in 2013.

The Chinese have had an interest in In 2014, China’s outbound inautomotive for some time. It is like- vestment surpassed its inbound inly we will see additional auto-relat- vestment, making it a net exporter ed investment as the decade unfolds, of capital for the first time in modwith the ultimate prize being a Chi- ern history. With the global econonese manufacturer building cars in my limping, the U.S. can expect to Pure Michigan in the near future. see more foreign investment from

China. It is wise to position Michigan to be a magnet for this capital.

There is much Michigan has to offer the Chinese consumer and investor — golf courses, education, pristine environment, medical treatments, and commercial and residential real estate, to name a few. Chinese investors’ motivation is they believe their assets are significantly better protected in the U.S. than at home.

China is increasingly investing its wealth directly into global companies, factories, real estate and other areas that are creating jobs in America and a return on investment for the Chinese.

China is currently the United States’ second-largest trading partner, its third-largest export market See China, Page 9

KEITH CRAIN: At the very least, a key to the city for Orr Perhaps a statue or a bust would be more fitting.

Kevyn Orr deserves this community’s deepest appreciation.

Make no mistake, you can name lots of people who deserve to get their own statue or key, starting with our governor, but the center of attention for a year and a half has been our emergency manager.

He took our city into bankruptcy. But more importantly, he brought Detroit out of bankruptcy.

He was the lightning rod for anything and everything that had to do with Detroit for quite a while.

And now that it’s all over, Detroit is ready to tackle the next very challenging chapter in its history.

Orr deserves a key to our city.

It was a thankless job that no one in his or her right mind would want.

But he understood the need, and he responded to the call from the governor. He had already handled the bankruptcy of Chrysler, a simple quick fix compared with this gigan-

tic task of making sense of a city with billions of dollars in debt. Initially, it seemed like there was no possible solution.

He, along with his allies and some very good federal judges, carved out a solution. Sure, he had help. But the challenge was on his doorstep. If he failed, no one was going to stand up and share the blame.

No one is happy, and perhaps that’s the real success of the bank-

ruptcy. Everyone is sharing in the pain. There is plenty to go around, and everyone seems to be in pain.

No one was exempt.

No one remembers Orr from the Chrysler bankruptcy. He showed up and went to work. He built his allies and collected his enemies.

But he persevered.

Orr isn’t going to move to Michigan, and he says he will never run for public office. His wife is a doctor, and he probably couldn’t move if he wanted to move. He will come back to visit, to visit his school, the University of Michigan, but he’s got

his roots in Washington these days.

If he wanted to, he could probably come back and get elected to almost any office. But it’s different being an elected official and being the appointed czar.

We were very lucky, Detroit.

Everyone who got involved did a remarkably good job. Let’s hope that work continues for decades, although I worry about short memories of folks.

Orr deserves a statue, but let’s at least give him a key to the city.

That’s the least we can do to say thank you.

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OTHER VOICES It’s time to give nurse practitioners full practice authority A way to meet the pri- thority for nurse practitioners.

Colorado, Hawaii, North Dakota, without moving elsewhere. We One of the largest barrimary care demand is by The Michigan Senate has passed Oregon, Vermont, Washington and need to retain and grow this highly ers to economic growth is allowing nurse practition- a bill allowing nurse practitioners Wyoming) that allowed a wider skilled workforce in Michigan. the cost of health care. Beers the ability to diagnose to practice according to their edu- scope of practice for nurse practiMichigan’s health care purtween 2008 and 2013, the and treat patients without cation and experience. Senate Bill tioners, we found no adverse rela- chasers have a great opportunity median average family indirect physician supervi- 2 has been stalled in the House tionship between the population of to make a difference in their botsurance premium rose sion. Advanced practice Health Policy Committee for over nurse practitioners and primary tom line. Passing SB 2 will con34.6 percent, placing addiregistered nurses would a year, and there is speculation the care physicians practicing in those tribute to the continued growth of tional financial burdens also have limited indepen- committee has enough votes to states. What is clear in those states Michigan’s economy, keep health on employers who offer indent prescriptive authori- pass the bill out onto the chamber is that the number of primary care care costs in check and increase surance benefits. Nationty after being in a four- floor. practitioners increased. primary care options. ally, health care spending Bret Jackson year mentorship program.

Opponents of the bill argue it will Passing SB 2 also allows MichiBret Jackson is president of the has increased to 17 percent of the gross domestic product. Nineteen states and the District of decrease the number of primary gan to keep its nurses in the state. Economic Alliance for Michigan, a A way to create health care cost Columbia have enacted into law care physicians in the state. When It assures nurses the chance to ad- statewide business-labor coalition savings in Michigan is by allowing and implemented full practice au- looking at eight states (Arizona, vance their education and careers based in Novi. nurse practitioners full practice authority. At least 20 studies from other states demonstrate the cost-effectiveness of nurse practitioners who are able to practice to the fullest extent of their education, training and national certification.

Rand Health reviewed options for cost savings in Massachusetts and estimates a $4.2 billion to $8.4 billion savings over 10 years from increased use of nurse practitioners.

In Texas, the Perryman Report suggests an increase to nurse practitioners’ scope could raise the state’s economic input by $8 billion yearly.

By 2020, the Association of American Medical Colleges estimates that many states, if they are not facing one already, will face a shortage of primary care physicians. This is due to an aging baby boomer population, an aging physician workDTE Energy wants to help your business manage your energy usage to save money. We force and the millions of millennioffer all kinds of energy efficiency information and tools, plus easy tips to help you be more als who will be newly insured through the Affordable Care Act. efficient. For instance, you’ll cut heating and cooling costs by simply adding insulation

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CHINA CONTINUED ■ From Page 8

and its biggest source of imports.

Investment goes where it is welcome and stays where it is nurtured. Michigan and Detroit are creating an environment for foreign capital to breed and grow.

Michigan has embraced a global view, is tapping into the hundreds of billions of dollars that the Chinese hold in trade imbalance, and is helping to have some of that cash return to our state through investment and trade.

Michigan is a natural magnet for automotive investment. There are other opportunities to tap as well.

It has been said that “government does not create jobs,” but it can and should create the environment where jobs and investment can be nurtured. Gov. Snyder has set the table for future foreign direct investment by being the most immigrant-friendly governor in America and striving to correct the state’s business fundamentals.

With visionary leadership from the public and private sectors, automotive should only be the start of Chinese investment that grows jobs in the region and the state.

By building bridges between the Great Wall of China and the Great Lakes State of Michigan, we benefit both peoples.

A regular contributor to www.ChinaUSfocus.com, Tom Watkins has worked for more than three decades to build economic, educational and cultural ties between the U.S. and China. He is president and CEO of the Detroit Wayne Mental Health Authority.

where there isn’t any, especially along piping and ductwork. Install a programmable thermostat to automatically lower heating and raise air conditioning temperatures during off hours. Seal doors and windows to prevent air leaks. You’ll find even more ways to save using our Interactive Business tool. And you can find a certified contractor with our Energy Efficiency Directory. It’s easy. Just go to dteenergy.com/savenow and start saving today.

Start saving today, visit:

dteenergy.com/savenow

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December 15, 2014

CRAIN’S DETROIT BUSINESS

2014 UPCOMING

PARTNER EVENTS 3rd Thursday Dec. 18 • 4:30 - 6:30 p.m.

Tango’s Westin – Southfield 1500 Town Center Non-members: $10 Registration: southfieldchamber.com Awards Breakfast The Southfield Area Chamber of Commerce and the City of Southfield to recognize and award Southfield businesses and individuals who have demonstrated ‘best practices’ in business, leadership and community service: Southfield Company to Watch; Business Innovation Award; The Sustainability Award; Outstanding Chamber Business Award; Commitment to Community; Volunteer of the Year.

Winners will be presented to by the Mayor and the Southfield Area Chamber. Guest speaker: Kim Yost, CEO, Art Van Furniture December 19, 2014 7:30 a.m. – 9 a.m.

Hilton Garden Inn, Southfield 26000 American Dr. Members: $25 Non-members: $35 Registration: southfieldchamber.com CEED Microloan Programs CEED has made $5.5 million in loans and created more than 1,800 jobs.

Now, after 30 years of providing access to capital, CEED is increasing their commitment to small business by reducing their interest rate. Loans up to $50,000 are offered at a 5% fixed rate for equipment, inventory, supplies and some working capital.

To learn more and register for an upcoming loan orientation: miceed.org or (734) 677-1400

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

After revenue decline, YMCA looks to alternate funding, new programs

BY SHERRI WELCH CRAIN’S DETROIT BUSINESS

For many years, the YMCA of Metropolitan Detroit relied upon a membership model that brought people and revenue into its branches.

But six years after the start of the recession, membership and program participant numbers are still down.

This year, about 62,000 people took part in activities at the YMCA’s 11 branches in Wayne, Oakland, Macomb and Livingston counties, down from about 78,000 in 2008.

“The days of people filtering into the Y and the ‘If you build it they will come’ are over,” said President and CEO Scott Landry.

“One of our key sources of funding is fee for services, (but) the capacity to pay for that in Detroit has declined.”

So the YMCA is going into schools to deliver programs to those who can’t afford memberships, Landry said, and looking for more grant and contract funding to fund those programs.

In the past, the YMCA defined itself by its budget size, number of facilities and number of memberships, Landry said.

“Going forward, we need to be driven much more by our programs ... not by our facilities ... we’ve got to look outside of ourselves and find partners to basically increase our programmatic reach.”

Bottom-line losses Declines in membership and program revenue, along with a $1.8 million annual debt service payment for capital projects and a depreciation charge of about $3 million, have contributed to losses on the YMCA’s bottom line the past two years. Landry is projecting a comparable loss this year.

In 2013, the Detroit-based agency reported a deficit of $1.15 million on total revenue of $39 million, following an operating loss of $776,594 on $36 million in total revenue the year before.

Three years ago, the YMCA created a new membership tier for families who meet lower-income criteria. Rates differ by branch, but the average family membership cost is about $85 per month, said Chad Creekmore, vice president of membership and marketing. Families with annual household incomes of less than $39,000 can purchase a family membership for $35 per month at any of the YMCA’s metro Detroit branches.

Individual memberships average $50-$55 per month.

To serve people who don’t have the capacity to be traditional YMCA members and make up for declines in memberships and feebased program attendance, the organization is seeking new grants and contracts and increased donations, said Latitia McCree, senior vice president of mission resources. It secured a $115,000 grant from the Michigan Department of Ed-

COSTAR GROUP

YMCA’s President and CEO Scott Landry: “The days of people filtering into the Y and the ‘If you build it they will come’ are over.”

ucation to pay for 16 students to attend full-time preschool at the Boll Family Childcare Center in Detroit free of charge.

And this fall, Detroit Public Schools hired the YMCA under a $250,000 contract to provide science, technology, engineering, math and arts programming to up to 150 K-12 students after-school over one year. The contract builds on similar management agreements with Detroit charter schools, McCree said.

The YMCA is also providing child care in the Detroit, East Detroit, Warren, Wyandotte, Melvindale and Oak Park school districts and actively trying to expand the number of contracts each fall, Landry said.

And it’s awaiting word on whether it’s been awarded a contract to manage a large summer camp program in the region.

“It’s less and less us delivering a program or selling a membership (and) more and more us managing a contract or collaborating or borrowing swimming pools,” Landry said.

Turning no one away For the YMCA, which traditionally has been driven by marketing and selling programs, that’s a very different way of doing business, he said.

“It’s a moving revenue stream, but the critical thing for us is our core belief that no one should be turned away because of their inability to pay. ... We’ve got to find different ways to create the revenue,” Landry said.

The new contracts follow the YMCA’s launch of programs like Detroit Swims, which teaches kids to swim for free, which expanded to the Mt. Clemens and Southgate branches last year and to the Livonia and Auburn Hills branches this year. The program is taught at area schools, borrowed community pools or at local YMCA branches with students who can’t otherwise get there bussed in on the strength of donations supporting the program, McCree said.

The YMCA has also launched the Girls on the Run program to teach girls age 8-13 to prepare for a 5K run, along with self-esteem,

anti-bullying lessons and teamwork and expanded it to all of its local branches. The program, which Landry said is an example of the YMCA responding to social issues, is fee-based in some areas but free in low-income areas, Landry said.

In November, the YMCA secured a $225,000 grant from the Wyncote Foundation in Philadelphia to relaunch the year-round Y Arts program, which provides youth media arts programming, McCree said.

Next year, it also plans to launch a program to serve children with special needs and a program to help prevent chronic disease in adults through education, exercise and diet.

“The public’s perception (of the YMCA), because we have gyms, has focused on the fitness piece,” McCree said.

But the YMCA provides many services for the community like child care, college preparation and the running/self-esteem program for girls that aren’t broadly known.

“What we’re doing is making sure people are aware that the Y is truly a cause-driven organization,” she said.

Membership programs have been among the most fragile of nonprofit programs post-recession, said nonprofit management consultant Jerry Lindman, former director of the former Center for Nonprofit Management at Lawrence Technological University.

The nonprofits that are surviving have been examining fundamental changes to their traditional business model, with most finding that their markets, and the people they serve, have changed along with the traditional sources of revenue, he said.

The metro Detroit YMCA’s shift “demonstrates smart use of partnering ... based on mutual need and interest, given that schools have been forced to eliminate physical education and exercise,” said Lindman.

It “has potential to both reconnect with their customers and develop some new revenue sources for the Y,” he said.

Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch

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A CONVERSATION WITH CEO HEALTH DOESN’T DETER AMPLIFINITY Growth continues through change in leadership – and old boss ready to help in new role, Page 13 Nathan Labenz, Stik.com

Social Media and Marketing In 2012, Stik.com made man-bitesdog headlines locally as a San Francisco tech company with West Coast funding that was moving to downtown Detroit. The company, which uses Facebook to let people get recommendations from friends on professional service providers such as doctors, lawyers and financial planners, was founded by Jay Gierak and Nathan Labenz, two Michigan natives who wanted to come home and had also drawn the attention of Detroit Venture Partners. Labenz talks with Tom Henderson about the trials of growing a startup.

You raised a Series A round of venture capital of $2.3 million in early 2013, led by Detroit Venture Partners.

Time to raise more? We are about to close on a Series B round. It won’t be huge money, probably a couple of million bucks, hopefully by the end of the year.

You’ve had to reinvent yourself a few times, compounded by your ties to Facebook, which has had its own changes. Has growing a business been harder than you thought? The rocketship success stories get all the attention, but Airbnb went through what they call their 1,000 days of darkness, where nothing worked, and now they’re a $10 billion company. As an earlystage company, you’re always tweaking and looking for the recipe that will not just make you viable, but will give you outsized returns and the ability to scale and be a force in the market.

How many employees do you have?

We are about 15 now. We’ve slimmed down a bit in the last six months.

We’re going to a buy-online model, which means a smaller sales team. At our peak, we had maybe 21 or 22.

When you were at 21, you didn’t think you’d be cutting instead of hiring? We chose a space to be in that has incredibly fast change, so it often felt like two steps forward and one back. Platforms change so quickly.

You end up having a number of iterations, which we call pivots, before you have success. It’s less about the number of pivots you’ve had than does your pivot give you an opportunity to be huge. I like where we are at now. We have 23- and 24-year-old kids here who are just killing it.

Any important metrics you can provide? We have 500 customers, ranging from small businesses like individual Realtors to multibilliondollar companies. We get about 175,000 monthly visitors to Stik.com, but we don’t wake up every day saying, “How do we get more Web traffic?” We’d much rather sell more ads. We are growing revenue, though our board suggested that I not share a revenue number at present. Local businesses haven’t figured out yet how to get a return on investment from social media, but they will.

If you know someone interesting in banking, finance, technology or biotechnology whom Tom Henderson should interview, call (313) 446-0337 or write thenderson @crain.com.

Tom Henderson

PIERRETTE DAGG/CRAIN’S DETROIT BUSINESS

Status update Social media key for building brands, but exercise caution

BY BILL SHEA CRAIN’S DETROIT BUSINESS

A

sea change is coming next month for businesses and organizations that use Facebook to market themselves.

The world’s largest social media network announced that in January it will change its secret algorithms so that fewer posts from business pages are seen by its users.

If a company or organization wants those who have “liked” a page to see messaging, they’ll have to pay — a change fueled by Facebook’s desire to generate new revenue.

“Facebook changed its game completely. It is not the end-all, be-all for business,” said Matt Friedman Friedman, co-founder and principal at Farmington Hills-based communications agency Tanner Fried-

SOCIAL CLIMBERS Here are the number of users for each of the top social media sites, according to most recent counts: Facebook: 864 million Twitter: 271 million Instagram: 200 million Pinterest: 70 million

man, which works with clients on public relations and reputation management.

“It became an advertising vehicle rather than a free attention vehicle.”

Such changes are important because social media are business tools for marketing and reputation management — building the brand, as marketers like to say — and for trying to extinguish public relations catastrophes.

And sometimes social media are the problem, and must be used to fix a troublesome tweet or Facebook fumble.

Here’s a look at the trends, pitfalls and best practices when it comes to social media for businesses of all sizes.

Facebook evolution Facebook has steadily been declining in value as a free marketing platform.

In 2012, Facebook itself said brands pages reached just 16 percent of fans.

A study of 106 major brands on Facebook from October 2013 to February 2014 by social media agency Social@Ogilvy showed that the average reach of posts by the brands had declined by about half to 6.15 percent, meaning only that percentage of fans were seeing the posts, according to Advertising Age. For 23 pages in the sample with more than 500,000 likes, the drop was from 4.04 percent in October to 2.11 percent of fans in February, Ad Age reported.

Twitter, the 140-character microblogging site, has increasingly become the go-to social media tool for marketers pushing both brand messages and for managing problems.

And it remains free.

See Social, Page 12

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Social: Even a disaster can be good ■ From Page 11

“If you’re on Twitter, all your followers can see your post,” Friedman said.

Social media, which can operate in real time, have become the go-to tools for marketers and brand managers as the applications arose over the past decade.

“As a way to immediately reach your audience in a time of adversity, social media has proven invaluable,” Friedman said.

But because it’s free to join, simple to use, and has such a massive reach, Facebook remains a key marketing tool even as reach declines, social media observers say.

And reaching more Facebook followers doesn’t always require a significant investment. In fact, it can work for some with just a few dollars.

One example is the JDRF Metro Detroit/Southeast Michigan (formerly the Juvenile Diabetes Research Foundation), one of Friedman’s clients.

Because November was Diabetes Awareness Month, the national JDRF created a special social media avatar that local chapters were asked to get supporters to use as part of a campaign for raising money for Type 1 diabetes research and support.

“To make this request on Facebook to reach as many followers as possible, we spent $10 of the client’s money to ‘boost’ the post,” he said.

“It worked. We had a record amount of ‘likes,’ and many more followers changed their avatars to support the campaign than would have otherwise. It turned out to be a good use of a little bit of money.”

But Friedman urges caution.

“Facebook asks business account administrators to boost every post. Our advice is to do that only when a return can be shown, such as this,” he said.

Managing disaster

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Companies increasingly are becoming adept at turning potential social media disasters into positives, sometimes by adopting the goof-up itself for marketing use. For example, when Chevrolet regional zone manager Rikk Wilde awkwardly presented the World Series MVP award on live television in October, mumbling about the Chevy Colorado having “technology and stuff,” the automaker quickly used the moment in its advertising.

Wilde’s “technology and stuff” immediately generated snark on Twitter, but Chevy capitalized by using the phrase in digital and display advertising — using the awkwardness to its advantage.

“We embraced it and ran with it,” Chevrolet spokesman Mike Albano told Automotive News.

An occasional social media blunder committed by businesses is accidentally making public intellectual property and proprietary business practices — such a specialty manufacturing techniques — in videos or pictures.

“You don’t want it to become public some way and you lose your protections,” said attorney Robin Luce Herrmann, practice group leader for one of law firm Butzel Long PC’s two business litigation groups. She concentrates her prac-

Sticking with a social media plan — especially limiting access to the company’s social media accounts to a few people — can also help avoid the classic pitfall of getting into late-night arguments with customers or, worse, flame wars with trolls. tice in the area of media law and monitors social media trends.

In July 2012, Tecumseh, Ontariobased Omega Tool Corp., a tier-one GM supplier, published a promotional video of its plastic body panel manufacturing capabilities — but used a then-secret 2014 Corvette front bumper in the video. The automotive media leapt on the gaffe and published stories and blogs, pushed out on social media, about the accidental reveal of a heavily-anticipated vehicle.

Problems all along the communications spectrum can be prevented by crossdepartment planning, she said.

A good strategy is to involve all the relevant departments in constructing the social media policy, HerHerrmann rmann said.

“You want to have an executivelevel person, an HR management, the marketing manager, and the IT director,” she said. “You have to say, ‘Here’s what we’re doing, here’s what we want to protect.’

They all have a role to play. They all need to be working together.”

Because social media are by nature social and personal, corporations have to navigate the various privacy protection laws.

“You have to be very careful with those applications, with personally identifiable information you’re getting access to, what you’re doing with it and how you’re protecting it,” she said.

When the pros stumble Social media marketing “experts” are not infallible.

In one of the more high-profile examples, a staffer for Arlington, Va.-based New Media Strategies accidentally tweeted a disparaging remark about Detroit drivers from the official Chrysler LLC account rather than his own.

That profane tweet happened not long after Chrysler had drawn critical and popular praise for its 2011 “Imported from Detroit” Super Bowl ad featuring rapper Eminem.

The employee was fired, and Chrysler replaced the agency with Ignite Social Media LLC, which has offices in downtown Birmingham’s Peabody Mansion and in North Carolina.

Large corporations are invest-

ing in social media in hopes of avoiding mistakes and to handle the massive interaction when they do occur.

General Motors Co., wading its way through an ongoing recall crisis, has 20 staffers in Detroit specifically to manage the automaker’s social media presence seven days a week, including on about 100 vehicle forums, the New York Times reported recently.

Other concerns It’s not just social media apps that businesses must wrangle, but the popular review sites such as Yelp and TripAdvisor are critical to monitor for businesses of all sizes, said Jim Tobin, co-founder and president of Ignite. Failing to Tobin deal with bad reviews costs companies money in the sense it’s revenue they would have otherwise generated, but for bad reviews that steered potential clients elsewhere.

“They genuinely cost them money. It’s money never seen,” Tobin said.

Small businesses often fail to realize bad reviews are out there, and they also fail to ask customers to post positive reviews. Part of that is human nature, Tobin said.

“If someone pays you a compliment, it feels strange to ask them to write it down,” he said. But businesses must.

Companies also must be careful not to panic over a bad review, Tobin said, and must remain calm when there are obvious false reviews posted among a sea of good ones.

“People can smell out the fake stuff. They are savvy enough to take one negative review if there are a lot of positive reviews,” Tobin said.

Sticking with a social media plan — especially limiting access to the company’s social media accounts to a few people — can also help avoid the classic pitfall of getting into late-night arguments with customers or, worse, flame wars with trolls.

“It’s easy to be impulsive,” Friedman said. “At best, it’s ineffective. At worst, it’s damaging.”

Bill Shea: (313) 446-1626, bshea@crain.com.

Twitter: @bill_shea19

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Focus: Social Media and Marketing

Amplifinity grows despite CEO’s sudden health struggle

BY TOM HENDERSON CRAIN’S DETROIT BUSINESS

There has been a lot of good news this year for Ann Arbor-based Amplifinity Inc., which uses social media websites to help companies such as DirectTV, Sirius XM and ADP grow their businesses through customer and employee referrals.

In March, the company got its second round of venture capital funding, $2.7 million. It has continued to grow its client base and expand sales and marketing, and even hired a chief marketing officer recruited from Compuware Corp.

And as December rolled around, the company was preparing to double its space and take over the entire building at 912 N. Main St. to house its 35 employees, up from 25 when the year began.

But the best news of all, says board member Jonathan Murray, was that last Tuesday, company founder and former CEO Dick Beedon flew to Chicago for a company board meeting planned for the next day. Seemingly a mundane thing was anything but.

Despite all the progress, 2014 was marred for Amplifinity by Beedon’s long struggle to live after a staph infection that first exhibited symptoms while he was in New York to meet with a prospective client.

Beedon said when he arrived at his hotel in New York on April 30, he felt bad, took a couple of Tylenols and went to bed. In the morning, he woke up with a temperature of 104, called his doctor and was told to get to the emergency room.

Beedon took the next flight home and went to the ER at the University of Michigan hospital in Ann Arbor.

He would stay in the hospital there for more than five months, the first four in the intensive care unit.

Doctors quickly diagnosed a severe staph infection that had begun to eat away at an aortic valve he’d had implanted 17 years earlier.

“There was a leak where it had already eaten through. It was getting ready to blow, and if it had, I’d have been dead in minutes,” said Beedon.

Two days after surgery to replace the valve, he went into total septic shock, had a heart attack and underwent a second operation. In subsequent months, he had a third operation on a perforated ulcer in his stomach and a fourth on an infected vein.

“They had the paddles on me 15 times,” said Beedon in an interview last week, referring to defibrillators used to shock his system back to life. “And three times, they got my daughter out of school to come say goodbye to me because I was going to die. The only thing that saved me was I was in really good shape when this happened.”

Until his illness, Beedon, 60, had been a long-distance swimmer, swimming 3,000 meters a day, or about two miles, six days a week.

It became clear to Beedon and the Amplifinity board that he needed to be replaced as CEO. On Aug. 15, Larry Angeli, who had been a senior vice president and head of worldwide marketing at Compuware before joining Amplifinity in December 2012 as vice president of sales, replaced him as CEO.

In early December, one of Angeli’s former colleagues at Compuware, Trisha Winter, joined Amplifinity as chief marketing officer. Most recently, she had been vice president of brand and communications for Dynatrace, the division at Compuware that monitors the performance of software applications for clients.

On Oct. 7, his wedding anniversary, Beedon was released from the hospital after losing 60 pounds.

He is feeling well enough now to resume work at Amplifinity.

“My exact role is undecided yet.

It depends how well my recovery goes,” said Beedon. “It’s going to be a long road back. I’ve gained 10 or 15 pounds back. I get tired easily, but I don’t use a walker anymore, and only use a cane if it’s a long walk. I can go up stairs, now, too.”

Angeli said he and Beedon have the same vision for the company.

“He and I used to go on sales calls together. He was the best combination of CEO and sales guy you could have,” Angeli said.

“We want him to be involved, trust me. We welcome him back in whatever capacity he wants. Customers love him. He’s a great asset.”

Murray, the board member, was involved in the first VC round for $3.5 million in 2012, a round led by Early Stage Partners, a Clevelandbased firm Murray then worked for.

Murray now runs the Kerrytown office in Ann Arbor for Pittsburgh-based Draper Triangle Ventures, which led the B round for Amplifinity in March.

“When Dick became ill, there was an outpouring of support from the community that was overwhelming,” said Murray. “When he made his first visit to the office after leaving the hospital, it had such an emotional effect that he was finally able to come in and see everyone.”

Chris Rizik, president and CEO of the Renaissance Venture Capital Fund, said Beedon is respected as one of the true entrepreneurs in the Ann Arbor area.

“That Amplifinity was able to not only keep going but to keep growing while he was gone is a testament to him and the team he recruited,” said Rizik. “He’s had a number of people who have been with him at two or three companies. Eric Jacobson, for instance, the president and CFO.” Amplifinity was founded just before the Great Recession hit. Origi-

ALY DARIN

A near-fatal staph infection forced Dick Beedon to step down as CEO of Amplifinity in August. He was released from the hospital in October and plans to return to the Ann Arbor-based company in a role that’s still to be determined.

nally called uRefer.com, it went live with its website in July 2008 and soon landed its first customer, Farmington Hills-based American Laser Centers, which later became American Laser Skincare LLC. (American Laser Skincare closed its clinics and filed for creditor protection in bankruptcy court earlier this fall.)

Amplifinity generates referral requests on behalf of companies across a range of social media platforms, including Facebook, Twitter and Yelp, and automatically tracks lead generation and sales.

Amplifinity markets its software platform directly to customers and through such resellers as network integrators, major IT service companies and advertising agencies.

The company also offers referral services by email and direct mail.

The recession stalled growth and delayed a planned series A round of venture capital by two years.

Before that, Amplifinity raised $2 million in seed and angel funding. RSVP Capital, a venture capital firm in Ann Arbor headed by Paul Vlasic, who is Amplifinity’s chairman, joined both the seed funding and the A round.

Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

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New CEO Larry Angeli says he and Beedon share the same vision for Amplifinity and says of his former boss: “We want him to be involved, trust me.”

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December 15, 2014

Denso aims to save parts, money with one-size-fits-all air conditioner

BY DAVID SEDGWICK CRAIN NEWS SERVICE

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What if a supplier could design a one-size-fits-all component for all of its customers, a product that would allow major economies of scale?

Seat makers have successfully taken that approach with frames and other subcomponents. Now Denso Corp. is trying it with air conditioners.

The giant Japanese supplier has designed an air conditioner — dubbed COA — that is 20 percent smaller and lighter than a conventional Denso unit. The term, Denso says, stands for “common, collaborative, compact air conditioner.�

The unit can be used in a vehicle of any size, from small sedans to large pickups, said Andrew Clemence, Denso’s director of quality engineering. “We significantly reduced the size of our HVAC unit so we could shop it to other automakers as a common design,� Clemence said.

The new system debuted last year in the Toyota Voxy and Noah, two minivans sold in Asia. Next, Denso’s factory in Battle Creek will launch production early next year for an unidentified automaker in North America.

The trick to Denso’s air conditioner is its compact dimensions.

A unit for pickups and large sedans would be built a bit wider — to accommodate a bigger heat exchanger — without changing its overall height or depth.

That’s essential for a heating, ventilation and cooling component that must fit behind a center console. “An HVAC system resides in what we call Manhattan real estate: the center of the instrument panel, where everybody wants to be,� Clemence said.

Denso, whose North American operations are based in Southfield, got the idea for a standard HVAC system in the early 2000s after it introduced a one-size-fits-all unit

With Denso’s COA air conditioner (below) the assembly lines (above) won’t require as many changeovers for different products.

THE WHYS OF ONE SIZE Suppliers design generic parts to: 䥲 Reduce production changeovers 䥲 Trim engineering costs 䥲 Reduce inventories of parts and raw materials 䥲 Use fewer subsuppliers for Toyota Motor Corp. The next logical step, Clemence said, was to design a basic unit that any automaker could use.

In 2011, Denso asked its customers whether they could accept common performance specs for an

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HVAC system. The automakers agreed to do so, Clemence said, although he declined to identify them.

A generic air conditioner saves money in several ways. Denso will reduce engineering costs, it will need fewer parts from fewer suppliers, and it can simplify manufacturing.

Because Denso won’t have to produce different types of air conditioners, the assembly lines won’t require as many changeovers for different products. Likewise, the plant can use smaller assembly robots with simplified software.

To make this possible, Denso maintained the same “hard points,� or key exterior dimensions, on HVAC units for different customers, said Brenda Dredge, the company’s director of production engineering.

That, in turn, allows the robots to assemble the HVAC units for different customers without a changeover on the production line.

Generic components caught on earlier among suppliers of seat components. For example, German supplier Brose North America Inc., based in Auburn Hills, produces 12 million gear systems for seat tracks — a common component accepted by all its customers.

The gear system is “the same for Chrysler, Ford, BMW, Mercedes,� said Carsten Brandt, Brose North America’s development director for seat systems.

Brose first produced generic gears in 2001 and is expanding its portfolio of generic components.

The key is to do so for “under the skin� components, leaving automakers free to create a unique brand identity.

All of Brose’s generic components “are invisible to the end user,� said Arnd Herwig, the company’s vice president of development. “We are the guys that make things that work in the background.�

From Automotive News

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German glass tech firm sets North American operation in Oxford

BY MICHAEL LAUZON CRAIN NEWS SERVICE

A German glass encapsulation technology firm has established an operation in Oxford.

BBG GmbH & Co. KG’s new subsidiary will handle mold modification for North American customers, the Mindelheim, Germany, company recently announced.

BBG specializes in systems that bond glass to plastic, as in vehicle windows, photovoltaic cells, aerospace windows and bathroom shower cubicles. It produces encapsulation molds and turnkey systems for such markets. It also builds other types of injection molds, draw dies for vacuum forming, and tools and molds for a range of composites processing.

Encapsulation resins in BBG’s technologies include PVC, polyurethane and thermoplastic elastomers.

BBG wants a North American

operation to grow its business on the continent. The Michigan location will allow BBG to offer its services faster and at a more competitive price while working more closely with customers, the company explained in a news release. Vehicle manufacturers and aviation companies will be particularly targeted by BBG North America LP in Oxford, it added.

BBG for the time being will concentrate mold production, machinery and plant construction in Mindelheim.

Global customers of BBG include Fuyao Glass Corp. of Fuzhou, China; Inalfa Roof Systems Group of Venray, Netherlands; Magna CTS of Troy; and Webasto Group of Stockdorf, Germany.

BBG manufacturing locations are in Mindelheim, Oxford and Changchun City and Shanghai, China. The Shanghai facility is a recent addition near key customers including Webasto; Fuyao; polyurethane machinery supplier Hennecke GmbH of Sankt Augustin,

Germany; and glass, chemicals and construction products conglomerate Saint-Gobain S.A. of Courbevoie, France.

BBG said the auto industry is in a healthy phase and its investment in the Oxford office is well-timed to take advantage of high auto demand.

“Car glass converters such as Webasto and Fuyao invest heavily,” noted BBG North America general manager Bernhard Satzger in a news release. “They upgrade existing plants or build additional capacities and production plants. Both companies operate production plants in the immediate vicinity of our American site.”

BBG is a family-owned business that employs about 70 and logged sales of 13.1 million euros ($16 million) in 2013.

BBG officials did not respond to requests for more information on the Oxford operation.

From Plastics News

NOMINATIONS SOUGHT FOR M&A AWARDS, BIGGEST DEALS Involved in a merger or acquisition in 2014? You may be eligible for Crain’s M&A Awards. Crain’s Detroit Business and the Association for Corporate Growth will honor companies and individuals in the following categories: 䡲 Best Deal of the Year: Under $100 million and $100 million or more. The deal must have closed in 2013.

The buyer or the business sold must be in Wayne, Oakland, Macomb, Washtenaw or Livingston counties. 䡲 Dealmaker of the Year/buyer-seller. 䡲 Dealmaker of the Year/adviser. M&A experts, lenders, CPAs, consultants and attorneys, among others, are eligible.

Dealmaker candidates also must be in Wayne, Oakland, Macomb, Washtenaw or Livingston counties.

Winners will be profiled in the March 23 issue of

SEEKING HEALTHY WORKPLACES Is your workplace the healthiest in Michigan?

Find out by nominating your company for Healthiest Employers of Southeast Michigan, an awards program that will be included in a June 2015 Crain’s report.

The Healthiest Employers award, sponsored by Health Alliance Plan, takes a look at the best practices that employers across the state use to create a healthy workplace.

Judging will be handled by Indianapolis-based Healthiest Employers LLC. The group has conducted similar competitions in most of the major cities in the United States.

The contest is free to enter.

Winners will have their wellness efforts recognized as part of a print supplement to run next year. They also will be featured in a video series as well as honored at an event in April, with time and location still to come.

To enter, go to crainsdetroit.com/nominate. The deadline for entering is Jan. 26.

Crain’s Detroit Business and will be honored at an awards event in May. For questions about the awards, contact Executive Editor Cindy Goodaker at cgoodaker@crain.com or (313) 446-0460. For questions concerning the nomination process or the nomination form, contact YahNica Crawford at ycrawford@crain.com or (313) 446-0329.

To nominate, see crainsdetroit.com/nominate. The deadline for nominations is Jan. 12.

Biggest Deals Deals of $10 million or more in transaction value initiated or closed during 2012 will be published in the Jan. 26 issue. To be considered, the buyer or sold company or company unit must be in Oakland, Wayne, Macomb, Washtenaw or Livingston counties.

Information needed is: buyer, sold unit, cities for each, transaction value, advisers, date the deal closed (if it has closed) and any explanatory information. Please send an email by Jan. 12 to Executive Editor Cindy Goodaker at cgoodaker@crain.com.

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PEOPLE

CALENDAR THURSDAY

IN THE SPOTLIGHT

Bush

Fin

CONSULTING Allison Bush to vice president, health care division, Morpace Inc., Farmington Hills, from research director.

Also, Debra Fin to vice president business development, health care Clark division, from new business market development specialist, health care industries, Dow Corning Corp., Midland, and Patsy Clark to vice president, health care division, from vice president, Market Strategies International, Livonia.

EDUCATION Fred Lumpkin to director of corporate work study, Cristo Rey High School, Detroit, from freelance consulting/adjunct professor, Farmington Hills.

LAW James Stapleton to chief business development and marketing offiDickinson cer, Wright PLLC, Detroit, from managing principal, LEAP Legal, San Jose, Calif., and Stapleton San Francisco.

Health Alliance Plan has named Todd Hutchison senior vice president and CFO. Hutchison previously was vice president of sales and account management for Health Alliance Hutchison Medical Plan in Urbana, Ill., and he has held leadership positions at Principal Financial Group and Cigna HealthCare. He joined HAP in 2011 as vice president of underwriting and actuarial services.

Hutchison, 44, replaces Ronald Berry, who has moved to another company.

Hutchison has a bachelor’s degree in business administration from the University of Iowa, and a master’s degree in business administration from Drake University, Des Moines, Iowa. He is a fellow in the Life Management Institute.

Automation Inc., Chelmsford, Mass.

Abdul-Hafiz Afaneh to vice president of global engineering, Wolverine Advanced Materials LLC, Dearborn, from engineering director.

MEDIA Patti Taylor to general sales manager of raWCSX-FM (94.7) and WRIF-FM (101.1), Greater Media Detroit, Ferndale, from general sales manager, WCSX-FM (94.7). Also, Jonathan Ghazal to sales manager, Detroit Sports 105.1 (WMGC-FM), from account executive.

NONPROFITS MANUFACTURING

Ryan Dinkgrave to director of govern-

Joseph Conroy to vice president of global operations, Wolverine Advanced Materials LLC, Dearborn, from

ment, corporate and foundation relations, Focus: Hope, Detroit, from manager of government affairs and grant writing.

vice president of operations, Brooks

DEC. 18

Fetyko

French

Kate French to vice president, marketing and communications, Community Foundation for Southeast Michigan, Detroit, from senior partner, account director, Team Detroit, Dearborn.

Steve Fetyko to vice president and CFO, United Methodist Retirement Communities Inc., Chelsea, from executive vice president and CFO, Memorial Healthcare, Owosso.

REAL ESTATE Daniel Lovitz to vice president of acquisitions, Agree Realty Corp., Farmington Hills, from senior director of single tenant retail acquisitions, American Realty Capital Properties Inc., Boynton Beach, Fla. David Sudia to sales executive, Seller Nation of Metro Detroit, Southfield, from recruiting and human resources manager, Initech Solutions LLC, Macomb Township.

RETAIL Jason Haley to COO, Great Lakes Ace Hardware , Farmington Hills, from national field project manager, Ace Hardware, Farmington Hills.

SERVICES

Haley

Justin Glass to chief digital officer, United Shore Financial Services LLC, Troy, from senior vice president/business development.

Matt Goodman to president, global trade management, Livingston International, Southfield, from vice president, global trade management.

BUSINESS DIARY CONTRACTS Vanguard USA Inc., Whitmore Lake, a provider of sporting optics and accessories, announced it will be the exclusive optics sponsor for Southern Boyz Outdoors, a group of outdoor enthusiasts from southeast Louisiana that document their adventures on their TV show, “Southern Boyz Outdoors.”

Websites: vanguardworld.com, southernboyzoutdoors.com.

EXPANSIONS Air Time Trampoline Troy LLC, Troy, opened Air Time Trampoline and Game Park at 36901 Warren Road, Westland. Telephone: (734) 215-2400.

Website: airtimetrampoline.com/ canton-westland-mi.

Angels For Freedom In-Home Healthcare Solutions LLC, Commerce Township, is now serving clients in Genesee County. Website: angelsfor freedom.com.

The Barre Code, Chicago and Birmingham studio owners Janelle Fox and Lindsay Irrer are opening a franchise at 1260 Walton Blvd., Rochester Hills.

Telephone: (248) 923-2392. Website: thebarrecode.com.

BorgWarner Inc., Auburn Hills, has opened its new production plant in Lanheses, Viana do Castelo, Portugal.

The facility provides 50 percent more manufacturing space than the currently rented site in Valenca and has space for future expansion. Website: borgwarner.com.

Champane’s Wine Cellars, Warren, opened Champane’s Pub, a craft beer and wine bar, at the store, 7007 Chicago Road. Website: champanes.com.

Dickey’s Barbecue Restaurants Inc., Dallas, has opened a Dickey’s Barbecue Pit franchise, 20755 Hall Road, Macomb Township. Telephone: (586) 7415270. Website: dickeys.com.

Lawrence Technological University, Southfield broke ground on its new academic building, the Taubman complex. The $17 million first phase is scheduled for completion by the 2016 fall semester. Website: ltu.edu.

Preh Inc., Novi, an automotive systems manufacturer headquartered in Bad Neustadt a.d. Saale, Germany, has completed a 53,800-square-foot expansion of its production facilities in Monterrey, Mexico. Monterrey workers make car human-machine interface systems, primarily for the North American market.

Website: preh.com.

Rainbow Child Care Center, Troy, has opened a school in Warsaw, Ind. SVS Vision Optical Centers, Mt. Clemens, has opened an optical center in Gaylord.

Tubby’s Sub Shops Inc., Roseville, has opened a store at Shell Ecorse Marketplace, 39315 Ecorse Road, Romulus.

Telephone: (734) 331-6653. Website: tubbysgrilled.com.

MOVES A.T. Kearney Inc., a global management consulting firm, has moved its

Detroit-area office from 2000 Town Center, Suite 1600, Southfield, to 1000 Town Center, Suite 1820, Southfield. Website: atkearney.com/detroit.

NEW PRODUCTS A4 Access, a subsidiary of Wright & Filippis Inc., Rochester Hills, is certified as the first authorized distributor of pneumatic vacuum elevators in Michigan.

Manufactured by Pneumatic Vacuum Elevators LLC, Medley, Fla., the bank tubelike elevator is operated by air pressure above and below a car using a small amount of electricity and can be retrofitted into homes. Websites: a4-access.com. vacuumelevators.com.

Absopure Water Corp., Plymouth, has introduced three new flavors to its Cap10 All Natural Sparkling Mineral Water products: black cherry, orange mango and pineapple coconut. Website: absopure.com.

Fathead LLC, Detroit, and Martha Stewart Living Omnimedia Inc., New York City, announced the launch of Martha Stewart Wall Art Decals, a line of decorative wall graphics. Website: fathead.com.

LLamasoft Inc., Ann Arbor, a provider of supply chain design software, introduced SupplyChainGuru.com, a software-as-a-service application that enables businesses to increase the scope and influence of supply chain modeling without increasing IT infrastructure expense. Website: llamasoft.com.

An Evening with Dr. Joe Bavonese. 69 p.m. Direct Marketing Association of Detroit. The co-founder of the Relationship Institute will speak about marketing strategies, lead generation and more. 5th Avenue, Royal Oak. $35 members, $45 nonmembers.

Contact: (248) 955-8151; email: info@dmadetroit.org; website: dmadetroit.org.

FRIDAY DEC. 19 2014 Excellence in Southfield Awards. 7:30-9 a.m. Southfield Area Chamber of Commerce and the city of Southfield. Kim Yost, CEO, Art Van Furniture, is guest speaker at this awards breakfast. Hilton Garden Inn Southfield. $25 members, $35 nonmembers. Ticket sales end at 5 p.m. Dec. 16 . Contact: Tanya Markos-Vanno, (248) 557-6661; email: tanya@southfieldchamber.com; website: southfieldchamber.com.

UPCOMING EVENTS Detroit Economic Club Presents.

11:30 a.m.-1:30 p.m. Jan. 8 . With Michael Finney, president and CEO, Michigan Economic Development Corp., and Rodrick Miller, president and CEO, Detroit Economic Growth Corp. MotorCity Casino Hotel Detroit. $45 DEC members, $55 guests of members, $75 others. Contact: (313) 963-8547; email: info@ econclub.org; website: econclub.org.

13th Annual NAIAS Breakfast. 7:309:30 a.m. Jan. 15. Inforum. Keynote speaker is Werner Struth, board member, Robert Bosch GmbH. Michelle Krebs, senior analyst for AutoTrader.com, leads a discussion with Struth; Sheryl Connelly, manager for global consumer trends and futurist for Ford Motor Co.; and Suzanne Dickerson, director for international business development Clemson and marketing at University’s International Center for Automotive Research. Detroit Marriott Renaissance Center. $40 Inforum members, $55 nonmembers, $25 students. Contact: (877) 633-3500.

Register at inforummichigan.org.

Multicultural Media Luncheon. 11 a.m.-2 p.m. Jan. 15. The Ajamu Group LLC. Keith Clinkscales, CEO of Revolt Media & TV, emcees this awards program and speaks on brand reinvention. Westin Book Cadillac Detroit. $75 general admission, $150 VIP. Contact: Cheryl Ajamu, (248) 223-0904; email: cheryl. ajamu@ajamugroup.com; website: ajamugroup.com.

Grow Your Business Through Exporting: Tips to Get Started. 11 a.m.-1 p.m. Jan. 15. Automation Alley. Noel Nevshehir, director of international business services, Automation Alley, is keynote speaker. Southfield Public Library. $10 in advance, $20 at the door. Preregistration closes end-ofday Jan. 13. Contact: (800) 427-5100; email: info@automationalley.com; website: automationalley.com.

2015 Macomb Economic Forecast & Luncheon. 11:30 a.m.-1:30 p.m. Jan. 16. Chamber Alliance of Macomb County. Jim Jacobs, Macomb Community College president. Andiamo Banquet Center, Warren. $35 chamber members, $45 nonmembers. Contact: Briana Koehn, (586) 731-5400, ext. 11; email: events@shrcci.com; website: shrcci.com.

2015 AutoGlow. 4:30 p.m-1 a.m. Jan. 16. Ford Motor Co. Fundraiser benefits the Children’s Center; the theme is “The Future Starts Here.”

Ford Field, Detroit. $325 beginning Dec. 16. Contact: (313) 262-7123; email: autoglow@thechildrenscen ter.com; website: thechildrenscen ter.com/autoglow.

Open City: Be the Change. 6-8 p.m.

IGNITION 2015 Eat breakfast with Crain’s Detroit Business at the North American International Auto Show from 911:30 a.m. Jan. 14 and see some of the most innovative technology in the automotive sector.

This inaugural event features entrepreneurs who are aiming to make a mark on the industry.

Attendees also can help choose the hottest startup at the auto show.

The event will be held at Cobo Center, Detroit. Cost is $75, and the first 150 to register receive a free Industry Preview ticket, valued at $95.

For more information or to register, visit crainsdetroit.com/ignition2015, call (313) 446-0300 or email cdbevents@crain.com.

Join the conversation with #IgnitionDetroit.

Jan. 19. Build Institute. A panel discusses social entrepreneurship in Detroit. Cliff Bell’s, Detroit. Free.

Contact: Muna Danish, (313) 3181328; email: muna@dhivedetroit.org; website: buildinstitute.org.

The Big Four . 11:30 a.m.-1:30 p.m.

Jan. 20 . Detroit Economic Club.

Oakland County Executive L. Brooks Patterson , Detroit Mayor Mike Duggan , Wayne County Executive Warren Evans and Macomb County Executive Mark Hackel are featured speakers. Cobo Center. $45 DEC members, $55 guests of members, $75 others; includes admission to 2015 North American International Auto Show. Contact: (313) 9638547; email: info@econclub.org; website: econclub.org.

Breakfast of Champions. 7:30-9 a.m.

Jan. 21 . Leadership Oakland. Kent Snyder , financial adviser, Kent Financial Group , discusses “The Economics of Happiness.” MSU Management Education Center, Troy. $25 members, $36 nonmembers.

Contact: (248) 952-6880; email: info@leadershipoakland.com; website: leadershipoakland.com.

Executive to Executive Series #2: Achieving Outcomes through Continuous Improvement. 8-10 a.m. Jan. 28.

Samuel Plante Moran LLC. Flanders, M.D., executive vice president of quality, safety and clinical effectiveness, Beaumont Health System, is the speaker. Lawrence Technological University-Science Building atrium, Southfield. $30, or free for LTU students, faculty and alumni. Contact: Donna Kress, (248) 204-3054; email: dkress@ltu.edu; website: ltu.edu/management/ executivetoexecutive.asp.

Detroit Economic Club Presents .

11:30 a.m.-1:30 p.m. Jan. 28 . With Mike Petters , president and CEO, Huntington Ingalls Industries. Westin Book Cadillac Detroit. $45 DEC members, $55 guests of members, $75 others. Contact: (313) 963-8547; email: info@econclub.org; website: econclub.org.

Inside the CEO Mind. 8-10 a.m. Jan. 29. Detroit Regional Chamber. Cynthia Pasky, CEO of Strategic Staffing Solutions, speaks at this breakfast event. $25 chamber members, $50 nonmembers. Contact: Maggie Oldenburg, (313) 596-0482; email: molden burg@detroitchamber.com; website: detroitchamber.com/events.

Breakfast of Champions. 7:30-9 a.m.

Feb. 18. Leadership Oakland. Jennifer Korman, community relations, Mercedes-Benz Financial Services, moderates a panel of young professionals who will talk about what it means to be a leader. MSU Management Education Center, Troy. $25 members, $36 nonmembers. Contact: (248) 952-6880; email: info@lead ershipoakland.com; website: leader shipoakland.com.

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‘Craft vinegar’ maker drinks in growing buzz Vinegar. It’s an ancient condiment, but it’s trendy again. Today, we have “craft vinegar.� When mixed sparingly, it can be used as part of a gourmet cocktail or to create uniquely flavored foods.

While craft beers and spirits are gaining much of the buzz, craft cocktails are also seeing a rise in consumer interest. With bars like Sugar House (Detroit), The Oakland (Ferndale) and Punch Bowl Social (Detroit) wowing their customers with craft cocktails, there is also a DIY movement for those looking to change up their at-home imbibing.

And that’s where McClary Bros. drinking vinegars comes in.

Farmington-based McClary Bros. uses locally grown fruits and vegetables to create drinking/culinary vinegars.

These vinegars are not like the ones you use to clean out the coffeepot.

These vinegars are considered “colonial-era drink mixers� in that the Sean Genereaux recipes are formulated using unpasteurized apple cider vinegar with added natural ingredients.

Flavors for vinegars include fig leaf; lemon and ginger; apple pie; basil; beet and carrot; cherry; rhubarb; pineapple and fennel seed; and blood orange and Michigan honey.

Jess McClary, founder and owner of McClary Bros., said she started out planning to operate a bake house, but then had “a lightbulb moment� and decided she wanted to pursue a healthier food business.

She didn’t have a background as a vinegar expert, so there was a series of trials and errors until she got the formulas right. The company name comes from her twin 4year-old boys, whom she hopes one day will take over the growing company.

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McClary said one of the biggest hurdles is consumer education, but some national buzz has helped.

Researchers, as chronicled by health and diet publications, suggest that vinegar may amplify certain genes’ work in breaking down fats, making it a weight loss aid.

Another selling point: Probiotics in vinegar can provide the stomach with good bacteria to assist in digestion.

What about the price? Think of it as a long-term buy. A bottle of McClary Bros. craft vinegar costs $18 for 16 ounces.

A Bloody Mary mix goes bad, Diet Coke goes flat, milk spoils, and fruit gets rotten. But McClary Bros. is positioning itself as the sustainable answer to what to stock in the cupboard, McClary said.

A semifinalist in the 2014 Comerica Hatch Detroit business competition, McClary Bros. expects to have distribution for its infused vinegars in 13 or 14 states soon, thanks to word-of-mouth among high-end retailers.

Locally, the vinegars can be purchased at Whole Foods and Busch’s markets. Mixologists have their own take on using the products at Two James Distillery, Great Lakes Coffee and Firebird Tavern in Greektown. They use the vinegars to create alcoholic and nonalcoholic drinks.

It’s a startup, but it’s growing.

Beyond the business model for the food business, there is an art and science to using the product.

McClary Bros. offers bartenders and consumers suggested pairings as people experiment with the product. They recommend pairing whiskey, bourbon or rye with the apple pie drinking vinegar; gin, tequila, or vodka with the beet and carrot vinegar; and gin, rye or vodka with the basil vinegar.

For a simple cocktail, add 1.5 ounces of the spirit of your choice with 1 ounce of the McClary Bros. drinking vinegar. Top off with 1.5 ounces of sparking water. Mix, and enjoy, over ice if desired.

Tony Piraino, co-owner and operator of Firebird Tavern, said as drinking vinegars is beginning to become more popular, it’s great to be able to offer a locally made option, including ingredients for nonalcoholic cocktails. “Bringing in McClary’s was a no-brainer,� he said.

Other ways to use the infused vinegars: Making salad dressings, marinades and sauces.

Consider it a test of the imagination, a celebration of local craftsmanship, and a digestive aid, wrapped into one.

Sean Genereaux is a freelance bar and restaurant writer with experience as a bartender-mixologist.

He also works as a psychiatric care specialist/instructor.

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While the company’s tasting room is in Ferndale, in the Rust Belt Market at Nine Mile Road and Woodward Avenue, its production of vinegars, bottling and labeling is done by Forgotten Harvest in Oak Park as part of a new social enterprise business.

McClary said the company seeks to combine its local operations, besides the bottling, into one location, but doesn’t yet know where.

Gross revenue was $35,000 last year; it’s projecting $225,000 this year.

McClary Bros. is also planning spinoff products such as Beaubien Preserves (which use the fruit left from McClary Bros.’ processes as the base for its chutney) and soda.

And Jess McClary is part of Goldman Sachs’ 10,000 Small Businesses program. The program can be likened to an MBA program for small-business owners to bolster their skills and confidence — and jump-start growth. McClary completes the program in January. “It’s been a life-changing experience and a game-changer for my company,� she said.

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Jess McClary, founder and owner of McClary Bros., went into the craft vinegar business after deciding she wanted to launch a healthy food company.

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VICE PRESIDENT, SALES & MARKETING, GLOBAL SEALING SYSTEMS Henniges Automotive North America, Inc., a Tier-1 supplier of seal’g systems for the auto industry in Auburn Hills, MI seeks a Vice President, Sales & Marketing, Global Sealing Systems to define & implement overall global OEM customer strategy.

Areas of responsibility incl strategic leadership, sales, system/process developm’t, & market’g funct’ns in a multi-cultural & global sett’g. Duties: establish & oversee all aspects of commercial, sales, strategic customer alliances, & support’g funct’ns for global seal’g operat’ns; direct customer commercial activities for auto seal’g systems, to incl business developm’t & growth thru eval of new technology, funct’n of component, & developm’t of advanced seal’g systems; manage global multi-million dollar seal’g systems business programs, to incl mgmt of customer/program profit & loss, return on investment, & customer satisfact’n levels; formulate strategic customer initiatives & create & execute sales plan to achieve max sales volume & profitability; identify & execute strategic partnerships for joint ventures & alliances, hav’g responsibilities to grow sales revenues & profitability & improve the sufficiency of capital employed; develop & foster an effective global systems/process orientat’n to the sales & market’g funct’n & team; hold membership in Global Exec Team & develop & implement strategic direct’n & formulate short- & long-term volume projects for seal’g business thru eval of environmental constraints, customer mfg requirem’ts, & competitor intelligence; develop customer-specific technical presentat’ns dur’g product sourc’g tim’g; achieve strategic diversificat’n by position’g the company to move into new geographical regions thru strategic sell’g; develop & deliver market’g & brand strategies; prepare & defend monthly operat’g status reports to Board of Directors.

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December 15, 2014

CRAIN’S DETROIT BUSINESS

Detroit attracts new appetites Restaurant openings offer spread of dining options

BY AMY HAIMERL CRAIN’S DETROIT BUSINESS

W

hen Punch Bowl Social opened its gastro diner-meets-rec room last week, it was the highlight of an already-overflowing list of restaurants to hang a shingle in the Motor City over the past year.

More than a dozen new eateries have opened, with the much-anticipated Antietam, Gold Cash Gold, HopCat Detroit and Selden Standard all debuting in the past two months alone. And more are already announced, including Chartreuse Kitchen, Jolly Pumpkin and Parks and Recreation.

You could say it has been restaurant mania in Detroit, leaving observers to wonder why and how it happened.

“I don’t think it’s any one thing,” said Dave Kwiatowski, the co-owner of Wright & Co., which opened this summer in the Wright & Kay building on Woodward Avenue. “I think it’s a culmination of a suburban metro Detroit area that is ready to have a city again, the lack of viable options in the market, and the low rents.”

That’s what convinced Kwiatowski and his wife to buy the building next to Slow’s Bar BQ five years ago and open the cocktail bar Sugar Lounge. He had since toyed with the idea of opening a restaurant in the city, but it wasn’t until he met his partner, chef Marc Djozlija, and saw the space on Woodward last year that he knew it was time to execute.

They knew Slow’s owner Phil Cooley and team were trying to open Gold Cash Gold, that Hugh Yaro had opened Craft Work in the West Village, and that Andy Hollyday and Evan Hansen had signed a lease in Midtown to open Selden Standard — but they weren’t deterred.

“A year ago, when somebody said, ‘Hey, where do I go in Detroit for a great meal?’ what would you tell them other than Roast?” Kwiatowski asked.

The question hangs for a moment.

“The options were limited. We perceived a gap in the market for a restaurant around the caliber of Roast but a little fancier than Slow’s,” said Kwiatowski. “Even with Andy and Evan opening and Gold Cash Gold coming, we knew there was still room.”

He and Djozlija conceived Wright & Co. as an elegant “neighborhood gathering space” where customers come for dinner as well as a quick after-work drink or a nightcap. The pair spent $200 per square foot on the rehab of the

DAVID HALL/CRAIN’S DETROIT BUSINESS

Founder Robert Thompson said “gut and economics” led him to open a Detroit version of his Denver-based Punch Bowl Social chain (above) last week. Seven partners spent two years turning a former pawnshop at Michigan Avenue and Wabash Street into Gold Cash Gold, an 80-seat restaurant with six apartments above.

I think it’s a “ culmination of a suburban metro Detroit area that is ready to have a city again, the lack of viable options in the market, and the low rents.

”

Dave Kwiatowski, Wright & Co. ELI BOYER

space, though the total cost could have been much more if their landlord, Dan Gilbert’s Bedrock Real Estate Services, hadn’t replaced all the windows in the building and installed a new elevator to lift patrons to the secondfloor dining room.

In Detroit, it’s rare to find space that doesn’t require serious cash just to get it up to code. Sandi Bache Heaselgrave, for example, spent $50,000 upgrading leased space before her coffee shop, Red Hook, could pass inspections and open his fall.

Then she had pay for equipment and aesthetics. Not having to cover those types of expenses allowed the Wright & Co. owners to focus on designing their environment.

“We opted for oxblood leather when everybody said we can do it out of vinyl,” said Kwiatowski, 37.

“We opted for some high-end finishes, but I thought the space de-

manded it. It had to be an extremely sophisticated space.”

So far, he said, the model is working. The 120-seat restaurant is “crushed” on Friday and Saturday nights, serving up small plates that are meant for sharing, such as warm dates and sautéed bay scallops.

This success is happening despite launching several months before the onslaught of new restaurant openings, which could steal fickle palates, and having to compete against suburban mainstays, such as Torino and Bistro 82, for the dining dollars flowing through Southeast Michigan.

“I don’t think we’re anywhere near the point of saturation,” said Kwiatowski.

In fact, Kwiatowski is planning to open a new bar/café in Midtown called Café 78.

The metro Detroit chef network

is incredibly close-knit. When Hollyday and Hansen opened Selden Standard, tables were filled with other chefs all there to support the newcomer and then tell their customers about their favorite dishes.

Even the suburban restaurateurs are quick to sing the praises of their new brethren rather than bemoaning the dollars flowing south.

Luciano DelSignore, who owns Southfield-based Bacco Ristorante and the locations of Bigalora Wood Fired Cucina, held a dinner at Bacco to introduce Hollyday to new clients.

“It’s the view of the old school, that we need to block other people and make sure that other businesses don’t open,” said Aaron F. Belen, 32, principal at AFB Hospitality Group, which opened Bistro 82 and Sabrage lounge in Royal Oak last year. “That’s just a smallminded view of someone who

doesn’t want to compete and invest in their people and their business. What’s going on with the rebirth of Detroit is a wonderful thing for Oakland County, Wayne County and the region.”

The chefs themselves are excited to have more diners in Detroit, whether they are coming for their restaurant or a friendly competitor’s.

“I hope Selden Standard brings someone’s eyes down here,” said Eli Boyer, one of seven partners in Gold Cash Gold. “I hope we bring eyes to our neighbors, like LJs Lounge and Astro Coffee. We all bring more people.”

The partners spent the past two years and $1.9 million renovating a 125-year-old building at Michigan Avenue and Wabash Street and turning it into an 80-seat restaurant with six apartments above. The previous tenant was a pawnshop and the building façade called out “Gold Cash Gold” in giant block letters, lending the new restaurant its name.

Chef Josh Stockton comes to Detroit from Las Vegas and envisions the restaurant as a “neighborhood joint” — that’s the common theme among all these new restaurants — that uses in-season ingredients and rotates the menu regularly. He breaks down his own hogs, which he buys from his dad in Tennessee, and cans and pickles produce to capture the tastes of summer into the low-winter-sun months.

“We want to create an experience, not just a great meal,” said See Next Page

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CRAIN’S DETROIT BUSINESS

December 15, 2014

Pacts: State takes aim

From Previous Page

Boyer, showing off the interior of reclaimed wood and stained glass.

As more restaurants open, however, some will have to elevate their game to compete and new players will have to refine their concept and execution.

“I think the reality of the situation is that when neighborhoods are redeveloping, the businesses and restaurants, of which we have many long-standing ones, have to step it up,” said Sue Mosey, president of Midtown Inc. “Everyone has to step up their game.”

For example, this year Rodin closed its doors inside the Park Shelton building across from the Detroit Institute of Arts, and now Chartreuse Kitchen is opening in its old home.

Sandy Levine, the owner of The Oakland cocktail bar in Ferndale, is building out the new restaurant, which will have a small, rustic menu verging toward New American. The concept comes from necessity: The kitchen is small and has no walk-in freezer or cooler, so everything will be fresh and brought in that morning.

“It’s hard from a kitchen perspective, but it’ll be great for guests,” said Levine, who started working in kitchens at age 11 as a dishwasher in his grandparents’ deli.

Levine always wanted to have a joint in the city. He even tried to open The Oakland in Detroit but couldn’t find a space. Either it was too expensive or it required too much rehab. So when he saw the open airiness of the Park Shelton, he knew it was finally time to commit — despite paying double the per-square-foot rental rate that he pays in Ferndale.

Levine plans to open in the spring and is excited to come into a dining scene with so many new chefs. After all, he said, “a dozen and a half restaurants have opened, and sales at The Oakland are up 13 percent to 15 percent since last year.”

Being down the street, HopCat Detroit won’t hurt either.

The new 700-seat brewpub opened Saturday with 130 beers on tap and a gallery of artist murals on the exterior walls.

There is a cult-like following of Grand Rapids-based HopCats, of which there are six — and Mosey sees that as a good thing for Detroit and businesses like Chartreuse and Selden Standard.

“A lot of these places coming in already have big brands, so they are bringing in a lot of people who wouldn’t be coming anyways,” Mosey said. “So they are building a new market. But it’s important that we continue to build residential and keep building the market for these places.”

Grand Rapids isn’t the only outof-market investor in the city.

Denver-based Punch Bowl Social decided this was the perfect fourth location for the gastro-diner chain, which has spots in its hometown as well as Austin, Texas, and Portland, Ore. (Piece of trivia: Both the Denver and Detroit operations are located on Broadway Street.)

The newly opened Punch Bowl is a 24,000-square-foot food-and-games palace on the first floor of the Z Garage downtown. PBS employs 150 people and is open breakfast through bar-close seven days a week. CEO and founder Robert Thompson expects 2,000 people to

Page 19

■ From Page 1

ANJANA SCHROEDER/CRAIN’S DETROIT BUSINESS

Andy Hollyday (left) and Evan Hansen stand outside Selden Standard, which they opened in November.

come through the doors on weekend nights, drawn by the food, cocktails and games, from bowling to marbles.

“I get six calls a week from national real estate developers trying to get us to bring a Punch Bowl Social to their development,” said Thompson. “Most of them are vanilla projects with a meaningful economic upside. But we’re not shooting for that right now. We’re looking for the jewels in the rough.”

Dan Gilbert’s Bedrock team was one of those phone calls. They managed to entice Thompson to Detroit, and when he arrived, he knew within three hours that there would be a deal. He liked Detroit and was taken with the idea of being on the ground floor of a 1,300-car parking garage that’s full every day at 9 a.m.

“It was a mix of both gut and economics,” Thompson said.

That, said Mosey and others, is

most of the “ In cities we’ve studied, the restaurants ... are the generators; they are the activators.

”

Dan Mullen, Bedrock Real Estate Services

a vote of confidence for Detroit and its future. For Dan Mullen, vice president of leasing and development for Bedrock, PBS is an ideal anchor for downtown Detroit. The company is actively seeking out businesses — local, national and international — that will be destinations, that can’t be found elsewhere in the region.

“Our vision is creating these amazing blocks of real estate that is really charming,” Mullen said.

“We want to work off the architecture and block by block provide a different type of experience.”

The company has been focused on restaurants but says retail isn’t far behind in its master plan for the nearly 60 buildings that Gilbert owns. The company is currently pursuing a number of popular retailers. Asked if one might, perhaps be, an Apple store, Mullen

laughed and said, “I would love to have an Apple store downtown.”

But for now, most announcements will be of the restaurant variety — and they like to do it in twos and threes because it generates buzz.

“In most of the cities we’ve studied, the restaurants always, always lead,” Mullen said. “They are the generators; they are the activators. You do a restaurant like Wright & Co. or like PBS and people just flock to it. Retail is typically secondary when it comes to the planning stage.”

Norberto Garita hopes some of those people will flock to El Barzon, the Mexican-Italian restaurant he has operated in Southwest Detroit since 2007. The restaurant is very successful — one of the few places that would have been a true response to Kwiatowski’s question about where to send diners — but it didn’t start strong.

“It was very tough,” said Garita.

“I was thinking to close down because at the beginning it was very slow.”

Things got much better. Garita recently purchased the building next to El Barzon and started developing a new restaurant that will serve pizza and more casual meals.

“I have some customers and they say, ‘Now you’re going to have a lot of competition,’ ” he said. “What I see, my competition is just me. I’m happy to see more people open businesses here in Detroit.”

Not everyone is looking toward Detroit, however. Birminghambased Peas & Carrots Hospitality plans to open two new restaurants this summer and start a franchising agreement. But COO Josh Humphrey is staying focused in Birmingham, which he thinks can handle “at least a dozen more restaurants before they start cannibalizing each other.”

While Humphrey sees opportunity in Detroit, the time horizon for making back the investment is much longer than in Birmingham and areas with higher density and per-capita income. Oakland County, after all, has 1.2 million people and a per-capita income of $36,000 compared to Wayne County, which clocks in with 1.8 million but only $22,000 in per capita income.

“I want to open in Birmingham because the turnaround is much faster,” said Humphrey, 37. “But there is a market in Detroit. You are seeing a trend of people in the suburbs driving down there to try out all of these places popping up.”

Amy Haimerl: (313) 446-0416, ahaimerl@crain.com.

Twitter: @haimerlad

Wolff said.

“I see no way that the bill, in its current form, wouldn’t cancel out both our current tax abatement and every other abatement that we could offer under that resolution,” he said.

State Rep. Earl Poleski, RJackson, the bill’s sponsor, said he doesn’t think the bill will void existing abatements or other arrangements between businesses and communities, but that he doesn’t know for sure.

“It’s really intended to be a statewide governing provision,” he said. “It could not retroactively void specific agreements, and I would think those (prior agreements) are a done deal. But if it were enacted, it would void any ordinances in communities that are contrary to state law.”

The bill was introduced quickly — in fact, so quickly, it ended up not being able to be considered in the minimum time required by law before the legislative session ends Thursday — and caught many with an interest in the topic off-guard because of its incursion into local control.

Community benefit agreements are fairly widespread, as are local regulations governing them — so a ban could have statewide consequences, said Samantha Harkins, director of state affairs for the Michigan Municipal League, which opposed the House bill.

“In some communities, they’ve worked well; in some, they either don’t get implemented or the projects involved don’t come together, so it could be a very disparate impact across the state,” Harkins said.

“And when Harkins this gets introduced within about two weeks of the end of the session, there is no time to complete that kind of research.”

Harkins said she believes the bill could cancel every community agreement and related tax abatement local governments have given businesses in recent years, including the one in Lake Isabella.

“The way I read that (bill) is that agreement is now void and a business that qualified for an abatement (under an agreement) may no longer qualify,” she said.

“The bill does say that any resolution enacted that would be in violation of that law is void.”

Detroit Mayor Mike Duggan, who has voiced concerns about the City Council’s proposed ordinance as a possible deterrent to development, still opposed the Poleski bill.

“Simply put, Duggan the legislation — no matter how well-intentioned — infringes on the timehonored principles of home rule and local control. It thus consti-

The proposed Detroit ordinance would require developers to negotiate such agreements on projects of $15 million or more. tutes poor public policy,” he wrote in a letter to the competitiveness committee last week.

The proposed Detroit ordinance, which the City Council has been considering since May, would require developers to negotiate such agreements on projects of $15 million or more and encourages them for $3 million or more, when at least $300,000 of possible public subsidies are in play.

City Council President Brenda Jones, who submitted the initial draft of the ordinance, did not return phone calls seeking comment.

Gov. Rick Snyder, in an interview with Crain’s, said he harbored concerns about the bill.

“I would have concerns … about local autonomy and flexibility,” Snyder told Crain’s last week about House Bill 5977.

“There’s a balancing act here between the role of the state and the role of local government, and (agreements) would depend on the particular circumstance.”

Business associations and trade groups that have expressed support for the bill or elements of it in committee meetings include the Detroit Regional Chamber, National Federation of Independent Business, Associated Builders and Contractors, Michigan Restaurant Association and Michigan Manufacturers Association, according to a House Fiscal Agency report.

Sandy Baruah, president and CEO of the Detroit Regional Chamber, said his organization supports portions of the bill that would standardize work rules and employee pay regulations statewide, since businesses value consistency.

But while the chamber opposes the Detroit ordinance proposal as a possible deterrent to investing in the city, Baruah said the organization is more lukewarm about backing a statewide ban on such rules.

“We don’t like the CBA ordinance, but we’re not really thrilled about the Legislature telling any community what they can and cannot do,” he said.

“One of our big issues is, we just got through the grand bargain where the state and city have thrown their lots in together and found a new working relationship to help Detroit. Debates like this have the risk of undermining the productive arrangement that has been forming between city and state.”

Chad Halcom: (313) 446-6796, chalcom@crain.com.

Twitter: @chadhalcom

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TriMas: Spinoff company expected to be based in Michigan ■ From Page 3

company acquisitions and organic growth in expanding overseas markets, TriMas executives said.

TriMas hopes to complete the spinoff around June by issuing shares to TriMas shareholders in what it hopes will be a tax-free transaction. TriMas CFO Mark Zeffiro would become CEO of the new company.

The deal still needs U.S. Securities and Exchange Commission approval and a final nod from the TriMas board.

TriMas didn’t give a new company location in the announcement, but Valenti said it would be in Michigan because several of its legacy brands are rooted here and in the upper Midwest. Oakland County is a likely choice, he said.

Valenti expects to become a member of the new board and said Zeffiro likely would be too, but no other TriMas directors or executives will be part of it. He hopes to

make progress rounding out the new board in January, he said.

“Being on the new board was important to me, because I had some loyalties and connections within the company that precede the current management,” he said. “And I wanted it to be clear this is not a dividend-and-thengoodbye (transaction). We want this to become a strong company headquartered and with a future here in Michigan. And as proof of that commitment, I wanted to be sure to be a part of it.”

Cequent’s — and TriMas’ — largest presence in Michigan is Plymouth-based Cequent Performance Products Inc., which employs about 250 of TriMas’ 300plus Michigan employees. TriMas employs about 5,500 people worldwide.

Cequent Group has been building sales and profitability over the last several years. In 2009, it

posted an operating profit of $4.8 million on revenue of $373 million. That grew to $25.8 million on $589 million in revenue in 2013.

For the first nine months of 2014, operating profit was $39.2 million on revenue of $484.6 million.

The company has made two acquisitions in the last year: Towbar company C.P. Witter Ltd. of Wales, and a segment of Al-Ko SE in Europe.

Zeffiro said last week the company is a market leader in North America and Australia and is gaining market share elsewhere via acquisitions.

“Our efforts to modernize the significant equipment are mostly complete with the heavy lifting behind us,” he told analysts in a conference call. “Our focus will shift from plant consolidation and footprint moves into margin expansion and optimization of a global

sales presence.”

TriMas share prices briefly rose, then dropped 4 percent the day of the spinoff news. Some analysts told Crain’s last week the tumble was most likely concern over exposure to falling oil prices and corporate debt.

“We believe the tax-free spinoff of the Cequent businesses … allows the company to more explicitly focus on its core businesses, grow faster, and improve its ongoing profitability more quickly,” Nicholas Heymann, co-head of global industrial infrastructure at Chicago-based William Blair & Co. LLC, stated in a report last week.

“Concern remains with management’s effectiveness in spinning out Cequent appropriately and effectively while simultaneously … improving operating profitability in its energy business, and expanding all of its businesses geographically. … (But) we are cautiously

optimistic that management will be able to deliver on its promises despite having its bandwidth spread so thin.”

Valenti said there is room for both companies to thrive.

“TriMas has a large institutional base of holders, compared with some companies, and the institutional world can be extremely stratified about what they want,” he said.

“Some may not always be the more typical TriMas type of investor, some might say ‘we like the Cequent cyclical growth, the leadership and the dominant market position it has. Over time, investors will gravitate toward whichever holdings they prefer.

And we’re going to be in the frontrow seat watching that unfold like everyone else.”

Chad Halcom: (313) 446-6796, chalcom@crain.com.

Twitter: @chadhalcom

Gemphire: Sooch aims to duplicate success she had at ProNAi ■ From Page 3

The 12 patients in the study had late-stage non-Hodgkin’s lymphoma that had been treated unsuccessfully with conventional therapies including radiation.

Four went into remission and tumors shrank in 10 of the 12.

Sooch hopes to catch lightning in a bottle again with Gemphire, which she joined six weeks after leaving ProNAi. “I looked at opportunities locally and at interesting opportunities nationally,” she said. “I looked at Harvard spinoffs and I looked at San Diego. I spent a lot of time kicking tires. I wanted to lower the risk of whatever I was going to do.”

In the end, staying here and joining Gemphire — which at the time was known as Michigan Life Therapeutics LLC — made the most sense and had the least risk.

Sooch knew and respected cofounder Charles Bisgaier, who preceded her as president and CEO of ProNAi and was an early angel investor in the company.

He, Sooch and co-founder David Lowenschuss, the chief legal officer, say Gemphire is a combina-

tion of “gem,” for what they think is a gem of a drug, and “sapphire,” a reference to the career that Bisgaier’s father, Abraham, had as a jewelry maker in New York, arriving here from a concentration camp after World War II. The risk was reduced by the tens of millions of dollars Pfizer spent between 1999 and 2004 on trials for gemcabene, a drug taken orally once a day. A total of 952 patients with varying levels of LDL — the so-called bad cholesterol — were tested in a total of 17 human trials.

Ten were phase-one trials, which found little toxicity, and seven phase-two trials, which showed clinical effectiveness in lowering LDL and triglycerides.

Before bringing gemcabene to trial, Pfizer decided to focus on another cardiovascular drug, spending $1 billion on Torcetrapib to raise HDL, the so-called good cholesterol. During phase-three trials, patients began dying and the trials halted. Soon after, in 2008, Pfizer ended all R&D on cardiovascular drugs.

Bisgaier was on the original patent for gemcabene when it was

developed by Parke-Davis in 1995.

He and Lowenschuss, veterans of Ann Arbor-based Esperion Therapeutics Inc. before it was bought by Pfizer in 2003 and then veterans of Pfizer, tried to license the drug.

After three years of lobbying, in 2011, Pfizer agreed.

The two then spent three years going through reams of data from the 17 human trials to decide on a first market application, filing for more patents and applying for orphan status from the FDA to treat homozygous familial hypercholesterolemia, a genetic disorder that causes levels of LDL to soar to about 500 milligrams per deciliter of blood. Any level above 129 is considered high. There are estimated to be only 2,000 patients in the U.S. and 45,000 worldwide with the condition, which often results in heart attacks, strokes and death before the age of 20.

With orphan status approved in February and one patent approved so far, it was time to recruit Sooch and time for her to start raising money again.

“You cannot find an asset with this much data. The data package

is compelling,” said Sooch, a native of India who in June was named one of Crain’s American Dreamers for her successes here.

This month, the funding round she raised for ProNAi was honored at the annual awards dinner of the Michigan Venture Capital Association as the financing deal of the year.

Because orphan drugs treat patients with severe or deadly diseases that are rare, they present small markets. Without help, drug companies wouldn’t develop therapies, so the FDA provides a streamlined path to market.

In Gemphire’s case, that could mean as little as three years to market instead of nine or 10. And because of all the human trials already conducted, Sooch thinks it will mean a cost of getting to market of $25 million instead of hundreds of millions.

The company hopes to get FDA approval early next year for trials that will start in the summer.

Gemphire plans to conduct a small phase-two trial on 10 patients to determine dosing levels, then a phase-three trial of 50 pa-

tients worldwide. There are pockets of patients with the condition in the Netherlands, South Africa, Lebanon and Quebec. Because patients are diagnosed early and require lifelong treatment, they are easy to find and test.

The company has hired six veterans of the pharmaceutical industry who will start work in January and expects to have a staff of 10-12.

Most development work and the ramping up of production will be done by area contract research organizations and contract manufacturers. If phase-two and -three tests go as planned, market-scale manufacturing would be done by a large pharmaceutical company, Sooch said.

Only two drugs have been approved for homozygous familial hypercholesterolemia, and both are extremely toxic to the liver, according to the FDA. An eventual exit for investors could include a sale to big pharmaceutical company or, like ProNAi, through an initial public offering.

Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

Providence: Hospital in Novi plans to expand in Livingston ■ From Page 3

cal therapy, lab services, a variety of imaging services and community rooms for public events.

“We can clearly expand our services (in phase two) to add an emergency room if the community needs it and to include surgery,” Karadjoff said.

The medical center is expected to help add an additional 800 to 1,000 inpatient admissions per year from Livingston County once the outpatient center is at full capacity, Karadjoff said.

Because of its population growth, Livingston County is a hotbed of competition for pa-

tients, and that encourages health system investment, said Rob Casalou, CEO of St. Joseph Mercy.

“St. Joseph is the market share leader (with 35 percent to 40 percent), with UM right behind,” Casalou said. “Providence Park is trying to compete in that.”

St. Joseph Mercy Livingston, a 136-bed hospital in Howell, is Livingston County’s only full-service acute care hospital. The St. Joseph Catholic system also operates the nearby St. Joseph Mercy Brighton Health Center, which offers a 24-hour emergency depart-

ment, outpatient surgery and other medical services.

UM operates health centers in Howell and Brighton, a studentrun clinic in Pinckney and a Survival Flight helicopter and jet at Livingston County EMS headquarters in Howell. The helicopter or medical jet can transport patients from ambulance to UM’s hospitals in Ann Arbor or hospitals owned by Trinity Health Michigan or Sparrow Health System.

Over the next two years, Casalou said, St. Joseph Mercy is expected to modernize and add

technology to its Howell hospital and enhance its Brighton outpatient center by at least a $25 million investment.

“We are doing it for growth, providing more contemporary services and also innovation,” Casalou said. “We have to deliver care differently.”

Meanwhile, Providence Park continues to expand capacity at the main 212-bed hospital. It will add 32 beds on its fifth floor in June and could add another 32 beds on the sixth floor sometime in the future.

In January, Karadjoff said, a

9,000-square-foot surgical innovation center will open to provide advanced educational opportunities to physicians, residents and fellows in 20 specialized training stations and a 50-seat auditorium.

Plans are also underway to begin construction next summer on a 180-unit senior living facility for independent, assisted and memory care living, Karadjoff said. The local zoning and permitting process has begun.

Jay Greene: (313) 446-0325, jgreene@crain.com.

Twitter: @jaybgreene

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Contracts of DSO president, music director extended

BY SHERRI WELCH CRAIN’S DETROIT BUSINESS

The Detroit Symphony Orchestra late last week said it extended the contracts of President and CEO Anne Parsons and Music Director Leonard Slatkin through the 201617 season.

The DSO announced the contract extensions during its Dec. 11 annual meeting, which rounded up the symphony’s work and accomplishments during the year, including saying that more than 500,000 people tuned in the DSO’s “Live From Orchestra Hall” webcast series in 2014.

On the financial front, the or-

Parsons

Slatkin

chestra reported $27.58 million in total revenue and a $60,000 net surplus for 2014, compared to $27.86 million in total revenue and a $20,000 net surplus last year.

The DSO said it drew $2.77 million from its endowment this year

to help fund operations, which compares to a $2.32 million draw from the endowment in 2013.

Ticket and earned revenue were up for the year, but contributions toward the DSO’s operating budget were down nearly 7 percent for the year at $17.06 million.

The DSO also said it raised $5.6 million toward its endowment during the year. Following draws to support operations, it ended the year with $38.8 million in endowment funds held by the orchestra and third parties as of Aug. 31.

The orchestra said it is expanding its music education initiatives in Southeast Michigan with an

undisclosed multimillion-dollar gift from Clyde and Helen Wu. Through live and digital partnerships, the DSO plans to provide hands-on music education and training in classrooms, communities and virtual settings to support local music teachers and reinforce local arts education programs.

This fall, the DSO launched a pilot of “Live from Orchestra Hall: Classroom Edition,” delivering the DSO’s school time performance of “An American Adventure” direct to more than 30,000 Detroit students, and a total of more than 50,000 students nationwide, in their schools.

Schools: ‘Unlikely bedfellows’ to seek solutions ■ From Page 1

“I’d like to see it get done, in terms of having some conclusions and thoughts, by the first half of next year,” Snyder said in an interview with Crain’s last week.

The process won’t be easy, as the steering committee comes to the table with a roster of 31 leaders with a wide spectrum of political and philosophical ideologies.

“It’s a coalition of unlikely bedfellows,” said Dan Varner, a member of the group and the CEO of Excellent Schools Detroit, a nonprofit whose goal is to have 90 percent of Detroit students graduate from high school and enroll in college or a postsecondary training program.

Varner The coalition is co-chaired by Tonya Allen, president and CEO of the Detroit-based Skillman Foundation; the Rev. Wendell Anthony of Fellowship Chapel and the president of the Detroit branch of the NAACP; David Hecker, president of AFT Michigan/AFL-CIO; John Rakolta Jr., CEO of Detroitbased Walbridge Aldinger Co.; and Angela Reyes, executive director of the Detroit Hispanic Development Corp.

The steering committee plans to provide its recommendations to Snyder, Duggan and state lawmakers within 90 days.

The group’s first meeting is Friday and, if its recommendations are implemented and show signs of success in Detroit, they could be used as models for school reform in other districts across the state, Snyder said.

It will examine how the city’s fragmented school systems impact student outcomes and efficiency in operations, and will tap education experts from Detroit and across the country in identifying the best ways to improve the city’s broken education system.

That is key for the business community.

“If we are going to recover — and we are — we need to change the dynamics of the overall educational system in Detroit,” Rakolta said.

A student population that has shrunk by about half in the last quarter-century and poor test scores are just two of the daunting issues confronting DPS, which has

been under the control of emergency managers since 2009.

The current EM, Jack Martin, was not available for an interview last week with Crain’s.

“DPS believes that it’s a good thing to have a broad cross-section of the local community involved in and focused on this most critical issue. We look forward to engaging with them,” Michelle Zdrodowski, chief communications officer for DPS, said in an emailed statement.

Snyder was quick to point out that it’s not just DPS that needs fixing. Charter schools in the city — DPS authorizes only 14 of them, while most others are authorized by universities — as well as the 15 Detroit schools overseen by the EAA, the turnaround district for Michigan’s lowest-performing schools, are also on the radar for reform, he said.

The coalition is still in its nascent stages, and members said there are no specific reform proposals at this point. However, members and other education experts said a wide-ranging look at a host of issues plaguing Detroit schools will be needed.

The same is true for reading.

There were five that performed above average in reading, and seven that performed above average in math, according to the report.

The report also said that just 14 percent of DPS students were at their grade level in math in 2013, while 41 percent were at their grade level in reading. Charter schools didn’t fare much better, with 18 percent at their grade level in math and 43 percent at their grade level in reading, according to the report.

Student transportation is also a key issue, Glazer said.

“If you can’t get your kids to most of the schools in the city,” that’s a problem that needs to be addressed, he said.

Excellent Schools Detroit has floated a plan that would create a “portfolio district” for DPS, which would coordinate enrollment, safety, transportation and other common infrastructure for all public schools in the city, including charters. The plan would require changes to the law.

Supply and demand

Charter schools, the first of which opened 20 years ago, have been a point of controversy.

A Detroit Free Press investigation into the state’s charter school system over the summer found things like lax oversight, questionable spending and a lack of disclosure by charters run by for-profit companies.

Dan Quisenberry, president of the Lansing-based Michigan Association of Public School Academies, an advocacy group for the state’s 296 charter schools, said the dialogue is important.

“The city is not a school district anymore; it’s a system of schools now, and parents are making all kinds of choices,” he said. “To think about the future of Detroit schoolchildren, everybody needs to be included in that discussion.”

A report by the National Alliance for Public Charter Schools released this month shows that 55 percent of Detroit’s students are enrolled in a charter school, the secondhighest rate in the nation, behind only New Orleans.

The report also shows Detroit has the fourth-highest total number of charter school students with just shy of 59,000, behind Los Angeles,

One of the key issues is overcapacity. In 1990, 200,000 students attended school in 275 buildings; today, 103,000 are in 230 buildings — or 84 percent of facilities serving 50 percent of the students.

Part of that stems from the proliferation of charter schools in Detroit, said Lou Glazer, president and co-founder of Ann Arbor-based Michigan Future Inc., a nonpartisan nonprofit funded by Michigan foundations.

“Particularly now that the cap is off of charter schools, we have a situation in which there are far too many schools for the number of students that are in the city.”

But that’s just one key issue facing the Detroit education system.

All three methods of delivering K-12 public education — DPS, charter schools and the EAA — are producing low student achievement, he said.

An Excellent Schools Detroit report from August shows that, of the schools for which data was available, the number of Detroit schools performing above the state average in math on the MEAP in 2013 can be counted on two hands.

Charter schools

New York City and Philadelphia.

The EAA The EAA, established in 2011, oversees 15 Detroit schools — nine elementary/middle schools, three of which are charters, and six high schools. EAA management began in August 2012, and students attend 210 days per year, 40 more than most other Michigan students.

Enrollment in EAA schools has also been a concern, dropping from 11,000 from when it started running schools to around 7,300 for the current academic year. Veronica Conforme, who was appointed as chancellor of the EAA last month after serving as its interim chancellor since June, has said that this year’s enrollment figures beat projections; the Conforme authority had projected about 7,000 students.

Conforme has also said that an internal operations review is needed.

She said in a November interview with Crain’s that financial controls have been improved and that a revised conflict-of-interest policy and an ethics hotline have been approved. There had been some concern over travel and credit card expenses of EAA administration.

Deadline ahead The self-imposed 90-day window to develop recommendations for Snyder, Duggan, state lawmakers, the DPS board and others is abbreviated for two reasons, Varner said.

“Every day we delay our creation of good schools and a great public education system in Detroit, we suffer the consequences,” he said. “It is also clear there is a window for policymakers, and part of that is that Martin’s term is expiring.”

He is confident the coalition will meet that deadline.

“We will have recommendations on Day 90,” Varner said. If we have to meet all day on 87, 88 and 89, we’ll do that. … There is probably 70 percent of things we can agree on and 20 percent that we can negotiate on.”

Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: kirkpinhoCDB

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RUMBLINGS Snyder eyes teaching for next career ov. Rick Snyder says he’s more interested in a classroom than the Oval Office as his next workplace.

Snyder’s name was floated recently by pundits as a potential long-shot 2016 presidential candidate, but the two-term Republican said last week he’s more interested in education.

Snyder took a victory lap around town last week to tout the end of the Detroit financial emergency management situation, and in a visit to Crain’s office on Wednesday he outlined his scenario for his post-Lansing career in four years.

A teaching career in which he can “help people more on an individual or small-group basis” is next, he said.

Snyder said he’s following a career path he mapped as a teenager: Work in the private sector, work in the public sector, then teach.

He has experience. When he was 24, Snyder — who earned his bachelor’s degree at 19, his MBA at 20 and his law degree at 23 — taught as an adjunct professor at the University of Michigan.

And he held out for that title: “They wanted to make me an instructor, and I told them ‘no’ until they gave me the title. Because when I was 60, I wanted to be able to show people I could be an adjunct professor when I was 24.

“I was already planning at that stage to show I had credentials.”

Snyder stopped short of speculating where or what subject he would teach.

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Quick Lane Bowl swag: Shinola for coaches When Rutgers University and the University of North Carolina square off on Dec. 26 in the inaugural Quick Lane Bowl at Ford Field, the coaches will take home a timely piece of Detroit.

Each member of both coaching staffs will receive a wristwatch from Detroitbased Shinola as part of the swag showered on coaches and players participating in college football bowl games.

Rutgers head coach Kyle Flood has 14 assistants, and UNC’s Larry Fedora has 19 aides.

That’s 35 Shinola watches in total, and the least expensive Flood men’s watch listed at Shinola.com is the $550 Runwell model. So that makes for a minimum of $19,250 worth of watches.

The priciest is the $1,500 Black Blizzard titanium chronograph. Thirty-five of those works out to $52,500.

No one has said what model the coaches will receive or if they’ll have a selection from which to pick.

The coaches also each get a welcome basket of Michigan products from Meijer.

Each of the players gets a $250 Best Buy gift card, Sony headphones, a custom Fathead vinyl wall graphic of themselves, and bowl logo merchandise including a commemorative football.

WEEK ON THE WEB FROM WWW.CRAINSDETROIT.COM, WEEK OF DEC. 6-12

The participating teams each will get a $1.2 million payout, according to a report from the Asbury Park Press in New Jersey.

Additionally, the winning team gets a $25,000 locker room makeover from Dan Gilbert’s Fathead.

Tickets are $35-$89, available at QuickLaneBowl.com.

Book recounts upstart junkyard race car team In 1970, a few unknown automotive engineers in Detroit designed and built a race car from an old 1964 Pontiac sedan with 80,000 miles on it to compete against professional, deeppocketed factory-backed racing teams.

How did they do? Better than anyone would have thought when they began racing on the Trans-Am circuit in 1971 against the big boys with all the sponsorship logos on their uniforms.

And then, to prove it wasn’t a fluke, they did it, again, the next year, rebuilding a wrecked Firebird they found in a junkyard.

The story is recounted in Blood, Sweat & Gears: The Story of the Gray Ghost and the Junkyard Firebird, written by first-time author David Barnes, who leads Bloomfield Hills financial advisory firm Heber Fuger Wendin. The book is published by Sarasota, Fla.-based Telemachus Press.

The 284-page book retails for $9.99 print and $3.99 for Kindle on Amazon.com.

BITS & PIECES 䡲 Tom Gage, who has covered the Detroit Tigers for The Detroit News for 36 years, was elected the 2015 winner of the annual J.G. Taylor Spink Award by the Baseball Writers’ Association of America.

He’ll be presented the association’s top award during the National Baseball Hall of Fame and Museum’s induction weekend in Cooperstown, N.Y., in July.

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

Ann Arbor: More VC than Valley?

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There is more venture capital per capita in Ann Arbor ... than there is in Silicon Valley. ... Well, as Disraeli famously stated: “There are lies, damn lies and statistics.”

Farm to grow produce, raise fish

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Hope Center, a food pantry in Macomb County, plans to build a commercial-scale aquaponics farm to help feed the hungry.

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Tom Henderson’s “Big Bucks, High Tech” blog about accounting, banking, venture capital and high tech is at www.crainsdetroit.com/henderson

Sherri Welch’s blog on “The Business of Being Nonprofit” can be found at www.crainsdetroit.com/welch

UM hires headhunter to help find coach he University of Michigan has retained Los Angeles-based executive search firm Korn/Ferry International as a headhunter for a new football coach.

Korn/Ferry’s sports division is led by Jed Hughes, who was involved in UM’s 2011 hiring of football coach Brady Hoke, who was fired Dec. 2, and the 2010 hiring of athletic director David Brandon, who resigned Oct. 31, when Hughes worked for Chicago-based headhunter Spencer Stuart.

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ON THE MOVE 䡲 Troy-based Giarmarco

Mullins & Horton PC appointed William Heritage III president of the 40-year-old law firm, to succeed the late Joseph “Jeff” Page III. Heritage, 45, was head of the firm’s Heritage business practice group and a member of its executive committee. Page, who also chaired the firm’s health care law practice, died Oct. 6 at age 72 from complications of multiple myeloma. 䡲 Karen Fordham, COO of Detroit Medical Center Huron Valley-Sinai Hospital, was promoted to CEO, effective Jan. 1.

Fordham, 39, replaces Andrei Soran, named Fordham COO for the Detroit Medical Center. 䡲 The Detroit-based Michigan Minority Supplier Development Council hired Michelle Sourie Robinson as president and CEO, succeeding Louis Green in the nonprofit’s top post, starting Jan. 5.

Robinson had been Robinson at Home Depot Inc., most recently as director of supplier diversity. Green is CEO of a new firm, Supplier Success LLC. 䡲 The Community House in Birmingham named William Seklar as president.

Seklar, former president

and CEO of the Children’s Leukemia Foundation of Michigan, succeeds Camille Jayne, who becomes chairman of the nonprofit.

COMPANY NEWS 䡲 Restoration Hardware is planning to open an outlet store in downtown Detroit, likely in the 1200 block of Woodward Avenue. Corte Madera, Calif.-based Restoration Hardware is a luxury home-furnishings retailer. 䡲 DTE Energy Co. renovated a vacant Art Deco building next to its downtown Detroit headquarters as part of the utility’s broader efforts to improve the area, The Associated Press reported. The threestory, 32,000-square-foot building, now named the Navitas House, will contain about 140 information-technology employees. It has been vacant since the Salvation Army closed it in 2004. 䡲 Little Caesars Pizza plans to build a new 205,000square-foot headquarters building next to its current headquarters inside the Fox Theatre and bring 600 more jobs to Detroit. Construction on the Little Caesars Global Resource Center is expected to begin in the spring. 䡲 Livonia-based Team Schostak Family Restaurants is bringing 25 Seattle-based MOD Pizza locations to Michigan over the next five years. The company plans to open the first location in Northville in the spring. 䡲 Canton Townshipbased Ashley Capital LLC is under contract to purchase 116 acres of former General Motors property on Eckles Road at Amrhein Road in Livonia for an undisclosed price. Ashley Capital purchased the land from the RACER Trust, and plans to develop a multitenant industrial park at the site. 䡲 A statement is expected soon from Plymouth Whalers Gov. Mike Vellucci about the minor-league hockey club’s possible relocation. It emerged on Twitter that team owner and founder Peter Karmanos Jr., retired chairman and cofounder of Detroit-based Compuware Corp., wants to move the team from Plymouth Township to Chatham, Ontario. 䡲 Shareholders of Detroit-based Compuware Corp. approved the company’s proposed acquisition by San Francisco-based Thoma Bravo LLC during a special meeting. More than 99 percent of Compuware shareholders at the meeting voted for the agreement. 䡲 New York-based private equity firm Riverside Co. acquired Troy-based 3-D printing supplier Fisher/ Unitech Inc. Terms were not disclosed.

OTHER NEWS 䡲 Troy-based Kresge Foundation is pledging $20 million in new commitments over five years to help expand high-quality early childhood development offerings in Detroit. 䡲 The University of Michigan Taubman College of Architecture and Urban Planning will open an architecture program in Midtown for Detroit Public Schools’ high school students next month, according to the AP. 䡲 The orange barrels making for a traffic slalom course on Woodward Avenue will continue through the winter for M-1 Rail streetcar construction in Detroit, officials said. Work will include continued construction on freeway overpasses and underground utility relocation. 䡲 Sachin Uppal, 37, of Brighton, was sentenced in U.S. District Court in Detroit to 64 months in federal prison for running a $3.9 million Ponzi scheme. He had been convicted in August of wire fraud. 䡲 Immigration and Homeland Security agents arrested two people and seized 6,000 pieces of counterfeit clothing and other fake items with a suggested retail price of $1.6 million from The Source II, a shop on Woodward Avenue in Detroit, after multiple undercover buys, said the AP. 䡲 Gov. Rick Snyder approved more than $2.7 million to provide financial assistance to Michigan counties and communities impacted by last spring’s flooding and last winter’s deep freeze, the AP reported. 䡲 Amazon and other online retailers with ties to Michigan would have to collect its 6 percent sales tax on purchases under legislation approved by a divided state Senate. The legislation went to the House.

OBITUARIES 䡲 Gary Gosselin, editor of Michigan Lawyer’s Weekly and former business editor for the Oakland Press and the News-Herald, died Nov. 30. He was 56. 䡲 Jeremy Haberman, former owner of Ferndale’s Magic Bag and a member of Crain’s 40 under 40 Class of 2006, died Dec. 5. He was 42. 䡲 Eugene Jetts Jr., cofounder and president of Sterling Heights-based Jet’s Pizza, died Dec. 5. He was 60. 䡲 D. Mike Pennington, a longtime journalist and retired senior director of marketing communications at Troy-based Meritor Inc., died Dec. 5. He was 64. 䡲 Norman Rosenfeld of Bloomfield Hills, former Sibley’s Shoes Inc. chairman and CEO, died Nov. 13. He was 95.

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Join the North American International Auto Show and Crain's Detroit Business for a breakfast event that will showcase cutting-edge technology in the automotive sector. This inaugural event will feature entrepreneurs trying to make a mark on the industry.

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FIRST 150 REGISTRANTS RECEIVE A FREE INDUSTRY PREVIEW TICKET – A $95 VALUE.

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