Crain's Detroit Business, Jan. 5, 2015 issue by Crain's Detroit Business

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www.crainsdetroit.com Vol. 31, No. 1

JANUARY 5 – 11, 2015

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2014 NEWSMAKERS OF THE YEAR

New year, new state biz laws take aim at roads, wages

It was a universal truth, they said. Chapter 9 would take seemingly forever for Detroit. But then came ‘the Big Bang Theory of Bankruptcy’ KEVYN ORR

2 stars align for Detroit

Bankruptcy’s end revs up spending on auto show Meadowbrook sale: How it might be a good thing

This Just In It’s official: Gilbert new owner of Compuware HQ

NEWSPAPER

Dan Gilbert’s Bedrock Real Estate Services LLC and Meridian Health are officially the new owners of the Compuware Corp. headquarters. A 50-50 joint venture between Bedrock and Meridian, 1000 Webward LLC, closed New Year’s Eve on the purchase of the 1.1 million-square-foot building and an attached parking garage with more than 2,600 spaces from the Detroit-based IT company. The companies jointly announced a purchase agreement for the 10-year-old building in November. Compuware later said in a U.S. Securities and Exchange Commission filing that the deal is for around $142 million. Robin Schwartz, director of public relations for Bedrock, said in an email that Meridian, a Detroit-based managed care company, will move about 700 employees by spring into about 240,000 square feet and plans to expand to 2,000 employees by 2019 in about 300,000 square feet. Quicken will have more than 300,000 square feet in the building after expanding into an additional floor, she said. Compuware, which currently has about 500,000 square feet, will lease about 130,000 square feet. Schwartz said a new name for the building has not yet been decided. — Kirk Pinho

STEVEN RHODES

BY AMY HAIMERL CRAIN’S DETROIT BUSINESS

hen Emergency Manager Kevyn Orr filed Chapter 9 on July 18, 2013, nobody imagined that by the dawn of 2015, the country’s largest and most complex municipal bankruptcy would be resolved. “It happened at almost warp speed,” said Gerald Rosen, chief judge of the U.S. District Court for the Eastern District of Michigan, who also acted as chief bankruptcy mediator. Even he, an eternal optimist, was uncertain: “My wife says it’s always 78 and sunny in my world, but from the beginning I knew this would be a challenge. There were virtually no

OTHER TOP NEWSMAKERS PROFILED ON PAGES 4-5

Gerald Rosen, the mediator: “It was really the colliding together of unrelated people and events to form a perfect universe.”

assets other than the DIA’s art collection.” So what changed? It’s Rosen’s Big Bang Theory of the Bankruptcy. “It was really the colliding together of unrelated people and events to form a perfect universe,” Rosen said. At the center of that universe were Orr and Judge Steven Rhodes of U.S. Bankruptcy Court, who are Crain’s Newsmakers of the Year for 2014. See Newsmaker, Page 17

NEWSMAKER OF THE YEAR LUNCHEON Date: 11:30 a.m.-1:30 p.m. Feb. 25 Location: MotorCity Casino Hotel, Detroit Tickets: $70 for individuals, $750 for table of 10, $60 for students Register: crainsdetroit.com/events Deadline: Preregistration closes at 5 p.m. Feb. 20. If available, walk-in registration will be $90 a person. Questions? (313) 446-0300 or cdbevents@crain.com Hash it out: Join the conversation with #crainsnewsmaker.

MARY BARRA ★ DAVID BRANDON ★ MATT CULLEN ★ CHRIS ILITCH ★ GENE MICHALSKI★ BOB PAUL ★ MINA SOOCH ★ DARREN WALKER ★ M. ROY WILSON

Groups ponder value of ballot plan for roads funding BY CHAD HALCOM CRAIN’S DETROIT BUSINESS

Talking 9.9 million Michigan voters into a 1 percent increase in the sales tax, with no real relief at the gas pump due to a new fuel tax structure, could mean mounting an eight-figure public awareness campaign, experts said. But right after a costly midterm

election, finding $15 million, give or take, in just four months to rally voters in support could be a problem. The Michigan Infrastructure and Transportation Association has spent more than two years pushing for a legislative fix to the problem of roads funding, and is ready to put in at least some money to support the May ballot question.

The Michigan Petroleum Association has also said it may help with signs on trucks or supply stations for its members to raise driver awareness and public support. Business Leaders for Michigan said it will “be a part of a coalition advocating in support of the ballot proposal” and will make a voter education commitment to it, but stopped short of saying if that in-

cludes funding. The Michigan chapter of Americans for Prosperity, the Virginiabased political advocacy group backed by Koch Industries Inc. coowners Charles and David Koch, has already come out against the proposal. It’s not clear if that position will mean funding an opposiSee Roads, Page 15

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MICHIGAN BRIEFS Stryker reported ready to move on U.K. medical device maker

Adrian lends a hand to students who take out loans

As reported in Michigan Briefs last month, Kalamazoo-based Stryker Corp. plans a takeover offer for the London-based medical device maker Smith & Nephew plc that could happen in the coming weeks, people with knowledge of the matter told Bloomberg News. Stryker plans to offer a significant premium to Smith & Nephew’s current share price, with one of the people saying it could be about 30 percent. Stryker is not planning a socalled tax inversion because of the limited tax benefits and political risk, said one of the people, who asked not to be identified because deliberations are private. The U.S. government is clamping down on inversions to stop companies from moving their addresses abroad through deals to cut taxes.

When it came time to pick a college, Abby Slusher leaned toward a private school near home for the small campus and class sizes. Her mother pushed Adrian College for another reason: a new program guaranteeing every graduate would make more than $37,000 or get some or all student loans reimbursed. Adrian is among the first colleges to take out insurance policies on every incoming freshman and transfer student who has student loans and at least two years of school remaining. The idea has been around for a few decades at Yale Law School and specific programs elsewhere, such as seminary and social work degrees. Some small, religious schools started offering guarantees to all new students in recent years, but Adrian President Jeffrey Docking is taking it further by framing the program as a solution to skyrocketing tuition costs and

chased the property from Peter Secchia in 2002 for $4.5 million. 䡲 Bell’s Brewery Inc., based in Galesburg east of Kalamazoo, will begin shipping beer to Los Angeles and Orange, Riverside, San Bernardino and Ventura counties in Southern California, the Grand Rapids Business Journal reported. 䡲 Work will begin next month at the Amway Grand Plaza Hotel in Grand Rapids on The Kitchen by Wolfgang Puck and Wolfgang Puck Express, the Grand Rapids Business Journal reported. 䡲 Olivet Nazarene University, a Christian liberal arts school in Bourbonnais, Ill., said its School of Graduate and Continuing Studies

months. Some programs will be partially filmed in Grand Rapids. Create and Craft said Grand Rapids is “a natural fit” because of a regional economy “built around entrepreneurs and makers” and the annual AQS Quilt Week convention, which draws around 10,000 people.

U.K. network thinks GR area does know meaning of the word ‘quilt’ Create and Craft, a 24-hour arts and crafts TV network based in England, has opened an office in downtown Grand Rapids, the Grand Rapids Business Journal reported. The network last month started airing in about 40 million homes in the U.S. The office houses about six staffers, with Create and Craft planning to double the number in the next couple of

student loan defaults. Adrian paid about $575,000 this year, or $1,165 per student, to take out policies on 495 students. For those who graduate and get a job that pays less than $20,000 a year, the college will make full monthly student loan payments until they make $37,000 a year. With a job that pays $20,000 to $37,000, the college makes payments on a sliding scale. There’s no time limit for the payment plan, but the college caps total loan payments at $70,000 per student. Adrian’s annual cost of tuition, room and board is about $40,000 before any forms of financial aid. Docking already sees benefits: The entering freshman class at the 1,700-student school is up about 50 students to 570; to break even, Adrian needed about two dozen new students who took out loans. — Associated Press

MICH-CELLANEOUS 䡲 The vacant Olds Manor building in downtown Grand Rapids will be converted into a mixed-use residential and commercial building called The Rowe, MLive.com reported. The building has been owned by RDV Corp. since Amway Corp. founders Rich DeVos and Jay Van Andel pur-

will begin offering programs this year at the Pyramid Campus in Caledonia, near Grand Rapids, the Grand Rapids Business Journal reported. ONU also operates a location in Grand Ledge west of Lansing and several in Illinois and Indiana. 䡲 The Maple Hill Auto Group in Kalamazoo will spend $3.5 million to expand and separate the showrooms for three of the five automo-

䡲 A story in the Dec. 15 issue about TriMas Corp. spinning off Cequent Group should have said Cequent accounts for about $614 million, not billion, of TriMas’ $1.4 billion in revenue over the past 12 months.

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bile franchises it has on the city’s west side, MLive.com reported. Among the drivers of the expansion: Soaring Subaru sales. 䡲 An anonymous donor helped the Little Traverse Conservancy buy about 2,400 feet of Lake Michigan shoreline between Harbor Springs and Cross Village in the northwestern Lower Peninsula, the Petoskey News-Review reported. Conservancy director Tom Bailey says his organization has raised all but $250,000 of its $1.8 million goal. The land will become a publicly accessible nature preserve. 䡲 The Grand Rapids Business Journal recently reported that AGA Marvel in Greenville has released a new line of built-in and mobile draft beer dispensers and refrigerators that are 40 percent more energy efficient than previous generations and are double-insulated to reduce foam. The product starts at a retail price of $1,799. And Christmas is about … well, you can do the math.

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New biz laws tackle wages, roads 2 LAWS THAT AFFECT BUSINESS Wages: State minimum wage increased from $7.40 to $8.15 an hour. Will gradually increase to $9.25 by 2018. Tipped employees now receive $3.10. If tips don’t bring that to the federal minimum wage of $7.25, employer contributes the difference. Personal Property Tax: Voters in August approved phase-out of the tax. The lost revenue for local governments and schools is offset by increased state revenue from expiring corporate tax credits and increasing the amount of the state use tax sent to local school districts.

Inside

Food safety training, tax changes also on tap BY CHAD HALCOM CRAIN’S DETROIT BUSINESS

It was a year of big individual wins and losses in Michigan for companies such as IBM Corp., Tesla Motors Inc. or Delphi Corp. — but 2014 was more notable for the lower-profile law changes affecting thousands of businesses statewide. Manufacturers and the communities that host them were affected by a major overhaul to the business tax structure, and some of their em-

ployees likely saw a boost from the first of several increases to the minimum wage this year. But some of the windfall for the state’s lowest-income employees could pass along to the Michigan Department of Treasury next fall if voters approve a sales tax increase that triggers billions in new funding for roads and schools.

Wages Michigan workers over 18 and

earning minimum wage before Sept. 1 saw a pay increase from $7.40 to $8.15 an hour after the Legislature in May passed a bill that gradually raises the wage floor to $9.25 by 2018. Tipped employees now receive $3.10. If tips don’t bring that hourly rate up to the federal minimum of $7.25, the employer contributes the difference. The bill, signed by Gov. Rick

Slot cars offer hobbyist a new career track, Page 10

See Laws, Page 14

Company index These companies have significant mention in this week’s Crain’s Detroit Business:

Proposed sale an opportunity for Meadowbrook Insurance Group

1000 Webward . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 AAA Michigan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Andiamo Restaurant Group . . . . . . . . . . . . . . . . . . 16 Association of Petroleum Dealers . . . . . . . . . . . . . 15 Barbat Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Beaumont Health System . . . . . . . . . . . . . . . . . . . . 5 Bedrock Real Estate Services . . . . . . . . . . . . . . . . . 1 Blue Cross Blue Shield of Michigan . . . . . . . . . . . . 11 Business Leaders for Michigan . . . . . . . . . . . . . . . . 1 Caring Partners Home Health . . . . . . . . . . . . . . . . . 8 Compuware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Delphi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Detroit Regional Chamber . . . . . . . . . . . . . . . . . . . 15 Detroit Venture Partners . . . . . . . . . . . . . . . . . . . . . 8 Ford Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Gemphire Therapeutics . . . . . . . . . . . . . . . . . . . . . . 5 General Motors . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

BY JAY GREENE

Glacier Hills Home Care . . . . . . . . . . . . . . . . . . . . . 8

CRAIN’S DETROIT BUSINESS

The pending sale of Southfield-based Meadowbrook Insurance Group Inc. to a Chinese conglomerate isn’t expected to immediately change the company, its corporate headquarters or its top executive team, Crain’s has learned. But officials for Meadowbrook (NYSE:MIG) say in statements they are limited in what they can publicly discuss until later in 2015 when the acquisition is expected to be completed. On Dec. 30, Shanghai, China-based Fosun International Limited announced it plans to acquire Meadowbrook for $8.65 per share in cash for a transaction value of approximately $433 million. The per-share sale price is 24 percent above what Meadowbrook was trading at on Dec. 29 and 39 percent above Meadowbrook’s threemonth average closing price for the period before Dec. 29, Fosun said in a Dec. 31 filing on the Hong Kong Exchange. As of Dec. 31, Meadowbrook’s shares had risen 19.3 percent to $8.50. The transaction also represents a multiple of approximately 1.04 times Meadowbrook’s tangible book value per share as of Sept. 30, Fosun said. “Combining with Fosun further strengthens our capital base as we continue to focus on supporting the needs of our customers, partners and policyholders, improving our underwriting performance and driving profitability,” said Bob Cubbin, president and CEO of Meadowbrook, in a statement. “This transaction is the culmination of a thorough Cubbin strategic review process to maximize shareholder value,” he said. Cubbin said the sale price “is a positive outcome for our shareholders, who will receive significant value.” See Meadowbrook, Page 18

THIS WEEK @ WWW.CRAINSDETROIT.COM

GRB New Detroit . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Henry Ford Physician Network . . . . . . . . . . . . . . . . 11 Ilitch Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 IRule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Loomis Sayles . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 LMC Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . 16 M-1 Rail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Martin Waymire Advocacy Communications . . . . . . 15 COURTESY OF NORTH AMERICAN INTERNATIONAL AUTO SHOW

This year’s North American International Auto Show is expected to draw more than 800,000 attendees from more than 60 countries, an official says.

Meridian Health . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Michigan Chamber of Commerce . . . . . . . . . . . . . 15 Michigan Infrastructure & Transportation Association . 1 Michigan Retailers Association . . . . . . . . . . . . . . . 15

City’s Ch. 9 exit fuels auto show spending Analysts: Improved perception of Detroit, industry boosts interest BY DUSTIN WALSH CRAIN’S DETROIT BUSINESS

The city of Detroit exited Chapter 9 bankruptcy only weeks ago, but the motion already has moved the needle on spending ahead of the North American International Auto Show. The exhibit floor at Cobo Center is in final preparations, restaurants are booked, and party planning is in the eleventh hour. The economic impact of the NAIAS is expected to be as much as 8 percent higher than last year — as high as $420 million, compared with $390 million in 2014, said David Sowerby, portfolio manager at Loomis Sayles LP in

Bloomfield Hills. The increase is largely due to better national economic indicators, including travel spending, newvehicle sales and rising incomes, Sowerby said. But perception of the city and industry can’t be discounted. “The industry is stronger Sowerby because of the near-death experience” of the recent recession and city bankruptcy, Sowerby said. “Bankruptcy absolutely moves the needle to the plus side. It may have a marginal effect on economic impact, but it has piqued interest.” The show, set for Jan. 12-25, will see more than 40 worldwide new-car debuts and is expected to draw more than 5,000 journalists and more than 800,000 attendees from more than 60 countries, said Rod Alberts, executive See Auto Show, Page 16 Remains of the year Relive 2014 in words and pictures, from bankruptcy to restaurants to the August flood and the resulting cleanup, crainsdetroit.com/2014

North American International Auto Show . . . . . . . . . 3 Princeton Enterprises . . . . . . . . . . . . . . . . . . . . . . 18 Rassini International . . . . . . . . . . . . . . . . . . . . . . 16 Slot Mods USA . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 TI Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Truscott Rossman . . . . . . . . . . . . . . . . . . . . . . . . . 15 United Methodist Retirement Communities . . . . . . . 8 University of Michigan . . . . . . . . . . . . . . . . . . . . . . 4 Wayne State University . . . . . . . . . . . . . . . . . . . . . . 5

Department index BUSINESS DIARY . . . . . . . . . . . . . . . . 13 CALENDAR . . . . . . . . . . . . . . . . . . . . 13 CLASSIFIED ADS . . . . . . . . . . . . . . . . 15 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 6 LETTERS . . . . . . . . . . . . . . . . . . . . . . . 6 MARY KRAMER . . . . . . . . . . . . . . . . . . 7 OPINION . . . . . . . . . . . . . . . . . . . . . . . 6 PEOPLE . . . . . . . . . . . . . . . . . . . . . . 12 RUMBLINGS . . . . . . . . . . . . . . . . . . . 19 WEEK ON THE WEB . . . . . . . . . . . . . . 19

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Mary Barra CEO, General Motors Co., Detroit

Newsmakers 2014

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Mary Barra became the first woman to head a major automaker in January, succeeding Daniel Akerson as CEO of General Motors Co. With fewer than 5 percent of Fortune 500 CEOs being women, Barra became a household name overnight. But that joy was short-lived. In February, the Detroit automaker began issuing recalls over faulty ignition switches. Barra was summoned to testify in front of Congress to answer questions on the automaker’s knowledge of the defect before the recalls. She made several appearances in front of legislators, who took Barra to task over the defect, currently linked to at least 30 deaths. GM has recalled more than 30 million vehicles in the U.S. since February for the faulty ignition and paid a record-setting $35 million fine imposed by the National Highway Traffic Safety Administration. Wall Street and some members of Congress applauded Barra’s testimony as she continues to repair

GM’s culture and, hopefully, its public image. Fortune magazine deemed her its Crisis Manager of the Year. Barra told Automotive News in November that she wants employees to be more forthright in meetings. She wants them to question their boss, or their boss’s boss, or her, whenever someone is not delivering. She uses the phrase “own it” a lot. ”If I don’t live up to what we all agree,” she said, “they should call me out.” — Dustin Walsh

Matt Cullen CEO, M-1 Rail It has taken seven years and an immeasurable amount of political jockeying, but the $137 million M-1 Rail streetcar project broke ground in July and is on schedule to be running up and down Woodward Avenue in 2016. The project’s conductor as CEO has been Matt Cullen, the longtime Dan Gilbert lieutenant who also was instrumental in General Motors Co.’s purchase of the Renaissance Center and was a force for riverfront improvements. Construction of the 3.3-mile downtown rail loop between Grand Boulevard and Congress Street, which will be done in late 2016, almost never began — but Cullen led the rescue effort. In December 2011, local, state and federal officials declared the

rail plan dead in favor of a $500 million regional rapid bus line proposal. “That was the toughest. We had worked so hard on it,” Cullen told Crain’s last fall. Cullen led an effort by M-1’s key backers, who had assembled $100 million in funding commitments, to save their project. After meetings with city, state and federal officials, they bought themselves a reprieve. Eventually, the rapid bus line fell apart as Detroit went bankrupt, and M1 Rail moved from concept to underconstruction reality. Cullen has spent years helping assemble what is now $179.4 million to complete the system — an amount that includes $24 million for 10 years of operations and maintenance. Funding the project are private companies, foundations and hospitals, along with local, state and federal government agencies — making for a 24part public-private financing arrangement that took seven years to negotiate and create. M-1’s plan is a mostly curbside, fixedrail streetcar circulator system, comingled with traffic, with 20 stations at 12 stops. Its six streetcars, not all of which will be in regular daily service, will run in the median at its north and south ends. Organizers predict 5,000 to 8,000 riders a day. Cullen also is president and CEO of Gilbert’s ever-busy Rock Ventures LLC, but has said he was spending up to half his time working on M-1 Rail until construction began. — Bill Shea

AARON ECKELS

David Brandon Former athletic director, University of Michigan, Ann Arbor It was amid a sea of optimism and sense of renewal that David Brandon left his job as CEO of Ann Arborbased Domino’s Pizza Inc. to become athletic director at the University of Michigan in 2010. Four years later, Brandon resigned after months of intense criticism from fans, pundits and some members of UM’s board of regents. Why did it all turn so sour? Brandon was hired to turn around an athletic department that appeared demoralized because its flagship program — the football team — was struggling. Brandon fired head football coach Rich Rodriguez in January 2011 and shortly thereafter hired little-known Brady Hoke to replace him. Failure to recruit ex-UM assistant Les Miles away from Louisiana State University triggered some grumbling. Hoke had a fine

inaugural season, but the football program regressed over the next three years, culminating in this season’s 5-7 record. Under Hoke, the Wolverines were just 1-3 against each of their archrivals, Ohio State University and Michigan State University. At the same time, a series of marketing and revenue initiatives, including changes to student seating and ticket price increases, were met with hostility that further undermined Brandon. Public relations disasters, such as dismissive emails to fans and miscommunication about an injured football player, also eroded his credibility and contributed to local and national calls for his ouster. Students held a rally calling for Brandon to be fired. Finally, as the outcry was reaching a crescendo, Brandon resigned on Oct. 31, saying his situation was too much of a distraction for the athletic department. The university will pay Brandon $3 million over the next four years. Brandon’s interim replacement, Jim Hackett, fired Hoke on Dec. 2. Brandon’s legacy includes many positives, and as recently as July 2012, UM signaled its approval of his work when it gave him a new contract through 2018. Brandon’s supporters, including many of the 900-plus student-athletes, have pointed to his overall stewardship of the athletic department, with funds and attention being given to nonrevenue/Title IX sports and using donations to create a sprawling campus for all the programs. — Bill Shea

Chris Ilitch CEO, Ilitch Holdings Inc., Detroit Since co-founding the Little Caesars pizza chain in 1959, Mike and Marian Ilitch have amassed a $3 billion-plus business empire that also includes successful sports teams and entertainment venues. The day-to-day architect of their grandest vision yet — a 50-block renewal of Detroit neighborhoods anchored around a $535 million hockey arena for the Ilitch-owned Detroit Red Wings — is son Chris Ilitch, president and CEO of Ilitch Holdings Inc. It has been known for years that the Ilitches wanted a new arena to replace aging, city-owned Joe Louis Arena. But it wasn’t until the plan, known as District Detroit, was unveiled in July that the scope of the project was made public. Chris Ilitch is in charge of the arena and neighborhood renovation. Its centerpiece is a state-of-the-art, 20,000-seat, eight-story arena with a lower bowl that sits 40 feet below ground. Its footprint will be on nearly 13 acres of mostly vacant or derelict land acquired for about $50 million west of Woodward Avenue and north of the Fisher Freeway. Planned next to the arena are a public piazza, residential units and a 1,200-space, five-story parking garage that has

one level underground. The arena, being handled by the Ilitches’ Olympia Development of Michigan, is a “deconstructed” design that pulls the glass-roofed concourse, offices and other elements into separate buildings connected but outside the arena bowl to make its restaurants and retail available all the time, even when the venue isn’t being used for hockey or events. Chris Ilitch has explained that the wider plan calls for $200 million or more worth of restaurants, bars, retail and housing to the west and south of the arena, creating mixed-use neighborhoods in the current area around the Fox Theatre and Comerica Park — all to be paid for by Olympia or third-party investors/developers. A widened Woodward Avenue bridge over the Fisher Freeway will be lined with storefront shops for pedestrians. The district will be linked into the M-1 Rail streetcar project on Woodward, and it effectively will stitch together downtown and Midtown by filling in the mostly empty, blighted area in between. A total of 14 buildings, including the arena and a new eight-story headquarters for Little Caesars next to the Fox Theatre, which currently houses the family’s corporate operations, will be built concurrently and open starting in late 2016 through summer 2017. — Bill Shea AARON ECKELS

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Gene Michalski CEO, Beaumont Health System, Royal Oak Beaumont Health System CEOs generally don’t generate as much publicity as Gene Michalski has in his three years as head of the nonprofit system. As only the fifth Beaumont CEO in its 60-year history, Michalski, a 36-year veteran of Beaumont, has been involved in many high-profile news events. Under his tenure, he has presided over a months-long financial contract dispute with Blue Care Network, restructured six clinical service lines, nixed a joint venture with a for-profit oncology company and nearly merged Beaumont with five-hospital Henry Ford Health System of Detroit. But what solidified Michalski as a Crain’s Newsmaker this year was his successful negotiation to merge Beaumont’s three hospitals with fourhospital Oakwood Healthcare System and Botsford

Healthcare. The new Beaumont Health is Southeast Michigan’s largest health care system, with $3.9 billion in revenue and a 30 percent market share for inpatient admissions. Over the next few months, Michalski and Beaumont executives will develop plans to integrate programs to make the system work as a single entity and develop a new branding scheme for the eight individual hospitals. An executive search is underway for a new CEO of Beaumont Health, although Michalski has publicly made it known he would like to stay around for a while. In 2008, as the recession started to bite, Beaumont began a turnaround plan after it posted net financial losses of $214 million. By 2012, Beaumont hit record operating profits of $58 million. Last year, operating income dropped to nearly $7 million, primarily because of rising uncompensated care and Affordable Care Act reimbursement reductions and financial penalties. Michalski, 66, received his bachelor of science degree in biology, master of science in physiology and MBA in finance from Wayne State University. He began working for Beaumont in 1978 as associate hospital director at Beaumont Hospital in Royal Oak. — Jay Greene AARON ECKELS

BOB PAUL CEO, Compuware Corp., Detroit Bob Paul had one of those years. The president and CEO of Detroitbased Compuware Corp. lived in interesting times from start to finish, a year that began with the company trading on the Nasdaq exchange under the symbol CPWR and ended with it a privately held company owned by the Chicagobased private equity firm Thoma Bravo LLC. It began with Paul as president and CEO and ended with him out of a job, having chosen to accept the golden parachute of $6.7 million in a combination of cash and equity that his contract called for in the event Compuware, a computer services company founded in 1973, was bought and taken private. In January, Compuware announced it had reached an agreement that ended a $2.3 billion takeover bid launched in December 2012 by Elliott Management Corp., a New York City-based hedge fund. A few days later, Compuware sold three business units to a Los Angeles-based private equity firm for $160 million. On Sept. 2, Paul dropped the bombshell news that Compuware was going to be sold for $2.5 billion to Thoma Bravo and taken private, in a deal approved by shareholders Dec. 8. A few days after the sale of

the company was announced, Compuware announced it would be split into two companies, with the mainframe support business continuing to operate under the Compuware name and the business that helps companies monitor the performance of their software applications in real time operating as Dynatrace. As if all that wasn’t enough, on Nov. 17, Crain’s broke the news that Compuware had agreed to sell its iconic downtown Detroit building at Campus Martius for $142 million to Meridian Health and Dan Gilbert’s Bedrock Real Estate Services. The deal to sell Compuware to Thoma Bravo closed on Dec. 15, Paul’s last day at the company. His departure was announced on Dec. 16. What’s next for him? He told Crain’s in an interview on the 16th that he was in no hurry but might start a small investment fund or launch a startup tech company — Tom Henderson

Mina Sooch CEO, Gemphire Therapeutics Inc., Northville Mina Sooch established herself in 2014 as a superstar in local entrepreneurial circles. In January, she raised $12.5 million in venture capital for what had been a struggling pharmaceutical company that she joined in 2012 as president and CEO, Plymouth Township-based ProNAi Therapeutics Inc. Then in April, she raised an additional $59.5 million for the company, the largest single round of venture capital in state history. Both of those were based on results that ProNAi presented at a major oncology convention in New Orleans in December 2013 on how its lead product improved the

Darren Walker CEO, Ford Foundation, New York City The $366 million foundation commitment or “grand bargain,” which helped leverage $195 million in state support and ultimately helped secure Detroit’s exit from bankruptcy, never would have happened without the Ford Foundation’s lead gift. And the New York-based foundation never would have made that $125 million commitment without its president and CEO, Darren Walker, championing it. Walker had been the foundation’s president for only a couple of months when he and other foundation leaders were asked to contribute hundreds of millions of dollars to help shore up Detroit’s General Retirement System and the Police and Fire Retirement System pension funds in exchange for spinning the Detroit Institute of Arts off from the city of Detroit.

Page 5 conditions of patients with nonHodgkin lymphoma who had been resistant to other treatments. The results and the fundraising set the stage for the company’s initial public offering in 2015. In September, it was time for ProNAi to bring in a CEO who had experience leading public companies — Nick Glover. Sooch joined another small cardiovascular drug company, Northville-based Gemphire Therapeutics Inc., and began raising a round of $25 million for human trials. Gemphire’s lead drug, gemcabene, lowers the levels in the

blood of LDL, the so-called bad cholesterol. Sooch plans a first market application of targeting patients with a rare genetic condition that results in extremely high LDL levels. In June, Crain’s named Sooch — an immigrant from India who has an engineering degree from Wayne State University and an MBA from Harvard University — to its 2014 class of American Dreamers. In December, the second funding round for ProNAi was named by the Ann Arbor-based Michigan Venture Capital Association as the financing deal of the year at its annual award dinner. — Tom Henderson LON HORWEDEL

He was able to win approval for the lead gift with his board of directors, making the deal real. Once the Ford Foundation was in, the other foundations began to meet and Walker became the facilitator of those meetings. He helped bring the philanthropic leaders together for meetings and telephone calls to ensure they accomplished something during those meetings, serve as a resource to answer questions on how it would all work and facilitate the grant commitments. He also brought the foundation’s resources to bear, directing its legal counsel to work with the Community Foundation for Southeastern Michigan’s team and other outside attorneys on legal questions around the deal and the crafting of the Foundation for

Detroit’s Future — the organization that will administer the grand bargain funds andmonitor the city’s compliance with ongoing grant conditions, such as proper pension fund oversight and periodic status reports. The trustees of the Ford Foundation — the secondlargest foundation in the country, with more than $11 billion in assets and $500 million in annual grants — immediately embraced the grand bargain plan because it was Detroit, Walker told Crain’s early this year. “We might not consider another city in America where we don’t have a legacy and heritage,” he said. “But the foundation’s capital was made in Detroit, and it is inextricably linked to the city.” — Sherri Welch

BUCK ENNIS/ CRAIN’S NEW YORK BUSINESS

M. Roy Wilson President, Wayne State University, Detroit Those who hoped M. Roy Wilson, an ophthalmologist and researcher who had been an executive at the National Institutes of Health, would be an activist president when he took over at Wayne State University in August 2013 haven’t been disappointed. He told Crain’s shortly after taking the position that he was going to concentrate on improving the school’s tech transfer operations. In April, it was announced that Stephen Lanier, who had been associate provost for research and a professor of cell and molecular pharmacology and ex-

perimental therapeutics at the Medical University of South Carolina in Charleston, S.C., would be joining WSU in June as vice president of research. In May, John Shallman, who had been director of commercialization at Beaumont Health System, was named the tech-transfer office’s senior director of licensing. Kenneth Massey, who had 28 years of combined biomedical research and business experience, was named senior director of venture development. In July, WSU announced that the department of surgery in the School of Medicine had received an $8.5 million grant from Mike and Marian Ilitch to develop innovative surgery technologies. The grant created the Ilitch Chair for Surgical Innovation and established a fund to support research. In August, a three-year agreement was approved by the boards of the Barbara Ann Karmanos Cancer Institute and WSU to put Wilson on Karmanos’ executive committee. Gerold Bepler, Karmanos’ president and CEO, also was reinstated as chairman of Wayne State’s oncology department. He had been removed in November 2013 after Karmanos signed a deal without the school’s

knowledge to become part of Flint-based McLaren Health Care Corp. “Without rehashing what happened (last year), Wayne State was surprised by Karmanos’ announcement (that it would be acquired by McLaren) without notification. This agreement wouldn’t allow something like that to happen,” he said. In October, James Anderson, president and CEO of the Detroitbased consulting firm Urban Science, and his wife, Patricia, announced a $25 million gift to the school’s College of Engineering to spark entrepreneurship. Anderson told Crain’s that Wilson’s presence was central to the gift. “It was extremely important for me,” he said. “In him I saw a very committed president who knew what needed to be done and how to get it done. He is aligned with my vision 100 percent.” That gift was part of a $750 million fundraising campaign Wilson announced in August. “Our vision is to become a preeminent public research university,” Wilson told Crain’s then. “And to do that, we have a lot of lifting to do.” — Tom Henderson

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CRAIN’S DETROIT BUSINESS

TALK ON THE WEB

OPINION

From www.crainsdetroit.com

Development, roads make 2015 wish list T

hings we’re hoping for this year:

Development jump-start 䡲 A couple of long-languishing large development projects could make progress this year: A reboot of the Bloomfield Park project at Telegraph and Square Lake roads, and the redevelopment of the former Packard plant on Detroit’s east side. Packard buyer Fernando Palazuelo has begun demolition and site remediation toward a $350 million mixed use project. Southfield-based Redico LLC has purchased the Bloomfield Park foreclosure rights and is reviewing the site for which pieces of the partially built development are usable. And we’d still like to see the Moroun family make a plan for the Michigan Central Depot in Corktown.

Just selling cars 䡲

The automotive news in 2014 was dominated by recalls, Congressional testimony and continued supplier price-fixing investigations. Thankfully, this seemed to have very little effect on sales, but we could use a year in which the conversation is about features and innovation.

More road funding 䡲

Michigan voters will have a chance in May to increase the sales tax by one cent to provide more funding for roads. This, as Chad Halcom reports on Page 1, provides a bit of a conundrum for many business groups, who support better roads, but are uncertain about whether their members will want to support or fund this particular solution. This was not our preferred solution either, but the need is real. If the ballot proposal goes down, it’s back to square one.

Lots of Jim Harbaugh 䡲 Yes, the dancing in the streets may subside, but Harbaugh’s hyper-animated style will provide plenty of interest even if the University of Michigan football program isn’t an immediate turnaround. What you shouldn’t expect: Urban Meyer or Mark Dantonio trying to land a post-game punch on Harbaugh ala former Lions coach Jim Schwartz’s infamous 2012 example.

What we’ll miss: 䡲 The people who’ve contributed mightily to Detroit over the years whom we lost in 2014. They include artist and feminist Patricia Hill Burnett, former NBD Chairman Chick Fisher, mall pioneer Jerome Schostak, Melody Farms co-founder Michael George, Grammy winner-turned-banker Don Davis, automotive dealer Irma Elder and broadcaster Bill Bonds. For a longer list, see Page 18.

Re: Jim Harbaugh: Being UM coach fulfills boyhood dream This is truly one of the darkest days in AA, yet the intellectuals here are clueless. The reality that the UM — the beacon of public education in Michigan and one of the nation’s most prestigious universities — would pay millions for a sports coach is truly the essence of a society gone mad. A modern-day culture unable to value the importance and transformative value of education. Greg Thrasher I have these questions: 1. He was drinking a Diet Coke during the press conference. Did he get two free UM football tickets with it? 2. This job was the fulfillment of a “lifelong dream.” Hmm, where have I heard that before? Oh, I know — THE LAST UM COACH SAID THE SAME THING! 3. Is it true that all UM fans are totally gullible and will believe anything? Walt

Is there a future for the Brodhead Armory?

COSTAR GREOUP INC.

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

Re: Detroit Metro Airport adds to its menu of restaurants So the second Chick-fil-A in Michigan is coming to Metro Airport, and the other is in the Oakland University campus food court. Why, oh why, can’t we get a Chickfil-A located in a traditional retail environment in metro Detroit? Duke Amen. Would it hurt to have one in Midtown? Jeff Reid

I’m LOVING this homecoming ... but worried about the HUGE expectations. Aharrell2000

Re: One naval armory in Detroit in need of massive repairs

Does anyone really care about this to match the level of “news” hysteria? William J

Sorry to disappoint the historical crowd, but this goes nowhere unless restrictions are lifted. Time to get real. john md

I did reserve duty at Brodhead in the ’70s. Great old building at the time, and with that heritage, in that condition, and at that location, could have been an awesome redevelopment for the city. If the current condition is anything like the description, it sounds more like a white elephant … no wonder no proposals the last two times out. Too bad. Might need to whistle up Anita Baker’s bulldozers to put the old gal to rest. MoreMoreMore

Re: Keith Crain on Bill Bonds: He was the best Given the relative dreck labeled as “journalism” we all are forced to witness in this age of New Media, you (might) have to admit that we’re never going to see Billy or his like ever again. R.I.P., Billy. I didn’t always agree with you, but I always looked forward to seeing you do your stuff. Freedom Trinity

LETTERS Harness river’s water power Editor: Keith Crain says the lights are already out? (Nov. 24) He says we need to develop new power generating systems? He wants wind power, solar power and coal power? We don’t need any of those in Detroit. We have a stream of fast-

moving water going past Belle Isle year-round, as steady as water going over the falls at Niagara (estimated current of 6 to 8 mph). Could we direct water on the Detroit side of Belle Isle over a dam, turning generators to produce power? I have literature to show and, at

age 91, no desire to amass a personal fortune. However, Detroit once produced the electricity used for streetcars with coal burners. The city should benefit from the sale of electricity supplied by the Detroit River. John W. Kunz Huntington Woods

Send your letters: Crain’s Detroit Business will consider for publication all signed letters to the editor that do not defame individuals or organizations. Letters may be edited for length and clarity. Email cgoodaker@crain.com

KEITH CRAIN: Now the real work begins for city, county Last year was a time for getting everything together in Detroit: A new mayor, a new City Council, a bankruptcy that needed to be ended. And a economic recovery that was slow to touch the city. The mayor and City Council now have a year under their belts. We have seen some remarkable achievements by Mayor Mike Duggan. And now, most significantly, the bankruptcy is over and the emergency manager is gone. We still have a financial overview in place for quite a while, but the city

is basically on its own. And that is when the heavy lifting begins. The “grand bargain” saved treasures of the Detroit Institute of Arts from the auction block. But now as an independent museum, it will have to prosper on its own — with millage support for a while — a daunting challenge at best. The mayor will have to continue to fight blight to make the city more

attractive as well as keep the aggressive installation of new lighting at a brisk pace all over the city. We have to make sure that our police and firefighters are compensated justly, without breaking the budget. Most important, we have to keep up our search for development. We have far too many unemployed in our city, and we need jobs by the tens of thousands.

Meanwhile, Wayne County’s new county executive, Warren Evans, has his hands full — and must take care if he doesn’t want the county to end up in bankruptcy as well. The finances he inherited are disastrous. The unfinished jail is only a graphic example of the financial chaos. Wayne County needs a lot of support, and it’s just the latest in a long line of financial challenges. In spite of all these obstacles, businesses have been doing quite well in 2014, and it would be hoped

that 2015 will be just as good. The automotive economy is booming. The Detroit Three — along with plenty of suppliers — are enjoying success. Production is up, jobs are growing, and sales and profits are doing well. But it will be a challenging year for our governments. The city and county are still fragile. The city is growing stronger by the day, and the county needs a firm financial hand. It’s going to be a challenging year for everyone in Southeast Michigan. But after all, what’s new?

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January 5, 2015

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MARY KRAMER: Crain’s looks ahead to a milestone year Can you think of a bigger story than Detroit’s historic 16-month odyssey in Bankruptcy Court, with the city emerging with a stronger chance to rebuild for the 21st century? We couldn’t. That’s why our annual “Newsmaker of the Year” luncheon on Feb. 25 will honor key players who shaped that history: Judge Steven Rhodes of U.S. Bankruptcy Court and Emergency Manager Kevyn Orr. Another key player — Gerald Rosen, who served as the trial’s chief mediator (in addition to his chief judge role in U.S. District Court) — will convene the conversation. It’s a fitting beginning in the Crain calendar of events for 2015. In a city that boasts a birthdate of 1701, 30 years may not seem like much. But in 2015, Crain’s Detroit Business will celebrate that milestone. Our official observance begins in February, to coincide with our actual founding in 1985. In those days, we were pretty much “ink on paper,” and our single event was the Newsmaker of the Year luncheon. Today, we deliver news 24/7 in digital forms; we have more than a dozen signature events every year;

and we are directly engaged in efforts that support the growth of the local economy. Our goal is still to bring “news you can use” to the Southeast Michigan business community but, at the same time, help members of that community connect in ways to enhance their own businesses. We will do that in a number of ways in 2015: 䡲 A new series of business roundtables made up of established entrepreneurs and execu-

tives in second-stage companies. We hope this partnership with Great Lakes Entrepreneur’s Quest will help member companies grow even faster. 䡲 Year Two of The Detroit Homecoming, a unique effort to reconnect successful “expatriates” with ties to Detroit with their hometown through philanthropic or commercial investments. In mid-January, we will launch a Detroit Homecoming e-newsletter with an initial

Black

Crain’s announces staff promotion, new marketing hire Crain’s Detroit Business is starting the new year with a staff promotion and a new hire. Pierrette Dagg has been promoted to creative services director from senior producer for digital/online products. Dagg, 31, will manage sales and audience promotion and continue to support editorial projects in print and online. In addition, Ariel Black has joined the staff as marketing coordinator. Black, 23, will work on print and digital promotions, including a new monthly “expat” newsletter. Black most recently worked at Carbon Media Group in Bingham Farms as an associate managing editor. Dagg, who has been with Crain’s since 2011, has a degree in interdisciplinary studies from the University of Toledo. Black has a bachelor’s degree in online journalism and political science from Central Michigan University, where she was managing editor of Central Michigan Life and Grand Central Magazine and wrote for the Midland Daily News.

from readers who told us of a key deal they secured or an important client they made through reading Crain’s or attending a Crain’s event. If you’d like to tell us your own story of how you use Crain’s, please drop me a line at mkramer@crain.com. We want to use real-life stories from readers throughout the year. 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.

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audience of 10,000 expats; one goal will be to connect local job opportunities with that potential workforce. 䡲 On March 30, we’ll debut a new look to our print edition — and our website also will be redesigned by then. Both are intended to make it easier for readers to find stories and data that interest them — in print or online. 䡲 In August, we’ll publish a commemorative 30th anniversary issue. And you can help us celebrate, too. Over the years, we’ve heard

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

IRule to reveal $2.5M in VC; electronics investor key BY TOM HENDERSON CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

Detroit-based iRule LLC, which has developed smartphone apps to network and run high-end home and corporate entertainment systems, is expected to announce Monday that it has closed on a venture capital funding round of $2.5 million.

The significance of the round is far greater than the money involved, said Itai Ben-Gal, iRuleâ&#x20AC;&#x2122;s CEO and co-founder. Of prime importance was that one of the investors is an overseas electronics manufacturer and retailer with worldwide sales and distribution offices, which will help expand iRuleâ&#x20AC;&#x2122;s reach and revenue.

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Also of significance was that the way the round was structured allowed IncWell LLC, the Birminghambased VC firm founded by former Chrysler Group LLC CEO Tom LaSorda, to make a profitable exit from a previous investment in the company. Important, too, was that the round was joined by AOL founder Steve Case as a result of iRuleâ&#x20AC;&#x2122;s winning a Google Inc. Demo Day event in Detroit in February. That honor allowed the company to showcase its business plan along with nine other companies at the national Google Demo Day in Silicon Valley in April. The name of the electronics retailer as well as an announcement about a new iRule product will be disclosed at a trade show in February, BenGal said. Ben-Gal said he and Detroit Venture Partners, the lead investor in a funding Ben-Gal round of $1 million in 2013, wanted to limit the size of this round of funding, raising what was needed to spur the next round of growth without diluting eq-

BY SHERRI WELCH

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LaSorda said. â&#x20AC;&#x153;It was funny. We got some calls saying, â&#x20AC;&#x2DC;What is this for?â&#x20AC;&#x2122; I said, â&#x20AC;&#x2DC;Hey, under the terms of your subscription agreement, we had to write you a check.â&#x20AC;&#x2122; â&#x20AC;&#x153;This is a strategic partner that will be important for iRule. Itai is such an energetic guy, just what youâ&#x20AC;&#x2122;re looking for as an investor.â&#x20AC;? IRule, based in the Madison Building in downtown Detroit, has 22 employees. Ben-Gal said some of the funding will be used to hire eight to 10 employees over the next year, including beefing up the sales and marketing team and adding engineers for product development. Ben-Gal said he projects revenue to go from almost $2 million in 2014 to more than $3 million this year. He said commercial clients include CNN headquarters in New York City, all the Best Buy stores in the U.S. and Walt Disney Picturesâ&#x20AC;&#x2122; LucasFilm division. In 2012, Ben-Gal was named to Crainâ&#x20AC;&#x2122;s 2012 class of 40 under 40. At the huge Consumer Electronics Association show in Nevada in 2013, iRule won the award for best control product of the year. Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

Glacier Hills to expand home care after United Methodist acquires 50% CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

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uity needlessly. â&#x20AC;&#x153;We had a lot of demand and were able to be quite choosy,â&#x20AC;? BenGal said. â&#x20AC;&#x153;Taking on this strategic partner was important because they have a huge dealer base and worldwide offices.â&#x20AC;? Ben-Gal said the electronics retailer wanted to invest more than what was available to it out of the $2.5 million and offered to buy stock in the company from previous angel investors and IncWell. IRule, founded in 2009, also got a seed round of funding of $500,000 in 2011 that was led by Compuware Ventures LLC, a VC unit of the computer services company that was later shut down by CEO Bob Paul. â&#x20AC;&#x153;We had a small investment in iRule, a little over $100,000,â&#x20AC;? LaSorda said. â&#x20AC;&#x153;For us to make a good return in just 15 months is great. Usually you expect it to LaSorda take three to five years to have an exit.â&#x20AC;? This is the first exit for IncWell, which was founded in 2013. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve already sent checks out to the investors in our first fund,â&#x20AC;?

United Methodist Retirement Communities has taken a 50 percent stake in Glacier Hills Home Care Inc., giving it entry into home health care. The $1.3 million deal, which took effect Thursday, gives Glacier Hills Senior Living Communityâ&#x20AC;&#x2122;s home health care subsidiary in Ann Arbor the ability to expand outside Washtenaw County. Caring Partners Home Health Inc., the name of the joint company, plans to market to United Methodistâ&#x20AC;&#x2122;s clients and also leverage its longstanding brand in the market, said Ray Rabidoux, president and CEO of Glacier Hills. United Methodist has Rabidoux â&#x20AC;&#x153;a very high brand identity out in that market â&#x20AC;&#x201D; much more than we do,â&#x20AC;? he said. â&#x20AC;&#x153;Because this will be a related company, we expect people to be attracted to using our services.â&#x20AC;? Chelsea-based United Methodist, founded in 1906, owns and operates full-service retirement communities, active-adult communities and affordable housing. It also is an owner in three Program of All-Inclusive Care for the Elderly â&#x20AC;&#x201D; or PACE â&#x20AC;&#x201D; centers in Jackson, Ypsilanti and Lansing. The centers pro-

vide all-inclusive, nonresidential services and care for seniors. Taking a joint ownership in Caring Partners â&#x20AC;&#x153;allows us to extend our services beyond our physical walls or current buildingsâ&#x20AC;? while also better meeting the needs of seniors for whom home care is the best option, said John Thorhauer, United Methodist president and CEO. The deal also enables United Methodist to enter home health care at a lower price point, said Thorhauer, noting that startup costs typically are substantial. Thorhauer helped start a home health care business for Jenisonbased Sunset Retirement Communities & Services on the west side of the state 15 years ago. At that time, startup costs were close to $300,000, he said. Today, he thinks they would exceed $500,000. The jointly owned business will remain based in Ann Arbor but looks to expand into the Brighton and Jackson areas, Rabidoux said. The two also plan to expand Caring Partnersâ&#x20AC;&#x2122; services â&#x20AC;&#x201D; such as chore services â&#x20AC;&#x201D; to support seniors staying in their homes, Rabidoux said. Thatâ&#x20AC;&#x2122;s driven by changes in Medicaid policies to expand reimbursements of in-home senior services, he said. The business now operating as Caring Partners, which launched in 2004, employs 65 people, including licensed nurses, therapists, caregivers and companions. It generates $2.4 million in annual revenue from a fee-based model and

per-episode reimbursement for skilled, in-home nursing care from Medicare, Rabidoux said. Its primary competitors are also nonprofits, Thorhauer said. They are St. Joseph Mercy Chelsea and the Michigan Visiting Nurses Association at the University of Michigan. The deal between United Methodist Retirement Communities and Glacier Hills builds on earlier collaboration between the two agencies. Five years ago, Glacier Hills tapped United Methodist for advice when it launched specialized care for residents suffering from dementia or Alzheimerâ&#x20AC;&#x2122;s. The two collaborated once again three years ago on investigating electronic medical record software. Eventually, they jointly purchased one that they have used independently for the past year. â&#x20AC;&#x153;We started out doing that with the mindset that (we) .... might not select the same one,â&#x20AC;? Rabidoux said. â&#x20AC;&#x153;What we found was there were a lot of similarities in our missions and how we deliver services in our retirement communities.â&#x20AC;? Those collaborations led to the joint home health care company. In the future, Rabidoux said, they could lead to collaboration in backoffice operations. â&#x20AC;&#x153;You have to start with a trust relationship,â&#x20AC;? he said. â&#x20AC;&#x153;And once you have that, you can build on that.â&#x20AC;? Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch

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CRAIN’S DETROIT BUSINESS

Small cars, big success Post-layoff passion project proves life-changing for Slot Mods founder BY ZACK BURGESS SPECIAL TO CRAIN’S DETROIT BUSINESS

fter losing his office job five years ago, David Beattie made a life-changing decision to pursue his passion for the racetrack — specifically, the miniature racetrack. He found his true calling: slot car racing. What began as a hobby when he built models in his garage became a company: Slot Mods USA. Slot Mods has developed a reputation for the elaborate installations produced at its 5,500-squarefoot plant in Clinton Township. Think of them as the ultimate prize for car junkies who want the best and are willing to pay for it. “The growth has come through magazine advertising and networking,” Beattie said. “We’ve built tracks for billionaires. I can’t say who they are because they are private individuals.” Having an “in” with luxury retailers is another boost for the company. Over the holidays, the Slot Mods USA track was named one of Neiman Marcus’ 10 fantasy gifts for Christmas. The Slot Mods USA Ultimate Slot Care Raceway is priced at $300,000 and includes a re-creation of the buyer’s fantasy track along with an inaugural race night party co-hosted by racing legends such as Vic Elford and David Hobbs. For each sale, Neiman Marcus donates $3,500 to The Heart of Neiman Marcus Foundation, which supports youth arts education.. Last fall, Beattie made his television debut on NBC’s “Today” Show to talk about the fantasy gift. Not all the tracks cost $300,000. Beattie said the average cost to build a track is $125,000. And there are tracks that start at $50,000. But it is a splurge item: Beattie’s average customer has a net worth of $250 million to $1 billion. The average build time is two to three months per track. But with a solid pipeline of jobs to do, Beattie estimates this year’s revenue at around $1.5 million. Not bad for a guy who borrowed $10,000 from a childhood friend six years ago just to get started. Beattie had been operations manager for Rochester Hills-based EEI Global’s large-format printing department, but he lost his job when the economy crashed in 2008. Even before the layoff, he had been spending time on his slot car hobby — building a 170-foot track with friends in his basement. But after losing his job, he used it as a means of reinvention. An early $700 product with do-it-

PHOTOS COURTESY OF SLOT MODS USA

Slot car tracks were a hobby for David Beattie – and then he lost his job during the last recession. Lo and behold, the 170foot race course in his basement inspired a new career track: Slot Mods USA.

Beattie found this 1969 Camaro Z28 in a rusted garage and converted it into a slot car track featured in the Hammacher Schlemmer catalog: The price: $85,000.

The pros and cons of customization Fran Hall, owner of RCR, Race Car Replicas in Fraser, which makes replicas of real-life race cars that average about $100,000 in price, said there are pros and cons to high-end customization. “The pros of making something so customized is that you get the opportunity to live out your passion for a living … and make something for people that they yourself tracks failed, so Beattie turned to the custom market after research showed that products for slot car enthusiasts were scarce. Beattie and his wife, Shari, decided to go all in on the business. Shari dropped out of medical school to care for their daughter. The Slot Mods tracks have been featured in episodes of “Jay Leno’s Garage,” the Hammacher Schlemmer catalog, the Robb Report and Crain’s sister publication Autoweek. And besides traditional business clients, Beattie’s customers have included racing legend Bobby Rahal and Tony George, former CEO of the Indianapolis Motor Speedway and cre-

probably will have for the rest of their lives,” Hall said. The con is “finding really good people to work for you, who have the same passion as you do for something so detailed and customized. A lot of the guys who specialized in something so detailed … are going away. Kids are just not as interested in becoming gearheads.” ator of the Indy Racing League. “Like many guys my age who grew up in the ’60s, everybody was into cars, and you had a slot car of some type,” said Rahal, a threetime PPG Indy Car World Series champion. “About three years ago, a friend of mine named Zak Brown (CEO of the world’s largest motorsports marketing agency, Just Marketing Inc.) invited me to his house, and he had this unbelievable slot car set done by this guy named David Beattie.” After speaking with Beattie about his work, Rahal went ahead with a plan to build his dream track. Beattie would re-create a 22by-14-foot Road America Raceway

in Wisconsin, Rahal’s favorite track, exactly the way it looked in the 1960s. “David’s slot car tracks are works of art,” Rahal said. “I said I wanted the track to look like it looked in 1967, not today,” said Rahal, who declined to give a cost. “I gave David a number of old programs from Road America in the ’60s. Then I showed him how the buildings looked, how the guardrails looked, how the grass looked, so that he could get a real feel for what the circuit looked like in those days. “I told him about the topography and the hills, and over time he was able to re-create everything that we spoke of. He just did a phenomenal job with it. And when people come to my place to see it — they are just amazed. It’s more than just a slot car set.” In the ’50s and ’60s, a slot car set was every young boy’s fantasy — where you could be the driver of your dreams. Beattie has been able to help wealthy, middle-age men relive their childhoods and create the ultimate toy for their man caves. He helps them connect with their children, customers said. Take Jim Farley, executive vice president and president of Europe, Middle East and Africa for Ford Motor Co. Farley, who was Beattie’s second client, had just moved to Detroit from California in November 2007 and was looking for something to do with his son. He was specifically looking for something to do over the winter. “When I moved here, I asked the Ford designers where the best place was to buy magazines and model cars,” Farley said. “They gave me an address to a place on Woodward in Birmingham. “So, my first weekend, I went down there and they had (Beat-

tie’s) business card next to the cash register, so I told the guy that I was thinking about building a slot car track for my son. ... They told me I didn’t need to build it, that I Farley should have this guy build it and I was like, ‘No … I like working with my hands, and I want to build it. I said I would rather do it myself.’ ” What happened next would put Beattie on a course to success. “So I got home and my wife was like — ‘what are you talking about?’ ” Farley said. “ ‘You’re an executive at Ford; you don’t have any time, you’ve got three kids, you don’t have any time to be messing around with that stuff. Why don’t you let this guy do it?’ ” Farley invited Beattie over to his house to talk it through. “I remember giving him a hard time because he was driving a Volkswagen,” Farley said. “I welcomed him into my house, and he met my family. We talked about the project. I knew exactly what I wanted.” The next week, Beattie returned with a computerized example, which Farley said was great. Six months later, Beattie was done and Farley had the toy of his dreams: a replica of Laguna Seca, the California landmark. Farley loved it so much that he started to invite his colleagues from Ford over to his man cave, with all his old cars and his track from Slot Mods USA. Eventually, it led to another opportunity for Beattie. Said Farley: “I’m a big believer that our auto shows should be entertaining for the whole family, so I called our (Detroit) auto show guys and said we should build a slot car track for the auto show for the public days so that when people bring their families, their kids will have something to do while mom and dad are looking at cars. Eventually, they called David up and put a deal together and built a track” for the 2010 North American International Auto Show. Farley said the thing that resonated with him the most was Beattie’s personal story, about how he had lost his job and was at a crossroads. Farley had just come from Toyota, the auto industry was in flux, and he had witnessed a multitude of layoffs at Ford and throughout the industry. Beattie’s personal story stayed with him. “What I have learned is that there is a fine line between creativity and business,” Beattie said. “And you better have a handle on both of them, or there’s not going to be much success. And never let somebody tell you what you’re worth. Get paid for what you’re worth.” Still, Beattie said, he “always tries to overdeliver. If it’s $150,000, you’re going to get $200,000 worth of work. “Because for me, it’s emotion. It’s art.”

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Blue Cross starts health system payouts for value-based contracts BY JAY GREENE CRAIN’S DETROIT BUSINESS

The first payouts totaling $25 million have been made to five health care systems in Michigan that signed innovative, valuebased reimbursement contracts with Blue Cross Blue Shield of Michigan in 2011 and 2012. Since five-hospital St. John Providence Health System in Warren signed the first value-based contract with the Blues in 2011, 17 other health systems and a total of 71 hospitals in Michigan are participating under various starting dates and terms. Last month, six health systems signed three-year contracts with Blue Cross, including five-hospital Henry Ford Health System in Detroit and three-hospital University of Michigan Health System in Ann Arbor. The value-based contracts — which now include nearly all the large hospitals in Michigan eligible for the contracts — pays hospitals for covered services but encourages participating doctors to work closely with hospitals to reduce unnecessary tests and procedures and avoid hospitalizations and visits to the emergency department. So far, five health systems have shared $50 million in total savings with the Blues for services rendered in 2013, said Steve Anderson, Blue Cross vice president of provider contracting and network administration. Anderson Anderson said the savings amounted to about 1 percent of total hospital expenses. Besides St. John, Trinity Health Michigan, Beaumont Health System, MidMichigan Health and Botsford Hospital received the bonus payments based on provided services. The results “came in better than projections,” Anderson said. The reasons for the savings varied by hospital and participating physician organization, he said. “Generally, we have seen more physician and hospital collaboration than there was three or four years ago,” Anderson said. “There is a whole lot of communication now between entities,” aided by improved care coordination made possible by sharing clinical information through health information exchanges and electronic records. Savings also were produced by reducing hospital readmissions and inappropriate radiological procedures and by avoiding admissions and emergency department visits, he said. “We can improve on these numbers by capturing and sharing more ambulatory care” clinical information from patients who visit out-ofnetwork providers, Anderson said. Besides the $50 million in shared savings, Anderson said the five health systems also each received an average of about $500,000 per health system over three years to improve information technolo-

UNDER CONTRACT Hospital systems under Blue Cross value-based contracts: 䡲 St. John Providence Health System, Warren, 5 hospitals 䡲 Henry Ford Health System, Detroit, 5 hospitals 䡲 University of Michigan Health System, Ann Arbor, 3 hospitals 䡲 St. Joseph Mercy Health System, Ann Arbor, 6 hospitals 䡲 Detroit Medical Center, 8 hospitals 䡲 Beaumont Health System, Royal Oak, 3 hospitals 䡲 Oakwood Healthcare Inc., Dearborn, 4 hospitals 䡲 Botsford Hospital, Farmington Hills 䡲 Ascension Health Michigan, Warren, 7 hospitals 䡲 Trinity Health Michigan, Livonia, 7 hospitals 䡲 Munson Healthcare, Traverse City, 5 hospitals 䡲 MidMichigan Health, Midland, 4 hospitals 䡲 Holland Hospital, Holland 䡲 Hurley Medical Center, Flint 䡲 Sparrow Health System, Lansing 䡲 UP Health System, Marquette 䡲 Allegiance Health, Jackson 䡲 Dickinson County Healthcare System, Iron Mountain 䡲 Metro Health Hospital, Wyoming Source: Blue Cross Blue Shield of Michigan releases

gy, patient care administration and coordination. Bruce Muma, M.D., chief medical officer for the Henry Ford Physician Network, an affiliate of Henry Ford Health System, said the additional funding for information technology will help speed up care coordination between hospitals and doctors. “It is simple to Muma get information when dealing with patients admitted to a Henry Ford hospital or employed or affiliated physician,” Muma said. “Whenever my patient receives a service, I get an email in my inbox. And within minutes I see it on my iPhone, and I can call my patient and see how they are doing.” But if a patient is admitted or receives service at a non-Henry Ford or a non-Epic Corp. provider of electronic health records, Muma said, that data can take days to reach his attention. Henry Ford, along with Oakwood and Beaumont, use Verona, Wis.-based Epic’s EHR system. “I won’t find out about (the encounter) until that patient comes to see me in my office,” Muma said. But through the use of health information exchanges — a regional information collection and dissemination organization — hospital systems, physicians, insurers, pharmacies and other providers can share patient data from different electronic health record systems. “We are doing a better job in accessing patient information from physicians and hospitals not part

of Henry Ford,” Muma said. “This requires a lot of information technology infrastructure, feeding files into our EHR and managing the information.” Muma said extracting patient data from health information exchanges takes time to build spreadsheets that can be sent to the right physician or hospital. Anderson said some health systems are hiring back-office staff to track patient records from health information exchanges to improve care coordination. Systems are also further investing in physician-based information technology to improve communication. “We can track 98 percent of admissions, discharges and transfers from hospitals back to the primary care physician or specialist involved using HIEs,” Anderson said. “We still have a ways to go to track ambulatory data” from physician offices. Muma said the Blue Cross contracts fit with Henry Ford’s overall efforts to reduce patient care costs and improve quality. “The American health care system and the Medicare trust fund, which is the largest portion of health spending, is in danger of going bankrupt,” said Muma, who also is medical director for population health for 1,200-physician Henry Ford Medical Group. “We can’t keep on doing what we are doing. Changes have to happen, and the value-based contract is one of many forces helping the health care system transform itself.” Muma said national studies have shown that 30 percent of health care spending either is wasteful, duplicative or unnecessary. “We need to stop doing things that are not adding value,” he said. “It is frightening and challenging for hospitals and physicians because it means less revenue, but we have to make it more sustainable in the future” for patients and businesses. Anderson said Blue Cross has been reducing medical costs annually through a variety of collaborative efforts with hospitals and physicians in its provider network. For example, Blue Cross has saved $155 million over three years through its patient-centered medical home program, which requires primary care doctors to more closely manage patient care. Millions of dollars also have been saved by working with hospitals on various quality improvement initiatives. “We have been a top performer nationally” in reducing medical costs, said Anderson, who declined to provide numbers for competitive reasons. But he said the medical expense reductions help Blue Cross hold down premiums for fully insured members of health maintenance organizations and lower costs for self-insured customers. In 2013, medical costs were projected to rise 7.5 percent, drop to 6.5 percent in 2014 and creep up to 6.8 percent in 2015, said PriceWaterhouseCoopers LLP. Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

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PEOPLE IN THE SPOTLIGHT

Kwapis

Mefford

Poloney

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

Gascho

Kulis

Moeller

ARCHITECTURE Scott Kwapis to principal, JPRA Architects, Farmington Hills, from senior associate. Also, David Mefford to senior associate from associate, Scott Poloney to senior associate from associate, Jeremy Gascho to associate from designer, Aaron Kulis to associate from Newman documents leader, Michael Moeller to associate from documents leader and Thomas Newman to associate from documents leader.

Lauren Hantz has been appointed to the new position of president of the Hantz Foundation, which supports educational and economic development initiatives in the Detroit area. Hantz, 26, previously Hantz ran the foundation’s consumer loan department. She also is a commercial lending administrator with Hantz Bank and has worked closely with her father, John Hantz, and Hantz Woodlands leaders through their work to transform more than 140 blighted acres on Detroit’s east side into a hardwood tree farm. Hantz has a B.A. in English from the University of Michigan.

Hanson

regional director of operations,

Ciena Healthcare Management Inc., Southfield,

Richard

from COO, Olympia Group LLC, Lincolnwood, Ill. Dina Richard to senior vice president, treasury, and chief investment officer, Trinity Health, Livonia, from vice president, investments, Taubman Ventures Group LLC, Bloomfield Hills. Sharon Ross to executive vice president, population health management, The

Thomas

ENGINEERING Novi, from maintenance staff engineer, Road Commission for Oakland County, Waterford Township.

Ross

Clair Shores, from vice president, population health management. Also, Scott Johnson to vice president, operations, from director, strategy and performance.

LAW Kenneth Clarkson to partner, Jaffe Raitt Heuer & Weiss PC , Southfield, from shareholder, Sullivan Ward Asher & Patton PC, Southfield. Also, Emily Schey to shareholder from real estate partner, Freeborn & Peters LLP, Chicago. Steven Hays to shareholder, Howard & Howard Attorneys PLLC , Royal Oak, from associate. Also to shareholder from associate: Michael Minna , Brandon Wilson and Jacob Woolbright. Ziyad Hermiz to shareholder, Butzel Long PC , Detroit, from associate. Also, Paul Mersino to shareholder from associate.

Southfield, from development project manager, School of Education and Human Services, Oakland University, Rochester Hills.

REAL ESTATE Janet Stevens to director, office operations, Redico LLC, Southfield, from regional property manager, McKinley Inc., Ann Arbor.

SERVICES Timothy Brown to president, Cal-Chem Inc., Royal Oak, from national sales manager, Ele Corp., McCook, Ill.

Brian McDonald to CEO, RGIS LLC, Auburn Hills, from executive vice president and COO, Tyco International Ltd., Princeton, N.J. Dale Massy to executive vice presiSuperior dent,

Physician Alliance LLC, St.

Kara Grisamer to engineering department manager, Cardno ATC ,

to IT consulting manager, Plante Moran PLLC, Southfield, from sales force consultant, Xede Consulting Group Inc., Troy. Lawrence Leib to vice president, seDeLonge nior adviser, Schechter Wealth, Birmingham, from

ley Marie Aidenbaum to special

Peter Brogger to

managing director.

Danielle DeLonge

rector of communications. Also, David McGhee to program officer from congressional liaison for U.S. Rep. Dan Kildee, 5th Congressional District, Flint; Ash-

HEALTH CARE

Rebecca McLaughlan to vice president, McGraw Wentworth, Troy, from

Farmington Hills, from director of brand and creative services, CUNA Mutual Group, Madison, Wis.

NONPROFITS William Hanson to chief of staff, The Skillman Foundation, Detroit, from di-

Presbyterian Villages of Michigan Foundation,

Grisamer

FINANCE

production artist and pre-press manager from senior production artist and pre-press manager.

parks and recreation department, city of Westland, from deputy director, Wayne County Parks, Westland.

GOVERNMENT

CORPORATEEAGLE.COM

Alan Bergstrom to chief marketing officer, Community Choice Credit Union,

MEDIA Angela Pearce to vice president and senior marketing manager, ViMax Media LLC, Southfield, from senior marketing manager. Also, Matthew DeWilde to vice president and senior

Jessica Larkin Mistak to director,

Brogger

CONSULTING

from engineering project manager, General Dynamics Land Systems, Sterling Heights.

projects manager from group publisher and director of business development, Issue Media Group, Detroit; and Carla Smith to human resources officer from independent human resources consultant, Macomb Township. Avni Thomas to director of grants management,

president, Law Offices of Lawrence J. Leib, Farmington Hills. Chelsea Simmons Gannon to assurance manager, Baker Tilly Virchow Krause LLP, Southfield, from audit manager, Moss Adams LLP, Los Angeles.

KING AIR B200

McLaughlan

MANUFACTURING Jim Smiley to director of operations, Portable Church Industries, Troy,

McDonald

Electric Great Lakes Co., Troy,

from executive vice president of field operations. Also, Joe Ede to general superintendent of labor from field superintendent. Lynn Melucci to director, Orion

Solutions Group LLC , Troy, from managing partner, Melucci, Markoff & Associates LLC, Shelby Township. Dan Rosso to director of gas supply, Dillon Energy Services Inc., St. Melucci Clair Shores, from structured products analyst, BP, Chicago. Robert Stackhouse to CEO, Valuation Link LLC, Northville, from COO.

TECHNOLOGY Eric Olmstead to director of infrastructure and cloud services, C/D/H, Detroit, from consultant, Quincy.

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THE MILLER LAW FIRM

CALENDAR THURSDAY JAN. 8 Detroit Economic Club Presents. 11:30 a.m.-1:30 p.m. With Michael Finney, outgoing 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.

UPCOMING EVENTS 13th Annual NAIAS Breakfast. 7:309:30 a.m. Jan. 15. Inforum. Keynote speaker is Werner Struth, board member, Robert Bosch GmbH. Michelle senior analyst for Krebs, 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 and marketing at Clemson 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.

CoreNet Michigan 2015 Economic Forecast. 11 a.m.-2 p.m. Jan. 15. CREW Detroit. Chuck Stokes, editorial director at WXYZ-Channel 7, oversees a luncheon and panel featuring

Matt Cullen, president and CEO, Rock Ventures LLC; Sam Munaco, president, Advocate Advisors; Rodrick Miller, president and CEO, Detroit Economic Growth Corp.; and Rob Riney, president and CEO, Henry Ford Health System. The Dearborn Inn, Dearborn. $52 members, $67 nonmembers. Contact: Norma Lee Beuter, (248) 646-9629; email: beuter@com cast.net. Website: crewdetroit.org. Multicultural Media Luncheon. 11 a.m.2 p.m. Jan. 15. The Ajamu Group LLC. Keith Clinkscales, CEO, 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.

IGNITION 2015 Eat breakfast with Crain’s Detroit Business at the North American International Auto Show from 9 to 11:30 a.m. Jan. 14 and see some of the most innovative technology in the automotive sector. This inaugural Ignition event features entrepreneurs who aim to make a mark on the industry. Attendees also can help choose the hottest startup at the auto show. The event will be at Cobo Center, Detroit. The cost is $75, and the first 150 to register receive a free Industry Preview ticket, valued at $95. For information or to register, visit crainsdetroit.com/ignition2015, call (313) 446-0300 or email cdbevents@crain.com. Join the conversation with #IgnitionDetroit. Grow Your Business Through Exporting: Tips to Get Started. 11 a.m.-1 p.m. Jan. 15. Automation Alley. Keynote speaker is Noel Nevshehir, director of international business services, Automation Alley. Southfield Public Library. $10 advance, $20 at the door. Preregistration closes end of day 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. With Jim Jacobs, president, Macomb Community College. 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 “The Future Starts Here” benefits the Children’s Center. Ford Field, Detroit. $325. Contact: (313) 262-7123; email: autoglow@thechildrenscenter.com; website: thechildrenscenter.com/ autoglow. Open City: Be the Change. 6-8 p.m. Jan.

Changing the Odds in our Clients’ Favor

19. Build Institute. A panel discusses social entrepreneurship in Detroit. Cliff Bell’s, Detroit. Free. Contact: Muna Danish, (313) 318-1328; email: muna@dhivedetroit.org; website: buildinstitute.org. The Big Four. 11:30 a.m.-1:30 p.m. Jan. 20. Detroit Economic Club. Featured speakers are Oakland County Executive L. Brooks Patterson, Detroit Mayor Mike Duggan, Wayne County Executive Warren Evans and Macomb County Executive Mark Hackel. Cobo Center. $45 DEC members, $55 guests of members, $75 others; includes admission to 2015 North American International Auto Show. Contact: (313) 963-8547; 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.

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Executive to Executive Series No. 2: Achieving Outcomes Through Continuous Improvement. 8-10 a.m. Jan. 28. Plante Moran LLC. The speaker is Samuel Flanders, M.D., executive vice president of quality, safety and clinical effectiveness, Beaumont Health System. 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/man agement/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: moldenburg@ detroitchamber.com; website: detroit chamber.com/events.

BUSINESS DIARY ACQUISITIONS & MERGERS The Burtek Group, Chesterfield Township, acquired Process Fab Inc., Santa Fe Springs, Calif., an engineering, design and manufacturing company. The Burtek Group will continue to operate out of its Michigan and Santa Fe Springs facilities under Burtek Holdings Inc. Websites: burtekenterpris es.com, processfab.com.

CONTRACTS Bitcoin Brands Inc., Ann Arbor, has signed an agreement with Midwest Bitcoin LLC, Chicago, to operate additional bitcoin ATMs at locations around the country. The companies plan to use bitcoin machines from BitAccess Inc., Ottawa, Ontario. Websites: bitcoinbrandsinc.com, midwestbtc.com. ChemicoMays LLC, Southfield, a chemical management provider, has contracted with Green Endeavor Inc., Portland, Ore., to distribute eco-friendly Green Endeavor chemicals. Websites: chemicomays.com, greenendeavor inc.com. InterClean Equipment Inc., Ypsilanti Township, a manufacturer of heavyduty vehicle wash systems, recently commissioned the newly developed Rainbow Ultima Wash System for Heidelberg Distributing Co., Cincinnati. Website: interclean.com. Palace Sports & Entertainment LLC, Auburn Hills, announced a multiyear contract with United Shore Financial

Services LLC, Troy. Elements of the agreement include the naming rights to Club West, and United Shore will present the “Super Saturday” theme night for Saturday home games. Terms of the deal were not disclosed. Websites: palacenet.com, unitedshore.com.

EXPANSIONS Belle Tire Distributors Inc., Allen Park, has opened a store at 600 N. Homer St., Lansing. Telephone: (517) 325-9536. Website: belletire.com. Closet NV , West Bloomfield Township, a luxury consignment boutique, has opened a second location, at 745 E. Maple Road, Birmingham. Telephone: (248) 731-7181. Website: closet nv.com. Faurecia North America Inc., Auburn Hills, started production at its new automotive seating plant in Wentzville, Mo. The plant produces seats for General Motors Co.’s Chevrolet Colorado and GMC Canyon truck lines. Website: faurecia.com/en. P.F. Chang’s China Bistro Inc., Scottsdale, Ariz., has opened a restaurant at Briarwood Mall, 720 Briarwood Circle, Ann Arbor. Telephone: (734) 7803900. Website: pfchangs.com.

MOVES New Paradigm Promotional Marketing has moved from 13700 Oakland Ave., Highland Park, to 30999 Industrial Drive, Livonia. Telephone: (734) 237-3800. Website: newparadigmpromo.com.

NEW PRODUCTS TekDry LLC, Denver, which has developed a patented process to dry out wet phones and electronics in 20 minutes with data and functionality restored, is launching the service at a Play N Trade store at the Shores Shopping Center, 31049 Harper Ave., St. Clair Shores. Websites: tekdry.com, saintclairshores.store.playntrade.com.

NEW SERVICES 123Net Inc., Troy, a telecommunications and Internet service provider, announced that it is bringing capacity up to 10 gigabits per second in the Troy area. The expansion will include up to five new high-speed fixed wireless sites. Website: 123.net. Ally Financial Inc., Detroit, an automotive financial services company, has launched new tools that make it faster and easier for consumers to manage their accounts, make payments via mobile devices and access faster customer service while online. Website: ally.com/financial. Students at Lawrence Technological University, Southfield, now can enroll in an affiliate U.S. Army ROTC program and take the full ROTC curriculum beginning with the spring semester, which starts in January. All the ROTC courses will be taught at Eastern Michigan University by Army instructors. The students will be able to earn a minor in military science and leadership at LTU. Website: ltu.edu.

EXECUTIVE CALENDAR Regional event dates, locations and contacts, all in one place.

crainsdetroit.com/executivecalendar

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Laws: With new year comes new rules for Michigan businesses ■ From Page 3

Snyder, replaced the existing minimum wage law, obviating a petition drive that had sought to put a wage increase to $10.10 on the Nov. 4 ballot. The next wage increase, to $8.50, takes effect in January 2016. The new law allows companies to pay 85 percent of the state minimum to workers ages 16 or 17 (when 85 percent isn’t below the federal minimum wage) and a training wage of $4.25 per hour to employees 16-19 years of age for their first 90 days.

Food safety Among more than 200 bills to work their way through the Legislature in a lame-duck session that ended Dec. 19 was a bill requiring most food service establishments to have at least one management employee trained in food allergies as a food safety manager. The bill, SB 730 of 2013, passed the House 90-19 and the Senate by a 33-5 vote on Dec. 18 and still awaits Snyder’s signature. The bill requires most restaurants to have a management employee with certification in a training program on food allergies accredited by the American National Standards Institute, using standards of the Conference for Food Protection. Companies also must display an informational poster on food allergies in staff areas and a notice to customers on a menu or a window sticker near the entrance of their obligation to inform employees of a food allergy.

Personal Property Tax Voters in August had to cement

a phase-out of the oft-contentious personal property tax, first passed by the Legislature in 2012, as well as a new way to make whole the communities that have relied on that revenue. The measure passed with nearly 70 percent approval. The PPT for years supplemented tax assessments of real property, particularly on manufacturers, with a tax that small businesses pay on office equipment and that manufacturers pay on industrial equipment. This year, all purchases of industrial and commercial personal property are exempt if the combined cash value is under $80,000. Some larger exemptions take effect in 2016. The lost revenue for local governments and schools is offset by increased state revenue from various expiring corporate tax credits and by increasing the amount of the state use tax sent to local school districts. The new law also creates a special assessment of 2.4 mills, rolling back over time to 0.9 mills, to fund local services that only manufacturers receiving the PPT reduction pay.

Tax loophole Lawmakers in September plugged a potential $1.1 billion budget hole with a new law to reinforce their predecessors’ intentions in 2007, after a Michigan Supreme Court finding that businesses could use a loophole to lower their tax burden for three years. The high court in July sided with IBM, finding out-of-state companies could use a formula under a multistate tax compact passed

over 40 years ago to compute their taxes, rather than through the Michigan Business Tax. IBM was therefore entitled to a refund of $6 million rather than just over $1 million in its dispute with state Treasury officials. But the ruling could have applied to 134 other out-of-state companies as well for the tax years 2008 through 2010 before the MBT law was repealed. Treasury contended the combined refunds would total over $1.1 billion, much of which would have had to be paid out this fiscal year. But the Legislature instead sent Snyder a new bill amending the 2007 law creating MBT “to express the original intent of the Legislature regarding the application” of it. Essentially, that means IBM gets its refund, but anyone else with a pending claim over the same tax compact in Michigan has to follow the MBT law. That law eventually gave way to the Michigan Corporate Income Tax Act of 2011.

Road funding Also clearing the Legislature in its last hours of its session Dec. 19 was a package of 11 bills all tied to a proposed sales tax increase on the May 5 election ballot this year. Voters will have to decide whether to approve a constitutional amendment and raise the sales tax to 7 percent from 6 percent and eliminate the sales tax on motor fuel. (See story, Page 1.) This generates a net revenue increase of $588 million — mainly $300 million for schools (equivalent of $200 per pupil) and nearly $100 million for local governments. That ballot measure, if approved,

triggers legislation converting a 19 -cent-a-gallon flat tax on gasoline and a 15-cent-a-gallon tax on diesel into taxes that could rise with wholesale fuel prices. Other bills would yield an additional $95 million from yearly registration fees on cars and heavy trucks. Another bill requiring online retailers to collect sales tax on Internet purchases in the state is expected to yield an additional $50 million but is not directly tied to the ballot measure.

Others Companies that pay in to the Michigan Self-Insurers Security Fund to cover workers with disabilities under the state Worker’s Disability Compensation Act could see an assessment increase to 3.5 percent

from 3 percent for 2015 to 2019, under a package of bills to extend benefits for Delphi employees. The bill package extends benefits to several hundred former employees of Delphi who were left without them after the auto supplier emerged from Chapter 11 bankruptcy protection in 2009. It was signed into law in July. Another bill signed in October included language that would prevent Tesla Motors from directly selling its electric vehicles in Michigan. Any automobile manufacturer is banned from selling new cars directly to customers in the state without going through a franchised dealer — which Tesla doesn’t have. Chad Halcom: (313) 446-6796, chalcom@crain.com. Twitter: @chadhalcom

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 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 2014 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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Roads: Groups ponder value of ballot proposal for funding ■ From Page 1

tion campaign, but even without one the supporters face an uphill battle persuading poor and middleclass voters to pay more, experts said. Business and trade organizations who banded together to support a legislative funding package last fall are still re-evaluating their positions this week, after lawmakers chose to include a proposed constitutional amendment at the ballot box. “I don’t think there will be unanimity among the whole business community on this issue,” said John Truscott, of Lansing-based Truscott Rossman LLC. “The (Michigan) Chamber (of Commerce) has already said they’re taking it to members and having a (board) vote. “They didn’t want it to go to a ballot, because they know how much ballot questions and campaigns can cost to persuade voters.” The Michigan chamber and Detroit Regional Chamber were both part of the Michigan Transportation Team coalition coordinated by MITA. But both groups later voiced concerns with the approach lawmakers took in the waning hours of a lame-duck legislative session on Dec. 19. Both cite the cost and rapid turnaround time of a ballot campaign, and the Michigan Chamber also notes that nearly 60 percent of constitutional amendment proposals fail. But whoever turns out in support of the ballot questions, political strategists told Crain’s they believe an opposition campaign is also likely, raising the price tag even more. Truscott said his public relations and communications company was part of an opposition campaign to a 2012 ballot proposal to augment Michigan’s renewable energy standards. About $10 million to $12 million was spent in campaigning on that ballot issue

THE ROAD TO THE BALLOT A May 5 ballot measure will ask voters for a constitutional amendment raising Michigan’s 6 percent sales tax to 7 percent and remove the sales tax on gasoline and diesel fuels. If approved, that proposal triggers separate legislation converting a 19-cent-a-gallon flat tax on gasoline and a 15-cent-a-gallon tax on diesel into taxes that could move with wholesale fuel prices. The new tax, at 14.9 percent, is computed yearly on a 12-month average of wholesale from about a year earlier — meaning it would be about 41 cents when it first takes effect in October. Current and future prices would help set the tax in subsequent years, with floors and ceilings in place. Other bills would yield an additional $95 million from yearly registration fees on cars and heavy trucks. A bill requiring online retailers to collect sales tax on Internet purchases in the state is expected to yield an additional $50 million but is not directly tied to the ballot measure. But the sales tax itself is earmarked for school aid, local governments alone, and he expects a sales tax question could fetch several times that due to a high threshold for voter persuasion. He estimates a support campaign could be done for $15 million, but might need $20 million or more if it encounters a well-funded opposition. David Waymire, partner at Martin Waymire Advocacy Communications Inc. in Lansing, agreed total spending could be $20 million or more on both sides of the issue, if polling shows voter resistance or a strong opposition forms. “May is not very far away, and a lot of work has to be done. It clearly would be a difficult job to persuade voters, but it’s doable,” he said. “The key point is, everyone is fed up with our roads and we’ve

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been disinvesting in this state for about 20 years now. If we follow this path with infrastructure and people, we’ll increasingly take our example from poorer Southern states with high unemployment.” Brad Williams, vice president of government relations for the Detroit chamber, said the organization expects to have a “lengthy conversation” at its board meeting next week and did not feel its executive team could support a constitutional amendment before then. “I’m sure we will be asked for a financial contribution. Of course, we’ve just come off a very expensive election that tapped much of our political resources,” he said. “And we’d have to look hard at asking our members to help us now raise funds for that as well.” President-CEO Rich Studley of the Michigan chamber said the organization “will take the time to listen carefully” to members and review the ballot and related legislation before it takes a position. “Successful statewide ballot question campaigns are usually very expensive. So the concern … (over) whether there is enough time or resources to execute a successful awareness campaign to sufficiently educate voters on the issue is a good (one),” he said in an email. “Our current focus is on gathering information about the ballot proposal and listening carefully to our members.” Truscott said he expects likely advocacy support will come from road builder and construction associations, and hospitality organizations or any groups that rely on tourism revenue. The state may play a role, he said, though by state law it can only support informational messaging, not advocacy. He also expects an opposition campaign, but it’s hard to tell what shape that would take. Annie Patnaude, deputy state director for the Americans for Prosperity Michigan chapter, said the organization opposes the ballot

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mulate its position, Wagner said. Jim Hallan, president-CEO of the Michigan Retailers Association, said that organization is also “taking a methodical approach to check the pulse of our membership” and will settle on its position after a Jan. 20 board meeting. Ed Weglarz, director of petroleum for the Association of Food and Petroleum Dealers, said in a statement that organization has already decided it “supports this ballot proposal as the fairest solution to address the road repair challenge.” The Michigan Municipal League will hold an organization meeting soon before taking an official position, said Media Relations Director Matt Bach. But experts said it is a likely supporter due to the local government revenue collection from a sales tax hike. Sara Wurfel, director of communications for Gov. Rick Snyder, said the road funding legislation has yet to be signed but the governor expects that to happen before the middle of the month. After that point, she said, he expects to be very engaged in awareness campaign efforts for the ballot measure, as he has done in messages to support past ballot measures. “Right now, research is key, polling and putting the coalition together (for ballot support) is key, and so is reaching out to the people who were supportive before but now have to re-evaluate their positions. Whoever handles the communications for this will have work to do,” Waymire said. “(But) this is the only chance, I expect, in the next four years to get something like this done given the new legislature coming in this year. I understand the groups that have concerns now, but if we miss out on this, Michigan will fall further and further behind in its infrastructure.” Chad Halcom: (313) 446-6796, chalcom@crain.com. Twitter: @chadhalcom

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question as a $1.7 billion tax hike, but is “evaluating our options” on whether to take part in a campaign opposing the measure. “How much of that opposition will be in education, which we’re already doing in many ways, and how much will be in expressly advocating for its defeat, still has to be seen,” she said. “When the (state) Senate approves a plan to buy a new office building, and the state still maintains a sizable film industry incentives plan in Michigan, it’s clear the government needs to do a better job, and can do a better job, with its resources. We don’t need a massive tax hike, which is exactly what this is.” The transportation association expects to offer some financial support toward a “yes” campaign for the May ballot measure, but it might not be in a leadership role when a ballot committee of supporters comes together, said Lance Binoniemi, its vice president of government affairs. “Clearly we’re going to be all-in. In terms of other members of (the Michigan Transportation Team), we’ve had only non-official conversations, (and) can’t speak for what will happen with those. It’s too early,” he said. “This is a proposal that’s beneficial to infrastructure and at the same time it helps schools and local government. (But) the sales tax question throws a curveball at some things.” And other organizations were still working out what swing to take at that curve this week. Steve Wagner, president of AAA Michigan (also a Michigan Transportation Team member), told Crain’s via email last week that 64 percent of voters support some form of increased funding for roads in an October survey of more than 600 registered voters. Still, the organization will “be analyzing and discussing this proposal after the first of the year” to for-

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January 5, 2015

Auto show: Rising city, rising sales – and rising expectations ■ From Page 3

director of the NAIAS and Detroit Automobile Dealers Association. Alberts said strong consumer demand coupled with Detroit’s exit from bankruptcy Dec. 11 is an aligning of the stars for a successful show. “I had calls on bankruptcy last year; we had to convince people from out of town it wouldn’t afAlberts fect the show,” Alberts said. “The only place we can go now is up, and people really want to be part of the cheering section for the city.” Sales of new vehicles in the U.S. are expected to total 16.5 million units when the 2014 totals come in and are projected to reach 17 million in 2015, according to Troybased LMC Automotive Ltd. “Economic bliss, driven by job creation, wage growth and low gas prices, may drive consumers to showrooms at a faster pace, emphasizing the notion that this recovery may not be over quite yet,” Jeff Schuster, senior vice president of forecasting for LMC, said in a release in December. Strong sales figures indicate interest for automakers’ new lineups, which in turn is pushing the spending at the show, Alberts said. As many as 16 of the more than 40 automaker displays will be brand new this year — with roughly 12 of them being double-decker displays, Alberts said. General Motors Co. will present its newest lineup for Buick and Chevrolet with dramatic, neverbefore-seen displays, said David Barnas, group manager of communications for GM. Alberts estimates automaker display build-out costs will reach $300 million for the 2015 NAIAS. Crews with hundreds of workers have been erecting the displays in Cobo since late October. Scott Keller, vice president of marketing for Auburn Hills-based display maker George P. Johnson Co., said display spending is getting smarter, not larger. “We have limited space at the show, so the footprint doesn’t change, but the use of technology has really increased,” Keller said. “While spending hasn’t increased, everyone wants a better return on investment without getting rid of the pizzazz.” Keller said displays are using more data-driven concepts to “accelerate the pipeline” of cars being sold after the show. “They are asking themselves ‘How much did we learn about this persona, the soccer mom or bachelor, etc.,’” Keller said. “Everyone wants to sell more cars immediately, but the better return on investment (at NAIAS) is better data.” George P. Johnson built the displays for all Fiat Chrysler Automobiles NV brands, Honda, Toyota, Tesla, Nissan and more. NAIAS spending doesn’t stop on the show floor. GM is hosting 100 foreign journalists, some of whom it paid to fly in for the show, in hopes of better media coverage of its unveilings. Those include a Sunday Buick world debut under Shed 3 in

JEFF KOWALSKY/BLOOMBERG

Last year’s Charity Preview at the North American International Auto Show raised $4.8 million for children's charities from the 13,791 who attended. This year’s event, Jan. 16, is expected to raise $5 million from more than 14,000 attendees. That would mean the event has topped $100 million raised since 1976.

At this auto show event, tech startups are in the driver’s seat Join Crain’s Detroit Business and the North American International Auto Show for a breakfast event that will showcase cutting-edge technology in the automotive industry. The inaugural Ignition event will feature entrepreneurs trying to make a mark on the industry. This pitch competition will feature companies from around the world and an array of technology and innovation. The competition will be moderated by Matt Burns, senior editor of TechCrunch. Startups participating are: Beet LLC, Plymouth, makers of products to monitor and diagnose problems in manufacturing. Inmatech, Ann Arbor, creator of the next generation of super-capacitors for power management. Eastern Market on Russell Street. Other unveilings Sunday night include offerings from MercedesBenz, Land Rover, Infiniti, Acura and Volkswagen. GM also will host the press at the Rattlesnake Club on the Detroit riverfront Monday night, Barnas said. Rassini International Inc., the Plymouth Township-based U.S. subsidiary of Mexico City-based Rassini SA de CV, is flying in executives from its parent company and footing the bill for three journalists from Mexico to attend the show. The move is to bolster the brake supplier’s presence at the NAIAS and build awareness of its presence here, Eugenio Madero, CEO of

IGNITION’S LIFTOFF Time/place: 9:30-11:30 a.m. Jan. 14, Cobo Center Tickets: $75. The first 150 registrants get a free Industry Preview ticket ($95 value). Registration/information: crainsdetroit.com/ignition2015, call (313) 446-0300 or email cdbevents@crain.com

Inventev, Detroit, developing the next generation of plug-in hybrid vehicle technology. Mojio, Vancouver, British Columbia, connecting a smartphone to a vehicle through its diagnostic port. TowerSec, Israel and Ann Arbor, a cybersecurity firm focused on protecting connected vehicles. Rassini International, said in an email. Rassini operates a tech center in Plymouth Township and a brake plant in Mt. Morris Township near Flint. But it’s the Charity Preview evening Jan. 16 that will draw out the most checkbooks. At $400 a ticket, Charity Preview night is expected to raise $5 million from more than 14,000 ticketholders. The event will surpass $100 million raised for local children’s charities since 1976, Alberts said. Auburn Hills-based TI Automotive Ltd. has hosted a Charity Preview party for journalists, executives and spouses at the MotorCity Casino since 2010.

This year, the fuel tank supplier upgraded from lower-level meeting halls at the casino to the Amnesia nightclub on its 16th floor. TI Automotive will entertain as many as 90 for the preview, up from 65 last year. “It’s a big deal for us to be part of the event,” said Frank Buscemi, global communications director for the supplier. The social function of the event has been growing, Buscemi said, as other supplier representatives have asked to benchmark their Charity Preview party for future planning. For downtown restaurants, the Charity Preview is a boon, said Joe Vicari, CEO of Warren-based Andiamo Restaurant Group. Vicari’s Joe Muer Seafood and Andiamo’s restaurants at the Renaissance Center sold out on Charity Preview night in early December — a full month earlier than last year. The two restaurants charge $200 a ticket for a preVicari set menu for the event, including appetizers before the preview and dinner afterward, Vicari said. Joe Muer and Andiamo Detroit Riverfront at the RenCen see sales double during the first week of the auto show from the week prior and the week after, Vicari said. “The week of the preview is our busiest time of the year,” he said. “There are newer restaurants, and they’ll see some action, too. This is a great time to be a restaurateur in Detroit.” Dustin Walsh: (313) 446-6042, dwalsh@crain.com. Twitter: @dustinpwalsh

AUTO SHOW HIGHLIGHTS The Gallery: Jan. 10

Kickoff event at MGM Grand

Detroit showcasing luxury brands, such as Bentley, Ferrari and Aston Martin Evening will feature a strolling dinner served by Wolfgang Puck, Neiman Marcus fashion show and music from DJ Ryan Richards Tickets: $1,000

Press Preview: Jan. 12-13

More than 5,000 journalists from 60 countries expected Industry Preview: Jan. 14-15

30,000 engineers, executives and supplier representatives expected Charity Preview: Jan. 16

14,000 expected to attend and raise $5 million for local children’s charities Tickets are $400, up from $360 in 2014 Public Show: Jan. 17-25

Organizers expect to surpass last year’s attendance total of more than 803,000 Tickets are $13 for adults and $7 for seniors and children ages 712; children under 6 enter for free Highlights: More than 40 worldwide new car debuts Alfa Romeo returns to show floor; last NAIAS debut was in 1995 Verizon Wireless on show floor for first time as wireless technology increases in automotive Phoenix-based Local Motors will showcase a 3-D-printed car Technology showcase in Michigan Hall featuring Covisint, Alpine Electronics, NextEnergy, Oak Ridge National Laboratory and Michigan Economic Development Corp., among others

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January 5, 2015

Newsmaker: Orr, Rhodes give city a 2nd chance ■ From Page 1

With the effort and creativity of dozens of other people, including Rosen himself, they effectively cleaned up Detroit’s books within 16 months, satisfying the city’s fiercest creditors and overseeing the creation of a “grand bargain” designed to protect the assets of the Detroit Institute of Arts and, more important, soften the blow of cuts to retirees’ pensions. On top of that, the city had started reinvesting in its future, installing new streetlights at a clip of 500 a week and demolishing nearly 200 blighted homes every seven days.

Making it whole again When it was announced that Rhodes would oversee Detroit’s bankruptcy, he was a little-known judge who was preparing to retire after serving in the Eastern District of Michigan since 1985. But Alice Batchelder, the chief judge for the U.S. Court of Appeals in Cincinnati, asked him to do what was seen as the near-impossible: Take a city in a financial death spiral with $18 billion in debt and negative cash flow of more than $260 million projected for 2015, and find a way to make it whole again. But by the end of the 16-month trial, with what seemed to be all the world watching, Rhodes had shown himself to be the kind of judge that scholars will study for decades, both for his legal acumen and his compassion. It was Rosen who recommended Rhodes for the case because he believed that Rhodes had the “scholarship, intellect, judicial temperament, compassion and openmindedness and open-heartedness” to manage all of the players and personalities while keeping the docket on a tight schedule. He wasn’t the only one: Phillip Shefferly, chief of the Bankruptcy Court in Detroit, wrote a letter in support, stating that the judges on the bench unanimously thought Rhodes was “best qualified” to preside. Rhodes proved that faith to be well-placed. The University of Michigan graduate ran his courtroom with a firm hand and a compassion for Detroiters that went beyond judicial courtesy. He invited those without lawyers — laypeople and retirees — to present their objections before the court and allowed them to question Orr and other $500-an-hour lawyers as if they were equals. In each of his rulings, Rhodes returned to the people of Detroit and how the bankruptcy would affect them. He wanted to ensure that the city’s future balance sheet could support its needs. “What happened in Detroit must never happen again,” Rhodes said in his Nov. 7 ruling confirming Orr’s plan to exit bankruptcy. “The hardship and anxiety that its employees and retirees, and their families, have endured and will continue to endure must never happen again. … Your enduring and collective memory of what happened here, and your memory of your anger about it, will be exactly what will prevent this from

JEFF KOWALSKY/BLOOMBERG

Emergency Manager Kevyn Orr with two others with a keen interest in a swift emergence of Detroit from bankruptcy: Mayor Mike Duggan and Gov. Rick Snyder.

ever happening again.” Of the attorneys in his courtroom, Rhodes demanded intellectual honesty, direct language and preparedness. He suffered no fools and had a sharp tongue for anyone trying to evade questions or use jargon. He started each day precisely at the moment court was scheduled — and he set that tone from day one. On the first day of hearings, the city’s lead attorney, David Heiman of the Cleveland-based law firm Jones Day, was prepared with his opening remarks about the case and his proposed timeline, just as he has done for each case since founding Jones Day’s bankruptcy practice 30 years ago. But he never got the chance. “Judge Rhodes came out of the blocks in full control, making it clear we were in his courtroom and things were going to go the way that he expected them to go,” Heiman said. “Not as a dictator but as a steward of the needs of the case and the city of Detroit and its residents.” But Rhodes was also direct about his expectations and how to meet them, Heiman explained. He frequently issued orders that contained lists of topics that he wanted the attorneys to consider so they could be prepared for court. “That was helpful to us because we had forewarning about what was going to come up and could think through it ourselves but also talk to our client (Kevyn Orr) and the governor’s staff,” Heiman said. That, and Rhodes’ penchant for swiftly cutting off repetition and longwindedness, helped keep the trial on track and moving swiftly. The timeline, Heiman said, “couldn’t have been done without the judge.” The case behind him, Rhodes, 65, now heads toward his retirement and life in his home of Ann Arbor, where he is known to be an avid bicyclist.

‘A clear picture’ If Rhodes was the public face of the bankruptcy proceedings, Orr was the behind-the-scenes man trying to restructure the city and find common ground with creditors. “He was straightforward, credi-

ble and had a thorough appreciation of the challenges,” Rosen said. “He had a clear picture. “He came to Detroit a stranger and left as a friend.” Orr came to Detroit from Washington, D.C., where he was a partner in Jones Day and where he worked with Heiman and on the Chrysler Group LLC bankruptcy. But these past months weren’t his first in Detroit: As a UM law student, he visited the city frequently and often cited his affinity for Detroit as part of why he took on the emergency manager role. Once he arrived, the Florida native was tasked with sorting through the wreckage that was Detroit’s books and city services. Accused early on of trying to sell off the city’s assets, Orr said he first had to find out whether there were any. Once it became evident to Orr that bankruptcy was the only path through the mess, he sought legal representation, which led him back to Heiman. “I know people at the outset raised lots of questions about the inherent conflict or bias that he had come from Jones Day,” Heiman said. “The truth of the matter, in my view, is that the prior relationship and knowing how to deal with each other was extraordinarily helpful in the process. We could move through issues incredibly quickly because he knows how I think and I know how he thinks.” One of the challenges he and Orr first had together was negotiating with creditors when they had few carrots and a stick that, initially, had little in the way of punishment power. Orr’s first plan of adjustment proposed deep and draconian cuts to city pensions as well as pennies on the dollar for most creditor classes. Not surprisingly, nearly everyone howled at the proposed pain. But that first plan showed bondholders, banks and retirees exactly how bad things could be if deals couldn’t be made. Rhodes’ firm rulings gave Orr a bigger and bigger stick with which to extract deals and hold firm on keeping the DIA’s collection safe. In one of the turning points of the bankruptcy, Rhodes forced the

emergency manager back to the table even after Rosen and his mediators had signed off on a proposed deal to pay Bank of America’s Merrill Lynch unit and UBS AG $235 million to terminate financial contracts. Rhodes would send Orr back twice more before finally accepting an $85 million settlement. Rhodes’ twice rejecting mediated claims put all creditors on notice that he was looking after the best interests of the city first and foremost. That gave Orr the freedom to entice better deals from parties who were now more fearful of what would happen if they faced the judge. Of course, none of that would have mattered without the grand bargain, which brought together $816 million over 20 years from both the state of Michigan and dozens of foundations, including the Ford, Kellogg, Knight and Kresge foundations. That pot of money allowed Orr to draft a plan that minimized — if not deleted — cuts to pensioners and preserved the city’s cultural heritage. While Rosen was the one who championed much of that in mediation, Orr was committed and open-minded to the idea even in the early days when it seemed more of a crazy pipe dream than a magic pot of money. “It is a vast understatement to say that the pension settlement is reasonable,” Rhodes said in his ruling on the final exit plan. “It borders on miraculous. No one could have foreseen this result for the pension creditors when the city filed this case. The plan’s proposal is only possible because of the pension settlement and the grand bargain.” But Orr also had a two-front war. While fighting with creditors, he also had to manage a delicate working relationship with newly elected Mayor Mike Duggan and Detroit City Council President Brenda Jones. It could have been an ugly and contentious triumvirate. But Orr, Duggan and Jones forged a relationship that served to steer the city through treacherous financial and political shoals. The trust they built was enough, in fact, to persuade Duggan and council to keep Orr after his term expired so he could see the bankruptcy through its waning days. That type of drama-free transition would have been thought impossible at the start of Orr’s emergency management term. But by the end, it was nearly expected — even if it was not without some contention. “Detroit continues to move forward,” Gov. Rick Snyder said at the time. “Today’s transition of responsibilities is a reflection of the continuing cooperation between the state and its largest city. Leaders are working together for the best interests of Detroit and all of Michigan.” Orr, 56, has yet to announce his plans, whether they lie in the public or private sector. But he has been able to return home to Washington, D.C., to his wife, Donna Neale, and children after nearly two years in Detroit. Amy Haimerl: (313) 446-0416, ahaimerl@crain.com. Twitter: @haimerlad

STEVEN RHODES: “Your enduring and collective memory of what happened here ... will be exactly what will prevent this from ever happening again.”

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

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CRAIN’S DETROIT BUSINESS

Meadowbrook: Proposed sale an opportunity for group ■ From Page 3

He said Meadowbrook’s 1,000 U.S. employees also will enjoy greater opportunities because they will be part of a global company. “Our customers, partners and policyholders … will benefit from an even stronger specialty risk, insurance and service provider,” Cubbin said. In a statement, Fosun said Meadowbrook would be its first U.S. insurance company acquisition and will enable the $50 billion investment group to begin to establish a “significant presence in the U.S. (property and casualty) market.” In August, Fosun acquired a majority interest in Bermuda-based Ironshore Inc. for $463.8 million. Ironshore maintains offices in more than a dozen U.S. cities, including Cleveland and Chicago. Fosun officials have said the Chinese firm is emulating the model used by Warren Buffett to build Berkshire Hathaway Inc. More than one-third of its assets are invested in insurance companies around the world. Fosun’s chairman, Guo Guangchang, said in a statement that “Meadowbrook has a talented employee base, comprehensive offering of high-quality specialty insurance products, robust distribution network and a strong commitment to meeting the evolving needs of its policyholders.” Cubbin said the transaction was unanimously approved by the company’s board of directors. Meadowbrook shareholders must approve the deal, and the companies must gain approval from multiple regulatory agencies. KPMG LLP, Towers Watson & Co., PricewaterhouseCoopers LLP and DLA Piper LLP advised Fosun. Willis Group Holdings Plc was Meadowbrook’s financial adviser, and Sidley Austin LLP provided legal counsel.

What led to the proposed sale? Although Meadowbrook and Fosun officials aren’t talking about it, Meadowbrook was in the midst of turning around its operations for the second time in 12 years. Crain’s previously reported that in August 2013 A.M. Best downgraded Meadowbrook’s rating to B++ from A-. In an interview earlier this year, Cubbin told Crain’s that the 55-year-old property casualty insurer, which employs about 250 workers in Michigan, was taking several steps to improve operations. Cubbin said changes included increasing workers’ compensation premiums by more than 60 percent in California, discontinuing money-losing business ventures and striking an agreement with Bedford, Texas-based State National Insurance Co. that allows it to sell A-rated policies through a fronting insurer. Meadowbrook terminated more than $120 million in business and planned to

stabilize its balance sheet and return to profitability this year, Cubbin said. For fiscal 2013 ended Dec. 31, Meadowbrook had had a net operating income loss of $117.9 million, or $2.36 per share, compared with net operating income loss of $28.4 million, or 57 cents per share, for the same period in 2012. For the most part, Meadowbrook has returned to profitability, financial records show. During the first three quarters of this year through Sept. 30, Meadowbrook’s net operating income has remained in the black. For example, net operating income rose to $8.39 million in the first quarter ending March 31, but has slid down to $3.64 million in the second quarter ending June 30, and further lower to $3 million third quarter ending Sept. 30. Meadowbrook’s net income also has dropped from $10.36 million in the first quarter, to $5.76 million in the second quarter to $4.97 million in the third quarter. But sometime during the past year, Meadowbrook’s board and management decided to explore a variety of what they called “strategic options.” Meadowbrook officials did not specify the range of options, but apparently the deal to sell the company was the one they finally agreed upon. Both Fosun and Meadowbrook officials also declined comment on whether Meadowbrook contacted Fosun about a sale or whether Fosun simply made an offer the board couldn’t refuse. Analysts previously told Crain’s that Meadowbrook needed to put together at least two straight quarters of positive growth before investors regained confidence in the company. Ken Billingsley, senior vice president and research analyst for Washington, D.C.-based Compass Point Research & Trading LLC., said Meadowbrook was steadily making progress by reducing expenses and building up the strength of its balance sheet. “We had been telling clients we didn’t think Meadowbrook would take under 80 percent of tangible book value, but anything around 90 percent then management would have to show the board and entertain (the offer),” said Billingsley, adding that he believes Meadowbrook has received several purchase offers. At 97 percent of book value, which is what Fosun offered, Billingsley said the board probably jumped at the offer. “This is a great deal,” he said. “I believe shareholders will vote for it.” But Billingsley said he believes U.S. insurance regulators will take a close look at the transaction because it is the first foray into the U.S. market by a Chinese company.

NOMINATE YOUR WORKPLACE FOR SOME HEALTHY COMPETITION 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.

January 5, 2015

Biz community loses many in 2014 Remembering those the Michigan business community lost in 2014 Connie Binsfeld, former lieutenant governor who championed children’s issues and was the first woman to hold leadership posts in Michigan’s House, Senate and executive branch, died Jan. 12. She was 89. Patricia Boyle, former Michigan Supreme Court justice, died Jan 13. She was 76. Eric S.C. Giles, founder, co-owner and chef of the Sunday Dinner Co. restaurant in Detroit, died Jan. 31. He was 49. Eleanor Breitmeyer Gebert, a longtime society reporter and editor at The Detroit News, died Feb. 5. She was 87. William Wolok, founder and former chairman and CEO of Romulus-based roll-off trailer manufacturer Benlee Inc., died Feb. 5. He was 84. E. Delbert Gray, former president and CEO of the Michigan Minority Supplier Development Council (then known as the Michigan Minority Business Development Council), died Feb. 13. He was 69. Angelo Henderson, a Pulitzer Prize-winning journalist who worked at The Wall Street Journal and The Detroit News and hosted the “Your Voice” program on WCHB AM 1200, died Feb. 15. He was 51. Bernard Winograd, a retired Prudential Financial Inc. executive who helped devise the initial public offering for Bloomfield Hillsbased luxury-mall developer Taubman Centers Inc. in 1992, died March 1. He was 63. Frank Hagerty, a Detroit native who cofounded the Traverse City-based Hagerty Insurance Agency LLC, one of the nation’s largest collector car and boat insurers, died March 18. He was 79. Kenneth Schwark, founder of Schwark Furniture in Macomb County, died March 23. He was 89. Ralph Wilson, who owned the Buffalo Bills since the team’s founding in 1960 and was the National Football League’s longesttenured owner, died March 25 at his Grosse Pointe Shores home. He was 95. Ray Shepardson, who was instrumental in the restoration of the Fox Theatre, Gem Theatre and Detroit Opera House, died April 14 in an apparent suicide in Aurora, Ill. He was 70. Jerome Schostak, considered a pioneer of the enclosed-mall format, died May 9. He was 80. Leonard “Len” Barnes, longtime editor and columnist for AAA Michigan Living magazine, died May 12. He was 94. Cornelia Kennedy, a former judge for the 6th U.S. Schostak Circuit Court of Appeals and the U.S. District Court for the Eastern District of Michigan and the first woman appointed to the federal bench in Michigan and the first female chief judge of a U.S. District Court, died May 12. She was 90. General Gordon Baker Jr., a longtime Detroit activist and officer in the United Auto Workers, died May 18. He was 72. Dominic Russo Sr., co-founder of Detroitbased Rocky Produce Inc. and Rocky Peanut Inc., died May 21. He was 82. Dean Becharas, owner of Highland Parkbased Becharas Bros. Coffee Co., died June 2. He was 79. Don Davis, a Grammy-winning music producer who became cofounder, chairman and CEO of Detroit-based First Independence Bank, died June 5. He was 75. Charles “Chick” Fisher, former chairman and CEO of NBD Bank and a founding director of the Community Foundation for Southeast Michigan, died Davis June 15. He was 84. Michael George, co-founder of Melody Farms Dairy Co. and the Chaldean Iraqi Ameri-

can Association of Michigan and founding chairman of Farmington Hills-based George Enterprises LLC, died June 24. He was 81. Marilyn Fisher Lundy, a member of Detroit’s famed Fisher family and longtime president and CEO of Matrix Human Services, died June 24. She was 89. Oliver “Ollie” Fretter, founder of the Fretter Inc. chain of appliance stores, died June 29. He was 91. Henry Nolte Jr., who was chief in-house legal counsel to three Ford Motor Co. CEOs from 1974 to 1989 and then chairman of the Detroit law firm Miller, Canfield, Paddock and Stone PLC, died June 30. He was 90. David Page, a partner at Honigman Miller Schwartz and Cohn LLP who was chairman of Southfield-based Meadowbrook Insurance Group Inc. and chairman of the board of trustees at the Children’s Hospital of Michigan Foundation in Detroit, died July 1. He was 80. C. David Campbell, president and CEO of the Detroit-based McGregor Fund, died July 7. He was 61. Jennifer Moore, former business reporter and news anchor at WDIV-Channel 4, former communications manager at Ford Motor Co. and co-founder of the media consulting firm Konrad & Moore Inc., died July 11. She was 64. Lawrence Buhl Jr., longtime civic leader and great-grandson of former Detroit Mayor Christian Buhl, died July 22 in Harbor Springs. He was 80. John Genitti, longtime owner of Genitti’s Hole-in-the-Wall restaurant and dinner theater in Northville, died Aug. 16. He was 67. Frederick Gale Ruffner Jr., founder of Farmington Hills-based publisher Gale Research Co. and Detroit-based Omnigraphics Inc., died Aug. 12. He was 88. Stella Sossi, whose family owns Roma Café in Eastern Market, died Sept. 8. She was 93. Sossi started as a bookkeeper for the restaurant in 1945 and married owner Hector Sossi in 1946. Lillian “Lil” Erdeljan, a prominent metro Detroit philanthropist and wife of Aleksandar Erdeljan, former CEO of Troy-based R.P. Scherer Corp., died Sept. 11. Irma Elder, CEO of Troy-based Elder Automotive Group and the first woman to own a Ford dealership in metro Detroit, died Sept. 30. She was 84. Joseph “Jeff” Page III, president of the Troybased law firm Giarmarco, Mullins & Horton PC, died Elder Oct. 6 from complications of multiple myeloma. He was 72. Raymond Biggs, former CEO of Huntington Bancshares of Michigan, died Nov. 6. He was 77. Norman Rosenfeld, former Sibley’s Shoes Inc. chairman and CEO, died Nov. 13. He was 95. Patrick Nowak, former director of the Michigan Department of Transportation and a former Oakland County deputy executive, died Nov. 22. He was 76. Eugene “Gene” Jetts Jr., co-founder and former president of Jet’s Pizza, died Dec. 5. He was 60. Bill Bonds, iconic Detroit broadcaster and longtime broadcaster for WXYZ-Channel 7, died Dec. 13. He was 82. Ronald Milner, former president of Milner Hotels Inc., died Dec. 17. He was 85. Bonds Bill Burton, CEO of the Troy-based Detroit Radio Advertising Group, died Dec. 20. He was 85. Patricia Hill Burnett, artist, feminist, 1942 Miss America runner-up, died Dec. 29. She was 94.

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January 5, 2015

RUMBLINGS New coach comes with suggestions ow that the University of Michigan has landed Jim Harbaugh as its football coach, how should it take care of him? Matt Barrows, the San Francisco 49ers beat writer for The Sacramento Bee, includes the following suggestions in a Dec. 30 tongue-inHarbaugh cheek blog post about the now-former 49ers coach: You may notice that your Harbaugh never shuts off. This is normal. Your Harbaugh may arrive one day with a chipped tooth, a bent finger or a gash across his forehead. This is normal. Your Harbaugh has been programmed for combat and within six months will pick a fight with the biggest, baddest bully on the block. Urban Meyer, you have been warned. For the rest, see sacbee.com.

Speaking of Harbaugh … For the next couple of weeks, it will be difficult to escape the joy surrounding Harbaugh’s return. That’s in part because the Bank of Ann Arbor has paid to erect bright yellow Harbaugh-related messages on six billboards around town. “It’s who we are, it’s our community, it’s what we can do in understanding important events in the community and reacting accordingly,” said bank President and CEO Tim Marshall. Among the messages are “Welcome back, Jim-Bo” and “Those who return will be champions.” Harbaugh was a UM quarterback in

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the mid-1980s. One billboard is along I94, three are on I-275, and three are in the city. They’re a combination of paper and digital, Marshall said. They’ll remain up for about two weeks. The idea to put up the messages came from the bank’s Ann Arbor ad agency, Perich, Marshall said. “Ernie Perich just pitched me the idea of doing billboards on Saturday when the path to Harbaugh was clearly in place,” Marshall said. “By 4 p.m. Monday afternoon, the creative was done and the contracts were signed off.” Media outlets around the country wrote about the billboards, which the bank tweeted images of via @BankOfAnnArbor. On Twitter, the bank briefly changed its name to “Bank of Ann Arbaugh.” The feel-good marketing is part of the bank’s effort to reinforce the idea that it is Ann Arbor’s bank. “That’s what we try to pound home,” Marshall said.

Hey boy, let’s go straight to video Ryan Gosling’s made-in-Detroit film, “Lost River,” won’t see theaters. The drama, shot by the actor-turned-director in the city last summer, will instead be released by Warner Bros. on video in April. “Lost River” received a $1.75 million Michigan film tax incentive in 2013. While filming in Detroit, the movie’s working title was “How to Catch a Monster.” At the time it received the film tax incentive, its projected in-state expenditures were $6.2 million; it was expected to hire 104 Michigan

COURTESY BANK OF ANN ARBOR

The Bank of Ann Arbor is heralding the return of Jim Harbaugh to UM with bright yellow billboards around town.

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workers. The movie features Christina Hendricks, Saoirse Ronan and Eva Mendes and marks the first time Gosling has written and directed a feature film. It’s about a single mother who gets swept into a Gosling dark fantasy underworld while her teenage son discovers a secret road leading to an underwater town. Gosling was spotted repeatedly around the city while filming last summer; the “Hey Girl, Detroit” Tumblr account chronicled his whereabouts — and poked fun at his popularity — via memes like, “Hey girl, are you related to Joe Louis? Because you’re a knockout.” But critics weren’t swooning. From Variety’s Justin Chang: “ ‘Lost’ is indeed the operative word for this violent fairy tale about a fractured family trying to survive among the ruins of a city overrun by thugs, sexual predators and other demons.”

Henry Ford still on tap The Henry Ford Health System South Campus residential, retail business project that the Detroit-based system announced in 2010 is still alive and well. Sources tell Crain’s that major announcements are expected to be made over the next several months to develop and improve a 300acre parcel south of Grand Boulevard near Henry Ford Hospital in Detroit. William Schramm, Henry Ford’s senior vice president of strategic business development, said talks are underway with several developers for retail and residential buildings. Schramm confirmed that one of the developers interested in working with Henry Ford on a residential and retail project is Farmington Hills-based Northern Equities Group. Officials there declined comment. Last year, Cardinal Health Inc. became the first tenant in the South Campus community health park when it opened a new medical products distribution center. Schramm said Henry Ford also is trying to encourage developers into building a new senior living center south of West Grand. The center could provide living quarters for Henry Ford Hospital retirees and long-term residents of the neighborhood, he said. The South Campus park is bounded by Grand Boulevard, the Lodge, I-94 and 14th Street.

Kellogg rival drops bid for Egyptian firm hares of Battle Creek-based Kellogg Co. slipped after Middle Eastern private equity investor The Abraaj Group said it was dropping out of a bidding competition with the cereal maker over Egyptian baked goods manufacturer BiscoMisr, AP reported.

ON THE MOVE Bruce Angiolillo was

named general counsel for North American operations by Takata Corp., the Japanese supplier at the center of a global air bag recall scandal. Angiolillo, a longtime partner at New York Citybased law firm Simpson Thacher & Bartlett LP, takes the role at Auburn Hillsbased TK Holdings Inc. to replace retiring Don Schiemann, to remain with Takata as an adviser. Chad Grant, former COO of the Detroit Medical Center’s Children’s Hospital of Michigan, was named CEO of Pontiac-based McLaren Oakland, a subsidiary hospital of Flintbased McLaren Health Care. Grant, 40, succeeds Clarence Sevillian, promoted to CEO of the McLaren Bay Region. Marschall Runge, M.D., was approved by University of Michigan regents to be the next executive vice president of medical affairs for the University of Michigan Health System. Runge, 60, who was executive Runge dean at the University of North Carolina School of Medicine, starts March 1 as successor to Ora Pescovitz, M.D., who left UM in June for a job at Eli Lilly in Indianapolis. Malcolm Brown, a shareholder in the Bloomfield Hills office of Butzel Long PC who has represented Oakland County in labor and employment law issues for more than 25 years, will join the administration of Executive L. Brooks Patterson as deputy county executive. Brown replaces Ken Rogers, who is leaving to become the full-time executive director of Automation Alley. Troy-based Seco Tools LLC said it promoted Robert Keenan, manager of its Canadian business and central time zone sales in the U.S., to president. Keenan

replaces Kurt Nordlund, who will become senior adviser to Swedish parent company Seco Tools AB. Outgoing state Rep. John Walsh was named director of strategy, and Kent County Circuit Judge James Redford was appointed chief legal counsel by Gov. Rick Snyder, said The Associated Press. Walsh succeeds Bill Rustem, who retired last summer. Redford, who lost a bid for the Michigan Supreme Court in November, succeeds Mike Gadola, now a state Court of Appeals judge. Nick Lyon, director of the Michigan Department of Community Health, also has become interim director of the separate Department of Human Services, after the departure of Human Services Director Maura Corrigan, a former Michigan Supreme Court justice who retired at year’s end.

COMPANY NEWS Troy-based health care IT company CareTech Solutions Inc. was acquired by Troy-based HTC Global Services. Terms of the deal were not disclosed. CareTech provides IT and Web products and services for U.S. hospitals and health care systems. Swedish rubber compounder Hexpol AB made its first North American plastics acquisition, buying the plastics compounding business of Whitmore Lakebased RheTech Inc. for $112 million, Plastics News said. A third new restaurant opened in Detroit Metropolitan Airport’s McNamara Terminal in time for holiday travelers. Gordon Biersch, a brewpub, debuted in the former Heineken Bar location. Longhorn Steakhouse earlier opened in the former Jose Cuervo Tequileria location, and in November, Espressamente Illy Café and Fountain Bar opened to replace one of four Starbucks locations at the airport. Siblings Kassem and Maya Fardoun will open the first franchised Falafill, a Chicago-based Mediterranean restaurant chain, in Midtown Detroit this month. The 1,200-squarefoot restaurant at 4206 Woodward Ave. will seat 30. Fiat Chrysler Automobiles, the Netherlandsbased parent company of what was Chrysler Group LLC, said it has changed the name of its U.S. affiliate from Chrysler Group to FCA US LLC. The parent company also said Italy’s Fiat Group Automobiles SpA is now FCA Italy SpA. The new name removes the name of Walter P. Chrysler from the company he founded in 1925 for the first time in its history.

OTHER NEWS The Aloft Detroit opened, bringing a boutique hotel and new apartments to the historic David Whitney Building downtown. All 108 apartments at The Residences at the David Whitney have been leased, and all of the hotel’s available 136 rooms were sold out for its first weekend. The bill for lawyers, consultants and other professionals in Detroit’s historic bankruptcy is $170 million, AP reported. The city disclosed the figure in a court filing as ordered by U.S. Bankruptcy Judge Steven Rhodes. Detroit’s two pension funds will get $195 million from the state Feb. 9, in a payment approved by a three-member board overseeing Michigan’s contribution to the city bankruptcy case, AP reported. The money is intended to strengthen the pension funds, prevent cuts from going deeper than 4.5 percent for retirees, and prevent any sale of cityowned art. The second phase of $8 million in federal New Markets Tax Credit funding for the $137 million M-1 Rail streetcar project in downtown Detroit was received. The M-1 Rail project is the first public transportation initiative to receive funding through New Markets Tax Credits, said a news release. A $5.5 million first-position mortgage for the Ellington development at Woodward and Mack avenues in Midtown has been secured. The development by Florida-based Ram Realty Services has 55 units and about 13,000 square feet of retail space occupied by Bank of America, Starbucks and J.P. Morgan Chase. A Michigan appeals court reversed a decision and dismissed a lawsuit filed on behalf of 159 people in the Detroit area whose medical records were mistakenly made available online by a contractor at Henry Ford Health System, AP reported. The state of Michigan won’t appeal a federal judge’s decision that struck down a law barring local governments from offering benefits to same-sex partners, AP reported.

OBITUARIES Paul Gadola, a retired U.S. district judge who served two decades on the federal bench in Southeastern Michigan, died Dec. 26. He was 85. Jim Tessmer, owner of Tessmer Book Bindery in Mt. Clemens, died Dec. 4. He was 71.

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The Ignition audience will crown the hottest startup at the auto show. This pitch competition will feature companies from around the world and an exciting array of technology and innovation. Moderator: Matt Burns senior editor, TechCrunch

Startups participating: 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.

WEDNESDAY, JAN. 14 9 -11:30 A.M. | COBO CENTER To register, visit crainsdetroit.com/ignition2015 or call (313) 446-0300

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ɻ Beet LLC, Plymouth Maker of products to monitor and diagnose problems in the manufacturing process ɻ Inmatech, Ann Arbor Creator of the next generation of super-capacitors for power management ɻ Inventev, Detroit Developing the next generation of plug-in hybrid vehicle technology ɻ Mojio, Vancouver Connecting a smartphone to a vehicle through its diagnostic port ɻ TowerSec, Israel and Ann Arbor A cybersecurity ﬁrm focused on protecting connected vehicles

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