Crain's Detroit Business, Feb. 2, 2015 issue by Crain's Detroit Business

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www.crainsdetroit.com Vol. 31, No. 5

FEBRUARY 2 – 8, 2015

$2 a copy; $59 a year

The more things change, more they stay the same

Page 3 Detroit sites in search of developers to give them new life 2 masters of disasters unite to expand in Midwest With new owner, TI Auto closes book on 2009 woes Inside Linkner’s new adventure in entrepreneurship, Page 5

This Just In Judge narrows scope of DMC-McLaren dispute An Oakland County judge narrowed the issues in dispute Friday on whether Barbara Ann Karmanos Cancer Institute improperly broke its affiliation agreement with Detroit Medical Center by joining Flint-based McLaren Health Care Corp. in 2013. Last week, lawyers for McLaren and DMC said they’d reached an impasse in trying for an out-of-court resolution, in a 16-month legal battle before Oakland Circuit Judge Wendy Potts. Potts in a Friday ruling eliminated two of seven McLaren’s claims against DMC: intentionally inflicting economic harm and creating unfair competition. She let five others stand, including a claim DMC violated state antitrust law by holding Karmanos to an affiliation agreement without end. No trial date is set, said Greg Lane, McLaren’s chief administrative officer. The DMC sold its cancer business to Karmanos in 2005 in a below-market-value deal for $9.9 million, which carried an exclusive affiliation agreement with no end date. McLaren sued DMC in September 2013, the same day it reached an affiliation agreement for Karmanos to join its hospital system. — Jay Greene

t was 30 years ago this week that Crain Communications launched Crain’s Detroit Business. Our front-page story in that first issue was about the ongoing circulation war between the Detroit Free Press and The Detroit News. Both papers wanted to remain independent. But we quoted a newspaper analyst who predicted a “joint operating agreement” was imminent. The announcement came in April 1986. And in the last minutes of the Reagan administration, Attorney General Ed Meese

declared the Free Press a “failing paper” and approved the JOA, which was finalized in late 1989. This story wasn’t covered very often or very well in the dailies, but it was a big story for Crain’s and the local business community, which included advertisers. Today, the JOA is still front-page news; our latest story on the dailies ran Jan. 19. I always thought that the business community needed its own business weekly. We were already publishing a successful Automotive News, but there was plenty of news being ignored. Our motto then and now: “There is more to Detroit than just cars.” It is just as true today as it was in 1985. There are lots of businesses in Southeast Michigan that have nothing or little to do with the automobile industry: retailing, banking,

CRAIN’S DETROIT BUSINESS: THE BIG 3-0 Looking back: In this issue, we begin a weekly feature looking at stories from 1985 and what has happened since they appeared, Page 4 On the Web: Read (or reread) a PDF of the entire first issue of Crain’s, crainsdetroit.com/30

See Crain, Page 19

Detroit’s mayor has earned high marks for style, speed and stability in his first year. But now comes year two

Duggan’s challenges turn more complex BY AMY HAIMERL | CRAIN’S DETROIT BUSINESS

ike Duggan has juice. In his first year as Detroit mayor, he has shown that he’s got the power to move the intractable, to make the impossible possible. He’s got a way to make people believe, to step in line. When he stood up at his invocation last January and told the gathered crowd “we are not going to tolerate this kind of service in the city of Detroit,” it stood in ovation, agreeing and believing. One week in, the mayor had already impressed by getting trash picked Mayor Mike Duggan will up and roads plowed during a polar vortex. deliver his State of the City That required classic Duggan: a tactical mind, a address at 7 p.m. Feb. 10. no-nonsense demeanor and a willingness to play enIt will be live streamed forcer. He assumes anything can get done, and holds at detroitmi.gov. those around him to the same exacting standards he sets for himself. He is also a man who lionizes the underdog, the one who speaks truth to power. But now he is the mayor. He is the power. And he doesn’t always appreciate truth-telling. “The mayor gets the highest marks from me,” said one executive, who spoke on the condition of anonymity. “But he’s a tough S.O.B., and I wouldn’t want to be on the wrong side of him.” Duggan arguably has more to deal with than any mayor

STATE OF THE CITY

See Duggan, Page 20

If year one for Detroit Mayor Mike Duggan was about speed and problem-solving, year two is about long-range thinking.

NEWSPAPER

NATHAN SKID/CDB

Nexteer eyes bigger brand with HQ move to SE Mich. BY DUSTIN WALSH CRAIN’S DETROIT BUSINESS

In an effort to grow brand recognition, Saginaw-based Nexteer Automotive Corp. is moving its global headquarters to Southeast Michigan. The former Delphi Corp. steering division plans to secure a lease in northern Oakland County in the next few weeks to move roughly 150 employees, including its Csuite, global financial team, human resources, information technology and sales staff, the company told Crain’s. Joe Perkins, senior vice president and CFO, said the move is triggered by a need to better en- Perkins gage its customer and supply base as well as drum up more media coverage. “We feel constrained being outside of Detroit in our ability to promote our brand,” Perkins said. See Nexteer, Page 21

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MICHIGAN BRIEFS Chase Bank to close 37 branches inside Meijer stores in Michigan Chase Bank this spring plans to close 37 branches inside Meijer Inc. stores throughout Michigan, MLive.com reported. The departure of Chase, part of New York City-based J.P. Morgan Chase & Co., comes more than two years after Walker-based Meijer made a deal with Columbus, Ohio-based Huntington Bancshares Inc. to open branches in the retailer’s stores. Huntington’s Steelcase Inc.-designed and furnished branches are in the majority of Meijer’s Michigan stores and will replace the Chase branches.

Ind. RV maker plans nearly 400 jobs for 3 plants in SW Michigan Recreational vehicle manufacturer Forest River Manufacturing Inc. plans to build three plants in the Southwest Michigan village of White Pigeon, creating nearly 400 jobs with a $7 million investment, The Associated Press reported. Elkhart, Ind.-based Forest River is a division of Berkshire Hathaway Co. The Michigan Economic Development Corp. last week announced Michigan Strategic Fund approvals for that project and one by Toyota Motor Engineering & Manufacturing North America, which plans to expand its Ann Arbor Township op-

State VC investment value up nearly 100% from 2013 Venture capital investing in Michigan had a strong 2014. Almost $220 million was invested in 50 state companies. While the number of deals was down from 74 in 2013, the dollar value was up nearly 100 percent from $111.1 million. The data in the MoneyTree Report is compiled by Thomson Reuters and released by the National Venture Capital Association and PricewaterhouseCoopers LLP. It was the second-highest annual total for state investing since the pre-bust Internet frenzy of 2000 and included the largest single VC round ever raised by a state company: the $59.5 million raised by ProNAi Theraputics Inc., which is developing a drug to fight cancer. They also compiled data for 160 metropolitan statistical areas in the U.S. In 2014, for the first time ever, the Detroit MSA saw more VC activity than Ann Arbor. 䡲 Detroit ranked 38th nationally with $106.1 million invested in 18 deals. 䡲 Ann Arbor was No. 46, with $67.2 million in 21 eration by spending $75.15 million and creating 85 jobs. Both projects also are expected to get local property tax abatements.

MICH-CELLANEOUS 䡲 Michigan State University alumnus and retired businessman Henry Timnick is giving $2 million to the university to create an endowed professorship in humanities in honor of his mother. 䡲 Passenger traffic at Bishop International Airport in Flint slowed at

deals. 䡲 Kalamazoo-Battle Creek ranked No. 63, with $31.4 million in five deals. 䡲 Grand Rapids-Muskegon-Holland, No. 86, with $13.7 million in two deals. 䡲 Lansing-East Lansing, No. 147, with $850,000 in three deals. 䡲 Flint, No. 157, with $50,000 in one deal. Chris Rizik, CEO and fund manager for the Ann Arbor-based Renaissance Venture Capital Fund, an affiliate of Business Leaders for Michigan, said that while it’s encouraging to have a high deal value for a particular year, it is more important to look at trend lines. “If you look from 2008 forward, you see that Michigan is a completely different state for venture capital than it was before,” he said. “The venture successes we’ve had have shown people this is a state where you can make money.” — Tom Henderson

the end of the year but still increased 5.7 percent compared with 2013, MLive.com reported. 䡲 An audit presented to the Flint City Council last week said the city’s general fund deficit has shrunk to $9 million from $19 million in two years and is on track to being eliminated in five years, MLive.com reported. 䡲 Lansing-based KTM Industries Inc. will pay the federal government about $171,000 to settle a case in which it allegedly submitted false records to get and keep a

grant from the National Science Foundation, The Associated Press reported. KTM CEO Tim Colonnese also will pay $25,000 and is banned from applying for federal grants, contracts or other programs for three years. 䡲 The Talent Tribune, which de-

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Find business news from around the state at crainsdetroit .com/crainsmichiganbusiness. Sign up for the Crain’s Michigan Morning e-newsletter at crainsdetroit.com/emailsignup.

CORRECTION ■ A story on Page 17 of the Jan. 26 issue should have said Kevin Bopp was named CEO and chief communications officer for Central Processing Services. Also, retired CEO Ted Widman’s name was misspelled.

Read AheadOfTheCurve.wnj.com, the deﬁnitive law blog for navigating the automotive supply chain.

Keeping automotive suppliers ahead of the curve

scribes itself as a “data-driven HR blog,” says the city of Owosso, just west of Flint, is among the top places in the Midwest to start a business, MLive.com reported. The blog used census data to determine net small-business growth, net small-business employee growth and percentage of businesses that employ fewer than 20 employees. 䡲 Munising police Officer Justin Schlabach is being sued by Southfield-based Fieger Law PC, Geoffrey Fieger’s law firm, after the officer shot and killed a fleeing motorist who advanced on the officer after crashing his car. Schlabach was cleared of criminal charges, WLUC-TV reported. 䡲 Short’s Brewing Co. in Elk Rapids passed New Holland Brewing Co. in Holland as Michigan’s thirdlargest brewery. Galesburg-based Bell’s Brewery Inc. and Grand Rapids-based Founders Brewing Co. are Nos. 1 and 2.

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2 disaster aid firms combine to build Midwest ties

Inside

Texas firm buys Statewide, seeks Mich. clients

COURTESY OF STATEWIDE DISASTER RESTORATION

ANDREW JAMESON/WIKIPEDIA

Besides assignments such as this one in Detroit, Stateside Disaster Restoration was kept busy cleaning up damage caused by the polar vortex and flooding.

With its recent acquisition of Southfieldbased Statewide Disaster Restoration, Texasbased Interstate Restoration LLC has gained a Midwestern foothold — and access to Michiganbased Fortune 500 customers. The deal is Interstate’s second for local disaster service assets, following its 2012 acquisition of the national business platform of the former Troy-based InStar Services Group LP from Black Eagle Partners LLC. That deal excluded InStar’s Oakwood Construction business in California, which was acquired by Birmingham-based

Belfor USA Group Inc. Interstate acquired Statewide for an undisclosed amount in November. The merger creates a business with more than $150 million in annual revenue and compatible cultures, Statewide founder Adam Becker said. The merger “allows us the opportunity to continue the growth we had last year throughout the U.S.,” he said.

A truly super Super Bowl for TV stations, ad buyers, Page 6

Becker See Disaster, Page 19

DAVID HALL/CDB

BY SHERRI WELCH CRAIN’S DETROIT BUSINESS

Company index These companies have significant mention in this week’s Crain’s Detroit Business: Ally Financial . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Bedrock Real Estate Services . . . . . . . . . . . . . . . . . 3 Center for Automotive Research . . . . . . . . . . . . . . 21 Central Michigan University . . . . . . . . . . . . . . . . . 12 Child Safe Michigan . . . . . . . . . . . . . . . . . . . . . . . 10 City Connect Detroit . . . . . . . . . . . . . . . . . . . . . . . . 7 Commonwealth Associates . . . . . . . . . . . . . . . . . . 12 Detroit Economic Growth . . . . . . . . . . . . . . . . . . . 18 Detroit Medical Center . . . . . . . . . . . . . . . . . . . . . . 9

COSTAR GROUP INC.

Eastern Michigan University . . . . . . . . . . . . . . . . . 12

A PART OF THE PARCELS

205 Alfred, part of a largely vacant portion of Brush Park 2 Brewster Wheeler Recreation Center 3 Brodhead Naval Armory 4 Brewster-Douglass housing projects 1

COSTAR GROUP INC.

Faurecia North America . . . . . . . . . . . . . . . . . . . . 21 Fuel Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 General Motors . . . . . . . . . . . . . . . . . . . . . . . 17, 21 GloStream . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Grow Detroit’s Young Talent . . . . . . . . . . . . . . . . . . 7 Interstate Restoration . . . . . . . . . . . . . . . . . . . . . . 3 Judson Center . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Larson Realty Group . . . . . . . . . . . . . . . . . . . . . . . 18 Madonna University . . . . . . . . . . . . . . . . . . . . . . . 12 Michigan Economic Development . . . . . . . . . . . . . . 4

Developers eye city-owned sites

Michigan State University . . . . . . . . . . . . . . . . . . . 12 Michigan Venture Capital Association . . . . . . . . . . . 4 Mike Morse Law Firm . . . . . . . . . . . . . . . . . . . . . . . 6 Neogen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Nexteer Automotive . . . . . . . . . . . . . . . . . . . . . . . . 1 Nonprofit Counsel & Counseling . . . . . . . . . . . . . . 14 Oakland University . . . . . . . . . . . . . . . . . . . . . 12, 13

BY KIRK PINHO CRAIN’S DETROIT BUSINESS

Dan Gilbert has his eyes set on a different slice of real estate in Detroit: A largely vacant 8.4-acre portion of Brush Park, the enclave just north of downtown that once housed some of the city’s wealthiest families, like the Whitneys, the Kahns and the Hudsons. A part of the formerly tony neighborhood that remains dotted with many dilapidated vacant homes — and some redevelopments — the

Current, expected RFPs include Brush Park, riverfront, Midtown 7.5- and 0.9-acre parcels are included in one of the seven requests for proposals that Detroit has or plans to issue for development or redevelopment in the city. Multiple developers are interested in the seven city-owned sites, which are spread throughout the city, from the riverfront to Mid-

town to a historic abandoned health complex off the Lodge Freeway near Clairmount Street. In Brush Park, Gilbert’s Bedrock Real Estate Services LLC is one of nine bidders seeking the city’s approval to redevelop a portion of the 100-acre-plus neighborhood. Steve Rosenthal, principal with

Bedrock, said in a statement emailed to Crain’s that the proposal provides an opportunity for the company and its affiliates to use their expertise and resources “to ensure this project is successful.” He said other partners, including investors, advisers and other individuals and organizations, would be involved if awarded the RFP. Past Brush Park redevelopment efforts have had marked starts and stops dating back over a decade.

Perceptron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Renaissance Venture Capital Fund . . . . . . . . . . . . . 4 Signal Restoration Services . . . . . . . . . . . . . . . . . 19 Skillman Foundation . . . . . . . . . . . . . . . . . . . . . . . . 7 Statewide Disaster Restoration . . . . . . . . . . . . . . . . 3 TI Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Triarq Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 University of Detroit Mercy . . . . . . . . . . . . 12, 13, 14 University of Michigan . . . . . . . . . . . . . . . . . . 11, 13 University of Michigan-Flint . . . . . . . . . . . . . . . . . 13 Urban Neighborhood Initiatives . . . . . . . . . . . . . . . 14 Walsh College . . . . . . . . . . . . . . . . . . . . . . . . 11, 13 Wayne State University . . . . . . . . . . . . . . . . . . 11, 13 WDIV-Channel 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

RFPs, Page 18

Department index

Bain acquisition of TI would close door on 2009 woes BY DUSTIN WALSH CRAIN’S DETROIT BUSINESS

After the signing of an agreement last week to be acquired by the private equity firm Bain Capital LLC, Auburn Hills-based TI Automotive Ltd. is shutting the door on an industry collapse. Terms were not disclosed, but sources told Bloomberg the deal was valued at $2.4 billion. The existing management team,

including Chairman and CEO Bill Kozyra, will continue to lead the company, and no changes will occur operationally. The deal is subject to approval by TI AuKozyra tomotive shareholders. The closing is expected in

THIS WEEK @ WWW.CRAINSDETROIT.COM

mid-2015, Kozyra told Crain’s. In January, TI Automotive reportedly delayed its board vote for the Bain offer to review a competing offer by Pamplona Capital Management LLP, Bloomberg reported. Pamplona’s offer was $115 million more than Bain’s, according to that report. The signing of an agreement with Boston-based Bain comes after months of speculation, which began last summer. In November,

reports that Bain was courting TI began to surface, but no deal had been reached. Kozyra said Bain’s investment marks the end of TI’s ties to the 2009 collapse of the automotive sector, which forced dozens of local suppliers into bankruptcy. To avoid its own bankruptcy, TI, a supplier of automotive fuel systems, swapped debt for shares with See TI Automotive, Page 19

Dance the weekend away ... Or find another cultural diversion in our weekly “10 Things to Do This Weekend” feature, crainsdetroit.com/10things COURTESY OF EISENHOWER DANCE

BUSINESS DIARY . . . . . . . . . . . . . . . . 15 CALENDAR . . . . . . . . . . . . . . . . . . . . 16 CLASSIFIED ADS . . . . . . . . . . . . . . . . 17 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 1 MARY KRAMER . . . . . . . . . . . . . . . . . . 8 OPINION . . . . . . . . . . . . . . . . . . . . . . . 8 PEOPLE . . . . . . . . . . . . . . . . . . . . . . 15 RUMBLINGS . . . . . . . . . . . . . . . . . . . 22 WEEK ON THE WEB . . . . . . . . . . . . . . 22

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LOOKING BACK

On Feb. 4, 1985, Crain’s reported on a state program that made direct venture capital investments in companies. This story tells how it turned out. 30 YEARS AGO THIS WEEK

State’s VC policy misguided, but set stage for future BY TOM HENDERSON CRAIN’S DETROIT BUSINESS

“S

tate pins high-tech hopes on venture-capital program,” read a headline in the first issue of Crain’s Detroit Business ever published, on Feb. 4, 1985. But even as the story ran, the program was already falling into disfavor and about to be halted. The main criticism today of what was called the Venture Capital Division of Michigan’s pension system was that it made direct investments into early-stage technology companies, a risky proposition at best. But the program, if misguided, was a well-intentioned effort by the state to diversify its economy, an effort that would have a resurrection of sorts in 2006 to lead directly to today’s boom in venture capital activity. “They were tilling in arid soil without any water. Direct investing was just too ad hoc. The program was dying off even as Crain’s wrote about it,” said Sam Valenti III, CEO of Bloomfield Hills wealth management firm Valenti Capital LLC, who joined the Valenti five-member investment committee of the state’s pension fund in 1983. That was the year after its first venture investment, in Perceptron Inc., a thenFarmington Hills-based maker of optical systems to manage quality control on the factory floor. At the time of the Crain’s article, the state had invested $4.5 million in Perceptron, and a total of $34.8 million in 20 companies, including $173,870 in a tiny biotech in Lansing called Neogen. Both would ultimately be successful

and go public, but their Read the original story, success“State pins high-tech hopes on venture-capital es came after program,” as it years of appeared on Page 18 of the Feb. 4, 1985, issue, struggle crainsdetroit.com/30 and after the pension system ended direct investing. “Other states tried direct investing, too, and they always came back to investing instead in those who invest in startup companies for a living,” said Chris Rizik, CEO and fund manager for the Ann Arbor-based Renaissance Venture Capital Fund, a fund of funds affiliated with the Business Leaders for Michigan that invests in VC firms willing in turn to invest in state companies. What the pension fund was doing, in essence, was trying to beat venture capitalists at their own game. For example, a handful of the state investments were in companies that Doan Associates, the state’s first VC firm, had also invested in. But the state wasn’t investing in all of Doan’s portfolio companies, just a few. It was, in effect, trying to pick Doan’s winners. Better, say Valenti and Rizik, to invest in all of a VC firm’s investments as one of its limited partners and not worry about which win and fail as long as you have more of the former.

ON THE WEB

Building an ecosystem Valenti said that while direct investing in tech companies was misguided, the effort was prescient. How prescient? There was no venture capital ecosystem in the state when the first investment in Perceptron was made in December 1982. The term “Silicon Valley” had just started to be used for the growing tech industry in Califor-

nia but wouldn’t be in common use for several years. And Route 128 was still only a highway in Boston and not a synonym for tech startups on the East Coast. Doan Associates and an Ann Arbor firm called Michigan Capital and Service were the only VC firms in the state in the late 1970s. Michigan Capital was sold to the National Bank of Detroit in 1980, but the bank’s foray into VC didn’t last long. It wasn’t until 1987 that EDF Ventures, the longest-lived VC firm now operating in the state, was formed, and it wasn’t until 2002 that there were enough VC firms here for Valenti to co-found the Michigan Venture Capital Association. So while there wasn’t much of a local VC industry, the economic climate of the early 1980s led to the push for diversification that in turn led to the push to fund tech startups. The climate in Michigan was every bit as bad as it was in the recent Great Recession, Valenti said. New companies couldn’t get bank loans. The auto companies laid off tens of thousands. Chrysler was on the verge of going out of business. Before joining the pension fund’s investment committee, Valenti had led Masco Corp.’s acquisition strategy. He had also been at the founding of the National Venture Capital Association in New York in 1970 and was an early investor in early private equity funds there. So when legislative actions in 1982 and 1985 allowed the state retirement system to invest up to 20 percent of its assets in alternative investments such as VC, private equity and hedge funds, Valenti was a logical resource to tap. He became vice chairman of the investment committee in 1988 and was chairman from 1992-2000, with the state becoming an acknowledged leader in the alternative investment class. The retirement system, which had almost $9 billion in assets at the time of the Crain’s article, had $52 billion when Valenti stepped down, driven in part by the returns from its alternative investments. Many of those investments, though, were in out-of-state firms with out-of-state portfolio companies. That began to change in 2006, when the Michigan Economic Development Corp. launched the $109 million 21st Century Investment Fund and the $95 million Venture Michigan Fund, both of which invested in Michigan VC firms and in out-ofstate firms willing to invest here. The state launched a second Venture Michigan fund in 2011.

Growing investment VC investment in Michigan continues to grow. In 2014, there was almost $220 million invested in state companies by all sources, according to the National Venture Capital Association. That was about double from 2013, the second-best year for

MICHIGAN’S INVESTMENTS The following is a list of 20 companies the state of Michigan made direct capital investments in between December 1982 and August 1984. They’re listed below with the amount the state invested in them as of January 1985 and what happened to them. Records on whether the state made money on its investments are not available.

Still here

Neogen Inc., East Lansing, $173,870. Now a diversified life sciences

company that provides a wide range of veterinary, food safety, agricultural and other products and services. Went public in 1987. Posted net income of $28 million on revenue of $247 million for the fiscal year ended May 31, 2014. Perceptron Inc., Plymouth, $4.5 million. The company, which provides laserbased measurement and machine vision products, went public in 1992. For its fiscal year ended June 30, 2014, it posted net income of $2.4 million on $60 million in net sales. Founder Dwight Carlson left in 1996. He founded Ann Arbor-based Coherix in 2003 and serves as its CEO. The company makes highspeed, high-definition 3-D measurement and inspection products. Prab Inc., Kalamazoo, $6 million. The company, founded in 1950, survived the ups and downs of the industrial robotics industry and develops material handling and chip and fluid management systems. Printek Inc., Benton Harbor, $2.5 million. Makes printers. Founder Tom Yeager sold the company to Vascom, Va.-based Dascom Americas last year. Quantum Composites, Bay City, $625,000. Started in Midland, it makes thermoset structural sheet molding compounds. Now owned by North Kingsville, Ohio-based Premix Inc.

Merged and moved

Applied Intelligent Systems, Ann Arbor, $2 million. The machine vision company was acquired by Electro Scientific Industries Inc. for about $60.6 million in 1997. Cartrex Corp., Grand Rapids, $600,000. The tape cartridges maker was purchased by Scottsdale, Ariz.-based Datamag Inc. in 1988 by assuming its $1.55 million in secured debt. Internet Systems Corp., Southfield, $200,000. Merged with an unnamed company in 1987, according to state records. Irwin Magnetic Systems Inc., Ann Arbor, $1.9 million. The maker of magnetic tape data storage systems once employed several hundred people. The company was sold to California-based Cipher Data Products Inc. in 1989, which was itself sold a year later. Founder Herb Amster died in 2010. Lexitel Corp., Birmingham, $2.3 million. The long-distance carrier merged later in 1985 with Bingham Farms-based Allnet, which was later sold to Rochester, N.Y.-based Frontier Communications. Meridian Instruments, Okemos, $603,110. Formed by three Michigan State University professors to sell laser microscope systems. Eventually sold, but no details are available. Photon Sources Inc., Livonia, $3.3 million. The laser-welding company was purchased later in 1985 by what is now Bedford, Mass.-based GSI Lumonics for $11.7 million. SMC Technology Corp., Ann Arbor, $200,000. The database software company was sold to a subsidiary of Hitachi later in 1985. Synthetic Vision Systems, Ann Arbor, $4 million. Purchased by what is now Tempe, Ariz.-based View Micro Metrology in 1989. Out of business

Attache Software, Ann Arbor, $1.5 million. Opened as a U.S. office of the

Australia and New Zealand-based parent of the same name. The parent company still operates, but not in the U.S. Condor Computer Corp., Ann Arbor, $1.2 million. The computer software company was dissolved in 1991, according to state records. PC Technologies, Ann Arbor, $528,689. The company sold computer peripherals. Dissolved in 1991, according to state records. Spectrum Casting, Flint, $116,223. Made high alloy castings. Dissolved in 1989, according to state records. Vixen Motors, Pontiac, $2.4 million. The company was formed to make fuel-efficient motor homes, and eventually collected $35 million from the state, the city of Pontiac and the Detroit police and fire pension fund, but went out of business in 1989. Worldmark, Eau Claire, $150,000. The food packaging company was dissolved in 1996, according to state records. VC investing in the state since the pre-bust Internet frenzy of 2000. The infrastructure also is growing. According to the Michigan VC association, there are now 23 VC firms headquartered in the state, up from 16 in 2009. And there are now 11 out-of-state firms with offices here, the most recent having been opened in Ann Arbor in November by the Houston-based Mercury Fund. Paula Sorrell, vice president for

entrepreneurship, venture capital and innovation for the MEDC, said that when she helped launch the state’s Small Business Development Centers in 2002, “there were about 50 tech startups we found to work with. Today, the MEDC tracks 3,000 early-stage tech companies.” Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

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Linkner to expand reach with leadership conferences, website BY TOM HENDERSON CRAIN’S DETROIT BUSINESS

Josh Linkner will formally announce Feb. 9 that he has launched the next phase of his entrepreneurial career, a series of one-day leadership conferences and a corresponding website with content from business leaders around the world. His new company, Fuel Leadership LLC, will hold its first event at the MotorCity Casino Sound Board in Detroit on April 13, with two events in the fall at U.S. cities yet to be announced. Speakers include Mark Fields, the CEO at Ford Motor Co.; retired basketball star-turned-businessman Magic Johnson; retired U.S. Navy commander and author Michael Abrashoff; author and entrepreneur Seth Godin; and actress Jessica Alba, who cofounded The HonLinkner est Co., a maker of eco-friendly products for babies expected to have an initial public offering this year that could hit $1 billion. Linkner said he wants to put on six to eight events in the U.S. next year and build up to 30-40 in the U.S. and abroad over the next five years. He co-founded Fuel Leadership with Jordan Broad, a former ePrize Inc. exec whose wife, Ashley Gold Broad, is one of the stars of “Hardcore Pawn.” Linkner said his co-investors are David Farbman, founder of Carbon Media Group, and Craig Erlich, the CEO of pulse220, an events and marketing company in Ferndale, where Fuel is temporarily based while Linkner looks for a downtown Detroit headquarters. Pulse220 will help stage the conferences. “We’ll be over the top. It will be like a rock conference. People will walk out with their jaws dropped,” said Linkner. Sponsors of the event in Detroit include Ernst & Young, Inc. magazine and Crain’s Detroit Business. In 1999, Linkner co-founded Pleasant Ridge-based ePrize, an online marketing company that was sold in 2012 and changed its name to HelloWorld Inc. last year. In 2010, he, Brian Hermelin and Quicken Loans Inc. Chairman Dan Gilbert co-founded Detroit Venture Partners, a venture capital firm that invests in early-stage social media, IT and Web companies, and quickly filled the Madison Building with portfolio companies. Linkner was CEO and managing partner of the firm until he stepped down in November to devote more time to his speaking and writing career. Linkner’s 2011 book, Disciplined Dreaming: A Proven System to Drive Breakthrough Creativity, and last May’s The Road to Reinvention: How to Drive Disruption and Accelerate Transformation, made the New York Times best-seller list and led to a speaking career. Linkner said those speaking engagements took him to a lot of business conferences, both one day and longer. He said their gen-

erally poor content inspired him to put on his own conferences. “There’s an 80-20 rule. Twenty percent of the content is good, the rest is poor to fair,” he said. “We’re going to give people the tools, techniques and networking they need for leadership. The need for events like this is higher than ever, but the process stinks. I want to flip it on its head.”

Linker said admission to the Detroit show will range from $895 to $1,695, which will allow more access to speakers, and includes a year’s access to Web content that includes weekly webinars; 5,000 leadership videos; a searchable database on what business leaders have to say about various topics; and access to eight-page summaries of hundreds of business

books. A Google check of “one-day leadership events” shows there is plenty of competition, including Tony Robbins of TV infomercial fame; Catalyst duo Andy Stanley and Craig Groeschel and financial guru Dave Ramsey. Said Linkner: “If there wasn’t a need for leadership training, it wouldn’t be a multibillion market.

There are a lot of old-school boring events. We’re going to be the gold standard. TEDx is the standard for interesting general information topics; we’ll be the gold standard for business leadership.” Linkner’s website is fuelleadership.com. Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

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Local TV affiliates, ad buyers score big during Super Bowl coverage BY BILL SHEA CRAIN’S DETROIT BUSINESS

An annual storyline in the runup to the Super Bowl is the eyepopping cost of advertising during the game. But the juicy financial story may be what a windfall the championship broadcast is for local affiliates. Thirty seconds of advertising on NBC during Sunday’s Super Bowl XLIX between the New England Patriots and Seattle Seahawks reportedly cost $4.5 million. Detroit’s NBC affiliate, WDIVChannel 4, isn’t disclosing the price for the dozen spots that were earmarked by the network for local sales here, but TV industry insiders estimated packages that included an in-game commercial sold for about $50,000. By contrast, a 30-second advertising spot during WDIV’s normal 6 p.m. Sunday newscast can sell for about $900, said a source who agreed to speak on the condition of anonymity. WDIV sold its entire Super Bowl inventory some time ago, said Marla Drutz, the station’s vice president and general manager. “We’re out there preselling it,” Drutz said. “A lot of advertisers want to get in early.” Additionally, lucrative local advertising spots are sold during the pregame and postgame coverage and during Super Bowl-related programming in the days before the game, she said. What the Super Bowl brings, Drutz said, “is the giant wave of interest and attention. It’s such a big part of our culture. The audience and advertisers know how popular it is.” Another choice spot for local ad buys is during the morning news on the Monday after the game because there will be discussion about the results and the traditionally popular national commercials. On Sunday, network programming began at noon. During the game, there were more than 40 national spots and others reserved for local and regional ad buys. WDIV’s local Super Bowl ad buyers are generally current clients rather than onetime buyers, and their spots are usually packaged with a variety of advertising components, such as online and mobile content, Drutz said. “You try to sell it as an entire experience for the consumer and the viewer,” she said. One of those buyers this year was Southfield-based attorney Mike Morse, who bought a 30-second spot during halftime before singer Katy Perry’s performance. He didn’t disclose his spending, but the deal included nine or 10 commercials for The Mike Morse Law Firm throughout the day before kickoff. “They put together a nice package and we went for it,” Morse said. “It’s a good opportunity to get eyes on your commercial that typically don’t watch daytime TV. I’m usual-

COURTESY OF THE NEW ENGLAND PATRIOTS/KEITH NORDSTROM

Quarterback Tom Brady led the charge this season for the New England Patriots as they headed into Sunday’s Super Bowl against the Seattle Seahawks. Ad buys before, during and after the game are moneymakers for local TV affiliates.

We’re out “ there preselling it. ” Marla Drutz, WDIV vice president and general manager

ly in a crowded space.” Like many attorneys, Morse advertises heavily during weekdays. He said he spends $4 million annually on television commercials, and his first Super Bowl buy was on WJBK-TV2 for last year’s game. Lerner Advertising Inc. in Beverly Hills did the creative for Morse’s new spot. “It’s branding, it’s awareness. Hopefully, calls increase next week and coming weeks,” Morse said. “We definitely saw an uptick in the month following the Super Bowl last year.” Super Bowl ad sales may have been more lucrative for WDIV than its network parent. RBC Capital Markets analyst David Bank told Reuters in 2013 that local ads yield higher profit margins than the national spots during the Super Bowl. “It’s massively profitable at the station level, much more so than at the network,” Bank told Reuters. NBC is paying $800 million a year for the National Football League’s slate of Sunday prime-time games under a nine-year deal signed in 2011 that went into effect this season. Broadcast rights contracts struck that year with NBC, CBS and Fox are worth a combined $28 billion and give each network three Super Bowl telecasts over the nine years. Local ad sales during the Super Bowl generated an estimated 85 percent profit margin for CBS affiliates in 2013, Bank told the news service, while the national network ads broke even for the network because of the enormous fees to produce and

air the game. Larger markets, because of the colossal viewership during the Super Bowl, command larger sums. When CBS aired Super Bowl XLVII on Feb. 3, 2013, the network’s New York City station, WCBS, sold at least two local ads for about $1 million each, Reuters reported that year. Super Bowl advertising has increased far faster than the rate of inflation, thanks to the game’s popularity. A 30-second commercial during this year’s game on NBC reportedly costs $4.5 million, with some going for more or less depending on what point they air during the game and other factors such as multi-ad packaging. That’s up $500,000 from a year ago. The most-watched TV program of all time was Super Bowl XLVII, with 164.1 million viewers, according to Nielsen Co. data provided by the NFL. Last year’s game, on Feb. 2, ranked third all time with 161.1 million viewers. The 2011 game was second at 162.9 million. National ads on ABC for Super Bowl XL, played in 2006 at Ford Field, sold for $2.4 million. When the Super Bowl was played at the Pontiac Silverdome in January 1982, ads on CBS cost $324,000. For Super Bowl I, which aired on both NBC and CBS on Jan. 15, 1967, commercials went for $42,000 for 30 seconds — or the equivalent of $297,000 in today’s dollars adjusted for inflation. From $42,000 to $4.5 million is an increase of 10,714 percent. In 1966, CBS and NBC jointly bought the rights to the first four Super Bowls (called the AFL-NFL Championship Game until Super Bowl III) for $9.5 million — or little more than a minute of commercial airtime during this year’s championship game. Bill Shea: (313) 446-1626, bshea@crain.com. Twitter: @bill_shea19

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City youth summer jobs program bolsters training, coordination BY SHERRI WELCH CRAIN’S DETROIT BUSINESS

Grow Detroit’s Young Talent, a public-private summer employment program for city youths, is putting more employer supports in place in the hopes of placing at least 5,000 youths in summer jobs at area companies. The program will provide stronger work readiness training this year and better coordination across summer job opportunities in Detroit, organizers said last week. Detroit Mayor Mike Duggan said the city would provide $1,000 in community development block grant funding — or half of the amount each youth can earn during the six-week program — as a match for every $1,000 that local companies contribute. Also new this year: an online platform at GDYT.org to manage youth recruitment, screening, placement and payroll for employers. Participating companies will also be provided with one of 50 youth employment specialists through City Connect Detroit to assist in matching students with jobs and employers and to manage any issues. The system will also collect data to track the program’s success and enable employers to log on to provide employee reviews, “so you can compare apples to apples when you’re helping kids grow and helping to match students to employers” next summer, said Kristen McDonald, vice president, program and policy, at the Detroit-

Michigan jobless rate holds nearly steady at 5.6% Michigan’s seasonally unadjusted unemployment rate was 5.6 percent in December, the state said last week, little changed over one month but down 2.1 points over a year. The Michigan Department of Technology, Management & Budget said Thursday that the December jobless rate was down 0.1 points from 5.7 percent in November and 7.7 percent in December 2013. The department said December’s regional unemployment rates ranged from a low of 3.2 percent in the Ann Arbor area to a high of 8.1 percent in the northeastern Lower Peninsula. It said the jobless rate in populous metropolitan Detroit fell 0.3 points in December to 6.7 percent. Read the full report at michigan.gov. From Associated Press

The system will collect data to track the program’s success and enable employers to log on to provide reviews. based Skillman Foundation, one of the program’s founders and funders. Corporations and foundations have contributed $1.9 million toward the program’s $3 million operating goal, she said. Groups also supporting the program include the W.K. Kellogg Foundation, the J.P. Morgan Chase Foundation, philanthropist Marjorie Fisher, the DTE Energy Foundation

and the Bank of America Foundation, McDonald said. City Connect and the Detroit Economic Growth Corp. are administering the program. Employers with existing summer youth employment programs can partner with Grow Detroit’s Young Talent and gain access to the database of young job candidates and employer support services. Detroit youth looking for summer jobs can apply through the website and also get free rides on city buses during the summer to get to their jobs. “The intent is to have employers on board by March so we have the ability to match the right kids and understand how many jobs are available,” before youth begin applying April 1, McDonald said. Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch

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OPINION

Look back with us as we mark 30 years A

s Crain’s enters its 30th anniversary year, we’ve had reason to review our coverage over the years and be reminded how much Southeast Michigan has changed over the past three decades. On Page 4 in this week’s issue, we publish the first of a weekly series of stories that shows how Detroit’s past has informed its present: How a misguided state practice of making direct venture capital investments in companies set the stage for more productive policies. In future weeks, we’ll look at how the demise of Stroh signaled broader changes in the beer industry; the legacy of some local icons and how regional cooperation has evolved over the years, among many other topics. But not every news story in 1985 had lasting implications. Here are some of them: “River cable car proposal sparks renewed interest,” March 18. Yes, there was a plan to build a cable car system across the Detroit River to Canada. You didn’t need a passport to cross the border in the ’80s, but even so, this plan never got off the ground, so to speak. “Distillers escalate pace of cordial war,” April 1. Detroit area distillers roll out 17 brands of flavored schnapps because “schnapps is becoming the cordial of the ’80s.” This was not an April Fool’s story. “Do real business groups eat quiche?” May 13, which notes the demise of beef. To quote: Heavy lunch fare is being axed by diners at luncheon meetings in favor of lighter, more nutritious meals featuring poultry and salads.” In more recent years, Crain’s has reported on the rise of steakhouses. “Cellular phones have untold uses,” Aug. 5. Written by a former Crain’s staff member who declared she was not going to get a car phone because “the typical cellular phone user is an executive challenging his blood pressure by berating an underling, rather than an up-and-coming salesperson out nailing down important contracts.” “Detroit goes against trend — new Coke sells best here,” Oct. 14. No one knew why. “Some auto suppliers balk at high tech,” Oct. 21. More than 30 percent of those surveyed had no plans to install microcomputers or minicomputers. More than 70 percent were opposed to flexible manufacturing systems; 72 percent to automated guided vehicles and 41 percent to computer numerical controls. “Robots, dolls popular Christmas toys,” Dec. 9. OK, so some things don’t change.

MARY KRAMER A look to the past for ways to secure Wright Museum’s future When I first moved to Detroit, I noticed how many African-American women — and many men — cared a lot about fashion, especially hats of all styles. Which meant that a ticket to an event such as the NAACP’s Freedom Fund dinner was also a ticket to a real fashion show — just without the runway. It’s no surprise, then, that Detroit was a major stop for the Ebony Fashion Fair, which for 50 years, from 1958 on, produced a runway show in many American cities with the latest styles from top designers like Givenchy, Yves Saint Laurent, Oscar de la Renta, Pierre Cardin, Christian Lacroix and many others. Years before anyone dreamed up FashBash. Churches and nonprofits sold tickets and kept part of the revenue; the more tickets they sold, the more money they’d make. “The fair sustained hundreds of African-American organizations,” says Juanita Moore, president and CEO of the Charles H. Wright Museum of African American History. “It was their single biggest fundraiser.” Maybe some of that fundraising magic will rub off on the Wright museum when it opens “Inspiring Beauty: 50 Years of Ebony Fashion Fair,” a traveling exhibit created by the Chicago History Museum. Moore wants to leverage the anniversary to build more financial support for the museum, which has flirted with financial disaster a couple of times. The Ebony exhibit, which opens Sept. 18, is one of five signature events this year. If there were a city in the country where you would expect broad support for a museum devoted to African-American history, Detroit would be it. But the museum, which opened its current 125,000-

LARRY PEPLIN

"The museum, and its role in the community, is too important to continue simply fighting for survival, year in and out," said Juanita Moore, president and CEO of the Charles H. Wright Museum of African American History in Detroit, in June of last year.

square-foot home in 1997, has struggled to break even. Foundations and funders have asked to see more communitybased support. Last year, wellheeled supporters and board members launched a “give a grand, make a million” campaign. That has netted $250,000 so far. Which is good — but a far cry from the outpouring of support coming the Detroit Institute of Arts’ way down the street. Moore said she recently hired a grants writer and is interviewing for a development officer. The Ebony exhibit is one of five key anniversary events. The first, March 1, features Grammy Awardwinning singer Patti Austin and a community chorus in a show, “Oh, Freedom,” at the Detroit Opera

House. Austin incorporates musical genres that owe all or part of their heritage to African-Americans, from blues and jazz to gospel and Motown. The final anniversary event is a gala on Oct. 10 at the Detroit Marriott. Maybe the Ebony Fashion Fair had the “wright” idea. If churches and nonprofits could sell tickets to Wright-related events and exhibits and keep part of the cash, it could increase the museum’s sales force many times over. Mary Kramer is publisher of Crain's Detroit Business. Catch her take on business news at 6:10 a.m. Mondays on the Paul W. Smith show on WJR AM 760 and in her blog at www.crainsdetroit.com/kramer. E-mail her at mkramer@crain.com.

TALK ON THE WEB Re: Education, not prevailing wage, early focus for Michigan Senate GOP Michigan’s politicians are not qualified to set education policy and practice. In addition, there are few in the education hierarchy in the state qualified as managers since they lack both experience and training. The outcome is another win-lose grading system, a funding structure that ignores the needs of individual students, school buildings and classrooms, curriculum, con-

tent and pedagogy stuck in the 19th century — and technology from the 20th century. Chuck Fellows

Re: Community meetings to give updates on M-1 Rail project Businesses along the lower Woodward corridor are already down over 50 percent. No customers can get to you if the roads or side streets are closed. This public/private partnership should have set up a fund to compensate business

From www.crainsdetroit.com Reader responses to stories and blogs that appeared on Crain’s website. Comments may be edited for length and clarity. owners for lost business. Michael

Re: Free school a costly course? Actually, not helping students get to advanced degrees costs society overall more than helping in

most ways. Look at the regions with the highest per capita incomes and the highest quality of life; they tend to be those with a lot of college graduates. That’s because, in today’s world, the chances of a factory worker buying a new home (and employing a carpenter, plumber, electrician and real estate staff along the way) are pretty slim at $17 an hour. But the chances of a $70,000a-year college graduate employing those workers are pretty high. So it is in the best interests of the carpen-

ter to help the kid next door go to college. MWAC The conversation should be about developing a cultural attitude where education is not only accepted but applauded as an achievement within the urban population. Making it free will not attract the kids who could benefit the most until attitudes change. By the way, it isn’t free. Taxpayers have to pick up the bill. Albert Gray

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GloStream merger forms Triarq Health; HQ remains in Troy BY JAY GREENE CRAIN’S DETROIT BUSINESS

A group of investors who jointly own Troy-based gloStream and New York City-based Triarq Network LLC have decided to merge their organizations into Triarq Health to take advantage of Medicare and private payers moving away from traditional fee-for-service reimbursement and into quality-based payfor-performance. Investors purchased Triarq, which will be based in Troy, in December for an undisclosed amount. The investors include Mike Sappington, Triarq Health chairman and managing member and founding CEO of gloStream; Ann Arbor entrepreneur David Fry; several other company executives; and private investors. Since the Affordable Care Act was approved in 2010, dozens of hospitals and physician organizations have formed accountable care organizations to manage the care of Medicare patients, saving the federal government more than $400 million so far by paying for improved performance and lower costs. The Obama administration announced last month it will ramp up its new performance-based reimbursement system — moving away from fee-for-service payments — to base 30 percent of payments on quality and effectiveness by 2018. Sappington said Triarq has been formed to supply services to help ACOs, physician organizations, health insurers and other groups manage care for new payment systems from Medicare, Medicaid, Blue Cross Blue Shield of Michigan and other pay-for-performance models.

hip replacement surgeries on Medicare patients with 600 more expected over the next two contract years, Restum said. The surgeries take place at DMC hospitals with Restum 30-day rehabilitation at the Rehabilitation Institute, he said. “We get paid for the work plus a few dollars in the shared savings model,” said Restum. As Medicare moves to paying

based on quality, Restum said health systems and physician organizations will form post-acute care networks to take care of patients outside of hospitals. “Having an outside company help put together a continuum of care works best for smaller types of health care systems,” Restum said. “If you had a crystal ball, (the larger systems) will create adequate post acute systems to provide seamless and follow-up care.”

Triarq Health expands reach Over the next year, Sappington said, Triarq plans to hire up to 50

workers — about 20 in Troy — as it expands nationally. It has nearly 200 employees globally, including 100 in India, 40 in Troy and the remaining 60 employees in New York, Florida and Connecticut. Sappington said Triarq is looking for more companies to acquire or invest in. It recently bought a website, Live Injury Free, which helps patients understand how to avoid injuries. GloStream, which is now a Triarq subsidiary called gloStream Practice Service, has broadened its focus over the past several years from information technology and consulting — helping physicians install and use Medicare-certified

electronic health records — to performance management. Its new president is Piyush Khanna, former COO of gloStream. Joe Crocenzi is Triarq’s CFO. GloStream, co-founded in 2005 by Milind Ghyar and Yaw Kwakye, two software developers, also owns an R&D and operations center in Nashik, India, where half the company’s employees work. Ghyar and Kwakye developed gloEMR, the company’s flagship electronic medical record application. Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

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Over the next few years, physician practices will continue to face revenue challenges by many payers who have not increased fees in five years, Sappington said. “The market is moving to fee-forvalue, and we think alignment between payers, consumers and providers with a focus on quality and cost is where (physicians) need to be,” he said. Sappington said Triarq is seeking to develop a program to offer physicians and other providers a way to contract with private and public payers on a bundled payment — or episode-of-care — basis. Episodes of care include things like hip and knee replacements, open heart, diabetes, congestive heart failure, cardiac valve or stroke. “Medicare has a bundled payment program initiative with 43 episodes of care they pay on and are allowing providers to participate,” he said. “These are focused on particular events, have predictable outcomes and tremendous variation in costs,” he said. “If we can give physicians the tools to make decisions that affect quality and costs, we can have a big impact.” At Detroit Medical Center’s Rehabilitation Institute of Michigan, CEO William Restum said the DMC contracted with Medicare in 2013 for the bundled payments initiative and saved 3 percent of projected costs the first year. DMC has conducted 300 knee and

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Join us to celebrate businesses

Child Safe Mich. becomes Judson Center subsidiary Business Awards

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Child Safe Michigan, which spun off from Phoenix-based Child Help USA in 2012, has merged into the Judson Center as a subsidiary. According to Judson President and CEO Cameron Hosner, the deal was technically set up as a selective asset purchase. That’s by virtue of Judson assuming the liability for a personal time-off bank of days owed to the eight Child Safe employees who transferred over as part of the deal. Another four to seven employees, including former Executive Director Ann Marie Lesniak, are not continuing with Child Safe under Judson Center, Hosner said. UHY LLP and Plunkett & Cooney PC served as advisers on the deal. Madison Heights-based Child Safe, which operated on a 2014 budget of about $900,000, was self-sustaining and covered the costs of providing foster care and/or mentoring services to about 300 children each year, said Chairman Keith Pomeroy, who is chairman of Troybased Pomeroy Living. But to increase the number of children and families it serves, teaming up with another nonprofit

We’re like you. All business.

made sense, he said. The two organizations explored a shared services agreement when talks began last April, Hosner said. But the two organizations would have continued to operate independent systems and processes and have separate management teams in place, he said. Judson Center invested $70,000 to renovate a building on its main campus in Royal Oak to house Child Safe and applied for a new 501(c)(3) nonprofit status for it. Many of the Child Safe board members, led by Pomeroy, will continue as board members of the new subsidiary, Hosner said. Child Safe brings a new mentoring program that Judson didn’t have and complementary programs in foster care and adoption services. Child Safe “can carry on the impact they were making under our umbrella, in a more impactful way,” by tapping Judson’s communications, outreach and fund development, Hosner said. “We’ll be working with them to expand their programs in designated areas,” likely in Oakland and Macomb counties, he said. Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch

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REPORTER’S NOTEBOOK AN MBA IN COMMUNITY DEVELOPMENT

Kirk Pinho covers real estate, higher education and Macomb and Oakland counties. Call (313) 4460412 or write kpinho@crain.com.

Detroit Mercy program provides training ground for future nonprofit execs, Page 14

Executive Education Kirk Pinho

Big data could be master’s focus at WSU Wayne State University could offer a master’s degree in big data and business analytics, offered jointly by the College of Engineering and School of Business Administration, by the fall of 2016. It will be unique because of its equal emphasis on both data analytics as well as business, said Ratna Babu Chinnam, a professor and graduate chairman of the engineering school who is leading the 30credit-hour program’s development. Chinnam It would offer three concentrations: big data engineering, big data analytics and big data business. “The vast majority of the programs either completely focus on the data science piece of it, meaning these programs are coming out of computer science departments, or they tend to come purely from business schools with a lot more emphasis on business,” Chinnam said. “We came to the conclusion that’s not going to really work. … The program has to be balanced.” Heather Dillaway, associate dean of master’s programs for the WSU graduate school and an associate professor in the department of sociology, said the program is in its beginning stages of development and still needs graduate school and board of governors approval. Chinnam said he expects the program to enroll 20 students in its first class and eventually grow to 40, attracting mostly working professionals. Those would include IT professionals, analysts, engineers, engineering and business managers and supervisors, management trainees and research staff, Chinnam said. A sample of program courses includes big data analytics, big data strategy and leadership, social mediadriven marketing, big data drive supply chain management, and the fundamentals of big data engineering. The program would culminate with a six-credit practicum. The program is designed to be completed by full-time students in one year and by part-time students in two years. The state Board of Higher Education would also need to approve the program. In addition, the university’s Big Data & Business Analytics Group will host its second annual Big Data Symposium March 10-11 at Wayne State. The second day of the event will be emceed by Crain’s reporter Tom Henderson.

Melanie Weaver Barnett of UM’s Ross School of Business: “There have been studies that show that the degree of a firm’s performance attributed to a company’s leadership is something over 60 percent, if you’re looking at sales or revenue.”

LON HORWEDEL

More than words College biz programs emphasize soft skills to make executives better leaders BY KIRK PINHO CRAIN’S DETROIT BUSINESS

ostly gone are the days when managers and executives could merely give orders to employees, shop-foreman style, and expect to get the intended results. They need finesse and tact. They need empathy. They need people skills, the ability to demonstrate a fluency in multicultural and multigenerational communication that often isn’t the core focus of MBA programs. With that in mind, area colleges and universities are adding these programs — and revising them frequently to reflect developing workplace trends — to keep up with changing leadership styles and requests from employers. Having the so-called soft skills is becoming increasingly important, and it pays off for the business, said Melanie Weaver Barnett, chief executive educa-

LEARNING TO LEAD Local programs: A sampling of the leadership courses offered at colleges and universities, Page 12 On the Web: A business case for diversity training

tion officer in the

University of Michigan Stephen M. Ross School of Business.

“There have been studies that show that the degree of a firm’s performance attributed to a company’s leadership is something over 60 percent, if you’re looking at sales or revenue, depending on the study that you look at,” she said. In addition, a 2011 study led by Scott DeRue, associate dean of executive education and a professor of management in the Ross School of Business, published in the academic journal Personnel Psychology, found that 56 percent of job satisfaction can be attributed to a company’s leadership traits, such as intelligence and emotional stability, and behaviors such as consideration of subordinates, contingent employee rewards

and management style. Ninety-two percent of employee satisfaction with a leader can be attributed to traits and behavior, and 31 percent of group performance can be attributed to leader traits and behavior. Companies are reinstating that type of training as the economy improves because they know it’s needed, said Lee Meadows, a professor of management at Walsh College. “It’s sometimes a bad Thanksgiving dinner that takes place inside an organization,” he said. “When Meadows boomers are trying to interact with millennials, Generation Y and Generation X, there is an inherent conflict in how they learn to communicate.” See Leaders, Page 12

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Executive education

Leaders: Even the boss can use a few lessons ■ From Page 11

Well-rounded Executives must have wellrounded skills, including a refined sense of business ethics, management and negotiations, said Cleamon Moorer, dean of the Madonna University School of Business in Livonia. Moorer “A lot of employees and managers in the past have been made to believe or feel that they should leave their values, ideals and feelings at the door and assume the corporate culture,” said Moorer, who also is a member of last year’s Crain’s 40 under 40 class. “If you do that, you are not going to get their whole effort and their whole commitment.” For Omid Sabbaghi, associate professor of finance and director of the graduate business programs at the University of Detroit Mercy, which offers a certificate in Sabbaghi

ethical leadership and change management, getting that from executives is important both inside and outside the workplace. In an effort to get to that, one of UDM’s courses has students help in soup kitchens. “It’s an immersion experience,” he said.

Beyond the technical For people in fields like medicine and engineering, rising through a company’s management ranks can pose its own set of challenges. That’s because instead of focusing on developing leadership skills, they have instead been worried about honing technical expertise, said Janell Townsend, director of Oakland University’s executive MBA program. Townsend “They focus their time on those types of things, but they also need business skills” that they have not had time to develop, Townsend said. To meet that need, the OU School of Business Administration offers an executive MBA with a focus in health care leadership that lasts 21 months and begins

with a new entering class each fall.

Business seeks help It’s not just executives or executives-to-be approaching colleges and universities for leadership training. Often, employers like Commonwealth Associates Inc. do. About a year ago, the Jacksonbased engineering firm was bracing for key retirements in its leadership structure, said Dennis DeCosta, the company’s president. “We said we needed to prepare the company for that, so let’s find somebody who can help develop the leaders who will help run the company in the future,” he said. So Commonwealth turned to the UM Ross school, which assessed the company culture and helped develop a plan for the company to better engage employees so they feel empowered and align employee and corporate goals. “We had to go down there and have those discussions and say, ‘Look, what do you think your career path ought to be? What would you like to do?’ and try to help individuals attain those goals and give them the path to do that.”

Changing methods The leadership training delivery method is constantly evolving.

Barbara Hopkins, Eastern Michigan University’s director of professional programs and training in the extended programs department, said that in the last few years, EMU programs have been offered increasingly online. Hopkins “Early on, we offered them face to face,” she said. “We offered them during the weekdays and found that folks in these worlds don’t have time to take three days out of their schedules, so we developed them online.” And much like leadership styles have evolved over time, UM’s Barnett said it’s no longer acceptable for leadership teachers to simply lecture and dole out assignments. “People are expecting more personalized learning experiences,” she said. “We create learning experiences that involve the participants that apply learning in the classroom — almost like a learning laboratory, which involves simulations, a current business challenge they are facing.” Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB

PROGRAMMED TO LEAD

any area colleges and universities offer leadership programs. They range from one-day courses to graduate degree programs. Here is a sampling.

Central Michigan University 䡲 MS in Administration,

leadership focus What it is: A 36-credit-hour program offered online or in a traditional classroom setting focusing on creative thinking, critical analysis and effective management. Phone: (989) 774-6525 Email: schaf1dr@cmich.edu Website: www.cmich.edu/msa Price: $500 per credit hour

Eastern Michigan University 䡲 Manager of Continuous

Improvement Certificate What it is: A 10-course program designed to teach how to lead teams to plan, deploy and monitor organization improvements. Phone: (734) 487-8285 Email: estoner@emich.edu Website: www.emich.edu/extended/training/ cfq/certificates Price: $3,700

䡲 Quality Leadership Series Certificate What it is: A six-course program for midlevel managers on how to build leadership strengths, focus on highpriority tasks, communicate effectively and build highperformance teams. Phone: (734) 487-8285 Email: estoner@emich.edu Website: www.emich.edu/extended/training/ cfq/certificates Price: $2,320 Madonna University 䡲 MS in Business Administration,

WE’RE SHAPING MICHIGAN’S FUTURE BUSINESS LEADERS. #1 online graduate business programs in Michigan by U.S. News & World Report (excluding MBA) #2 part-time and #3 online MBA in Michigan by U.S. News & World Report

leadership focus What it is: A 40-credit-hour master’s program that teaches students to become leaders by emphasizing the importance of people, satisfying their needs and objectives and integrating those with the goals of an organization. Phone: (734) 432-5667 Email: grad@madonna.edu Website: www.madonna.edu/grad Price: $650 per credit hour

䡲 MS in Business Administration, executive leadership focus What it is: A 35-credit-hour online program launching in February 2016 for middle- to senior-level executives; applications accepted this spring. Phone: (734) 432-5667 Email: grad@madonna.edu Website: www.madonna.edu/grad Price: $650 per credit hour

Named “Best Business School” for sixth consecutive year by Princeton Review

Learn more at umdearborn.edu/cob.

Michigan State University 䡲 “Measuring & Improving

Processes” Program What it is: A two-day program that teaches how to identify customer requirements, measure process performance, determine the root cause of business challenges and implementing process improvement strategies.

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Executive education Phone: (517) 353-8711, ext. 71002, or (800) 356-5705 Email: stmarie@broad.msu.edu Website: https://edp.broad.msu.edu/events/ 2142 Price: $1,495 2015 dates: Feb. 12-13

improve decision success. Phone: (517) 353-8711, ext. 71005, or (800) 356-5705 Email: stmarie@broad.msu.edu Website: https://edp.broad.msu.edu Price: $1,195, or $995 for early bird registration (deadline April 15) 2015 dates: May 13

䡲 “Business and Bagels” Series What it is: A morning seminar focused on a different leadershiprelated subject each month. Phone: (517) 353-8711, ext. 71005 Email: stmarie@broad.msu.edu Website: https://edp.broad.msu.edu Price: $30 2015 dates: Feb. 18, March 12, April 14, May 13, June 16

Oakland University 䡲 Executive MBA, health care

leadership emphasis What it is: A 39-credit-hour master’s degree program developing effective leaders in the health care system. Phone number: (248) 370-2059 Email: emba@oakland.edu Website: www.oakland.edu/ business/executive-mba Price: $38,500

䡲 “Communication Excellence:

Developing Your Leader Communication Card in a Digital World” Program What it is: A two-day program identifying your communication style, understanding biases affecting communication and leadership and elements of effective digital presentations. Phone: (517) 353-8711, ext. 71005 Email: stmarie@broad.msu.edu Website: https://edp.broad.msu.edu Price: Full tuition, $2,395; early bird, $1,995 (deadline Feb. 27) 2015 dates: March 25-26

䡲 “Strategic Decision Making”

What it is: A one-day course identifying issues that impede or

University of Detroit Mercy 䡲 Ethical Leadership and Change

Management Certificate What it is: A 15-credit-hour certificate program teaching business, nonprofit and government leaders ethics and values, personal development, corporate responsibility and organizational change. Phone number: (313) 993-1172, (313) 993-1203 Email: omid.sabbaghi@udmercy.edu or carrol.parris@udmercy.edu Website: http://business.udmercy.edu/ programs/graduate/ethics

Price: $1,439 per credit hour.

University of Michigan 䡲 Emerging Leaders Program What it is: A five-day sabbatical for midlevel managers that teaches how to set the right vision, build and inspire teams and drive change. Phone: (734) 763-1000 Email: rossexeced@umich.edu Website: www. michiganross.umich.edu/execed/ emerging-leaders-program Price: $9,700 Dates: April 20-24, Sept. 28 to Oct. 2

䡲 Positive Leadership Program What it is: A six-day seminar focused on training senior business leaders and executives how to respond to crises and change and better develop relationships. Phone: (734) 763-1000 Email: rossexeced@umich.edu Website: www.michiganross.umich.edu/ execed/positive-leadership Price: $9,950 Dates: June 14-19 䡲 Business Acumen for HighPotential Executives What it is: A 10-day seminar on situation assessment, leadership in complex situations, quick change. Phone: (734) 763-1000 Email: rossexeced@umich.edu Website: www.michiganross.umich.edu/acumen

Price: $17,500 Dates: March 3-12

䡲 Leading High-Performing Teams What it is: A three-day program for senior leaders and management teams teaching how to diagnose and fix problems and improve upon strengths of teams. Phone: (734) 763-1000 Email: rossexeced@umich.edu Website: www.michiganross.umich.edu/ execed/leading-high-performingteams Price: $5,900 Dates: March 16-18 University of Michigan-Flint

䡲 MBA, organizational leadership

concentration What it is: A 45-credit-hour online and on-campus program focused on leadership, change management and organizational cultures. Phone: (810) 762-3160 Email: cgomolka@umich.edu Website: www.umflint.edu/som Price: $621 per credit hour

Walsh College 䡲 Leadership Certificate What it is: A seven-course program on how to give and receive feedback, task delegation, conflict management and resolution and emotional intelligence.

Phone number: (248) 823-1238 Email: crush@walshcollege.edu Website: www.walshcollege.edu/leadershipyou Price: $1,725 2015 dates: Next session begins Oct. 1.

Wayne State University 䡲 Excellence in Leadership

What it is: A four-day seminar teaching how to lead and motivate effectively, build better relationships and enhance work-related communications. Phone number: (313) 577-4449 Email: exceed@wayne.edu Website: http://execed.wayne.edu/new_lead ership_program.php Price: $3,000 ($1,500 each for Path I: Develop Your Potential and Path II: Maximize Your Resources) 2015 dates: April 17 and 24, May 1 and 8

䡲 Building Your Brand With Social Media What it is: A two-day seminar for marketing, sales professionals and account representatives and others teaching personal branding online and offline. Phone number: (313) 577-4449 Email: exceed@wayne.edu Website: http://execed.wayne.edu/ building_your_brand.php Price: $1,500 2015 dates: May 15 and 22

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Executive education

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Detroit Mercy program trains leaders in HOPE BY KIRK PINHO CRAIN’S DETROIT BUSINESS

Tiffany Tononi’s first semester pursuing her master’s degree in community development from the University of Detroit Mercy was a baptism by fire. As a political science major at Kalamazoo College, Tononi didn’t have much experience in community development. But the skills she learned — how to do a community needs assessment, for example — are what the 30-year-old applies daily in her job as program manager for the Detroit-based Urban Neighborhood Initiatives Building Sustainable Communities Program, which works to improve the 1.3-square-mile Springwells Village neighborhood in southwest Detroit. “The program is very multidisciplinary, which I like a lot, and is very true to the type of work I do Tononi now,” said Tononi, who graduated from the program in 2011 and, as part of her graduate studies, had internships overseas in Jordan. The program — which began with eight students and has averaged 20-24 students since 2010 — is most akin to a training ground for future nonprofit executive directors, said Will Wittig, dean of the School of Architecture, which offers the program, and a professor. The program’s designers had solicited the advice of a number of organizations: United Way; the Hudson-Webber Foundation; the Community Foundation of Southeast Michigan; the Warren Conner Development Coalition; the Michigan Suburbs Alliance; the Southwest Detroit Business Association; the Michigan State Housing Development Authority; the Detroit Planning and Development Department; the Detroit Economic Growth Corp.; Core City Neighborhoods; LISC; the University Cultural Center Association; the Creekside Development Corp.; and the Bagley Housing Association, Wittig said. Over its nine years, the program has continued to evolve with input from students and nonprofit organizations, Wittig said. “We started it really based on what we saw as a gap in the educational offerings in the nonprofit sector, which was to provide an opportunity for individuals to get a master’s degree in community development that was not driven by the specificity of real estate development or public administration,” he said. Instead, the program — which has graduated about 50 students and has about 20 enrolled — offers training in human, organizational, physical and economic development, what it calls the HOPE model. In 2013, the Battle Creek-based W.K. Kellogg Foundation awarded it a $750,000 grant so the program could offer students one-year paid fellowships with local organizations, co-op

opportunities and scholarships. The grant pays for student fellowships and co-op salaries. This year, fellows are working at the Michigan Department of Transportation, the Grandmont Rosedale Development Corp., the Detroit Green Skills Alliance, The Guidance Center and Southwest Housing Solutions, Wittig said. “I can think of no other academic program that I have ever been associated with that has had as much interaction with the industry we serve,” Wittig said. The program has an average of eight faculty members from a variety of schools. The 36-credit-hour program culminates in a yearlong project that is usually completed by a team of three to five students. The majority of the students have full-time careers, so they pursue the degree part time, Wittig said. James Ribbron was one of those part-time students who worked full time as a Detroit city planner while attending the program from 2006 to 2008. Ribbron, now the director of the Detroit Board of Zoning Appeals, credits the program with providing him additional experience working with diverse groups of people and teaching the technical aspects of things like land-use planning, zoning and the city code. “I have a greater understanding of how these things apply in terms of helping to build the city up, helping people understand the process when they come to Ribbron pull a building permit, and the city ordinances,” he said. Jerry Lindman, principal of East Lansing-based Nonprofit Counsel and Consulting LLC and the former director of the former Center for Nonprofit Management at Lawrence Technological University, said the UDM program is needed. “Within the big picture of a nonprofit sector, community development organizations make up a big part of it, and also the skill sets the students learn in that program could be used in government agencies focused on community development, such as MSHDA (the Michigan State Housing Development Authority),” he said. And if marketed nationally the right way, it could attract students from across the country, he said. Regardless of the program’s potential reach, the students’ hearts will remain focused on the city’s 143 square miles, said Tononi. “This program is grown out of the city, it’s here in the city, and the professors and the directors work really hard to make sure not only students get the most out of the experience, but also that communities and organizations are also getting something out of it.” Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB

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PEOPLE

BUSINESS DIARY ACQUISITIONS & MERGERS

IN THE SPOTLIGHT

Gardner

The Area Agency on Aging 1-B has named William Walsh its chief administrative officer. Walsh began his career at General Motors Corp., working in the finance division. After Walsh that, he served as executive vice president and COO at Interlock Corp. and president and CEO of Walsh Group Inc., a consulting firm he founded. As CAO, Walsh replaces former CFO Joe Hehir, who left the organization in February 2014. Walsh, 59, holds a bachelor’s degree in business administration from the University of Notre Dame and has a master of management from the Kellogg Graduate School of Management at Northwestern University.

Group LLC, Bloomfield Hills. Gard-

Business

Cincinnati,

ARCHITECTURE/ENGINEERING John Avdoulos to associate principal, HKS Inc., Northville, from vice president. Also, Andrew Jaeger to vice president, from associate.

Wendy Pedersen to business development account manager, IBI Group Inc., Southfield, from business development marketing manager, NSA Architects, Engineers and Planners, Farmington Hills. Bart Reed to presiPedersen dent, DiClemente Siegel Design Inc., Southfield, from senior vice president, director of mechanical engineering. Also, Samuel Molin Jr. to executive vice president, director of engineering, from senior vice president, director of electrical engineering; and John DiClemente to senior vice president, director of administrative services, from vice president, director of administrative services.

Page 15

Media Inc., acquired AutoBeat

ner Business Media publishes Automotive Design and Production magazine and autofieldguide.com. That media and AutoBeat properties will form a new Automotive Group within the publishing company. Website: gardnerweb.com. NSF International, Ann Arbor, a global public health and safety organization that develops standards, and tests and certifies products for the food, water, dietary supplement and pharmaceutical industries, has acquired Erdmann Analytics, RhedaWiedenbruck, Germany, a laboratory specializing in analytical testing for food, portable water, wastewater, dietary supplement and pharmaceutical industries. The organization will be known as NSF Erdmann Analytics and remain in Rheda-Wiedenbruck and be led by its existing management team. Website: nsf.org. Superior Capital Partners LLC, Detroit, a private equity firm, has acquired the assets of Daystar Desserts LLC, Ashland, Va., a developer and baker of branded and private label cheesecakes and desserts for retail, grocery and in-store bakery channel customers, as an add-on acquisition to its portfolio company, Dianne’s Fine Desserts, Newburyport, Mass., a provider of gourmet frozen desserts for the food service industry and national restaurants. Websites: superior fund.com, diannesfinedesserts.com, worldsbestcheesecake.com. Theresa Law Center PC, Bloomfield Hills, an elder law, special-needs advocacy and estate planning law firm, has merged with Lipson, Neilson, Cole, Seltzer & Garin PC, Bloomfield Hills. Website: lipsonneilson.com.

CONTRACTS Advanced Photonix Inc., Ann Arbor, a supplier of opto-electronic sensors, devices and instruments used by test and measurement, process control, medical, telecommunication and homeland security markets, announced that its wholly owned subsidiary Picometrix LLC has received a follow-on government development contract from the U.S. Air Force valued at approximately $1.4 million for completion of a handheld terahertz measurement system to assist in the assembly and maintenance of the F-35 Lightning II Joint Strike Fighter. Upon completion, the company expects sales of the T-Ray 5000 handheld scanner system developed under this contract to be used to improve manufacturing efficiency and reduce the cost of maintenance. Website: advanced photonix.com.

Michigan Department of Transportation, Lansing, named G2 Consulting Group, Troy, an engineering services firm specializing in geotechnical, environmental and construction engineering services, as one of its preapproved engineering teams through an “as-needed” indefinite service contract. Websites: g2consulting group.com, michigan.gov/mdot.

STARTUPS Kuzzo’s Chicken & Waffles restaurant has opened at 19345 Livernois Ave., Detroit. Telephone: (313) 8610209. Website: kuzzos.com. June & December, Troy, a designer home goods and lifestyle brand founded by Nick Forte and Katie Forte, has launched its e-commerce website featuring American-made housewares, gifts and paper goods as well as Michigan-themed items. Website: junedecember.com.

CONSULTING Matt Kopmeyer to director, O’Keefe & Associates Consulting, Bloomfield Hills, from consulting manager and director of information technology, Bluewater Transaction Advisors LLC, Warren.

Kopmeyer

GOVERNMENT Linda Fultz to police sergeant, City of Wixom, from police officer. Also to police sergeant from police officer: Michael DesRosiers and Mark Bradley.

HEALTH CARE Ruth Goodell to senior vice president, insurance and risk management services, Trinity Health, Livonia, from managing director, Marsh USA, Detroit.

Peter Ginopolis – VP, LSG INSUR ANCE PA RTNERS & TICKETHOLDER FOR 32 YE ARS

LAW Samantha Ball to partner, Ball Johnson PC, Warren, from associate. Matthew Bower to partner, Varnum LLP, Novi, from counsel. Also to partner from counsel: Dennis Devaney and Richard Manczak. Ryan Plecha to partner, Lippitt O’Keefe Gornbein PLLC, Birmingham, from associate.

Carla Machnik to member, Bodman PLC, Detroit, from senior principal, Miller, Canfield, Paddock and Stone PLC, Detroit.

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CALENDAR THURSDAY FEB. 5 12th Annual Open Your Heart Gala . 5:30-9 p.m. Lighthouse of Oakland County. Event benefits northern Oakland County families in need, and features Mojo from Q95.5 “Mojo in the Morning.” Rochester Mills Production Brewery, Auburn Hills. $50 “Friend” tickets, $100 VIP tickets. RSVP preferred, but tickets may be purchased at the door. Contact: (248) 972-1487; email: pperkins@light houseoakland.org; website: light houseoakland.org. The State of Manufacturing 2015. 11:30 a.m.-1:30 p.m. Detroit Economic Club. Speaker is Jay Timmons, president and CEO, National Association of Manufacturers. Detroit Marriott Re-

FRIDAY

DETROIT POLICY CONFERENCE

FEB. 6

The Detroit Regional Chamber focuses on “Power Perspectives” at its Detroit Policy Conference, set for 7:30 a.m.-4 p.m. Feb. 26. Rodrick Miller, Detroit Economic Growth Corp. president and CEO, and Paul Pastorek, education adviser to Gov. Rick Snyder, will discuss the future of economic development in the Detroit region and the importance of education in a changing world. The event will be at MotorCity Casino Hotel, 2901 Grand River Ave., Detroit. The cost is $99 for chamber members or $165 for nonmembers (cost includes membership). For information or to register, contact Janelle Arbuckle at (313) 596-0340 or jarbuckle@detroitchamber.com or visit detroitchamber.com/events.

naissance Center, Detroit. $45 DEC members, $55 guests of members, $75 others. Ticket sales end at noon

Feb. 4. Contact: (313) 963-8547; email: info@econclub.org; club.org.

website:

econ

Get Connected: Starting a Nonprofit Organization. 8:30 a.m.-noon New Solutions for Nonprofits. Kidada Malloy, New Solutions resource specialist, reveals the knowledge needed to form and sustain a successful nonprofit. New Center, Ann Arbor. $50. Contact: (734) 998-0160; website: new.org.

UPCOMING EVENTS 3rd Annual Hardcore THAW. 8-11 p.m. Feb. 7. WWJ Newsradio 950 and The Heat and Warmth Fund. Les and Seth Gold, and Ashley Gold Broad, stars of TruTV’s “Hardcore Pawn,” host event with food, drink, music and appraisals. American Jewelry & Loan,

Detroit. $125 VIP, $60 general admission. To buy tickets or learn more about this event or others, including the Feb. 6 radiothon or the Feb. 5 Celebrity Coneys for a Cause, call (800) 866-8429, email info@thawfund.org or visit thawfund.org. The 2014-15 Detroit Red Wings. 11:30 a.m.-1:30 p.m. Feb. 9. Detroit Economic Club. Red Wings head coach Mike Babcock, and Ken Holland, executive vice president and general manager, are scheduled to speak. MotorCity Casino Hotel, Detroit. Open to board, life and gold members only. $45 DEC members, $55 guests of members. Contact: (313) 963-8547; email: info@econclub.org; website: econclub.org. Inside the CEO Mind. 8 a.m. Feb. 10. Detroit Regional Chamber. Thomas Haas, president, Grand Valley State University, is the speaker at this breakfast event. Grand Valley State UniversityDetroit Center. $20 chamber members, $50 nonmembers. Contact: Maggie Oldenburg, (313) 596-0482; email: molden burg@detroitchamber.com; website: detroitchamber.com/events.

Under the Dome: An Evening with Michigan’s Female Leaders. 3-7:30 p.m. Feb. 11. Inforum and Dome magazine. Tour

Give your employees the duck. Anything else is just chicken.

the state Capitol and meet women from Michigan’s 98th Legislature plus department heads and dignitaries. Michigan State Capitol and Radisson Hotel, Lansing. $35 Inforum members, $50 nonmembers. Contact: Linda Morrell, (313) 567-0287; email: lmorrell@ inforummichigan.org; website: info rummichigan.org.

Leaders & Innovators Series: Attracting & Retaining Talent. 7:30-9 a.m. Feb. 12. Flagstar Bank and WWJ Newsradio 950. WWJ/Fox 2 Business Editor Murray Feldman emcees this interactive

panel

discussion

featuring

Stephanie Comai, deputy director of the Michigan Department of Licensing and Regulatory Affairs, and Jocelyn Lincoln, vice president of Americas recruiting, Kelly Services. Lawrence Technological University – UTLC Gallery, Southfield. Free. Contact: Erin Mclin, (248) 430-5855; email: erin@apacc.net; website: apacc.net.

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Automation Alley’s Technology Industry Outlook. 10:30 a.m.-1 p.m. Feb. 12. The

medical carrier, or you could offer coverage from

luncheon features a presentation meant to help the business community promote Southeast Michigan as a center of cutting-edge companies and skilled workers. Anderson Economic Group will unveil a regional economic forecast. Colony Club, Detroit. $40 members, $50 nonmembers. Contact: (800) 427-5100; email: info@automationaalley.com; website: automationalley.com.

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7th Annual Homegrown Local Food Summit. 8:30 a.m.-5 p.m. Feb. 15. Slow

The question is, who will you choose? You could opt for a voluntary option from your

Food Huron Valley. This year’s theme, “Food Love,” promotes the local food movement. Keynote speaker is Judy Wicks, author and founder of Philadelphia’s White Dog Café. Poet and musician William Copeland from the Eastern Michigan Environmental Action Council also hosts a local food story slam. University of Michigan Central Campus, Ann Arbor. $50 ticket includes breakfast, brunch and snacks. Contact: Sarah Reinhardt, sarahlreinhardt@gmail.com; website: localfoodsummit.org. Breakfast of Champions. 7:30-9 a.m. Feb. 18. Leadership Oakland. Jennifer Korman, community relations, Mercedes-Benz Financial Services, moderates a panel of young professionals who will talk about what it means to be a leader. MSU Management Education Center, Troy. $25 members, $36 nonmembers. Contact: (248) 952-6880; email: info@leadershipoakland.com; website: leadershipoakland.com.

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Commercial Real Estate Financing AZ. 4-6 p.m. Feb. 25. CREW Detroit. Speakers include Claudia Cassa, vice president and alternate group manager, Comerica Bank; Jenny Meier, executive vice president and chief revenue officer, Bank of Birmingham; and Clarissa Chartier, chief credit officer and executive managing director, Talmer Bank. Crowne Plaza Hotel, Detroit. $40 members, $75 nonmembers. Contact: Norma Lee Beuter, (248) 6469629; email: beuter@comcast.net; website: crewdetroit.org.

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Do you know a 20-something who is someone to watch? Crain’s 20 in their 20s recognition program seeks young professionals who are making their marks in the region. Candidates are not limited to any particular field or activity but include up-and-comers who are making waves as young professionals within a company, have shown success or originality as entrepreneurs, or have made local impacts in some other demonstrable way. Besides the corporate world, candidates are considered from creative industries, nonprofits and social entrepreneurship arenas. Winners will be profiled in the June 1 edition and honored at a future awards event. Nominees must be 29 or younger before June 1. Nominations are due Feb. 13. To fill out the form, visit www.crainsdetroit.com/nominate. Questions? Contact Amy Haimerl at ahaimerl@crain.com or (313) 446-0416.

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allowed to add to the lender’s buy rate as compensation for arranging loans. Despite paying the consent order, Ally denied allowing discrimination and that discrimination took place. The consent order exaggerated the year-over-year improvement for the fourth quarter of 2014, the company said. Earlier this month, GM notified U.S. Buick/GMC and Cadillac dealers that it would redirect all of its lease incentives to Fort Worth-based GM Financial. The change is to take effect for Buick/GMC on Feb. 3. The target for Cadillac is in March, dealers said. No change has been announced for the Chevrolet brand, but dealers said they expect

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come was $177 million, up from $104 million in the fourth quarter of 2013. Pretax income for Dealer Financial Services was $396 million, up from $274 million in the fourth quarter of 2013. In the 2013 quarter, Ally booked $80 million in consumer refunds and a civil penalty of $18 million under a consent order with the Consumer Financial Protection Bureau and the U.S. Department of Justice. The consent order settled charges of discrimination tied to loans originated at dealerships. The CFPB blamed Ally for allowing dealers in some instances to charge minorities higher rates for dealer reserve. Dealer reserve, usually capped at 2 to 3 percentage points, is interest dealerships are

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The CEO of Detroit-based Ally Financial Inc. reacted angrily last week to General Motors Co.’s decision to move 100 percent of its U.S. Buick, Cadillac and GMC lease incentives to its Texas-based captive financial unit. “We were not surprised by the idea of GM growing their captive. We were surprised they would exclude any competition in the lease space,” Michael Carpenter said. “We will compete with anybody on a head-to-head basis. What pisses us off is when we don’t get to compete on a heads-up basis.” Still, Carpenter said the change — which takes away lease incentives from Detroit-based Ally and, on a much smaller scale, from U.S. Bank — was just a bump in the road for which Ally can compensate in other areas. But he acknowledged Ally’s unhappiness with the move. Meanwhile, Ally announced it originated $41 billion in consumer auto loans and leases for the full year of 2014 — the highest since 2007, the company said. “2014 was a tremendous year for us,” Carpenter said. Net income was $1.2 billion for the year, up from $361 million in 2013. Pretax income for the Dealer Financial Services group, including auto finance and also insurance operations, was $1.7 billion for the year, up from $1.5 billion in 2013. For the fourth quarter, net in-

Chevrolet to follow suit eventually. Analysts said most leases include some subvention, or subsidies. For all of 2014, Ally lease originations for all brands were $11.7 billion, up from $9.9 billion a year ago. That was about 29 percent of Ally originations for 2014, up from 27 percent in 2013. Without manufacturer incentives, Ally’s lease mix is likely to decline in 2015. Carpenter said the lender’s strategy is to offset the decline with more used-car loans and with more loans and potentially leases with non-GM and non-Chrysler dealers. In May 2013, Chrysler started sending all of its incentive money to Chrysler Capital, a program that provides captive-style financing for U.S. Chrysler-Dodge-JeepRam-Fiat dealers, backed by lender Santander Consumer USA. Carpenter said Ally can take the loss of GM lease incentives in stride and that potentially it could even work around the loss of loan incentives, even though GM has made no move to shift loan incentives. In the fourth quarter, GMsubvented new-vehicle loans made up 5.6 percent of Ally originations. “What if all the GM leasing goes away or ... all the incentive business were to go exclusively to their captive?” Carpenter said. “Our plans, laid over a five-year period, with demonstrated results, will allow us to offset any losses in originations.” From Automotive News

in their

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CRAIN’S DETROIT BUSINESS

RFPs: City looking for developers to give new life to old sites ■ From Page 3

Most recently, in November, the city extended the bidding deadline on the August RFP by a month to Dec. 15, 2014. The city has spent more than $39 million in that area since 2001 on things like infrastructure, demolition, land acquisition and historic rehabilitation, priming it for redevelopment. There are 47 parcels in the Brush Park RFP; four have houses, and all are considered historic.

Brewster Wheeler site Brian Holdwick, executive vice

president of business development for the Detroit Economic Growth Corp., said the city has also received responses to the Brewster Wheeler Recreation Center RFP, which was issued in August. John Roach, communications director for Mayor Mike Duggan, said the Brewster Wheeler RFP process is complete and the redeveloper selection process is under way. “We hope to be able to say more soon,” he said. Opened in 1929, the building is 52,000 square feet and sits adjacent to the 18 acres of property best known as the former home of the

Brewster-Douglass housing projects, the demolition of which finished last summer after a two-year process. The Brewster Wheeler RFP says the Planning and Development Department expects the redevelopment to be commercial, institutional, residential or mixed-used and that selection of a redeveloper was expected on Oct. 15, 2014.

Brewster-Douglass Next door, and considered by real estate experts a prime site for a mixed-use development with residential and retail space because of its size, the Brewster-Douglass site, located on St. Antoine Street off I-75 south of Mack Avenue, is expected to the subject of an RFP in 60-90 days, real estate sources said. Roach said there is not a firm timeline, but an RFP issue is planned soon. The Detroit Housing Commission owns the land but cannot sell it without approval from the U.S. Department of Housing and Urban Development because $6.5 million of HUD funding to the commission paid for the demolition of the Brewster-Douglass, long one of the city’s most iconic symbols of crime and decay. It opened in 1938 and was the first federally funded housing project in the nation for AfricanAmericans. During its lifetime, the complex was home to boxer Joe Louis and the Supremes before they became Motown icons.

Herman Kiefer site Less than five miles northwest of the Brewster sites, all 526,000

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Also up for bid: A former Detroit Public Lighting Department building just south of Coleman A. Young Municipal Airport.

square feet of the Herman Kiefer Health Complex sit unused on 18 acres, vacated by the Department of Health and Wellness Promotion and the Vital Records Division. Eric Larson, founder, president and CEO of Larson Realty Group LLC, said his Bloomfield Hills-based company was one of two to submit proposals to redevelop the health complex — which first accepted patients as a hospital in 1911 — off Taylor Street west of the Lodge Freeway. However, his company was not the finalist, he said. He proposed a “conservative” redevelopment that had a data center in its first phase and then multifamily and retail space for a “mixed-income” demographic in the second phase. Roach said in regard to Herman Kiefer, the RFP process is complete and the selection process is under way. He declined to name the developer the city is in discussions with. The final redeveloper selection of the complex had been expected by June 2. “They are both (Brewster Wheeler and Herman Kiefer) fairly complex development proposals, and it is taking us a little more time than expected to work through some of the details,” Roach said. Under Larson Group and its development partner’s direction, the former Tiger Stadium site is expected to be turned into a $44 million mixed-use development with at least 126 new housing units and 30,000 square feet of retail space. In addition, it’s expected to house a new headquarters building for the Detroit Police Athletic League. The baseball diamond will be maintained.

Jefferson armory Responses to a December RFP to redevelop the 107,000-square-foot R. Thornton Brodhead Naval Armory at 7600 E. Jefferson Ave. are due Feb. 16 at 3 p.m. The DEGC won’t consider any

proposals that require demolition of the existing armory, which would likely end up as a mixed-use development with residential and commercial space. That’s because of the site’s location in a special development district. The building, which hosted the likes of Franklin D. Roosevelt, Joe Louis and U.S. sailors, Marines and Coast Guard members, is in a significant state of disrepair, according to the RFP. It closed in 2004.

Other sites There are also some lesserknown sites for which the city is seeking redevelopments. As it works to demolish some 80,000 blighted homes, the city views the 38,000-square-foot former South District Recreation Department Building, on Piquette Avenue between John R and Brush streets in Midtown, as a future “deconstruction hub” where materials from demolished homes are offered for sale or provide value-added services, such as using them to make furniture or other goods, according to the RFP. Roach said the goal is to create a space for “small cottage companies to locate within the deconstruction hub to create a mall-like furnishings outlet.” A pre-bid meeting and tour of the 2.6-acre site is scheduled for Wednesday and bids are due March 16. Bidders must prove they have the ability to develop the property within 12 months of the bid award. In addition, a 162,000-square-foot former lighting department building on Grinnell Street between Van Dyke and Gratiot avenues is up for redevelopment. The building, which sits on 11.5 acres, is just south of the municipal airport. Proposals have been received and are being reviewed. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB

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February 2, 2015

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Disaster: Two disaster aid firms combine to build Midwest ties ■ From Page 3

Statewide recorded $35 million in revenue last year, up from $27 million the year before, thanks to the historic Detroit-area flooding in August and last winter’s polar vortex temperatures, he said. Becker took an equity stake in Interstate and now serves as Midwest president. He’s heading the search for acquisition targets in Illinois, Ohio, Wisconsin, Indiana and Kentucky. Interstate liked Statewide’s culture and its team, said Interstate President and CEO Stacy Mazur. Additionally, its central location — within four hours of a number of major cities — will help Interstate expand its Midwest business. “Our goal is to be in the pro sports cities ... population centers with the largest conglomeration of commercial property,” Mazur said. Interstate also hopes to capitalize on Statewide’s local and regional relationships with Fortune 500 companies based in Michigan. “We want to build (those) into national relationships,” Mazur said. As Interstate expands in the

goal is to be in the pro sports cities ... “ Ourpopulation centers with the largest conglomeration of commercial property. ” Stacy Mazur, Interstate Restoration

Midwest, it plans to add 10-15 employees in regional management, business development and sales and roughly 30 carpenters, water technicians and other skilled employees within two years, Becker said. The Detroit office will be a hub for the region, supporting that expansion. Fort Worth, Texas-based Interstate claims to be the country’s second-largest commercial restoration company behind Belfor. Before its acquisition of Statewide, it had 14 locations across Washington, California, Arizona, Colorado, Texas, Georgia, Florida, North Carolina, Virginia, Illinois and the New YorkNew Jersey area. Nearly all its business was with

commercial property clients primarily in hospitality, retail, health care and higher education, Mazur said. Statewide brought it locations in Detroit, Grand Rapids and Sarasota and Pompano, Fla., serving Michigan, Ohio, Illinois and Florida. It also served some residential business along with clients in new industries such as multifamily housing, manufacturing and office. Interstate plans to maintain that residential business, Mazur said, but its emphasis will be more on growing the commercial side. The Michigan operations will be co-branded as Statewide Disaster and Interstate Restoration this year, he said.

TI Automotive: Possible closure ■ From Page 3

its lenders in December 2009. “To emerge from that difficult time with little to no debt, we took on unnatural shareholders,” Kozyra said. “We knew we needed to create a liquidity event to create a strong, single shareholder. “Bain really loves the company and sees the great business that we are in. … We have a partner that will support our growth and strategy.” TI Automotive was previously owned by a consortium of funds led by Oaktree Capital Group LLC. A source familiar with the deal told Crain’s that Kozyra had a troubled relationship with Oaktree and other board members and that the deal “is likely a sigh of relief” for the company’s chairman. Kozyra denied any troubles with the board. “You wouldn’t expect to have too many problems when you’ve been as successful as we’ve been,” he said. “We’ve worked very hard to create shareholder value, and

To emerge from that difficult time with “little or no debt, we took on unnatural shareholders. We knew we needed to create a liquidity event to create a strong, single shareholder.

”

Bill Kozyra, TI Automotive

that’s what really allowed this transaction to occur.” The supplier generated roughly $3 billion in revenue in 2014, up from $2.5 billion in 2011, and employs 24,000 at 130 locations. The deal with Bain probably delays an initial public offering. TI Automotive’s owners hired Blackstone Group LP to evaluate a potential IPO. Kozyra declined to discuss the company’s strategy but said an IPO could be part of its long-term plan. “We will be private for the fore-

seeable future,” Kozyra said. “But I think anyone could look at most private companies that are growing to a certain size and wouldn’t be surprised if they went public.” Bain Capital manages $80 billion in investments, including Domino’s Pizza Japan, Burlington Stores, iHeartMedia Inc., Toys R Us and Cumulus Media Inc., which operates several radio stations in Detroit. Dustin Walsh: (313) 446-6042, dwalsh@crain.com. Twitter: @dustinpwalsh

Crain: 30 years of looking beyond cars ■ From Page 1

health care, law firms, nonprofits and, yes, education, to name only a few. We even have manufacturers that have no automotive ties. Our job, then and now, is to report to our audience the business news of the day. Whether it is good or bad, it doesn’t matter. Our audience deserves to know what is going on in this business community. As our first editor, I hired a young reporter, Peter Brown, who had the distinction of being interviewed for me by David Halberstam, the Pulitzer Prize-winning author, who was in town working

on a new book called The Reckoning, which became a best-seller, about Ford and Nissan. Peter helped launch Crain’s and became associate publisher before switching to Automotive News in 1989; he ended his distinguished career there just a few months ago after 30 years at Crain. Today, Crain’s Detroit Business is a lot more than just a weekly newspaper. We communicate with our readers in many ways, not just print. We have daily emails, email alerts and even “tweets” when something big happens to give our

readers instantaneous information. And we have lots of events and conferences. Certainly our “Detroit Homecoming” for “expats” last year was a great example of expanding our horizons. Our motto is still “the reader comes first,” and it’s as true today as three decades ago. We will continue to serve the business community of Southeast Michigan every day with news and information that helps you do a better job. We are grateful for your support and look forward to continuing to publish for many years to come.

A lot of activity and acquisitions are occurring throughout the highly fragmented restoration services industry, Becker said, presenting opportunities for growth. “The more dots on the map for us, the easier it is to (serve) those markets,” he said. Mark Davis, CEO of Troy-based Signal Restoration Services, sees Interstate’s acquisition of Statewide as a growth opportunity for his company because he thinks some local clients prefer Michiganowned vendors and suppliers. There’s no question that the Midwest is a potential area of growth, said Davis, who has a history with several members of Interstate’s top management. He and Interstate Chairman Jeff Johnson co-founded Rocky Mountain Catastrophe, the company that became a platform for Belfor USA. Mazur, Interstate’s CEO, and COO Chris Sinclair also worked with him at Rocky Mountain or Belfor, as did Belfor CEO Sheldon Yellen, Davis said. Signal Restoration, he said, has increased its recurring business

with insurance companies in Michigan by sixfold since 2012, when he and Frank Torre Jr., president and CEO of the Pontiacbased landscaping company Torre & Bruglio Inc., bought Signal Building Co. and changed its name. As a result, Signal’s revenue increased from just under $10 million in 2012 to over $100 million last year, Davis said. Signal, founded in 1972, provides commercial and residential disaster recovery services from offices in Troy and Clinton Township; New York City; Fort Worth, Texas; Garden Grove, Calif.; and Lebanon, Tenn. It expects to close on the acquisition of a disaster services company in Indianapolis and one in Miami during the first quarter. Davis also expects new recurring business with commercial and residential insurance companies to take Signal to the west side of Michigan and into Chicago within 18 months. Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch

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CRAIN’S DETROIT BUSINESS

Duggan: As year two starts, biz looks for hints at mayor’s vision ■ From Page 1

in America and, so far, he’s excelling at triaging the problems and pushing forward on solutions. But with speed comes the risk of haste and missteps. As Duggan prepares to give his second State of the City address on Feb. 10, area executives, organizers and leaders are seeking insight into his long-range vision for the city’s future and how he intends to tackle problems of a more complex magnitude than putting plows on the streets.

Opening moves Year one for the mayor was all about speed. He had to move swiftly and deftly to prove to residents — and the world — that things were changing in Detroit. “He has provided stability and shown that Detroit is open for business,” said Jean Redfield, president and CEO of NextEnergy. That wasn’t always a given. When Duggan was elected in November 2013, the city’s collective breath was Redfield held. Detroit was in bankruptcy and under the leadership of an emergency manager, Kevyn Orr. Nationally, Dan Gilbert was seen as the unofficial mayor of a city so dysfunctional that it had an unofficial mayor. Nobody was sure what Duggan’s role would be. So Duggan’s first task was to make himself relevant and in control despite there being no obvious way for him to claim his duly elected duties. From his first State of the City speech, Duggan established his bona fides and put everyone on notice that he was the one to deal with in Detroit. J.P. Morgan Chase & Co., for example, was planning to announce a $100 million investment in Detroit. After Duggan’s election, he quickly inserted himself into the process and made strong suggestions as to how the funds should be allocated. That altered a pattern of lacking involvement common to previous administrations. At the same time, Duggan forged strong relationships with Orr and newly elected City Council President Brenda Jones. He smoothly guided the city over the shoals of bankruptcy without letting it devolve into drama, bickering and infighting between council, himself and Orr. “He has rebalanced the machinery of democratic governance,” said Rip Rapson, president and CEO of The Kresge Foundation in Troy. “The fact that we now take for granted the relationship between the mayor and council is nothing short of Rapson astounding. There was so much residual bitterness, and he navigated us to a place where it seems normal and right. If he’d accomplished nothing but that

in his first year, it would have been a success.” But Duggan did. He got the city infrastructure functioning, something that has vexed a series of mayors. More than 34,000 streetlights have been installed in the past year, and the city removes 300 to 500 tons of illegal dumping per week. EMS response times dropped by half, from 22 minutes to 11 minutes. Duggan cut residential property tax assessments — twice — and developed a program to auction vacant properties. In the midst of all that, he had to deal with more than 500 water main breaks in the dead of winter; the Detroit Water & Sewerage Department

MAYOR MIKE DUGGAN’S CABINET Ike McKinnon: deputy mayor Carol O’Cleireacain: deputy

is never “ Mikehappier than when he’s tackling the big problems that nobody else can solve. ... For him it’s like a Rubik’s cube.

”

Kelly Rossman-McKinney, Truscott Rossman

mayor/economic policy

Alexis Wiley: chief of staff Melvin “Butch” Hollowell:

corporate counsel James Craig: police chief Edsel Jenkins: fire commissioner John Hill: CFO Gary Brown: COO Beth Niblock: chief information officer Bryan Barnhill II: chief talent officer F. Thomas Lewand: group executive for jobs and economic growth Charlie Beckham: group executive for neighborhoods Portia Roberson: group executive for ethics and civil rights Dan Dirks: director of transportation John Roach: director of communications Kevin Simowski: executive director, Detroit Land Bank Authority Rodrick Miller: president and CEO, Detroit Economic Growth Corp. Ron Brundidge: director, Department of Public Works Alicia Bradford: director, Recreation Department Brad Dick: director, General Services Department Amy Sovereign: Lean director Jill Ford: special adviser, entrepreneurship Lisa Howze: special adviser, governmental affairs Trisha Stein: interim director, planning and development Arthur Jemison: director, housing and revitalization Eric Jones: director, Buildings, Safety, Engineering & Environment Department Aimee Cowher: executive assistant to Mayor Duggan, director of lean processing

AARON ECKELS

shutting off the taps at thousands of homes; slights by the mayor of Atlantic City, N.J.; a hedge fund manager releasing goats in Brightmoor; a devastating flood; and the snowiest winter on record. “Mike is never happier than when he’s tackling the big problems that nobody else can solve,” said Kelly Rossman-McKinney, CEO of Lansing-based public relations firm Truscott Rossman. “He embraces the challenge, and for him it’s like a Rubik’s cube.”

Speed first If year one for Duggan was about speed and solving tactical problems, year two is about complexity and long-range thinking. The projects to be tackled are of a higher order and require nuanced

solutions and collaboration. That doesn’t happen just with speed and determination, the two traits that served him well in year one. “There is a startup hazard that the mayor has to navigate,” Rapson said. “Speed serves well for basic retooling, things that are technical responses. But as we move on to years two, three, four, and to the second-level macro problems that are about quality of life that Detroiters and new residents demand, that’s an area where the mayor is well served by surrounding himself with people who will be more deliberate and intentional.” Thus far, the mayor has received high marks for his hiring — and for retaining talent. There has been remarkably little churn. Duggan retained Police Chief James Craig even though early reports were that he would oust Orr’s appointment, and he added such significant hires as Beth Niblock, the new chief information officer, and Carol O’Cleireacain, the new deputy mayor for economic policy. Both women are tasked with such second-level problems as completing the overhauling of the city’s technology infrastructure to finding ways to bring outside money into Detroit. One outstanding question is Jill Ford, the much-anticipated head of entrepreneurship. At the Mackinac Policy Conference last year, Duggan announced that Ford would lead a new program for entrepreneurs, funded with a $3 million from federal block grants. But there has been no further news on that front. John Roach, the mayor’s spokesman, does email that “things are coming along nicely.” But just because there hasn’t been churn in the offices doesn’t mean that it’s not a challenging environment to work in. Duggan is a metrics-driven man who likes numbers, likes to measure progress. As such, each Wednesday he meets with senior leadership and asks for their numbers: How many houses torn down? Nuisance abatement lawsuits filed? Police response time? Whatever the goal, he wants to know the status. If you exceed your goal, you post the number in green. Meet it goal, post in blue. Fail? You’re in the red. “It’s intense on the 11th floor,” the city’s corporation counsel, Melvin “Butch” Hollowell, said last year at a Wayne State University Law School event. “Make no mistake about it, it’s not for the fainthearted.” Staff members don’t want to disappoint the mayor, but his brusque personality also means they don’t always feel that they can approach him. Nobody is certain who, exactly, can speak

on the “ It’s11thintense floor. Make no mistake about it, it’s not for the fainthearted.

”

Melvin “Butch” Hollowell

truth to power. So some say there can be a culture of doing whatever it takes to meet the goal regardless if it’s the best thing for the city or the program. For example, one source said, there is little incentive to slow down the pace of installing lights in favor of coordinating with neighborhood groups to ensure what happens will serve them well for the future. “What I’ve seen is someone who demands excellence all the time,” said Rossman-McKinney. “He is impatient with the pace. But everyone I’ve encountered is enthused about it. It’s not ‘I’m afraid of the boss,’ it’s ‘I’m afraid of disappointing the boss.’ Disappointing the mayor, you disappoint the residents of Detroit. That’s the ethics he brings to City Hall.”

Coming on strong When anyone identifies missteps in the mayor’s first year, they can frequently be categorized as the times he tackled second-level problems with first-level tactics. Duggan reportedly wanted to rewrite the city’s entire master plan in just three months. His staff convinced him that it was neither possible nor advisable. A master plan is a guiding document for the city, something that demands buyin and citizen input. It’s aspirational, a way for a city to say what it wants to be. That’s not something that happens neatly in 12 weeks. But in Duggan’s world, you see the problem, you tackle it, you complete it. “Like many folks who are very action-oriented, he doesn’t want perfect to get in the way of getting something done,” said RossmanMcKinney. “He works very hard to make sure that any expectation that is created is met.” The most significant example, however, is the Detroit Land Bank Authority. In a few short months the mayor crafted a program that would auction off vacant homes to those who promised to fix them up and occupy them within six months — longer in historic districts. “We are moving aggressively to take these abandoned homes and get families living in them again,” Duggan promised at the time. “There are a lot of people who would love to move into many of our neighborhoods.” The program debuted to much fanfare. Thousands of people turned up to tour the original dozen vacant properties all in the East English Village neighborhood. When the first home went for auction on May 5, it sold for $34,100. The next sold for $30,100, See Next Page

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then $42,100. Nearly a year later, however, the story is less enthusiastic. Of the nearly 300 homes that were successfully auctioned, buyers closed on less than half of deals. Bidders walked away for a number of reasons, but most frequently because they couldn’t get financing or they discovered the rehab costs were too significant. Of the original dozen properties that Duggan touted so widely as a success? Only two have closed; the other 10 were re-auctioned after bidders walked away. When he started crafting the plan, almost anyone in real estate could have told Duggan that the problem was two-fold: creating a functioning auction program and ensuring that people can access the money to rehab the properties. Without the latter, the former would fail. In fact, Darralyn Bowers, owner of Southfield-based Bowers Realty & Investments Inc., and the Detroit Association of Realtors did tell the Land Bank about the problems and asked it, at the very least, to develop a more Bowers transparent process so bidders would know the true costs they face. But people close to the process say the mayor wanted the auctions to start immediately, he wanted a win, rather than wait and launch a program that might have a higher rate of success. Still, Matt Cullen, president and CEO of Rock Ventures, says the mayor made the right choice. “He could have done a more gestalt look before he started acting, but I’m pleased that he didn’t,” Cullen said. “When Cullen you encounter a problem, you attack it. Do you do analyze it for a year first? No.” The mayor has convinced four local banks — Liberty Bank, Talmer Bank and Trust, FirstMerit Bank and Towne Mortgage Co. — to develop lending programs specific to the Detroit auction, though they haven’t moved the needle significantly yet. And the Land Bank is looking at new ways it can help potential bidders understand the costs and realities of buying property in Detroit. “The mayor says he’s wrong when he’s wrong,” said an executive. “But you have to prove him wrong.”

Future plans Local leaders are hoping that Duggan’s State of the City speech will provide a nuanced plan on how he intends to tackle the bigger macro problems that he couldn’t address while handling trash and goats: jobs, neighborhood revitalization, small-business development. His commitment to the neighborhoods of Detroit is well known, and he made them a pri-

ority in year one by creating the department of neighborhoods and installing district managers. And certainly the Land Bank auctions are an attempt to deal with blight and put owners back into abandoned houses. But block club leaders and other organizers say they are ready for a vision and strategy. “He is deeply, deeply committed to the residents of Detroit, in particular the folks who have been here through thick and through thin,” said RossmanMcKinney. Sue Mosey, president of Midtown Detroit Inc., would like to see a focus on small-business assistance and fixing of the city’s licensing and permitting processes. “There has never been a Mosey time that there has been this much interest from all kinds of folks to invest in Detroit,” she said. “The climate has never been this positive,” so ensuring they can get open and know the rules is critical. That issue cropped up last year for Duggan, when city inspectors issued blight tickets to business owners who had street art on their buildings. That set off a firestorm of anger as businesses thought the mayor was coming after art and murals, not tagging and destruction. The mayor quickly apologized and clarified that wall art is not graffiti. But many business owners didn’t know the rules about what defines art murals versus graffiti versus business signs. So there is great demand for an office staffed with concierges who can help. “To do that, though, it needs to work on the back end,” said one small-business owner. “It can’t just be a Mercedes body with a Yugo engine. We have to fix the city processes not just create an office.” That was a priority for year one under Tom Lewand, the group executive for jobs and economic growth, but it hasn’t materialized. Mosey and other small business owners hope it will in year two. On a broader scale, leaders want Duggan to continue to develop strong relationships with the suburbs and Lansing. They see that he has been effective at using his personal connections from years with the Wayne County prosecutor’s office; at the same time, residents want to see that their mayor bleeds Detroit. “He has to continue to be a leader of the region as well as the city of Detroit,” said Cullen. “He can’t say this is ‘our time in the sun’ and then recreate the dynamics that have divided the region in reverse.” Said Rossman-McKinney: “The challenge in the first year is always getting as much of the really hard stuff done as you possibly can. Then once you are really dealing with some of the most challenging problems you have the opportunity to look at more specifics.” Amy Haimerl: (313) 446-0416, ahaimerl@crain.com. Twitter: @haimerlad

Page 21

Nexteer: Motown-bound ■ From Page 1

“This will have a critical positive effect on informing the industry on who Nexteer is, driving our brand and recognition for us in the technology and innovation we provide.” Perkins declined to identify in which cities the electronic steering supplier is searching for space, but said the company expects to spend less than $1 million on signage and renovation of the space. Nexteer’s Saginaw production operations, and its 5,000 employees, will remain unchanged following the move, expected early next year. Jay Baron, president, CEO and chairman of the Ann Arbor-based Center for Automotive Research, said the location is critical to the company’s image. “If you make movies, you are in Hollywood; if you are in automotive, you are in Detroit. Where you are located validates your significance and commitment in an industry, and in an industry with so many new faces, validation is important,” Baron said in an email to Crain’s. “If you don’t think brand recognition is important, why is Shinola in Detroit? The Shinola business model is built around being in Detroit.” A move closer to the auto industry’s epicenter will also allow Nexteer to better manage its growth, Perkins said. Nexteer generated revenue of $2.4 billion in 2013, up from $2 billion in 2010, and has a $9 billion backlog of business over the next 24 to 30 months, “It’s not like we’re running looking for growth; our backlog is booked work,” said Mike Richardson, senior vice president, chief technology officer and chief strategy officer. “But our focus is now how we can deliver efficiently and work more closely with our customers and suppliers.” Seven automakers have global or North American headquarters in metro Detroit, as well as being home to 60 of the top 100 North American auto suppliers, according to industry advocacy group MichAuto. “Companies have to be where they can execute for strategy,” said Glenn Stevens, vice president of MichAuto and strategic development for the Detroit Regional Chamber. “Having a headquarters in Michigan is an advantage, but if Nexteer wants to be in the middle of automotive innovation and talent, they have to be right here in metro Detroit.” Faurecia North America Inc., the North American subsidiary of French supplier Faurecia SA, opened a new $30 million headquarters in Auburn Hills in July 2013. Mike Heneka, president and CEO of Faurecia North America, said a substantial local presence is a “competitive advantage.” “We at Faurecia have found that being local in the hub of the North American auto industry is critical,” Heneka said. We are close to most of the (automakers) and engineering centers. With such a push for refreshing their fleets, it’s critical that we can provide rapid and on-site program and engineering support.” Stevens also commended Nexteer for keeping its manufacturing base in Saginaw, as it is critical to maintain employment centers around the state for Michigan’s success. Nexteer hired 90 engineers in

Saginaw in 2014 and plans to add an additional 65 employees at that site this year. But having its C-suite in this region will build its notoriety. “Detroit is also the center for events around this industry: conferences, seminars, the places you want your executives to be and to be seen,” Stevens said. “This is still a relationship business, and you need to make sure you’re leveraging that part of the industry.” Nexteer has a history of reinvention, and the move to Oakland County is as much a return to the region as it is a relocation. Once the main U.S. steering operation of General Motors Co., it was spun out under Troy-based Delphi in 1999 — 100 years after the division began operations. As Delphi’s steering division, the Saginaw operations supplied huge orders for GM. But when Delphi entered bankruptcy protection in 2005, the Saginaw steering division was on the brink of closure. Former Nexteer CEO Bob Remenar is largely credited for saving the Saginaw operations after he urged Delphi management to let him try and save the diviRemenar sion. Remenar worked through U.S. Bankruptcy Court in New York to close four plants — in Spain, Italy, France and Alabama — and lay off one-third of its salaried workforce. It also was relieved by handing over its pension obligations to the federal Pension Benefit Guaranty Corp. The plan to clean up its balance sheet didn’t attract a buyer, but was enough to get GM to agree to take over the newly named Nexteer in 2009. In 2010, Remenar and GM worked to renegotiate its union labor contract, down to $12 an hour from $14 an hour. Under Delphi, the starting wage was about $28 an hour. United Auto Workers employees ratified the contract after Nexteer restored family medical coverage to the contract. A month later, GM sold Nexteer to Chinese investors Pacific Century Motors, a joint venture between Aviation Industry Corp. of China, Beijingbased Tempo International Group Ltd. and state-owned Beijing E-Town International Investment & Development Co., for $440 million. Tempo has since exited to JV. “We really owe our existence to Bob Remenar,” Richardson said. “He pushed to keep this company afloat and make it profitable.” Remenar left Nexteer in 2012 to become president and CEO of Southfield-based supplier Chassix Inc. He left that position last year. In 2013, Nexteer launched a $260 million initial public offering on the Hong Kong Stock Exchange. The supplier has invested $400 million in the U.S. market, of a global total of $840 million, since 2010. “We’ve driven our top line, we’ve completed our capital structure; it’s imperative we now focus on driving our brand,” Richardson said. Dustin Walsh: (313) 446-6042, dwalsh@crain.com. Twitter: @dustinpwalsh

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

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

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CRAIN’S DETROIT BUSINESS

RUMBLINGS

WEEK ON THE WEB FROM WWW.CRAINSDETROIT.COM, WEEK OF JAN. 24-30

Super Bowl is big game for ‘jock tax’ T

he taxman was the unspoken winner of Sunday’s Super Bowl

XLIX. Players in the National Football League title game are hit with the “jock tax” on their earnings and bonus money. When the Seattle Seahawks and Pittsburgh Steelers played in Super Bowl XL at Ford Field in February 2006, the city of Detroit reportedly collected about $200,000 in nonresident income from the players. The city collects a 1.275 percent nonresident tax that is applied to anyone who works in the city, including professional athletes. Other cities and states specifically target athletes. Each player on the winning team in Sunday’s game between the Seahawks and New England Patriots in Glendale, Ariz., will earn $97,000, while each player on the losing team will get $49,000. Both teams also have accumulated bonus money for winning earlier rounds of playoff games. Arizona has a 4.54 percent state income tax that applies to the bonuses and number of days players spent in the state working — time known as duty days. The Patriots will get a credit for the Arizona tax paid against Massachusetts’ 5.15 percent state income tax. Washington has no state income tax. For example, Seattle cornerback Richard Sherman will be dinged for a tax bill of nearly $20,000, win or lose. That’s based on his $10 million salary and the cumulative bonus cash for three rounds of playoff games. In Sherman’s case, the duty days formula translates to 10 days of work in the state for the Super Bowl against a total of 235 days for the NFL season, according to a calculation by Robert Raiola, a CPA and senior manager for New Jersey-based O’Connor Davies LLP. Raiola specializes in tax planning for individuals and their families in the sports and entertainment industries.

COURTESY OF JEWELRY FOR A CAUSE

The Caliber Collection includes these Detroit brass cuff links made from bullet casings.

Jewelry of Detroit guns, shells to aid causes Bullet casings recovered from Detroit crime scenes and local gun buyback programs are finding new life as jewelry and lighting sold to benefit various causes. Greenwich, Conn.-based Jewelry for a Cause’s Detroit Caliber Collection is bangles, cuff bracelets and cuff links made from bullet casings obtained through the Detroit Police Department. The pieces, stamped with the serial numbers of recovered guns, are available at the Detroit Institute of Arts and The Detroit Shoppe or online at JewelryForACause.net. The jewelry ranges from $150 to $1,325, with 20 percent of the net proceeds coming back to Detroit to help fund gun buyback programs to get illegal guns off the streets. Other cities in the collection are Hartford, Conn.; Newark, N.J.; Pittsburgh; and San Francisco. Also, Grand Rapids furniture designer Joseph Jeup is working with Jewelry for a Cause and its founder and designer, Jessica Mindich, to create the “Raise the Caliber” lighting collection as part of the jewelry company’s national campaign to end illegal gun violence. Jeup also plans to use casings collected in Detroit to create pieces for his first lighting collection. Like the jewelry, each lamp is stamped with a serial number of a gun taken off the streets of Detroit. Shredded guns from Detroit will be added to a large, traveling metal sculpture of shaking hands set to come to Detroit this spring. The sculpture, commissioned as part of the “Raise the Caliber” campaign, created from 2,000 pounds of shred-

ded, illegal guns, made its debut at Hartford’s Bushnell Park in September.

Ovshinsky inducted into Inventors Hall of Fame The late Stanford Ovshinsky, the photovoltaics pioneer who founded Energy Conversion Devices Inc. in 1960 to explore alternative forms of energy, was named as one of 14 members to Ovshinsky the National Inventors Hall of Fame. Ovshinsky, who died at age 89 in 2012, is spotlighted on the Hall of Fame site as a “prolific, self-taught inventor whose work touched on many aspects of modern life, from solar energy to data storage to nickel-metal hydride batteries.” The hall of fame was created by the U.S. Patent and Trademark Office and the National Council of Intellectual Property Law Association.

Annual SE Michigan group benefits survey now online The Troy-based office of Marsh & McLennan Agency LLC, formerly McGraw Wentworth, has launched its 12th annual Southeast Michigan Mid-Market Group Benefits Survey for midsize companies with 100 to 10,000 employees. The idea is that employers can share insights on their health care plan strategy-making; results are to be shared in early June. More than 500 companies are expected to participate this year in Marsh’s survey, including auto suppliers, manufacturers, school districts and nonprofits. The survey results, which will include changes in employer-sponsored health benefits, will be released in early June, said Marsh officials. To participate, visit mcgrawwentworth.com/ resources/survey.

BITS & PIECES 䡲 Lawrence McLaughlin, partner at Honigman Miller Schwartz and Cohn LLP and chairman of its real estate department, has been named to the 2014 Commercial Real Estate Hall of Fame by Midwest Real Estate News. Hall of Fame McLaughlin members are selected for the depth of their experience and their contributions to the profession.

Wireless sensing systems pitch wins for Civionics ivionics LLC, an Ann Arbor-based company that is developing wireless sensing systems to give manufacturers advanced notice of potential equipment failure, won $5,000 as the winner of the elevator-pitch contest at the 15th annual Collaboration for Entrepreneurship event. The event at Burton Manor in Livonia was put on by MiQuest, a Lansingbased nonprofit affiliated with the Small Business Association of Michigan.

ON THE MOVE 䡲 Cooper-Standard Hold-

ings Inc. named Matthew Hardt as CFO, effective March 2. Hardt, 47, will replace Allen Campbell, 57, who will remain an executive vice president and be chief infrastructure officer for the Novi-based automotive fluid systems supplier’s Asia-Pacific operations. Hardt, previously CFO of the industrial solutions division of Harrisburg, Pa.-based TE Connectivity Ltd., joins Cooper-Standard this week as an executive vice president. 䡲 Ed Buss, an official overseeing Michigan’s prison food contract with Aramark Correctional Services, left the job after five months. The Department of Technology Management and Budget announced Buss’s exit but did not give a reason. Philadelphia-based Aramark’s performance in Michigan has been under scrutiny over misconduct by employees and food contamination issues.

COMPANY NEWS 䡲 Dearborn-based

Carhartt Inc. plans to open what it calls its “flagship retail store” in a three-story, 51,000-square-foot building at 5800 Cass Ave. in Midtown. The work clothing company owns and operates 16 retail stores across the country; its first Detroit store is expected to open by this summer. 䡲 The value of the Detroit Pistons has increased by 80 percent over the past 12 months, says Forbes. The Pistons are worth $810 million, up from $450 million a year ago, according to Forbes’ National Basketball Association estimates issued this month. The team was ranked 23rd among the 30 NBA teams. 䡲 Freshii, a Torontobased soup and salad restaurant, is set to open

COURTESY OF SEA LIFE MICHIGAN

Water life came to Great Lakes Crossing Outlets last week with the opening of the Sea Life Michigan Aquarium.

Feb. 9 at 1001 Woodward Ave., the former First Federal Building in downtown Detroit. Another Detroit Freshii location is open at 679 W. Kirby St. 䡲 Livonia-based Michigan Urgent Care Centers opened Ferndale Urgent Care, the company’s 10th urgent care and occupational health center, at 641 W. Nine Mile Road. 䡲 Gunma, Japan-based Sanden Corp., which maintains a regional office for Sanden International Inc. in Plymouth Township, will pay a $3.2 million fine as the latest company tied to a far-flung automotive supplier price-fixing prosecution for its role in setting the prices of air conditioning compressors. Sanden agreed to plead guilty to one charge of conspiracy to restrain trade in a deal subject to approval at U.S. District Court in Detroit.

OTHER NEWS 䡲 The new Sea Life Michi-

gan Aquarium opened to the public at Great Lakes Crossing Outlets in Auburn Hills. Mall owner Bloomfield Hills-based Taubman Centers Inc. entered an agreement with London-based Merlin Entertainment plc to bring Sea Life Michigan to the mall’s former Game Works location. 䡲 S.A.Y. Detroit, the nonprofit founded by Detroit Free Press columnist Mitch Albom, plans to reopen a shuttered northeast Detroit recreation center to launch a new academic and sports program for city youth. Detroit Lions quarterback Matthew Stafford’s Score7 Charitable Fund committed a seven-figure grant. 䡲 Mayor Mike Duggan announced a plan to allow Detroit municipal workers, retirees and their families to pay half the price of their winning auction bids for city-owned houses. The program is subject to Detroit City Council approval. 䡲 Joe Louis Arena now has free high-speed public Wi-Fi — good news for fans of the Detroit Red Wings. Venue management compa-

ny Olympia Entertainment used Morrisville, N.C.based SignalShare and San Jose, Calif.-based Extreme Networks to install the system, which was to become available starting with Saturday’s game against the New York Islanders. 䡲 Oakland County was the beneficiary of $171 million in foreign direct investment in 2014, totaling more than a quarter of the $638 million total business investment, county officials said. The foreign investment created 1,941 jobs, the county said. 䡲 Applications for the two-year Wayne State University Detroit Revitalization Fellows program are being accepted through Feb. 20. The program places mid-career professionals in full-time, salaried positions with civic, community and economic development organizations working on improving Detroit. 䡲 Irvin Poston, former head of General Motors Co.’s technical center in Warren, will be honored with the Gold Award from the Engineering Society of Detroit at a banquet March 11 at Schoolcraft College in Livonia. 䡲 The Detroit Institute of Arts will use $148,000 in grants on projects including restoring the museum’s original exterior walls and bronzes outside the Woodward Avenue entrance, AP reported. The DIA was awarded two grants from the Michigan Council for Arts and Cultural Affairs. 䡲 A donation of more than $5 million by alumnus George Mink will be used to provide scholarships to engineering students at Lawrence Technological University in Southfield starting next year, AP reported. Mink, who had several patents for material-handling equipment, and his wife gifted the money to the school when they died in 2013. 䡲 Henry Ford College in Dearborn received a $1 million endowment gift from the estate of alumnus Arthur Kochoff to help fund scholarships for students, AP reported. Kochoff, who died last year, was a longtime manufacturing engineer.

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