Crain's Detroit Business, April 13, 2015 issue by Crain's Detroit Business

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CRAIN’S Readers first for 30 Years

DETROIT BUSINESS April 13-19, 2015

Mall evolves as shoppers do

Data Detroit: 7.2 sq. miles drive the city

Making deals: It’s as hard as you think

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LOOKING BACK

GOP balks at funding Healthy Michigan plan Governor’s planned ‘lockbox’ is bare By Jay Greene jgreene@crain.com

When championing Medicaid expansion under health care reform in 2013, Gov. Rick Snyder spoke often about his desire to place half of the near $1 billion in state savings over the next decade into a “health savings lockbox.” The state savings, primarily from lower general fund spending on mental health and prison health costs, would be used in fiscal 2017 when federal funding for

Healthy Michigan Medicaid expansion started to decline and the state needed to contribute up to 10 percent of total costs to keep the program going. But despite Snyder’s budget recommendations to fund the lockbox in fiscal 2014 and 2015, the state Legislature failed to place 50 percent of state savings — which amounted to more than $220 million — into the health savings subaccount of the governor’s budget stabilization fund.

With the state facing a budget shortfall of at least $400 million in fiscal 2016, there also is no proposal this year to set aside state savings from Healthy Michigan expansion. “We are concerned about further funding for Healthy Michigan,” said Rick Murdock, executive director of the Michigan Associa tion of Health Plans , which represents 12 of the state’s 13 Medicaid HMOs. Murdock said his concern is two-fold: One, how legislators will

thenderson@crain.com

By Bill Shea bshea@crain.com

See TIGERS, Page 28

TechTown, Automation Alley help Civionics grow By Tom Henderson

See LOCKBOX, Page 29

MLB’s reach to women in play at D Shop The Detroit Tigers’ D Shop retail store at Comerica Park is a petri dish in which the economic results of Major League Baseball ’s ongoing effort to market the game to women can be viewed. The walls, racks and shelves inside the 6,000-squarefoot shop brim with jerseys, hoodies and T-shirts designed specifically for women in a full range of sizes, and other apparel and merchandise aimed at female fans — designed to appeal to what MLB has said is the gender that makes up 46 percent of baseball fans. Both the brick-and-mortar Tigers ballpark shops and the team’s official online store are filled with jewelry, footwear, handbags, makeup, swimwear, medical scrubs, maternity wear, luggage and fitness gear. Also for sale are Pandora bracelets and charms and a Dooney & Bourke line of handbags, all in Tigers livery. The past couple of years have seen the amount of

Ann Arbor startup gets a regional lift

[GLENN TRIEST]

The D Shop at Comerica Park has walls,racks and shelves full of hats,T-shirts,hoodies,purses and jewelry for the discerning female Tigers fan.

Can a village raise a tech startup? Ann Arbor-based Civionics LLC hopes so, as it tries to make the switch from being a company existing on government research grants for its wireless sensors to one that will make products to sell to customers. The company, spun off from the University of Michigan in 2009 to provide wireless sensors to monitor the health of civil engineering projects, is a poster child for the regional cooperation that has evolved in recent years to help promising tech startups become actual companies. Civionics was founded by Jerome Lynch, a UM professor of civil and environmental engineering, and Andy Zimmerman, one of his doctoral students. Lynch is now chief science officer; Zimmerman is CEO, though he lives in Colorado now, and a new CEO likely will be named soon. Civionics is based in the tech incubator at UM’s north campus; it is

[LEISA THOMPSON]

Jerome Lynch,chief science officer for Civionics,holds one of the company’s sensors. being mentored by an executive in residence at Detroit’s TechTown who likely will become the compaSee CIVIONICS, Page 27

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CRAIN’S DETROIT BUSINESS // April 13, 2015

MICHIGAN

BRIEFS Strong medicine deal? Mylan offers to buy Perrigo Mylan NV has offered to buy fellow drug maker Perrigo Co. for $28.9 billion — a deal that would create a powerhouse for generic medicine. According to a statement last week reported by Bloomberg, Mylan offered $205 a share in cash and stock for Perrigo, which is based in Dublin but operates from Allegan in West Michigan. That represents a 25 percent premium over the April 8 closing price for Perrigo, which makes a range of products including skin gels, injectables and nasal sprays. Perrigo’s board will meet to discuss the proposal, the company said. The bid by Mylan, which makes about 1,400 medications, would add to a record period of consolidation in the pharmaceutical industry. Mylan, with operating headquarters in Canonsburg, Pa., agreed last year to acquire non-U.S. operations of Abbott Laboratories for $5.3 billion as part of a plan to move its tax address to the Netherlands. Per-

rigo completed a similar tax maneuver in 2013, acquiring Elan Corp. so it could be domiciled in Dublin.

Vt. defense contractor plans move to West Mich. Bennington, Vt.-based defense contractor Plasan North America Inc. announced plans to invest $12.3 million to relocate its headquarters and operations to the Grand Rapids suburb of Walker, MiBiz reported. The manufacturer of a variety of ballistic armor, composite structures and other protection systems primarily for land vehicles used by the U.S.Department ofDefense and other government agencies will consolidate its corporate offices, research and development and production into the new leased facility in Walker, where it expects to create 120 additional jobs over the next three years. Plasan — which also considered locations in Texas and Tennessee — plans to begin operations by the end of August. “It’s a big deal that here in West Michigan, we’re able to attract a de-

fense contractor,” said Eric Icard, project manager at The Right Place Inc., the Grand Rapids business development organization that helped facilitate the move. The company’s decision to relocate was driven largely by increases in efficiency and operating costs, said Keith Rayborn, president of Plasan North America. Plasan’s two largest ground vehicle OEM customers are in Warren, adjacent to the U.S.Army’s Warren-based Tacom Life Cycle Management Command.

MICH-CELLANEOUS LINC Community Revitalization, a neighborhood revitalization nonprofit in Grand Rapids, said it plans a $15 million project to create at least 70 apartment, townhome and row housing units, filling the majority of a city block and creating what LINC is referring to as Eastern Village, the Grand Rapids Business Journal reported. LINC said the properties would be “priced affordably to appeal to working-class individuals and families,” with construction to begin next spring and completion in 2017. South Lyon-based Aerius Flight LCC is the first company in the state to get Federal Aviation Administration approval for commercial-application drone photography and videography, MLive.com reported. The company is comprised of commercial rated pilots and certified flight instructors who are graduates

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of Western Michigan University’s College of Aviation. TangerFactory Outlet Center Inc. moved up the opening date for its West Michigan mall to July, MLive.com reported. Previous dates had set the opening for the $80 million, 80-store retail center in Kent County’s Byron Township for this fall. Tanger Outlets, which broke ground last summer on the center, has two other malls in the state, in Howell and West Branch. Walker-based MeijerInc. said it plans to invest about $50 million in upgrades at four supercenters in the Dayton, Ohio, area, MiBiz reported. The company expects work to begin this month and wrap up by year’s end. In Michigan, at least one in five jobs is tied to water. That’s according to the new Michigan Blue Economy report, from the Annis WaterResources Institute at Grand Valley State University and the Michigan Economic Center at Prima Civitas, Michigan Radio reported. Transportation, ports and shipping add more than 65,000 jobs and $3 billion to the economy each year, said the report. Shipping on the Great Lakes has groaned back to life after another rough winter. Freighters were moving mostly unhindered through U.S. and Canadian waters last week, MLive.com reported. This was a relief to shipping companies that started the 2014 shipping season well behind normal

INSIDE THIS ISSUE BANKRUPTCIES . . . . . . . . . . . . . . . . . . 6 BUSINESS DIARY . . . . . . . . . . . . . . . . 23 CALENDAR . . . . . . . . . . . . . . . . . . . . . . 24 CLASSIFIED ADS . . . . . . . . . . . . . . . . 25 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . . 8 MARY KRAMER . . . . . . . . . . . . . . . . . . 17 OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . 8 OTHER VOICES . . . . . . . . . . . . . . . . . . . 9 PEOPLE . . . . . . . . . . . . . . . . . . . . . . . . . 23 RUMBLINGS . . . . . . . . . . . . . . . . . . . . 30 STAGE TWO STRATEGIES . . . . . . . . 16 WEEK ON THE WEB . . . . . . . . . . . . . . 30

COMPANY INDEX: SEE P 29 schedules due to historic ice cover and brutal weather. The Lake Carriers Association said the ice-related shipping slowdown last year cost 4,000 jobs and about $705 million in economic losses in steelmaking, power generation and construction industries in the Great Lakes basin. Mark Gill, U.S.Coast Guard director of vessel traffic services in Sault Ste. Marie, said he anticipated the Coast Guard will cease ice-breaking by April 30. The Fresh Thyme Farmers Market in East Lansing will open April 29 in Trowbridge Plaza near Michigan State University and replace what used to be Goodrich’s, MLive.com reported. The grocery store is the first in Michigan for Fresh Thyme, described as a hybrid between Whole Foods and TraderJoe’s.

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CRAIN’S DETROIT BUSINESS // April 13, 2015

City’s economic engine: 7.2 sq. mi. By Amy Haimerl ahaimerl@crain.com

ore than 35,000 people live and 135,000 work within the 7.2 miles that make up greater downtown Detroit, according to the new “7.2 Sq Mi” report issued recently by the Hudson Webber Foundation. “The 7.2 is the economic engine that is driving the city,” said Dave Egner, foundation president. “It accounts for 40 percent of the city jobs.” This is the second time the foundation has issued a report card on the area, which encompasses downtown, Midtown, Corktown, Eastern Market, Woodbridge, Lafayette Park and Rivertown. That report was a baseline, Egner said, while the 2015 report is aimed at spotting trends.

So is gentrification happening? Not exactly. Per capita income is still less than $25,000 and the corridor is 69 percent African American. “This notion that greater downtown is becoming less diverse and overly affluent is not true,” Egner said. “But we have to make sure that this greater downtown remains diverse. It’s our differentiation factor with other metro areas.” To highlight the difference between now and then, Crain’s compared data from the 2013 and 2015 report cards, but from different data sets. The 2013 report pulled from the 2010 Census, while the 2015 is based on a snapshot taken in 2012 by the American Community Survey.

3 Q&A: GRETCHEN PERKINS

Key to deals: 1,000 meetings a year Huron’s Perkins recognized for sourcing prowess Gretchen Perkins is the star of the April issue of Mergers & Acquisitions, staring out at readers, her arms crossed just below the words that proclaim her “Dealmaker of the Year.” The issue focuses on M&A’s eighth annual midmarket awards, and Perkins is the first woman to win the top honor, which was given for two things — her role as chief deal sourcer for Detroit-based Huron Capital Part ners LLC, and for serving as cochair of the national Public Policy Committee for the Association for Corporate Growth. Huron Capital is usually the most active private equity company in the state. It did 22 acquisitions last year, with a sector focus on manufacturing. Founded in 1999, Huron Capital has raised more than $1.1 billion for four funds, the latest an oversubscribed fund of $500 million. The firm has bought more than 90 companies, and its current portfolio companies employ more than 7,500 throughout North America. The business model is to roll individual companies into larger platform companies. Huron has 15 platform companies with aggregate revenues of $750 million, according to managing partner Brian Demkowicz. Perkins, 51, is a partner in the firm, which she joined in 2008, recruited from Royal Oak-based Long Point Capital Inc. by Demkowicz. Perkins was hired as vice president of business development, was later promoted to senior vice president and in 2013 was promoted to partner. Her volunteer service includes being on the board of the United Cerebral Palsy Association of Met ropolitan Detroit and mentoring a class of 25 at-risk girls at Osborn Evergreen Academy in Detroit through Women of Tomorrow. Perkins talked to Crain’s reporter Tom Henderson about her role at Huron and why beating the bushes for deals, instead of waiting for investment bankers to come calling, is important for a company in the private equity hinterlands of Detroit.

[GLENN TRIEST]

Gretchen Perkins is chief deal sourcer for Huron Capital Partners. Congratulations on the award. How about a little background? Where did you go to school? I graduated from the University of Michigan in 1986. I got my bachelor’s of business administration from the business school, with a concentration in finance. And then? I started working for the First National Bank of Chicago. I was there three years and then relocated to Detroit. I came back because I got engaged to a guy who lived here. I joined Barclay’s Busi ness Credit as a business development officer. That’s when I began my career in mergers and acquisition. In Chicago, I’d been working in real estate. I then worked for GE Capital in Detroit for three years, then I went back to Barclay’s for another three years after it became Fleet Capital Corp. , doing cash-flow and asset-based lending for auto suppliers around town. I then joined an automotive consulting firm, IRN, which was based in Grand Rapids. In 2002, I was recruited to Long Point Capital, which had evolved to the point where they needed someone to See DEALMAKER, Page 26

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DAC reaches 100, marks it with sculpture park By Dustin Walsh dwalsh@crain.com

The Detroit Athletic Club will celebrate its centennial on April 24 with strong membership and a new sculpture park. The Albert Kahn-designed club is also completing rooftop renovations to create a restaurant, lounge and meeting rooms, which are expected to open in July. The nonprofit club has spent nearly $60 million in restoration and construction projects over the past 17 years, said Executive Manager Ted Gillary. It hasn’t always been easy. Private clubs have been under stress across the country. Some have closed locally, including the Renaissance Club and Detroit Club. But despite some ups and downs over the years, the DAC remains the city’s most prominent locale for

current leaders to caucus. Cindy Vizza, publisher and senior director of knowledge for the Washington D.C.-based National Club Association, said the recession shook out many clubs. “A lot of closures occurred for the lower- and middle-tiered clubs,” Vizza said. “Clubs like the DAC, with rich history and membership, survived intact and are now taking on new growth.” The $2.3 million sculpture project, which will be placed on the island bisecting Madison Avenue in front of the club, represents the club’s original mission of supporting amateur athletics. Nine-foot statues of a second baseman throwing a runner out at first, two runners and a football running back donning the number 20 were commissioned by the club’s foundation and sculpted by A.

DAC history In 1880s, DAC members held the world records for the 100-yard dash, 220-yard dash and the pole vault.

DAC member and University of Michigan running back Neil Snow scored five rushing touchdowns in the 1902 Rose Bowl — a record that still stands.

Detroit Tigers center fielder Ty Cobb, while not a member, played for the club’s DAC Deltas during a rehab stint in the summer of 1906.

[DETROIT ATHLETIC CLUB]

The DAC plans a $2.3 million sculpture project on the Madison Avenue island in front of the club to represent its original mission of supporting amateur athletics. Thomas Schomberg. His most famous work is the Rocky statue in Philadelphia. A fourth sculpture – a female swimmer – will be installed in the circular drive entryway of the club. The DAC trained female Olympic hopefuls decades ago. But it’s the brass of DAC membership that has cemented its legacy in Detroit history. “The strength of this club is the social aspect,” Gillary said. “The trust between members here translates into the business out there; our members dine together, play sports together, get to know each other’s families.” Bill Kozyra, chairman, president and CEO of Auburn Hills-based TI Automotive LLC , has been a member since 1997. “When I’m there, I’m with people like me; it’s a tremendous platform to prosper, personally and professionally,” Kozyra said. “Inside the DAC is always a reminder of the great start we had as automotive pioneers here in Detroit.” Midtown start, then a fizzle The original club opened in 1887 on Woodward Avenue north of what is now the Whitney restaurant. However, by the early 20th Century the club had mostly fizzled out and was being solely funded by amateur baseball player John Kelsey, founder of Kelsey Wheel Co. , Ford Motor Co.’s major wheel supplier. Kelsey, along with many of the early auto industry pioneers, continued to meet socially at the Pontchartrain Hotel Bar on Woodward Avenue, waxing nostalgic about the club which produced some of the biggest names in sports at the time, including world-class track stars John Owen Jr., Harry Jewett and Fred Ducharme. Kelsey, along with fellow Spanish-American War veteran Henry Joy, president of the Packard Motor Car Co. and later part owner of the Detroit Tigers; Charlie Hughes, who founded the Detroit Cougars, which became the Detroit Red Wings, and many others decided to reboot the club and commissioned a $2 million clubhouse on Madison Avenue. The group, 109 of Detroit’s leading dignitaries, signed the articles of

association in 1913 and the club opened its doors in April 1915. Upon its opening, DAC members controlled 90 percent of auto production in the world. Members have included Henry Ford and every generation of the family since, John DeLorean, founder of DeLorean Motor , Roger Penske and hundreds of others. Northwest Airlines and the famed Ford Mustang were conceived there, according to the DAC. Surviving, then thriving Today, the DAC’s nearly 4,400 members represent more than 2,000 companies, according to the DAC. The makeup consists of more than 2,900 resident members, 400 intermediate (ages 21-33) and nearly 1,100 clergy, broader U.S. and international members. Gillary said intermediate membership, capped at 400, has a waiting list. Resident members, those with voting rights, pay an entrance fee of $3,500 and $337 monthly dues. Women, who were finally allowed as members in 1986, now make up roughly 12 percent of membership, according to the DAC News. Crain’s Detroit Business Publisher Mary Kramer served as the club’s first and so far only female president in 2003. Bill Morrow, senior vice president of Crain’s parent Crain Communica tions Inc., was president in 1995. Other clubs have not been as prosperous. The Detroit Club, which opened in 1892, closed for good last year when its longtime home at Cass Avenue and Fort Street was auctioned. The Renaissance Club closed in 2010, unable to withstand mounting buyouts of GM executives, and merged with The Skyline Club in Southfield. The Great Recession claimed others including the famed Knickerbocker Yacht Club in New York. which dated to 1874. The Detroit Golf Club, on Hamilton Road in Detroit, felt the sting of decline during the recession. The club dropped to roughly 550 members, but has since recovered to 638, said COO Michael Strain. “We’re in the dues business; when you lose a third of the mem-

Several famous writers contributed to the DAC News, ames Thurber, Edgar including Ja Guest, Dorothy Parker, Ring Lardner and Robert Benchley. The Last Word, an old-timey cocktail of equal parts gin, green Chartreuse, maraschino liqueur and lime juice, was invented at the club.

In 1916, DAC members owned, operated or financed 60 carmakers and 100 auto suppliers. Source: DAC News

bership, you lose a lot,” Strain said. “It’s more than initiation fees and what it costs to get in the door. The clubs that are successful are those that find ways through their membership to sponsor new members.” Strain said the club maintained services while drastically dropping the initiation fee to $6,500 from $40,000 during the recession. Its fees have since risen to $13,500 with plans to reach $20,000 by 2020. The club’s dues are $600 per month. “We didn’t alter our service and that’s what kept us steady,” he said. The DAC also faced struggles through the recession with membership dropping to around 2,300 members. Much of its new growth is riding on the inclusion of members’ families, Gillary said. Gillary said the club’s focus on family is critical on two fronts – it’s important to members and it allows access to the next generation of club members. “We made a strategic plan several years ago to bring in more families here so parents and children can engage the club together; whether that’s at the pool or over dinner or at one of our many events,” Gillary said. “The sons and daughters of our members represent a very strong part of our intermediate membership.” Kozyra said he hopes his son, a 30-year-old TI plant manager, becomes a member. “My son represents the new guard coming into the industry and the DAC is really a platform for his generation of professionals to learn,” Kozyra said. “He has an opportunity I didn’t take at his age, to make contacts and find new sources of information from the great minds there. He can rub elbows with the Ford family. There isn’t another place in Detroit where that’s likely to happen.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

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April 15, 1985, issue looked at Arborland’s shift LOOKING BACK Crain’s to a discount format. The change was one of many for the Ann Arbor shopping center, which has adapted over the years to fit changing consumer habits. More at crainsdetroit.com/30

Arborland evolution a case study in shopping habits By Sherri Welch swelch@crain.com

Arborland Mall ’s shift to a discount format three decades ago would prove to be yet another steppingstone in its journey of adaptation to the changing retail market. Within a dozen years, Arborland — which opened as a strip center and enclosed a few years later — was “de-malled” and converted back into a strip center. Along the way, those strip centers carried different labels, from manufacturer’s outlet mall to power center, depending on the mix of tenants. It began to attract national lifestyle retailers, as well as the higher-end discount retailers that now occupy Arborland Center , bringing its occupancy to nearly 100 percent today, with all but a single retail space taken. In many ways, Arborland’s evolution through the years has mirrored changing trends in retail, from the early days when shoppers spent hours in enclosed malls to today’s busy lives fueling shoppers’ need to get in and get out of stores. The Ann Arbor power center, today anchored by Bed Bath & Be yond, Toys R Us, DSW, Nordstrom Rack, Marshalls and Hiller’s Market ,

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Arborland has evolved from a strip shopping center to an enclosed mall and then back into a strip center,with such shops as Potbelly,OfficeMax and Hiller’s Market.

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may not be done evolving. “Its future is very debatable,” said Ann Arbor real estate developer and consultant Peter Allen, an adjunct faculty member of the Ross School of business and A. Alfred Taubman College of Architecture and Urban Planning at the University of Michi gan for more than three decades. With shoppers increasingly seeking destination retail in walkable

mixed-use developments, “I wouldn’t be surprised if within 10 years they bulldozed one of the large buildings and put residential over retail,” Allen said. Started as strip center Arborland Shopping Center was Ann Arbor’s first suburban mall. It sprang to life in 1961 as a strip center and was enclosed in 1970. It was

A newspaper advertisement from 1961 called the upcoming mall “one of the four great regional shopping centers in Michigan” and boasted that it would have parking for 3,000 cars. developed by principal owner Charles Gershenson — the brother of William and Aaron Gershenson who went on to found the company now operating as Ramco-Gershen son Properties Trust — broker John Sharemet and Taubman Cos., which

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had an ownership interest and did the design and construction, said Maria Mainville, Taubman director of strategic communications. Taubman opened Briarwood Mall in 1973, and retail also began to develop in and around downtown Ann Arbor. Despite Arborland’s location on Washtenaw Avenue at U.S. 23, along a main route between the University of Michigan and East ern Michigan University , the mall had a hard time competing. Vacancies rose over the next decade until 1983, when Melvin Simon & Associates , now Simon Property Group , the largest mall company in the U.S., bought the center. By that time Taubman had sold its share, Mainville said. Two years later, operating as Arborland Consumer Mall, the mall had shifted to a discount format aimed at middle- and upper-income shoppers. The strategy was working, as Crain’s reported in 1985, with the number of tenants rising from a low of 13 in 1984 to 44, or 90 percent occupancy, by 1985. But it wasn’t successful long term. Simon Property Group sold its equity in Arborland at a $500,000 loss in 1996, according to a filing with the U.S. Securities & Exchange Commission. And a year later, Balcor Management Services Inc . sold the mall to Palatine, Ill.-based Joseph Freed and Associates LLC, Albemarle Equities , L e r n e r - H e i d e n b e r g P r o p e r ties , Fremont Group and TBM Equi ties for a mere $7 million. Led by Joseph Freed and Associates, the investment group the following year converted Arborland from an enclosed mall to a power center with several anchor tenants through a renovation that demolished 75-80 percent of the buildings before rebuilding farther back on the property and bringing in new tenants like Bor ders, Allen said. See Next Page

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The following businesses filed for protection in U.S. Bankruptcy Court in Detroit April 3-10. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation. Daytona Storage Inc ., 143 Cady Centre, Suite 328, Northville, voluntary Chapter 7. Assets and liabilities not available. Telesource Services LLC , 1450 Highwood East, Pontiac, voluntary Chapter 11. Assets and liabilities not available. JAB Properties LLC , 4320 E. 12 Mile Road, Warren, voluntary Chapter 11. Assets: $615,000; liabilities: $581,212.59.

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CRAIN’S DETROIT BUSINESS // April 13, 2015

History of Arborland 1961: Charles Gershenson, as principal owner; broker John Sharemet; and Taubman Cos. develop Arborland Shopping Center as Ann Arbor’s first suburban mall.

1970: Arborland is enclosed, becoming Arborland Mall. 1983: Purchased by Melvin Simon & Associates, now Simon Property Group, for undisclosed amount. By that time, Taubman had sold its share.

1985: Shifts to discount store format; renamed Arborland Consumer Mall. 1996: Simon Property Group reports a $500,000 loss on the sale of the mall.

reported investment on behalf of a pension fund, which generally pays the highest since it typically looks for a long-term return. Arborland remains under Hart and AmCap ownership. And many of the same retail tenants also remain.The center is the strongest it’s been in 10 years, given the rebounding economy and the tenant mix, said retail consultant Cindy Ciura, principal of CC Consulting LLC in Bloomfield Hills. “It’s got a little bit of something for everyone,” with strong anchors and stores geared toward women, men, teens, children, pets and households in general, she said, helping attract a broader market of shoppers. Arborland had to find its way, she

said, but it’s been able to position itself in the market, in spite of the competition with Briarwood Mall and the high-end Arbor Hills right down the street. “They’ve found their niche,” Ciura said. Allen takes a different view. The only way to get to Arborland is to drive there, which is at odds with demand for walkable retail in areas like downtown Ann Arbor, Detroit’s Midtown and Birmingham, Allen said. Those areas are providing “authentic, unique experiences” and gaining in popularity, he said. He believes that type of mixeduse, walkable retail could be in Arborland’s future. If you’re doing the same thing

you were doing 10 years ago, “you’ve probably got some downward pressure,” said Karl Zarbo, director of operations for West Bloomfield Township-based Lormax Stern De velopment Co. But there’s no one-size-fits-all approach for reKarl Zarbo: Time tail properties. pressures are “At Macomb driving. business. Mall, we’re spending tens of millions (on renovations), and we’re not de-malling,” he said. Yet, Lormax Stern de-malled or knocked down Livonia Mall five or six years ago and reopened it in

2010 as an open air center, Livonia Marketplace. Today it’s anchored by Kohl’s and Wal-Mart and includes a series of smaller out lot buildings “to give it more of a street feeling,” Zarbo said. In Grand Rapids, Lormax Stern opted to take the mall portion off of the front of Centerpointe Mall, refaced the back stores and reopened it as an open air center, before selling it last July, he said. “Time pressures today are really what’s driving the business,” Zarbo said. “Our philosophy if Arborland was ours is ... it’s fine if they go to Briarwood for (fashion shopping), but we’d want them for different reasons.” Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

1997: Balcor Management Services Inc. sells Arborland to Palatine, Ill.-based Joseph Freed and Associates LLC, Albemarle Equities, Lerner-Heidenberg Properties, Fremont Group and TBM Equities for $7 million.

1998: Arborland closes to be “demalled,” converting to an open-air power center with several anchor tenants, through a renovation that demolishes about 75 percent of the buildings before rebuilding farther back on the property and bringing in tenants like the former Borders. 1999: Reopens. 2005: Sold to a joint venture that includes Simsbury, Conn.based Hart Realty Advisers Inc. and Stamford, Conn.-based AmCap Inc. for $102 million.

From Previous Page

It reopened in 1999 and six years later was sold to a joint venture that included Simsbury, Conn.-based institutional real estate adviser Hart Realty Advisers Inc . and Stamford, Conn.-based AmCap Inc ., which buys and manages shopping centers, for $102 million. Crain’s reported at the time that Hart held 90 percent of the venture and had bought it on behalf of an undisclosed state pension fund. AmCap did not return calls seeking comment. The deal “was a landmark threshold,” Allen said. “No one could believe they got such a high price.” Freed and Associates had bought the property at a distressed price because it was doing so poorly as the economy sought to right itself from the tech bust of the early 2000s, he said. “They bought it cheap (and) rebuilt it perfectly, hitting the taste buds of shoppers with just the right types of uses to attract new shoppers there,” Allen said. “Then they got high rent ... and they turned around and sold it at almost a 20 percent multiple.” At the time, the center was 100 percent leased with tenants including Hiller’s Market, Bed Bath & Beyond, Borders, Old Navy, DSW Shoe Warehouse, Arhaus Furniture, Star bucks and Cold Stone Creamery. The timing of the deal in connection with the recovering economic cycle helped, Allen said, as did the

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CRAIN’S DETROIT BUSINESS

OPINION Washington should help close talent gap What’s the No. 1 headache for many Michigan employers? Not enough people with skills required to do specific jobs. And Washington holds the key. There are two big opportunities to improve Michigan’s economy: Increase the number of H-1B visas for Michigan-based companies and jump-start Gov. Rick Snyder’s idea of loosening immigration restrictions for foreign-born people with college degrees who agree to live in the city of Detroit. Last week, business leaders protested federal policies that limit the number of H-1B visas — which allow skilled foreign workers to accept jobs in the U.S. Applications for the visas exceed the federal supply by an order of 3-to-1. Immigration is a hot political topic, but this is something Congress needs to act on to promote economic growth across the country — and particularly Michigan. The visa issue is particularly irritating since so many Michigan universities have a growing number of international students, many in technical fields like software design and engineering. Federal policy forces those students back to their home countries — to work for other companies that in turn compete with companies in the U.S. The second opportunity: More than a year ago, Snyder and Detroit Mayor Mike Duggan asked President Obama to allocate 50,000 employment-based visas to skilled immigrants who would live and work in Detroit. The White House has been hugely silent on the request. These visas are part of the green-card process, separate from H-1Bs, which are temporary work permits. But both initiatives would go a long way in helping Michigan strengthen its 21st century economy — without the federal government having to spend a dime.

No help from party for Snyder Talk is beginning to percolate about Republican presidential hopefuls; The Detroit News last week included Gov. Rick Snyder among the “21 elephants” in the 2016 presidential waiting room. But what chances do Snyder’s national aspirations have when his own party continues to oppose some of his key initiatives? As Jay Greene reports on Page 1, Republicans are bucking Snyder’s plans for setting aside dollars Michigan saves by using federal subsidies for extending health care to low-income residents. Snyder wanted to set aside half of the savings — more than $220 million in 2014-15 — into a “lockbox” for future health care spending when federal subsidies run out. Members of his party have other plans. It’s another example of Snyder’s own party trying to derail an important initiative from the CPA-turned-governor.

LETTERS

Continue state push for renewable energy Editor: In response to the article posted on Crain’s website March 25 regarding Gov. Snyder’s initiatives for more renewable energy use (“Snyder faces challenges in boosting Michigan’s energy efficiency, renewable energy”), I agree with this recent push for increasing renewable energy dependency because it means that we will be decreasing dependence on energy created by coal power plants. The article also stated that our state is likely to finally meet the requirements of Public Act 295 (10 percent utilization of renewable energy in the state). However, we cannot stop here. We must hold Gov. Snyder accountable to his commitment for increasing clean, renewable energy utilization in our state, especially as Public Act 295 terminates at the end of this year. In addition to it being better economically to invest in renewable energy rather than opening new coal plants, we must make light of the potential improvements in public health.

Crain’s Detroit Business welcomes letters to the editor. All letters will be considered for publication, provided they are signed and do not defame individuals or organizations. Letters may be edited for length and clarity. Write: Editor, Crain’s Detroit Business, 1155 Gratiot Ave., Detroit, MI 48207-2997. Email: cgoodaker@crain.com

Very few are aware that the CDC reported that Michigan’s asthma rate is 10 percent above the national average, or that Michigan ranks fifth in the nation in premature deaths due to coal plant pollution. A heavy contributor to our public health disparities has been coal plant pollution. As a future health professional studying at Wayne State University, I have witnessed the health effects of the coal plants in our state (i.e., the River Rouge plant) that have persisted for years. Volunteering at most of the Detroit-area hospitals

as well as taking part in community health initiatives in the metro Detroit area have allowed me to realize the connection between public health and the environment. We must persist in Michigan’s transition to increased renewable energy use and the shutdown of our coal plants. Not only because it will create jobs, but because it will improve the health of our residents. Focusing the state’s changing energy policy on public health impact will lead to the long-term reduction in both public health issues and health care costs. The impact of reducing health care costs for the state should not be underestimated, as it can contribute to better economic outcomes. As Gov. Snyder states, “Michiganders do not back away from challenges.” Transitioning to more clean and renewable energy may be challenging at times, but we must do better than we have in the past for the sake of public health. Yashesh Parekh Sterling Heights

Competition is always a good thing KEITH CRAIN So it looks like Dan Gilbert isn’t the only person interested in buying downtown Detroit real estate. Crain’s had a story in our April 6 issue that Carlos Slim Helú, one of the richest men in the world, had purchased a building downtown. We know of this one, and since he’s using corporations that don’t al-

ways identify him as the owner, it’s difficult to figure out whether there could be other properties that he owns as well. Granted, a couple of inexpensive buildings in Detroit aren’t going to even make a small dent in his portfolio, but it’s a great endorsement that this city is a good investment for folks all across the globe. And the nice thing for Dan Gilbert is that there appears to be a market for his property as well. It’s not fun to hold on to a lot of

illiquid property that no one wants. It’s always nice to have at least two other folks who want what you have. Just go to an auction sometime and you’ll see that in action. As Detroit continues its recovery, we’ll see a lot more interest in passive investment in not just Detroit, but the entire region. There’s lots of economic activity here, and investors realize that companies always need a home. The other good news is that real

estate activity should always mirror other sorts of investment. Real estate investment tends to be passive, but folks must assume that there will be companies who will need the space. Those companies are going to be buying equipment as well as hiring employees to run the machinery. Lots of these folks are simply moving from one facility to another, but there has to be some sort of new activity to make all this real estate investment pay off.

And that’s what we really need. Jobs. I’ve been standing on a soapbox for quite a while preaching the importance of economic development. It took Detroit a long time to get into the financial shape that required all the fixes. But that’s all behind us, and now we are happily in a mode of growth. It’s very nice to see lots of interest in real estate in Detroit. That’s just the beginning. And that is just what this city needs.

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Use of eminent domain would help revive Detroit OTHER VOICES John Mogk John Mogk is a professor at Wayne State University Law School. eith Crainâ&#x20AC;&#x2122;s March 23 column, â&#x20AC;&#x153;Begin economic development at home,â&#x20AC;? is right on the mark. Detroitâ&#x20AC;&#x2122;s revitalization needs much more than new offices, retail stores, lofts and innovative restaurants within the 7 square miles of greater downtown. The rest of the cityâ&#x20AC;&#x2122;s substantially vacant 138.9 square miles begs for new large economic development projects, such as auto and supplier plants, transportation hubs, processing complexes and research parks to complement agricultural and ecological use of the cityâ&#x20AC;&#x2122;s vacant land. However, there is little or no chance that large industrial projects will happen anytime soon, unless Detroitâ&#x20AC;&#x2122;s land assembly problem is solved. Detroit does not have the ability to quickly assemble land in large enough tracts to support major projects. The last two auto plants built in the city â&#x20AC;&#x201D; the GM Hamtramck and Chrysler Jefferson Avenue North assembly plants â&#x20AC;&#x201D; each required more than 450 acres and the use of eminent domain to acquire their sites. However, the use of eminent domain for economic development is no longer available in Michigan. The state constitution was amended in 2006 to prohibit its use for economic development, no matter how beneficial the projects might be for alleviating unemployment, rebuilding the cityâ&#x20AC;&#x2122;s economy and increasing the tax base. While eminent domain can still be used to eliminate blight, the term is narrowly defined, requires a high level of proof and must be demonstrated separately on each parcel to be taken. Large development sites are required to be assembled by separately negotiating the purchase of hundreds and often thousands of parcels, making site preparation costly, time consuming and practically impossible. Moreover, interspersed properties that are not blighted and held by speculators or absentee landlords can stop any future project. The GM Hamtramck and Chrysler Jefferson Avenue North assembly plants are each 2 million-square-foot facilities costing billions and employing thousands of autoworkers and tens of thousands more in supplier plants and support businesses. The city has collected hundreds of millions of dollars of property and income tax revenue from the plants and their workers for the past three decades, and there is more to come. The GM plant resulted from the maligned Poletown project spearheaded by Mayor Coleman Young to keep the auto industry in Detroit. The project was opposed by only a handful of local residents, and the property owners whose older homes were taken â&#x20AC;&#x201D; many of which were

blighted â&#x20AC;&#x201D; received twice their fair market value in just compensation and federal relocation grants to buy better homes in less blighted neighborhoods. A later University of Michigan study found that the great majority of homeowners were completely satisfied with their outcomes. Detroit is in a land assembly straitjacket. It desperately needs to restructure its economic base and is facing high land costs and long delays in assembling development sites. Tens of thousands of vacant parcels and blighted buildings are scattered like a checker board throughout the city and are poten-

tially available for new economic development. The city owns a majority of these, but a substantial number are privately owned, many by speculators, requiring negotiated purchases. For speculators, no price is too high and no time to negotiate too long, as learned by the Ilitch organization in assembling land for its new arena project. The organization has been assembling land for more than two decades, paid many times fair market value for a number of parcels and is still negotiating exorbitant prices with holdouts. Similar problems have been faced by the Henry

Ford Health Systemâ&#x20AC;&#x2122;s long-term land assembly project south of Grand Boulevard and Marathon Oilâ&#x20AC;&#x2122;s acquisition of a buffer zone for its plant in southwest Detroit. Michigan should amend its constitution and follow the lead of California in allowing eminent domain to be used for economic development, but protecting homeowners who have lived in their homes for at least one year. Purchase of their property would be required to be negotiated. This addresses a major criticism of eminent domain that permanent homeowners have a right to make a choice. Investors, specula-

tors, absentee landlords and vacant lot owners would not be protected and be entitled to fair market value for their property and not the exorbitant windfalls that they now command. Detroit leads the nation in the percentage of vacant land, blighted properties, unemployment and poverty. The cityâ&#x20AC;&#x2122;s revival requires a major redevelopment of industrial and commercial projects to complement the agricultural and ecological use of vacant land. Without the renewed use of eminent domain, however, it is unlikely to occur. äĄ˛

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SPECIAL REPORT AMY HAIMERL Editor’s Notebook WEB: ahaimerl@crain.com TWITTER: @ahaimeralad

SECOND STAGE

Building tech about more than just apps Detroit’s second annual Techweek starts today, with five days of speakers, pitch competitions, drinking and schmoozing to celebrate Detroit’s tech industry. Being in this world reminds me of covering the heady dot-com days in New York. VC money flowed as freely as the saké, and tech conferences reigned. The new was king! Long live the king! The collapse was devastating. All the pink slips and dashed dreams, the lost investments. It also taught me to spot hype or a bad business model. So you’ll forgive my skepticism when I stand at cocktail parties and hear the boosterism that crashed Silicon Alley. Don’t misunderstand me: I support entrepreneurs and the startup economy. But I cannot stand behind hype. I believe that risk taking and the freedom to fail are critical to innovation. But they can’t just be slogans; they must be paired with an understanding of what can be lost. I believe Detroit can build a strong tech industry if we focus on what makes us great rather that just trying to be the next great home of app makers. That’s about emulation rather than innovation. Just look at the growth of Detroit Labs. Yes, they built an app. But they built a pizza-delivery app. And what does Detroit know? Delivery pizza. Or Loveland Technologies, which has built a company solving Detroit-specific property problems and is now taking its technology national. Or MichiganFunders.com, one of the first equity crowdfunding sites to offer participation to all people, not just accredited investors, thanks to Michigan-specific laws. So what is the essence of Detroit? What is our competitive advantage? We build things. We move things. We know supply chains and distribution channels. We own that. And now we have the opportunity to dominate mobility, where tech meets the movement of goods and people. One of the only VC firms exclusively dedicated to mobility, Fontinalis Partners, is based in Detroit with Bill Ford as an investor. For Techweek, I’ll be conducting a fireside chat with Fontinalis co-founder Chris Thomas about what mobility could mean for Detroit’s future. Check out all the events at techweek.com/Detroit.

[LARRY PEPLIN]

Robert (left) and Kevin Schnieders have made careful plans to ease the passing of their business, Educational Data Systems Inc., from father to son.

Handing off the family biz Tips on how to move from avoidance to smooth sailing institute’s director. On closer consideration, it’s not he No. 1 mistake familyso surprising that owners procrastiowned businesses make in nate. Business transfers are sensisuccession planning is a tive in any field. For enterprises basic one. They don’t bother with it. seated at the intersection of two exThis is surprisingly common. plosive spheres of activity — money Specialists say it’s and family — emomore likely that a tional battles almost Strategies family business will certainly will arise. 䡲 How to keep things not have a plan than Siblings who “arrunning after a traumatic have one. gued over a piece of event, such as the death The Family Owned lint as kids” fall back of the owner, Page 13 Business Institute at into those habits, 䡲 A portrait of how one Grand Valley State UniHorak said. And when business handled the versity in Grand money and jobs are at handoff, Page 14 Rapids surveyed stake, things boil over. family businesses in “It’s not unusual that its database last year and found that family members never speak 80 percent of them said they plan to again.” pass the business to the next generThe plans demand tough peration. But only 19 percent had a for- sonal decisions, like choosing one mal, written plan to do so. child over another to run the com“That doesn’t surprise any of us. I pany and questions over estate and wish it did,” said Joseph Horak, the wealth planning beyond the scope By Gary Anglebrandt Special to Crain’s Detroit Business

of the company. Shadowing all these discussions is the subject of the owner’s eventual death — hardly a fun topic. Joseph Horak: “They’re actu“They’re avoiding ally avoiding their own mortality.” their own mortality,” Horak said. Also not fun for entrepreneurs is the control issue. As in other key points on the growth timeline of a business, succession planning is really about letting go. This is anathema to hard-driving, controlling entrepreneurs who made something out of nothing. “The very thing that allowed them to start a company and make it successful is the same thing that makes it hard to let go of one,” Horak said.

Family. Money. Control. Death. In this light, it’s a wonder anyone ever gets these plans done. “In most cases I see, there’s almost a complete lack of written documentation,” said Gerard Mantese, attorney at Mantese Honigman & Williamson PC who has handled shareholder dispute cases for family businesses for 32 years. For second-stage company leaders with growth on their minds, there are brighter things to think about, like getting new clients and controlling expansion, not to mention fixing the constant problems of running a business. “I don’t think there ever will be a time when we don’t have any problems. There is never going to be a clean slate,” Lorron James, a second-generation executive in Detroit-based logistics company See SUCCESSION, Page 12

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The risk of not having a plan is litigation and lack of direction at the company. Much of what goes into it is defensive, trying to ward off battles before they arise, putting into writing answers to all questions of procedure and control. Teams of accountants and lawyers are needed for a full plan, as there are many methods for dealing with many considerations, from retirement pay for the departing generation to avoiding estate taxes. In some cases, no amount of planning can avoid permanent relationship breaks, perhaps because one sibling feels jilted after another ends up with control of the company. “I have a handful of clients who can’t see their grandkids because of that scenario,” said Julius Giarmarco, estates and trust attorney at Giarmarco, Mullins & Horton PC in Troy. But with the health of the company at stake, drawn-out court distractions and leadership vacuums are not acceptable. The competition won’t wait for its rival to get its act together. “It is estimated that more than 70 percent of family-owned businesses do not survive the transition from founder to second generation,” Giarmarco wrote in a report on succession strategies. Because succession touches just about every corner of the owner’s life, a thorough succession plan is not a single document stating that John Smith Jr. will one day run the company. It’s a collection of agreements and strategies, Giarmarco said. These might include wills, trusts, buy-sell agreements, change-in-control agreements, irrecoverable trusts, employment contracts and so on. Components of the succession plan might include: 䡲 The buy-sell agreement . This sets terms for the eventual transfer of the business to the next generation, upon death, retirement or disability of the first generation. For the first generation, it “guarantees a market” for the sale of shares when such a sale is needed, Giarmarco said. For the second, it promises that the handoff will occur. For the business itself, it displays clear management continuity, which boosts valuation and attracts bigger customers. 䡲 Strategies to avoid estate and gift taxes . There are many ways to arrange the sale of the business in

ways that minimize estate and gift taxes, create retirement income for the founder or some combination of both. Private annuities and grantor-retained annuity trusts are among them. The important thing is that one be chosen and not left to chance. Thinking ahead is “huge” in this regard, Horak said. 䡲 Funding the transfer. The succession plan lays out how the funding of the sale of the business from one generation to the next will occur, in ways that minimize taxes and debt. One trick is to give the successor’s trust a gift of some percentage of the business. Those shares earn profits and later can be used to buy more shares, eventually giving control to the heir. Another is to name the successor as the parent’s life insurance beneficiary. The payout is used to buy company shares when the time comes. Educational Dearborn-based Data Systems Inc ., which provides employment training for local government unemployment offices, uses an installment agreement, whereby Kevin Schnieders, the second-generation CEO, pays into a trust until he has finished paying for his purchase of EDSI. This prevented EDSI or Kevin himself from taking on debt to fund the buyout. (See story, Page 14.) 䡲 Compensation agreements . Compensation agreements might be set up for key employees and departing owners. In the EDSI example, Robert Schnieders receives monthly payments from the company under a “non-qualified deferred compensation” plan used to provide retirement income. An added benefit to this arrangement is that Robert uses this income for his real estate investment business, which in turn can be left as an inheritance for Kevin’s two siblings, who are not receiving the business. 䡲 Life insurance. Life insurance is a handy tool for many succession problems. Besides funding the transfer, it also can be used to stifle sibling jealousies by naming the inactive children as beneficiaries of the life insurance when the active children receive the business, making sure all of the children are treated fairly, if not equally. Companies also can use it to reimburse themselves for the cost of retirement packages, by taking out policies on key employees and departing owners, as EDSI did with Robert Schnieders. 䡲 Contingency plans . At James Group International, James said his mother would take control of the estate if something happened to his father, and she would have the authority to designate roles for the sons. “My mother is trustee of the estate, and she would direct traffic,” he said. These plans can be for the succeeding generation, too. EDSI is in a trust until Kevin finishes paying for See Next Page

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SPECIAL REPORT: SECOND STAGE From Previous Page

For family-owned biz

the company. If he should die or become unable to work, “key man” insurance is in place to pay the trust the remaining amount he owes. 䡲 Key employee enticements. The owner probably will have some nonfamily employees who are integral to the enterprise and carry a wealth of institutional knowledge. These people might see the succession as time for them to do new things. To convince them otherwise, incentives can be put into place to get them to stick around and keep things running smoothly during the transition. A common one is the “golden handcuff,” which gives bonuses for staying on until retirement. 䡲 Establishment of boards . Experts recommend advisory boards of mentors, consultants, trusted associates and family members to help iron out details of the succession plan. Corporate boards, if they don’t already exist, are useful, too, because they provide a chairman role for the founder to continue to have a say, and can balance out siblings’ roles. Lorron James is a board member of James Group, while his brother John is not. And John is president of the company, while Lorron is vice president. 䡲 Voting share conditions. Before some siblings, perhaps younger ones, can get voting shares in the company, conditions can be put into place in the succession plan, such as requiring them to obtain a college degree or a certain level of professional experience. 䡲 Buy-sell agreements for the succeeding generation. Just because the business is handed off to one sibling doesn’t mean life and all its problems come to an end. If something should happen to the new owner a year after the transfer, or an active sibling decides to leave, agreements can be ready to state where control of the business goes from there. For example, the family might decide that the business should not go to the second-generation’s children if the owner dies or decides to leave, but rather back to the first generation, a family trust or

The Family Owned Business Institute at Grand Valley State University will hold its annual summit May 21 at the L. William Seidman Center on the school’s Pew Campus in Grand Rapids. This year’s summit looks at how family-owned businesses can be more innovative. Cost is $100 per person or $75 for two or more people. More information is at www.gvsu.edu/fobi.

some other arrangement. Mantese said he had a recent case where his client owned 50 percent of the company, “but there wasn’t a single scrap of paper as evidence to that.” The person in control tried to oust his client, and it took 15 depositions from people who happened to overhear past conversations to prove that his client did in fact have that agreement. They won the case — the defendant settled for $1.85 million — but leaving a business’ fate at risk in this way is not a best practice. 䡲 Disclosure requirements. In situations where multiple siblings end up with shares of the company, but only one has management control, corporate bylaws or operating agreements should mandate some financial reporting requirements, if none don’t already exist. Shareholders might become suspicious of how money is being handled at the company when not provided regular accounting updates. “That’s the pattern I see over and over,” Mantese said. “When there are no written agreements providing for regular disclosure of financial documents, those in control of the company feel like they can control if heavy-handedly.”

How to survive a traumatic event

cession. The exercises lead to an inventory of what the business owns and how it owns it, and this is useful for any business, family-owned or not, said Mark Lundquist, head of Bloomfield Hills-based consultancy Fulcrum Edge Inc. The process tidies up details about the business, easily overlooked matters such as what happens to a certain building in the event of the owner’s death. Does it go to a trust? The owner’s spouse? Kids? Does it stay with the subsidiary that has the title? Who has shares in that subsidiary? Who will have actual control over the property? So it’s worth the time. Ideally, the thinking about a plan should begin 10 years before it’s executed, and serious work on it about five years before, Horak said. In the case of EDSI, Kevin Schnieders spent 13 years learning the ropes and two years crafting the succession plan with this father. Once a plan is done, it will continually need adjusting. “Estate and business succession planning is not an event. It’s a process. You’re never done with it until you’re dead,” Giarmarco said. 䡲

There’s succession planning, which handles all the big-picture questions of who will own and lead a company someday. And then there’s “traumatic succession planning.” This is what Mark Lundquist, head of Bloomfield Hills-based consultancy Fulcrum Edge Inc. , calls the planning for the immediate aftermath of an owner’s death. No one wants to realize on the first payday afterward that only the owner had authority to sign the paychecks. Lundquist helps businesses set up procedures to avoid these oversights in step-by-step stages of 24 hours, seven days and 30 days after the unexpected death. The steps give people enduring the trauma of the death easy ways to keep operations running without having to think about it. “Go to one drawer, pull out that document and everyone just follows it,” Lundquist said. Here are a few examples of planning for traumatic events: 䡲 Have all the necessary email messages and voicemail messages

ready to go. Write down the steps for redirecting emails and voicemails. Have messages for employees, customers and suppliers. 䡲 Have all passwords and permissions saved and assigned, from bank accounts to social media accounts. Some companies have very specific processes to follow for taking over an account. They may require a second signatory or authorization before the death. 䡲 Have a replacement process ready. The board could be required to select a recruiting firm within 30 days. This can apply to key staff. 䡲 Maintain a list of potential replacement candidates. If they’re outside the family, it’s not necessary to have conversations with these candidates first, Lundquist said. Just have more than one name so if someone does turn it down, there are others to call. 䡲 Put all this information in one place, and make sure the people who need to know where it is, know where it is. — Gary Anglebrandt

The timing

Like any other high-level business effort, succession requires planning, and probably more of it than owners think. But this is healthy for reasons beyond the suc-

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CRAIN’S DETROIT BUSINESS // April 13, 2015 SPECIAL REPORT: SECOND STAGE

Dad, son move past arguments into a plan By Gary Anglebrandt Special to Crain’s Detroit Business

Kevin Schnieders says he’s had only four arguments with his dad in his whole life, and they all came while working for him. “He and I had four arguments in 13 years working together. I formally resigned in two, and he offered me a buyout in two,” Schnieders said. Schnieders is CEO of Dearbornbased Educational Data Systems Inc ., a company started in 1979 by Kevin’s father, Robert Schnieders, that provides employment training for local government unemployment offices. In the years leading up to Kevin taking over the business, the subject of heated debate between the two was always the same: people. They disagreed on hiring and firing, vacation policies and other workforce policies. Kevin liked new flexible scheduling ideas. His dad did not. “In fairness to my dad, he had a

lot of success in not doing those things. In 1982, it was, ‘Here’s your assignment. Leave your troubles at the door,’ ” Kevin said. They eventually broke their interpersonal logjam by defining individual roles and sticking to them. Robert, or Bob as everyone calls him, also exercised some acquiescence by letting Kevin have his way on the HR policies over which they disagreed. From then on, Kevin was in charge of human resources and operations. Bob stuck to sales and finance. “I feel blessed it only happened four times in our relationship,” Kevin said. The 13 years were spent learning the business and rising up through it, part of the management side of succession planning. Bob gave his son test projects, or “intra-preneurial events” as he called them, sending him to meetings with big customers and to other states to open new offices on his own. It never mattered whether father and son thought the son was ready

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for the handover. It mattered if customers and employees did. They knew things were on the right path when people would call and ask for Bob, and if Bob wasn’t around, they’d ask for Kevin. “That’s a good sign,” Kevin said. For the technical side of the business succession, the Schnieders duo gathered a team of accountants, bankers and lawyers — Bob insisted Kevin have his own lawyer — and spent two years building a succession plan, with a buy-sell agreement and establishment of a trust. Kevin makes payments to the trust installments until he finishes paying for the business. Bob receives income payments, and he reinvests some of that money into things like his real estate investment business, ES Investments LLC in Dearborn. Those assets can then be assigned to Kevin’s two other siblings, who were not part of the EDSI buyout and are not active members of the company. The installment plan warded off estate taxes and debt, both of which can negatively affect the business and stall any growth plans it might have had. Bob is chairman of the board and retains controlling stock that gives him authority over a sale of the company, were such a discussion to arise, until Kevin is finished making his buyout payments. It’s been almost eight years since Kevin succeeded his father. By that point, the staff knew him well, especially since he’d been in the HR role, so the transition wasn’t jarring for employees. “Employees would know him and respect him as the administrator who brought them into the company,” Bob said. EDSI has 500 employees in 40 offices in the country, compared with 200 employees when his father left. Bob said that to his surprise, he felt “separation anxiety” about leaving the company. “I thought it would be a walk in the park. My identity is not in my company, it’s in my family. Clean off my desk and walk away, no looking back,” Bob said. He said those four arguments that happened took place in the office, usually in a glass-walled conference room in full view of the rest of the staff. “People were pretending like they were just walking by, but it was obvious what’s going on in there,” Bob said. He and Kevin didn’t want that to happen anywhere else, so they had a pact never to talk business at the dinner table. “None of this stuff spilled over into the family,” Bob said. Bob’s wife, Elaine Schnieders, provided a measure of balance. “She cautioned me: Before I have another argument like that, to remember the most important relationship is Kevin,” Bob said. “Whether someone comes back to work or doesn’t come back to work, that’s a piece of dust on the table.” 䡲

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CRAIN'S LIST: LARGEST FAMILY-OWNED BUSINESSES

" " Rank $ !

% !

Kelly Services Inc. 999 W. Big Beaver Road, Troy 48084 (248) 362-4444; www.kellyservices.com

$5,562.7 $5,413.1

1946 William Russell Kelly

Ilitch companies 2211 Woodward Ave., Detroit 48201 (313) 471-6600; www.ilitchcompanies.com

3,300.0 3,100.0

1959 Michael and Marian Ilitch

Plastipak Holdings Inc. 41605 Ann Arbor Road, Plymouth 48170 (734) 455-3600; www.plastipak.com

2,405.8 2,295.3

1967 William P. and Mary Young

Moroun family holdings 12225 Stephans Road, Warren 48089 (586) 939-7000; NA

2,235.1 B 1,890.0 B

1937 T.J. Moroun

Soave Enterprises LLC 3400 E. Lafayette Blvd., Detroit 48207 (313) 567-7000; www.soave.com

1,970.0 1,796.0

1961 Anthony Soave

Meridian Health Plan Inc. 777 Woodward Ave., Suite 600, Detroit 48226 (313) 324-3700; www.mhplan.com

1,945.0 1,164.7

1997 David Cotton

The Suburban Collection 1795 Maplelawn Drive, Troy 48084 (877) 471-7100; www.suburbancollection.com

1,914.5 1,599.3

Sherwood Food Distributors LLC 12499 Evergreen Road, Detroit 48228 (313) 659-7300; www.sherwoodfoods.com

" ! # % !

' "% !

Terence Adderley, chairman, son

93%

Christopher Ilitch, president and CEO, Ilitch Holdings Inc., son

100

William C. Young, president and CEO, son

Manuel Moroun, son, and Matthew Moroun, grandson, both hold several executive positions with family holdings.

Angelique Soave, vice president, daughter; Andrea Soave Provenzano, vice president, daughter

100

Jon Cotton, president, Meridian Health Plan of Michigan, son; Sean Cotton, chief administrative officer, son; Michael Cotton, COO, son

100

1948 Richard Fischer

David Fischer, president and CEO, son; David Fischer Jr., vice president, grandson; Zachary Fischer, director, grandson

100

1,740.8 1,539.9

1969 Earl Ishbia and Alex Karp

100

H.W. Kaufman Financial Group Inc./Burns & Wilcox Ltd. 30833 Northwestern Highway, Farmington Hills 48334 (248) 932-9000; www.kaufmanfinancialgroup.com

1,625.0 1,425.0

1969 Herbert W. Kaufman

Howard Ishbia, executive vice president, sales and marketing, son; Jason Ishbia, executive vice president, finance and CFO, son; Joel Ishbia, executive vice president, inventory management, son; Gary Karp, executive vice president, corporate affairs and general counsel, son; David Ishbia, sales, son; Scott Ishbia, IT, son Alan J. Kaufman, chairman, president and CEO, son; Daniel J. Kaufman, corporate vice president, grandson

Walbridge Aldinger Co. 777 Woodward Ave., Suite 300, Detroit 48226 (313) 963-8000; www.walbridge.com

1,550.0 1,307.0

1916 John Rakolta C

John Rakolta Jr., chairman and CEO, son

Barton Malow Co. 26500 American Drive, Southfield 48034 (248) 436-5512; www.bartonmalow.com

1,498.0 1,145.5

1924 Ben Maibach Jr. D

Ben Maibach III, chairman and CEO, son; Doug Maibach, vice chairman, son; Ryan Maibach, president, grandson

Wolverine Packing Co. 2535 Rivard, Detroit 48207 (313) 259-7500; www.wolverinepacking.com

1,213.0 1,060.0

1937 Alfred Bonahoom

Jim Bonahoom, president, son; Roger Bonahoom, vice president, son; Jay Bonahoom, vice president grandson

100

Kenwal Steel Corp. 8223 W. Warren Ave., Dearborn 48126 (313) 739-1000; www.kenwal.com

899.2 904.3

1947 Sol Eisenberg

Kenneth Eisenberg, chairman and CEO, son; Stephen Eisenberg, president, Burns Harbor, grandson

100

Barrick Enterprises Inc. 4338 Delemere Blvd, Royal Oak 48073 (248) 549-3737; www.barrickent.com

779.7 798.9

1977 Robert Barrick

Trish Barrick, retail supervisor, daughter; Greg Barrick, general manager, nephew

100

758.4 631.0

1937 Max Tushman

Earl Tushman, president, grandson; Larry Tushman, vice president and secretary, grandson; Reed Tushman, director of operations, great grandson; Marc Tushman, director of logistics and operations, great grandson

100

Orleans International Inc. 30600 Northwestern Highway, Suite 300, Farmington Hills 48334 (248) 855-5556; www.orleansintl.com

The Diez Group 8111 Tireman Ave., Dearborn 48126 (313) 491-1200; www.thediezgroup.com

720.0 730.0

1973 Gerald Diez

April Diez, vice chairman, daughter; Gerald Diez Jr., president, son; Sherry Diez, vice president, daughter; Mark Diez, vice president, son

100

Carhartt Inc. 5750 Mercury Drive, Dearborn 48126 (313) 271-8460; www.carhartt.com

664.0 600.0

1889 Hamilton Carhartt

Mark Valade, chairman and CEO, great-grandson

100

LaFontaine Automotive Group 4000 W. Highland Road, Highland Township 48357 (248) 887-4747; www.thefamilydeal.com

663.3 577.1

1980 Michael T LaFontaine Sr

Ryan LaFontaine, dealer, son; Kelley LaFontaine, dealer, daughter; Michael T. LaFontaine Jr, dealer/LaFontaine global director, son

100

PVS Chemicals Inc. 10900 Harper Ave., Detroit 48213 (313) 921-1200; www.pvschemicals.com

518.3 549.3

1945 Floyd Nicholson

James B. Nicholson, president and CEO, son; James M. Nicholson, vice president, grandson; David Nicholson, vice president, grandson; John Nicholson, vice president, grandson; Timothy Nicholson, vice president, grandson

100

RKA Petroleum Cos. Inc. 28340 Wick Road, Romulus 48174 (734) 946-2199; www.rkapetroleum.com

506.9 613.8

1954 Hilmer Westphal Leemon

Kay Albertie, managing shareholder and daughter; Kari Elliott, CEO and granddaughter; Kyle Albertie, president and grandson

General RV Center Inc. 25000 Assembly Drive, Wixom 48393 (248) 349-0900; www.generalrv.com

453.0 355.0

1964 Abe Baidas

Robert Baidas, CEO and chairman, son; Loren Baidas, president and chairman, grandson; Wade Stuff, vice president of operations, grandson-in-law

100

ABC Appliance Inc. 1 W. Silverdome Industrial Park, Pontiac 48343 (248) 335-4222; www.abcwarehouse.com

394.0 395.0

1963 Gordon Hartunian

Martin Hartunian, president and CEO, son; John Hartunian, vice president of information systems, son

100

Fisher & Co. Inc. 33300 Fisher Drive, St. Clair Shores 48082 (586) 746-2000; www.fisherco.com

343.0 260.0

1965 Alfred J. Fisher Jr.

Alfred J. Fisher III, CEO, son; Michael Fisher, president, son; Alfred Fisher IV, COO, grandson

100

Commercial Contracting Group Inc. 4260 N. Atlantic Blvd., Auburn Hills 48326 (248) 209-0500; www.cccnetwork.com

321.0 285.0

1946 William Pettibone Sr.

William Pettibone, son

United Shore Financial Services LLC 1414 E. Maple Road, Troy 48083 (855) 888-8737; www.unitedshore.com

305.6 NA

1986 Jeffrey Ishbia

Mat Ishbia, president and CEO, son

100

This list of family-owned businesses is an approximate compilation of the largest such businesses headquartered in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. It is not a complete listing but the most comprehensive available. Crain's estimates are based on industry analyses and benchmarks, news reports and a wide range of other sources. Unless otherwise noted, information was provided by the companies. For some companies, the founders were later bought out by another family. Actual revenue figures may vary. NA = not available.

B Crain's estimate. C George B. Walbridge and Albert H. Aldinger founded the company in 1916. John Rakolta Sr. bought the company in 1963 with business partner Robert Robillard. D Founded in 1924 as C.O. Barton Co. by Carl Osborn Barton. The Maibach family acquired majority control in 1961. LIST RESEARCHED BY SONYA D. HILL

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SPECIAL REPORT: SECOND STAGE

How Duo-Gard was able to swallow a big-bite project By Gary Anglebrandt

Duo-Gard Industries

Special to Crain’s Detroit Business

Duo-Gard Industries Inc. makes bus shelters, walls, canopies, covered walkways and other architectural products, putting special attention into materials and working closely with suppliers. The company has been in business since 1984, having started out by developing a cellular polycarbonate panel — with translucent cells that insulate well — which was popular with owners of old factories who wanted to let more natural light into their shops. Problem: Consultants warn businesses not to bite off more than they can chew. It’s the “know when to say no” axiom: It’s all right to turn down work when taking it likely will cause more harm than good. Taking a new, big customer might cause the business to overextend itself, go too far into debt, accept bad terms, overburden workers and damage relations with longtime customers. Duo-Gard wrestled with this decision in 2011. Chesapeake Energy Corp. in Oklahoma City wanted a big polycarbonate wall, illuminated with LEDs, for a new parking deck it was building. It was a $7 million project, larger than any it had done. That may not sound like a prob-

Location: Canton Township Description: Manufacturer of architectural products President: David Miller Employees: 80 Revenue: $14.7 million in 2014 COURTESY OF DUO-GARD]

Duo-Gard built this polycarbonate wall,illuminated with LED lights,for a parking deck for Chesapeake Energy.Duo-Gard set up a special unit for the build.

lem, but it is when the company doesn’t have the resources to do the job. This project would span more than two years and require 130,000 square feet of curtain wall. Duo-Gard needed more space, people and equipment. All of that investment would hang in the air while Duo-Gard waited for a payday that would take years to arrive. The project engineers asked Duo-Gard President David Miller, “Can you do it?” “I’m rarely ever going to say ‘no’

to that question,” he said. But he knew it might have been the wise answer. Solution: Many companies at this point build or buy a new factory and stuff it with equipment for one big project and hope more work comes along to soak up the added capacity once the big project is over. Miller instead set up a “M.A.S.H. unit,” a special team at a separate location assigned solely to handle the Chesapeake job. In a span of three weeks, Duo-Gard got a shortterm lease on a building in Livonia, hired eight full-time production workers, and set up air compressors, metal processing equipment and any other machinery needed. While the unit was not a separate

entity, Duo-Gard in practice treated it like one by maintaining separate account records that wouldn’t alter the financial picture of the company’s regular business. It kept the big numbers off the regular books, helping to ward off outsized decisions for the main business. “It’s keeping yourself from fooling yourself,” Miller said. “Over the course of two years, it’s easy to start drinking the Kool-Aid.” Duo-Gard did have some leeway in that it would receive payments throughout the course of the job. It explained this to two key suppliers and negotiated a delayed payment schedule to match their own payment schedule. This relieved some cash flow pressure; the company’s bank relieved it some more by extending Duo-Gard’s line of credit by $1 million. Production started in 2012 and

wrapped up at the beginning of 2014. Everyone got paid. Risks and considerations: DuoGard spent $3 million on materials to get the job started. Having that kind of money hanging in the air left the company exposed. There also were engineering considerations for a major job consisting of all custom work. The polycarbonate had to be tinted to meet the customer’s specifications. Some of the materials hadn’t been used by Duo-Gard before. Redesigns and prototypes were done to make sure things came out as needed. Expert opinion: “This strategy was spot-on,” said Mark Lundquist, president and CEO of second-stage business consultancy Fulcrum Edge Inc., based in Bloomfield Hills. Short-term leases are ideal for this situation when they can be found, and the team’s separation from headquarters gives those employees a chance to develop their own culture and sense of ownership around the project. If work from the big customer turns out to have a degree of permanence, the business always can still look at building and owning an expansion to its main facilities. “I’m a big believer in controlled expansion,” Lundquist said. 䡲

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CRAIN’S DETROIT BUSINESS // April 13, 2015

SPECIAL REPORT MARY KRAMER Editor’s Notebook mkramer@crain.com

WSU honors Ross; will he reciprocate? This month, Grand ValleyState University will bestow a diploma on its 100,000th graduate in its 50-year history. The UniversityofMichigan and Michigan State University have more than 500,000 living alumni apiece; Wayne State University has 225,000. Universities work hard to stay connected to their alums — in part because a small number can become significant donors, offering a halo effect to students and other donors. Small wonder that WSU pulled out the stops to welcome real estate magnate Stephen Ross “home” last week for the first time since he graduated from WSU’s Law School 50 years ago. You can go home again, we thought, as Gov. Rick Snyder introduced Ross, like him, an alum of the Coopers & Lybrand accounting firm (now PWC). How lucky WSU would be if Ross decided to get engaged. After all, Ross has lavished time, attention and money — more than $300 million — on that other university down the road where he earned a bachelor’s degree in business administration. At one point, Ross’ cellphone went off on stage. His ring tone? The University of Michigan fight song, “Hail to the Victors.” “Uh-oh, wrong school,” Ross quipped. “Everybody in New York knows I’m from Michigan.” But after UM, it was Wayne State law, then a master’s of law in taxation from NewYork University School of Law and a real estate empire whose latest project, Hudson Yards in Manhattan, is the largest private real estate development in U.S. history. Ross hasn’t lived in Detroit since 1968. But Snyder and Detroit Mayor Mike Duggan — who had lunch with Ross last week — would welcome him as an investor. In his on-stage interview with Law School Dean Jocelyn Benson, Ross said he told Duggan: Start with jobs. “Unless it’s a vacation environment, you’re not going to grow without jobs. You don’t start building until there are more jobs.” And Ross spoke in ways that made it easy to imagine him as a force in Detroit — and at WSU. “The way I look at real estate, it’s what’s good for the city, what really belongs there, not just maximizing dollars,” he said. “That’s why I think we win about 90 percent of the projects in public/private partnerships. There’s responsibility that goes with a real estate developer. It’s your legacy, doing what has benefit to the city.”

[PHOTO COURTESY OF GRCC]

Students receive instruction in electronics during lab time at Grand Rapids Community College.

Downside to rising tide Community colleges wrestle with impact of fewer students due to better job market By Rod Kackley Special to Crain’s Michigan Business

ichigan’s community colleges are confronting a cyclical conundrum they haven’t seen since the last economic revival. The better the recovery gets, the more likely people are to find work and the less likely they are to sign up for classes at the two-year institutions. Mike Hansen, president of the Michigan Community College Association, said enrollments are down 5 percent to 10 percent at community colleges across Michigan. Enrollments have ridden the economic tides for the past 30 to 40 years, Hansen said. “When the economy starts to weaken and unemployment goes up, you will see more and more people returning to community college to get retrained,” he said. Community colleges in Michigan are han-

dling this current cycle of falling enrollments in a variety of ways, Hansen said. Some are cutting budgets, and some are looking for revenue enhancements. After years of swelling enrollments, Grand Rapids Community College is being hurt by all of the factors affecting Michigan’s two-year schools — including the strong area economy. “In Kent County, we had a 3.7 percent unemTina Hoxie: ployment rate for the GRCC’s dean of month of November” community affairs. 2014, said Tina Hoxie, GRCC’s dean of student affairs. “In November the year before, it was 5.4 percent. If students are working, then their decisions around going to school can be affected.”

Hoxie said more students are going part time now, which is also reducing enrollment numbers because part-timers take fewer credit hours. GRCC’s enrollment figures for the 2014-15 academic year are not final but are estimated to be down 5 percent for the fall semester. Howie said administrators expected the winter semester to be down by a similar figure. College budgeting 101 To solve the budget problems, GRCC administrators have chosen a multitier approach. The first steps are a voluntary early separation plan and a tuition rate increase. Faculty and staff members who leave GRCC under the early separation plan will receive a payment that equals 40 percent of the most recent year of their annual salaries. See STUDENTS, Page 18

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CRAIN’S DETROIT BUSINESS // April 13, 2015

SPECIAL REPORT: MICHIGAN BUSINESS

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Leah Nixon, director of communications at GRCC, said 55 faculty and staff members accepted the package. Of those, 27 will leave in 2015 and 28 in 2016. The early separation should save the college more than $2 million over the next three years and an estimated more than $10 million over 10 years, said Lisa Freiburger, GRCC vice president of finance and administration. But that alone will not put the college back on an even financial keel. The GRCC board also approved a 1.9 percent tuition rate increase. As a result, students who live in Kent County will pay $108 per content hour — $2 more — beginning in the fall 2015 semester. Students in the county will face a much higher increase for the dental, culinary and nursing programs. If all that fails, officials have a $2.5 million budget-cutting and revenue enhancement plan ready that includes staff and program reductions ranging from eliminating athletic programs to closing the swimming pool. “We are really trying to be proactive and not just get a handle on the budget one year at a time,” Freiburger said. “We are really trying to generate recommendations that will put us on a financially stable path for multiple years so that we are not looking at reductions on an annual basis.”

2008

2009

2010

2011

2012

2013

2014

Source: Michigan Community College Association

GRCC administration is willing to give itself up to the cyclical tide of Michigan’s economy. Fiona Hert, dean of the School of Workforce Development — and one of those taking the early separation — said her staff is trying to increase enrollment by asking West Michigan employers what they need most. “They can’t find the right people to hire and yet we have availability in our training programs,” Hert said. “So we are asking them, ‘How can we meet your needs?’ ” Kevin Stott, president of Talent 2025 in Grand Rapids, said community colleges are “essential” to his organization’s work. Talent 2025, a coalition of 85 CEOs from the largest businesses in West Michigan, works to develop, attract and retain talent in the region. “Community colleges can provide a pathway for first-generation college students,” Stott said. “They are also excellent for students who need more than a high school diploma but less than a four-year degree, to obtain a middle-skills job that requires certification or a twoyear degree.” All four community colleges in West Michigan — GRCC, Muskegon Community College , West Shore Community College near Ludington and Montcalm Community College northeast of Grand Rapids — are represented on the leadership of Talent 2025. Wendy Block, director of health policy and human resources at the Michigan Chamber of Commerce , said community colleges are an important component of workforce development in Michigan. “They offer a great return on investment,” Block said. “They are lower cost for students, offer quicker completion and a high rate of return on job placement.” Gov. Rick Snyder’s budget suggests he sees them as integral to developing a skilled workforce. In February, the Michigan Econom-

ic Development Corp. approved a $50 million grant program that Snyder began talking about in October 2014 to offer equipment and training to community college students through the Community College Skilled Trades Equipment Program. Chuck Hadden, president and CEO of the Michigan Manufacturers Association , said the program will provide the equipment necessary for students to learn the skills manufacturers need. “Manufacturing has created more than 114,500 jobs since 2009 (in Michigan), and employers are still searching to fill thousands of available positions,” Hadden said in a statement. At Grand Chuck Hadden: Rapids CommuManufacturers nity College, the Association School of Workforce Development offers classes at three sites in the city — and all stayed open through the enrollment downturn. Hert credited an active approach of asking the business community what programs employers needed. “We have done some wonderful classroom management in terms of the size and the number of programs we offer every semester,” Hert said. “We watch the enrollment very carefully, and if we decide that some of those sections won’t run, we will do that in cooperation with our faculty and make sure students are not left without the classes they need to graduate.”

Seeking students Other GRCC administrators are trying to boost enrollment rather than waiting for the next recession. Hoxie said her staff tries to show prospective students the advantages of going to community See Next Page

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SPECIAL REPORT: MICHIGAN BUSINESS From Previous Page

college, if only because of the price difference between a twoyear and four-year school. They also invite high school seniors to the campus. GRCC uses personal phone calls from counselors to students to try to persuade them not to “stop out” — meaning they will take classes for a semester, skip the next semester and return the following semester. Hoxie said GRCC also has used social media to stay in touch with students and get high school graduates to sign up. Retention is a challenge. Parttime students or students who just want to pick up a couple of courses typically will stop out, Hansen said, because most people don’t enter community college with an expectation of graduation. Behind the low grad rate The National Center for Education Statistics ’ Integrated Postsecondary Education Data System shows that the community college graduation rate in Michigan is 15 percent to 20 percent. Hansen said Michigan’s gradua-

Nominations sought for 40 under 40 awards

tion rate for 2013 — the most recent cohort, which is a specific group of students established for tracking purposes and available Mike Hansen: from the EducaGraduation rates tion Data System can be misleading. — found that 13 percent of firsttime, full-time, degree-seeking students graduated within 2½ years. However, Hansen said, this cohort represents less than 30 percent of all students. In addition, of that cohort, 28 percent transferred and

17 percent were still enrolled. The remaining 42 percent were no longer enrolled in that college or in that program. Hansen said the reasons they left college are myriad. They may have stopped out for a semester, found a job, or maybe life just got in the way. Hansen knows that the graduation rate seems shockingly low. But by including part-time students who take four to five years, the graduation rates increase to 20 percent to 45 percent. Add transfer students, and the graduation rate goes up to 55 percent. Sometimes, those who attend community colleges in Michigan graduate later, rather than sooner.

Take, for instance, Rick Snyder. The governor has a two-year community college degree along with three degrees from the University of Michigan. Snyder was awarded his associate of arts degree from Kellogg Community College in Battle Creek last Sept. 22, more than three decades after he began taking community college courses while still in high school. “Taking community college classes while still in high school was a wonderful opportunity for me and my family,” Snyder said. “I’m proud to be awarded my associate degree from Kellogg Community College.” 䡲

[PHOTO COURTESY OF GRCC]

Students in heating,ventilation and air conditioning classes get training at Grand Rapids Community College.

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Since 1991, Crain’s Detroit Business has gathered 40 of the community’s high achievers for a special salute. Past winners have started companies, found success at a young age at established businesses and made nonprofits stronger.

Crain’s is seeking nominations for the 2015 class of 40 under 40, which recognizes achievers across metro Detroit under age 40 based on factors such as financial impact and community leadership. Winners will be profiled in the Oct. 5 issue and honored at an awards event in November. With more than 680 alumni invited, the event brings together the current class with colleagues, clients, family and friends to celebrate. To be eligible, nominees must be age 39 or younger as of Oct. 5, 2015. Nominations must be received by April 27. Winners will be notified this summer. Nominations for the awards are submitted online and can be found at crainsdetroit.com/section/ nominate. For questions regarding the nominations: Contact Bill Shea at bshea@crain.com or (313) 446-1626. For technical questions regarding the nomination form: Contact YahNica Crawford at ycrawford@crain.com or (313) 4461641.

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SPECIAL REPORT: MICHIGAN BUSINESS

For grads, MSU turf program covers a lot of ground By Seth Schwartz Special to Crain’s Michigan Business

Sitting on the couch following a break from work in June 1993, Rob Davis turned on the television to try to discover the attraction of soccer — and found his chosen field. The match between England and Germany at the Pontiac Silverdome was the first international soccer contest played indoors. Equally significant was the portable field of Kentucky bluegrass, whose installation was supervised by experts from Michigan State University. The next day, Davis called up the school. Ending a career path as a landscaper, he enrolled for the spring semester of 1994. “That game really opened my eyes to their turf management program and is the reason I went there,” he said. Today, on playing surfaces across the country, graduates of MSU’s Sports and Commercial Turf Management program have been planting roots as leaders in the maintenance of fields for baseball and football along with golf courses around the world. And venues as close as Comerica Park , home of the Detroit Tigers since 2000.

Trey Rogers: Professor of turf grass management at MSU.

[PHOTO COURTESY OF MSU]

Heather Nabozny of Milford has been the DetroitTigers’ head groundskeeper since 1999.Her first job after graduating from MSU was head groundskeeper for the West Michigan Whitecaps. Growing up in Milford in the 1980s, Heather Nabozny assisted with her father’s lawn care business throughout high school and college. Following two years at Northern Michigan University, she attended a seminar where she found out about the turf management program and transferred to East Lansing. After graduating, Nabozny became head groundskeeper of the

West Michigan Whitecaps in the spring of 1994. They are the Tigers’ Class A minor league affiliate in suburban Grand Rapids. Since 1999, Nabozny has been the Tigers’ head groundskeeper. “Michigan State gave me the foundation on which to build my experiences and turn them into knowledge and expertise,” she said. “The soil, plant and botany, ento-

mology, chemistry and science-based classes helped a lot. “But once I got a field of my own, I had to make my own decisions.” More than just mowing

Fielding calls weekly from a range of minor and major league baseball teams around the country along with golf managers, some of whom are overseas, Trey Rogers, a professor of turf grass management in MSU’s department of crop and soil sciences, is a also matchmaker for students seeking to fill job openings. Those entering the two-year program are required to have at least one season of work experience in sports turf, golf or lawn care before applying. As a result, students have a good idea of the direction they want to pursue and are eager to absorb instruction in and out of the classroom. And there is much to absorb. “You were in class from 8 a.m. to

5 p.m.,” said Chad Ball, superintendent of the course at Conway Farms Golf Club in Lake Forest, Ill., 40 minutes north of Chicago. “The chemistry and horticulture classes went into horrific detail. “For the final exam, we had 25 sticks on a table. We had to identify each tree and its habitat.” About three-fourths of the students in the sports turf major take the baseball route, while the remainder concentrate on football fields. Although Greg Elliott earned a degree in elementary education from Bowling Green State University in Ohio, he decided to go work with his brother in the Arizona Fall League , an instructional league for Class AA and AAA baseball players. Following two years of maintaining the playing surface for the Tole do Mud Hens , the Tigers’ AAA affiliate, Elliott realized his future was in taking care of baseball fields and headed to MSU. After graduating, Elliott spent a year in Iowa with the Class A Cedar Rapids Kernels and then four years back with the Mud Hens. He eventually became a four-time winner of See Next Page

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South Atlantic League the Groundskeeper of the Year award at Classic Park in Eastlake, Ohio, home of the Lake County Captains. In 2008, Elliott moved up to the major leagues and is now the head groundskeeper for the San Francis co Giants — who, since 2010, have won three World Series championships. Working for Prime Cut Lawn Care during high school in the Thumb Area of Michigan, Tom Ellis thought he had the background taking care of the high school and hundreds of homes. Arriving at East Lansing, he found there was plenty to learn. In two years, “they really prepare you for the job market,” said Ellis, who is assistant groundskeeper for the Detroit Lions.

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Turf roots run deep On major-league fields, minor adjustments are an ongoing process. As a result, MSU alums are often on the phone troubleshooting. “There’s a great network to draw from,” said Ellis, a 2014 MSU graduate who also works part time on the grounds crew at Comerica Park. “If you have a question on something, you can call someone up and ask them what they’re using and what they did.” In the summer of 1994, Clark Cos. in Delhi, N.Y., was hired to install and maintain a natural-grass playing surface for the World Cup in Gi ants Stadium . One year removed from his soccer game epiphany and working as an intern, Rob Davis quickly found himself in the middle of preparations. Having worked with MSU installing the field at the Silverdome, Clark contacted Rogers, stating, “We know how to put it in, but we don’t know how to take care of it.” Davis’ first order was mowing a straight line with an old rider mower. With 15 pairs of eyes staring a hole through him, he cut perfect lines onto the whole field, later voted the best among the nine World Cup venues. “I got my Ph.D. in one summer with the whole world watching,” he said. When the New York Giants moved into a new training facility in 2009, they hired Davis from Clark as head groundskeeper. Today he preserves the team’s three full-size, natural-grass outdoor fields; one indoor artificial field; and one partial outdoor artificial field to National Football League standards. There are also landscaped areas that Davis maintains to present a campusquality look. “Michigan State gave me a solid foundation,” he said. “This is a complicated industry. There are always areas that need tweaking and adjusting to keep the field healthy and playable. “That’s why it’s important to be able to talk to others, to bounce ideas off and see what they’re doing. You have to understand environmental pressure and when the field isn’t feeling well.” 䡲

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RUSSIA

St.Petersburg Moscow Togliatti

Autoliv’s office in Togliatti.

Autoliv Based: Auburn Hills Operations: One office in St. Petersburg and one plant in Togliatti Employees: 200 Products: Airbags, steering wheels, seatbelts and buckles, height adjusters Top executive: Dmitry Yakubovsky, general director Customers: AvtoVAZ, GM-AvtoVAZ, Ford, Nissan, Renault, Mitsubishi, Volkswagen

Chrysler Group LLC Based: Auburn Hills Operations: One national sales location in Moscow and a dealer network that includes 52 dealerships for Chrysler/Jeep brands, 22 for Fiat passenger cars 75 for Fiat professional cars and 12 for Alfa Romeo. Employees: 140 Products/Services: Fiat Chrysler Automobiles brand projects such as Jeep Territory, a test drive and brand-experience center, and an Alfa Romeo-branded restaurant (Forte Bello). Top executive: Giorgio Gorelli, CEO for ChryslerRus More information: Chrysler Rus is the importer of Jeep, Alfa Romeo, Fiat, Fiat professional and Chrysler automobiles in Russia.

ith a 2013 GDP of $2.113 trillion, Russia has experienced economic decline in recent years due mostly to its reliance on exports. According to the CIA World Factbook, Russia was deeply affected by the global economic crisis of 2008. Its economy averaged 7 percent growth throughout the 2000s, but in 2013 the Russian Economic Development Ministry forecast growth would stagnate at 2.5 percent through 2030. Growth prospects only have declined in the aftermath of Russia’s intervention in Ukraine. Russia’s major exports include petroleum and petroleum products, natural gas, chemicals, metals, wood, and civilian and military products. Its leading export partners are the Netherlands (14.6 percent), China (6.8 percent), Germany (6.8 percent) and Italy (6.2 percent). Major imports include machinery, pharmaceutical products, vehicles, plastic, meat, fruit and nuts, iron and steel. Its leading import partners are China (16.6 percent), Germany (12.2 percent), Ukraine (5.7 percent) and Japan (5 percent). Each World Watch features a different country. If you know of a Michigan company that exports, manufactures abroad or has facilities abroad, email Jennette Smith, managing editor, at jhsmith@crain.com.

Coming up May: Japan June: India

Domino’s Pizza Inc.

Dow Chemical Co.

Based: Ann Arbor Operations: 20 stores in and around Moscow Employees: 100 Products: Pizza, bread sides, beverages Top executive: Aslan Saranga, managing director of Turkven, Domino’s master franchise company

Based: Midland Operations: A representative office in Moscow, one manufacturing facility in Ramenskoye and one joint venture for Dow Izolan in Vladimir Employees: 270 Products: Styrene acrylic polymer dispersions for the Russian paint and adhesives industry and polyurethane systems

Domino’s has 20 stores in and around Moscow. Top executive: Arthur Eritspokhov, who is general manager in Russia and the Commonwealth of Independent States

Federal-Mogul Corp. Based: Southfield Operations: Headquarters and motor parts distribution center in Moscow and manufacturing facilities in Naberezhnye Chelny, Togliatti and Dimitrovgrad Employees: 650 Products: Pistons, rings, liners and bearings Top executive: Uwe Plaxin, managing director

Kelly Services Based: Troy Operations: Three offices in Moscow, three offices in St. Petersburg and 14 other locations throughout the country Employees: 450 Services: Staff leasing, temporary staffing, mass recruitment, search and selection, management selection, on-site management, recruitment process outsourcing, outplacement and HR consulting Top executive: Ekaterina Gorokhova, vice president and general manager of Kelly Services CIS, Russia and Poland More information: Kelly Services has operated in Russia since 1993.

Lear Corp.

Chrysler has a national sales location in Moscow.

Based: Southfield Operations: Seat manufacturing locations in Kaluga, Nizhny Novgorod and St. Petersburg and wire harness manufacturing operation in Volokolamsk Employees: 1,300

Products: Complete seat systems and wire harnesses Top executives: Gideon Jewel, seating executive for Europe; Mariano de Torres, electrical executive for Europe Clients: Ford, Mitsubishi, Nissan, Volkswagen

MSX International Based: Detroit Operations: Office and training center in Moscow Employees: 28 Services: Strategic consultancy, market research, compliance audits, dealer training, warranty cost management and technical assistance services to vehicle manufacturers and dealer networks Top executives: Vitaly Roustanovitch, managing director; Nikolay Pakhtunov, business development manager Clients: BMW, Ford, Kia, MercedesBenz, Nissan, PSAPeugeot Citroën, Volvo

TI Automotive Based: Auburn Hills Operations: Manufacturing facilities in St. Petersburg and Togliatti Employees: 250 Products: Auto fluid systems Top executive: Alexander Kedrov, general manager

Urban Science Based: Detroit Operations: One office in Moscow Employees: 6 Products: Business performance optimization solutions, including consulting and proprietary software Top executive: Pablo Tellería, managing director — Compiled by Natalie Broda

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PEOPLE

Send news items and photos to cdbdepartments@crain.com

CONSTRUCTION Mike Cook to vice president of business development, LaSalle Group Inc., Canton Township, from president, Facility-Solutions, Ann Arbor. Also, Ken Perko to vice president of estimating, from vice president of estimating, Brencal Contractors Inc., Warren.

Larson

Jeffrey Lar son to senior health care planner, Roncelli Inc., Sterling Heights, from president, JALarson Consulting LLC, Lake Orion.

FINANCE Brian Young to vice president, senior adviser and director of business development, Schechter Wealth, Birmingham, from district director, Northwestern Mutual Financial Network, Troy. Also to vice president, senior adviser, were Clune Walsh III from partner, Walsh

DEALS

SPOTLIGHT

Financial Group, Birmingham; and Deric Righter from CEO, Righter Advisory Services LLC, Bloomfield Hills.

HOSPITALITY Scott Bray to associate director of sales, The Inn at St. John’s, Plymouth Township, from associate director of sales, The Bray Henry, Autograph Collection, Dearborn.

NONPROFITS Jean Nemenzik to clinical department director, Kadima, Southfield, from clinical director, Hope Network, Behavioral Health Services, Pontiac. Mary Treder Lang to vice president of development programs, Vista Maria, Dearborn Heights, from consultant, Grosse Pointe Farms.

& DETAILS

PAULA SILVER: VICE PRESIDENT, CORPORATE COMMUNICATIONS DTE Energy

ON THE MOVE

Submit news to cdbdepartments@crain.com

ACQUISITIONS & MERGERS

Paula Silver has been named vice president of corporate communications at Detroit-based DTE Energy Co. Silver, 54, will be responsible for the strategic planning and oversight of DTE Energy communications. She comes from FederalMogul Corp., where she was vice president of communications and investor relations, and was director of global Silver communications in an earlier stint with the company. In between, she was vice president of communications and public relations for Quicken Loans/Rock Ventures. Silver has a bachelor’s degree in communications and journalism from Wayne State University. She replaces Sandy Ennis, who has been named vice president, diversity and inclusion.

AIDS Partnership Michigan, Detroit, and HIV/AIDS Resource Center, Ypsilanti, announced the nonprofit organizations have merged. APM and HARC will continue to use their names until a rebranding process is completed. Websites: hivaidsresource.org, aidspartnership.org.

to produce and supply brandimage components for Audi’s Terminal-style dealerships in the U.S. Website: imbranded.com.

EXPANSIONS Christensen Law PLLC, Southfield, a personal injury firm, has opened an office at 3049 Miller Road, Ann Arbor. Telephone: (734) 890-5200. Website: davidchristensenlaw.com. Taylor & Colt Barber Spa, Toronto, has opened a full-service men’s barber spa franchise at 601 E. Liberty St., Ann Arbor. Telephone: (734) 929-2229. Website: taylorand coltmi.com.

MOVES CONTRACTS Bianchi Public Relations Inc., Troy, has been retained to handle North American public relations activities by Eisele Connectors Inc., Grand Rapids, the North American subsidiary of Eisele Pneumatics GmbH & Co. KG, Waiblingen Germany, a global supplier of all-metal industrial connectors. Websites: bianchipr.com, eiseleconnectors.com. I.M. Branded, Rochester Hills, a dba for Automotive Media LLC , a provider of brand-specific fixtures, furniture and large-format digital printing (wall art) for the automotive industry, has been selected by Audi of America LLC, Herndon, Va.,

Kastler Construction Inc. and its sister company Visionary Cabinetry & Design have moved from 1206 N. Lafayette Ave., Royal Oak, to 425 and 429 S. Main St., Clawson. Both companies are owned by Rick Kastler. Websites: kastlerconstruc tion.com, visionarycabinetry.com.

NEW SERVICES Matrix Human Services, Detroit, has been awarded $35 million over the next five years from the Health & Human Services Administration for Children and Families, a division of the Department of Health & Human Services, to expand Early Head Start funding and services to Detroit children under age 4. Website: matrixhumanservices.org.

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CALENDAR WEDNESDAY

Crain’s 2015 M&A Awards

APRIL 15

Rules of the Game: 10 Strategies for Women in the Workplace. 11:30 a.m.-1:30 p.m. Detroit Economic Club. Susan Packard, co-founder of Scripps Interactive Networks & TV. The Townsend Hotel, Birmingham. $45 DEC members, $55 guests of DEC members, $75 nonmembers. Ticket sales end at noon April 14. Contact: (313) 963-8547; email: info@econclub.org; website: econclub.org.

UPCOMING EVENTS

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Amy covers the city of Detroit and entrepreneurship

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Fourth Annual Entrepreneur – YOU. 8 a.m.-2 p.m. April 20. Asian American Pacific Chamber of Commerce. Walsh College, Michigan Women’s Foundation, Inforum Michigan and Fifth Third Bank collaborate on a day of education and resources for woman entrepreneurs. Walsh College, Troy. $45. Contact: Erin Mclin, (248) 430-5855; email: erin@apacc.net; website: walshcollege.edu/eyouconference.

Join Crain’s Detroit Business, in partnership with the Association for Corporate Growth - Detroit Chapter, to meet the M&A Awards winners and finalists and hear the stories behind the top transactions of 2014 from the dealmakers themselves. It takes place 5-9 p.m. May 12 at the Troy Marriott. Tickets are $100 in advance, or $95 for current ACG members. Groups of 10 or more are $95 each. Preregistration closes May 11 at 9 a.m. If available, walk-in registration will be $120 per person. For information, contact Kacey Anderson, (313)446-0300, cdbevents@crain.com.

11th Annual Economic Forum Breakfast. 7:30-10 a.m. April 22. Michigan Hispanic Chamber of Commerce. Guests include Steve Arwood, CEO and president, Michi-

gan Department of Talent and Economic Development; Alejandra Castillo, national director, Minority Business Development Agency; G. Mustafa Mohatarem, chief economist, General Motors; and John Rakolta Jr., chairman and CEO, Walbridge Aldinger Co. Cindy Goodaker, executive editor, Crain’s Detroit Business, will moderate. Detroit Athletic Club, Detroit. $75 members, $100 nonmembers. Contact: Barb Lange, (248) 792-2763, ext. 101; email: blange@mhcc.org; website: mhcc.org. Global Cities Initiative: Building and Sustaining a Globally Competitive Region. 8-11:30 a.m. April 22. Detroit Economic Club. Featuring Sandy Baruah, president and CEO, Detroit Regional Chamber of Commerce; Mike Duggan, mayor of Detroit; Bruce Katz, vice president and founding director, Metropolitan Policy Program, the Brookings Institution; Rodrick Miller, president and CEO, Detroit Economic Growth Corp.; and Nancy McLernon, president and CEO, Organization for International Investments. Westin Book Cadillac, Detroit. $45 DEC members, $55 guests of DEC members, $75 nonmembers. Ticket sales end at noon April 21. Contact: (313) 963-8547; email: info@econclub. org; website: econclub.org. CEO Insights. 11:30 a.m.-1 p.m. April 22. Troy, Auburn Hills Chambers of Commerce. Richard DeVore, executive vice president and regional president for Detroit and Southeast Michigan, PNC Financial Services Group, is the speaker. Oakland Center, Oakland University, Rochester Hills. $35 Troy Chamber members, $45 nonmembers. Contact: Rebecca Wiles, (248) 853-7862, email: rwiles@auburnhills chamber.com; website: auburnhillschamber.com. Detroit Diversity Luncheon. 11:30 a.m.-1:30 p.m. April 22. Women of Financial Executives International. Speaker: Mary Liz Curtin, owner, Leon & Lulu, will speak on “Building a Brand With Personality - The Story of Leon & Lulu.” Forest Lake Country Club, 1401 Club Drive, Bloomfield Hills. $35 for nonmembers, free for FEI Detroit chapter members. Contact: Sharon Kimble, (734) 277-7519; email: feidetroit@ comcast.net; website: financial executives.org.

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16th annual 8MBA Leadership Luncheon. 11 a.m.-2 p.m. April 24. Eight Mile Boulevard Association. Moderated by Charlie Langton of WWJ 950, featuring the “Big 4”: Detroit Mayor Mike Duggan, Wayne County Executive Warren Evans, Macomb County Executive Mark Hackel and Oakland County Executive L. Brooks Patterson. $60 in advance or $70 at the door, $500 for a table of 10. Contact: Jordan Twardy, (248) 398-3388; email: jordan@eightmile.org; website: eightmile.org.

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Blue Cross seeks to spin off Medicaid HMO into for-profit LLC By Jay Greene jgreene@crain.com

Blue Cross Blue Shield of Michigan last week filed papers with the state to spin off Blue Cross Complete, a fast-growing Medicaid HMO, into a for-profit limited liability company in a joint venture with Indepen dence Health Group, a Philadelphiabased Blues plan. The transaction, which could lead to nonprofit Blue Cross Complete paying state and federal taxes, is under review by Attorney General Bill Schuette’s office. Under the proposal, Blue Cross Complete would merge into Com plete Health LLC, a new company formed last December by Blue Cross for the merger and the forprofit HMO conversion. In a statement to Crain’s, Blue Cross spokesman Helen Stojic said the state’s largest health insurer is preparing Blue Cross Complete for growth under Healthy Michigan Medicaid expansion. Since 2012, Blue Cross Complete has more than tripled in size to more than 75,000 members in the three Southeast Michigan counties

where it is licensed to do business: Washtenaw, Livingston and Wayne. All of the state’s 13 Medicaid HMOs have increased membership in the past year as Michigan has added more than 600,000 people through Healthy Michigan. Nearly 20 percent of the state’s population is now covered by Medicaid. Under the merger proposal, Complete Health would be owned equally by Blue Cross Michigan and AmeriHealth Caritas, a national for-profit Medicaid company coowned by the Michigan Blues and Independence Health. “We believe this joint venture best serves the interests of Michigan Medicaid beneficiaries, the state, and our business,” Stojic said. “(It) will bring together one of the country’s leading Medicaid managed care companies and the state’s leading health insurer.” In 2011, Blue Cross paid $215 million for a minority interest in AmeriHealth, which has 5 million members in Medicaid, Medicare and children’s health insurance programs in 15 states.

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After the merger, which is expected to close April 30, Complete Health will change its name to Blue Cross Complete of Michigan LLC. Blue Cross will own 69 percent of Complete Health. As part of the transaction, Blue Cross and AmeriHealth will each contribute $16 million to Complete Health to repay a $30 million surplus note Blue Cross Complete recently issued to Blue Care Network. The surplus note, which was used to cover more than $22 million in losses the past two years, is a subordinated security issued primarily by a mutual insurance company that pays interest at the end of a designated period. Last week, Crain’s reported that Blue Care transferred $49 million in capital to Blue Cross Complete to cover the financial losses and satisfy the state’s reserve requirements. Blue Care is a Blue Cross subsidiary. Joe Aoun, a health care attorney with Nuyen, Tomtishen and Aoun, P.C., in Ann Arbor, said Blue Cross needed to convert Complete into a for-profit company to devel-

Grand Valley State University is accepting applications for the position of Business Incubator Manager for Michigan Alternative and Renewable Energy Center (MAREC). This is a grant funded position with funding expected to be available for two years. BA in a business related field with demonstrated skill and capacity in areas of technology-related business start-ups, management of grants & various funding programs, marketing, small business counseling/coaching/mentoring, or other relevant experience. Three years of start-up business experience required. This position will manage the day-to-day operations of the business incubator program and will educate clients on the Michigan entrepreneurial ecosystem. For a full description, requirements, and to apply on line, go to www.gvsujobs.org. Salary is commensurate with experience. Application deadline date is May 1, 2015. Grand Valley State University is an affirmative action, equal opportunity institution.

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state’s 83 counties are being rebid to begin in fiscal 2016, which starts Oct. 1. “The state is creating prosperity regions” that will require Medicaid HMOs wishing to contract with the state to serve multiple counties in a region, Aoun said. For example, to serve Wayne County in region 10, Aoun said a Medicaid plan must also have the infrastructure and provider network to serve Oakland and Macomb counties. In region 9, plans must serve Washtenaw, Livingston, Jackson, Monroe, Lenawee and Hillsdale counties. “This change is making a lot of plans nervous and (is) why so many are talking” about a possible merger or partner, Aoun said. After the merger, Blue Cross Complete will have a six-member board: Blue Cross CFO Mark Bartlett; Lynda Rossi, Blue Cross’ executive vice president of strategy, government and public affairs; two members from AmeriHealth and two Blue Cross subscribers. 䡲 Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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op joint venture relationships with other Blues plans to split profits and share administrative costs and services. Aoun said Joe Aoun: Blue Blue Cross Cross Michigan will Michigan will benefit. benefit from having AmeriHealth as a partner in Blue Cross Complete. Blue Cross Michigan has been in the Medicaid business since 2006, when it acquired MCaid from the University of Michigan. Blue Cross Complete is expected to grow substantially this year. The Blues plan to apply to the state insurance department for permission to expand Medicaid services to enrollees in several Michigan counties. It currently is licensed in Washtenaw, Livingston and Wayne. Michigan this spring will issue requests for proposals for Medicaid HMOs interested in contracting for Medicaid managed care beneficiaries. The contracts in the

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CLOSING TIMES: Monday 3 p.m., one week prior to publication date. Please call us for holiday closing times. FAX: (313) 446-0347 E-MAIL: cdbclassified@crain.com INTERNET: www.crainsdetroit.com/section/classifieds Confidential Reply Boxes Available PAYMENT: All classified ads must be prepaid. Checks, money order or Crain’s credit approval accepted. Credit cards accepted.

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Detroit to host FIRST Championship By Kirk Pinho kpinho@crain.com

Detroit will be one of two host cities for the FIRST Championship , the world’s largest student robotics competition, for three years starting in 2018. The robotics events, which will take place at Cobo Center and Ford Field , could generate as much as $90 million in economic impact over three years, according to a news release from Gov. Rick Snyder’s office. More than 400,000 K-12 students participate in FIRST Robotics programs around the world, and more than 17,000 are expected to participate in the FIRST Championship later this month in St. Louis, Mo. Michigan has 345 FIRST Robotics programs (California has 238, by

Students work on their entry during a FIRST Robotics competition. [ARGENIS APOLINARIO]

comparison), which are collaborations between schools and robotics experts to build robots, problemsolve and gain career skills in science, technology, engineering and math, according to the release. There are also 77 first-year “rookie” programs in Michigan. Houston will be the other host city. The events will be held on sequential weekends. Bob Nichols, director of Kettering

University’s FIRST Robotics Community Center, a first-of-its-kind facility which in September began housing FIRST robotics teams on Kettering’s Flint campus, called the decision to hold the event in Detroit a “great recognition that Detroit is in a position to host an event this large.” FIRST, which stands for “For Inspiration and Recognition of Science and Technology,” was founded by inventor Dean Kamen in 1989. 䡲

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And then you got recruited to Huron when it, too, got to a size where it needed someone bird-dog ging acquisitions full time. What does that entail? This is a travel job. I’m gone most weeks for two to four days. I travel to conferences. I do city visits. I’ll go to Cleveland, say, and set up meetings with business advisers. Brokers, boutique investment bankers, attorneys, accountants, wealth advisers, anyone who is a trusted adviser to business owners. I’m looking under rocks. Our main competitors out there are talking to big investment bankers. We need to talk to others if we want to compete. You mean there’s more to it than just waiting for the phone to ring? Would that it was so simple. I’ll try to set up six or seven meetings one day, maybe a reception that night and another six or seven meetings the next day. I’ll meet with business brokers who may only have one deal their entire career that is a fit for us. Companies of the size we’re looking for in our target areas. But you meet with them and let them know who you are. You make sure the attorneys and the small-business brokers think of you when they have a coffee-roaster client that wants to sell. These people don’t have sophisticated CRM systems, so meeting with them is important. What kind of deal flow does your business development team gener ate? We generate 1,000 deals a year to look at, and last year we did 22 deals. It’s hard to pin an exact number on how many I was directly responsible for. I come across possible deals that other partners here have already heard of. Everyone here does deal sourcing. If I see something I like, I forward the information on to people here, and they pick up the ball and run with it. I know I originated more than half

the deals we closed. They do the heavy lifting to get deals done. But I had over 1,000 meetings last year, personally. What’s your upcoming schedule like? Next week is our big industry conference, ACG Intergrowth, in Orlando. I’m on two panels there. There will be four of us there, and we all have a full slate of meetings Tuesday and Wednesday and a partial day Monday. And we’re hosting a reception. We’ll have more than 100 meetings. The following week we have our company’s annual meeting, so I’ll be here. In May, I’ll be in Chicago, Toronto, New York and Atlanta, although normally I spend more of my time in smaller cities. And looking for deals in what areas? We have four sectors of focus. We have specialty manufacturing and within that is specialty coatings. Another is business services, where we have two platform companies that are particularly acquisitive right now. And we like consumer products and services and health care. Within health care, we like practice-management businesses. We have two dental practices. And we like dermatology and behavioral health. I was recently at the 20th anniversary party for Amherst Partners, which was in the ballroom at the Townsend Hotel in Birmingham. You go to lawyer events, and you see a lot of women. You go to banking events, and you see a lot of women. But you go to a gathering of private equity professionals and mostly what you see are men in black or navy blue suits. Why the ongoing lack of women in private equity in this day and age? I think it’s a lifestyle choice. The travel in this business is hard. I do more of it now than when I had young kids. I didn’t travel this much when I had young kids. But it was still tough. We talk about this a lot in the industry. We are about 10 percent female now.

What would you tell those young women who are juniors or seniors in business school, or working on their master’s degrees? What I tell young women, and I get called a lot by young women, is to be unapologetic about being a mother. I was always unapologetic that I was two people’s moms, and that’s very important. And I’d tell young women in the industry, hang in there, it gets easier. You can do it. And what do you tell them about what you like about the job. What’s fun? What’s energizing? I like that I’m in meetings with different people every day. Being in a people environment is very energizing. Sitting at my computer all day is draining. I’m building relationships, and that’s fun. I’ve been doing business development for 15 years now, and you develop friendships. I look forward to seeing these people when I go to their town. It’s fun to see how an entrepreneur has built a successful business, and it’s really fun to partner with them at Huron to help them take it to a new level. This is a uniquely American business. What did you tell your kids when they were young about your dedication to the job? I have always told my kids that I haven’t met anyone successful — and I meet a lot of people in my job — who didn’t get there without working very hard. So I was gratified that each of my kids, independently, called to tell me how happy they were that my hard work, the work that they observed through their lives, resulted in the recognition by M&A Magazine. They also told me how proud they are of me, which is pretty darn great. You recently moved downtown? I moved downtown in October. I was born in Detroit. My dad was a minister at St. John’s Episcopal Church on Woodward. In my apartment in Broderick Tower I can look out and see the steeple, so that’s cool. 䡲

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CIVIONICS, from Page 1: Startup gets regional lift ionny’s next CEO, and it is in the first “At this point, aUl.SS.cNieanvcye, AFior uFonrdcaet,iNonatand class of the 7Cs program launched we’ll by Troy-based Automation Alley in the Department of Home land Security. December to help fledgling compaaggressively By the end of 2013, nies in the advanced manufacturstart raising Lynch and Zimmerman ing space. decided they didn’t want The 7Cs program — the seven capital.” to continue as a two-perare concept, context, community, Andy Zimmerman,Civionics son grant-seeking organiclarity, customers, capital and comzation any longer and mercialization — aims to land companies their first customers. office, speaking about how various would focus all their efforts on beThe nonprofit has signed up the state and regional groups work to- coming a company that made and chief innovation officers of more gether to commercialize promising sold things. “Grants can be a trap. It can take than two dozen tier-one suppliers technology and intellectual properyour eye off the ball from what’s in Michigan to review the 7Cs party. ticipants when they are ready for “People have gotten a pretty best in the long term, because prime time. good sense of where we each add you’re so worried about the short Automation Alley invests $25,000 value and what holes there are to term. It’s encouraging to see Civionics breaking away from that cycle, in each firm in the form of debt that fill,” he said. can be converted to equity, through Gerry Roston is one of those fill- where you hop from idea to idea to funds allocated by the Michigan Eco- ing holes. He joined TechTown as an keep getting grants,” said Maynard. nomic Development Corp. At the time, Roston was still inexecutive in residence last August. Companies are hooked up with The former CEO of InPore Technolo- volved in the First Customer Promentors, obtain access to legal and gies in Lansing and past president gram and on behalf of Civionics, he financial consultants, and get help of the New Enterprise Forum in Ann said, he reached out to 100 potential from Troy-based Sandler Training on Arbor, Roston began working with energy customers without success. how to sell to customers and com- Civionics before he joined TechThrough someone with the Town as part of the MEDC-funded Michigan Shifting Gears program, plete their first sales video. “Civionics was a natural for 7Cs,” First Customer Program of the Insti- which helps corporate professionsaid Tom Kelly, Automation Alley’s tute for Research on Labor, Employ - als make career transitions, Roston director of entrepreneurship, who ment and the Economy at UM. and Civionics were invited last fall He has continued to mentor to visit a Chrysler stamping plant in had coached Civionics’ founders when he was with the Michigan Zimmerman and Lynch and help Warren. Serendipitously for CivionSmall Business Technology Develop - them find potential customers. It ics, though not for Chrysler, while ment Center before joining the isn’t official yet, but he says he will they were there, a gear broke in a big Alley. soon sign on as the company’s CEO, piece of equipment, resulting in a “Civionics is on the cusp of great while keeping his TechTown posi- line going down for two weeks while things, with everything that’s going tion. a new gear was ordered and built. on with the Inter“In a year “It was a 40-year-old piece of manet of Things and “(Civionics’) from now, chinery that was no longer being big data,” he said, sensors monitor hopefully Civ- built, so it had to be custom made,” referring to the curionics will have said Roston. “In the era of just-inrent buzz term in the manufacturing grown to the time manufacturing, you can’t aftechnology plant in real point where the ford to have a line down for two that refers to position of CEO weeks.” time ... how sensors, is a full-time It was a part, they told the plant smart dejob,” he said. manager, that sensors could have which puts vices and the given warning about so another (it) right on In search of a gear could have been ordered becloud will inmarket tersect. fore it was needed. the cusp of “Their Civionics cowas a small chip that broke off what will be founder Lynch the“Itgear,” sensors said Zimmerman. “Our monitor the manu- a 20-year trend.” teaches such sensors would have detected that facturing plant enclasses as Dy- was going to happen before it did.” vironment in real Tom Kelly,Automation Alley namics of Roston said Civionics is making a time. When you Structures, demonstration test kit for one of think of where advanced manufac- Earthquake Engineering, Advanced Chrysler’s suppliers, McNaughtonturing is going, you’ll need to be Dynamics and Smart Structures McKay Electric Co. of Sterling Heights. able to sense what’s going on in real and Sensors, Electrical Circuits and It is scheduled to be delivered in May and installed on a pilot basis in time. The technology is just now Signal Processing. getting to the point where you can He and Zimmerman designed the stamping plant. “It’s a small project. If it works out, put sensors all over the plant, which wireless sensors and first aimed at puts Civionics right on the cusp of the civil infrastructure market — it will get much bigger,” said Roston. The plan is, if the pilot project what will be a 20-year trend,” he hoping, without much success, to said. have their sensors placed on infra- proves the value proposition, McAnother of the 10 current 7Cs structure projects to monitor their Naughton-McKay will become the distributor of Civionics’ sensors and companies, Lighthouse Molding Inc. integrity. of Sterling Heights, is making the To their surprise, they didn’t get systems to Chrysler and other large durable plastic housing Civionics much encouragement from the sec- manufacturers. will need for its sensors in the harsh tor. Zimmerman said he hopes to environment of the stamping plant Then they tried the burgeoning have a first sale to an OEM in July. work floor. “At that point, we’ll aggressively energy market, thinking there In addition to the recent fund- would be interest in wirelessly mon- start raising capital,” said Zimmering it got from Automation Alley, itoring oil and gas wells, wind tur- man, who has had preliminary talks Civionics got $5,000 in January bines and pipelines for structural with area venture capitalists about when it won the elevator-pitch integrity, again without success. the company’s plans for future fundcontest at the 15th Annual Collab“The value proposition didn’t ing needs. oration for Entrepreneurship come to fruition,” said Zimmer“They just need to keep to their event in Livonia. knitting,” said Kelly. “What I like man. “We’re all still trying to figure this All the while, though, there were about them is they’ve finally figured out and find our places. It’s taken Small Business Innovative Research out what they want to do. They’re fotime for us to figure out what roles grants to go after to keep the lights cusing on stamping plants. There’s a we all play, and we’re getting better on and fund further research, a total lot of pain there.” 䡲 Tom Henderson: (313) 446-0337 at it,” said Mark Maynard, market- of about $4.2 million, said ZimmerTwitter: @TomHenderson2 ing manager of UM’s tech transfer man, including SBIR grants for the

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TIGERS, from Page 1: Merchandise for female fans

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women’s apparel and merchandise increase to the point that it nearly rivals the quantity intended for men. “You want to make sure you appeal to (women). It’s definitely grown. The retailers are changing to changes in demands,” said Bob Thormeier, general manager at the ballpark for Buffalo, N.Y.-based Delaware North Sportservice, the Tigers’ longtime concessionaire for merchandise, food and beverage sales. While sales data is proprietary, Thormeier said, retail sales to women are strong. The new line of 20 Dooney & Bourke handbags has been a “phenomenal success” across baseball and for the Tigers specifically, he said. The bags range in price from $78 to $480. A third of all MLB-licensed apparel purchased in the past year was bought by females who are interested in Major League Baseball, the commissioner’s office said. “Someday down the road, it will become 50-50 and may go beyond that,” Thormeier said. Selling the D brand What is sold at Comerica Park is fueled by demographic demand, Thormeier said, but all products must be licensed by MLB. “MLB has expanded the number of licensees, which has helped. It’s opened up more channels and avenues from providers we can purchase from,” Thormeier said. Baseball has struck deals in the past couple of years with female

merchandise makers such as Los Angeles-based nail polish brand OPI Products, Tokyo-based Sanrio Inc.’s Hello Kitty brand, and Victoria’s Se cret’s “Pink” line. Other recently licensed brands include Alex & Ani bracelets with team charms; Alex Woo necklaces with team pendants; Bani Bands adjustable headbands; and Cirrus Fit ness yoga mats and bags. In 2008, actress and sports fan Alyssa Milano drew wide attention for her launch of the “Touch” apparel line of team-branded designer clothing for women. The initial collection sold out in five weeks, Bloomberg reported, and it now also includes NASCAR apparel. Thormeier credits Touch with sparking an increase in women’s apparel sales at ballparks and stores. “That got a lot of buzz and really grew,” he said. The numbers All sports apparel generated $30 billion in sales last year, and about 30 percent of that was bought by women, said Matt Powell, chief analyst for Charlotte, N.C.-based sporting goods consulting firm SportsOneSource LLC. The percentage has been rising, and will for some time, he said. “The sports industry in general has really come to focus on the female customer in the past couple of years,” Powell said. Manufacturers and retailers, along with pro teams and colleges, are seeking to capitalize by expand-

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ing product lines and price ranges. The four major U.S. pro sports leagues all generate billions of dollars in revenue, mostly from broadcast rights deals, but also enjoy millions from merchandising. “Sports continues to grow and continues to look at ways it can leverage growth,” said Bob Williams, CEO of Evanston, Ill.-based Burns Entertainment & Sports Marketing Inc. , which represents companies that want to hire athletes to endorse products. That means looking beyond men. “A lot of women still make the purchasing decisions in the family,” said Williams, who has brokered deals involving Detroit pro sports stars such as Calvin Johnson, Barry Sanders, Isiah Thomas and Kirk Gibson. “It’s always been a demographic that has been targeted for marketing and growth. Football and baseball are kicking it into high gear, and I think the other sports will follow.” Women outnumber men in the U.S., and economists say female purchasing ranges from $5 trillion to $15 trillion annually, according to a 2013 report from audience metrics firm The Nielsen Co. Women will control two-thirds of the U.S. consumer wealth over the next decade, based on a FleishmanHillard Inc. analysis, Nielsen said. Building a base The increase in women’s purchasing power has come as MLB has grown in both attendance and revenue. It reached the $9 billion mark last season for the first time. Baseball’s attendance has grown more than 57 percent over the past 30 years, to 73.7 million fans last season for MLB’s 30 clubs. Women remain a distinct minority inside the ballparks: About 14.3 million women attended MLB games last season, according to a fall 2014 survey by market research firm Scarborough, MLB said. That’s about 20 percent of attendance. Gender data on broadcast and digital audience isn’t available. Major League Baseball has had ongoing programs to build its female fan base since 1999 when then-Commissioner Bud Selig created the “Commissioner’s Initiative on Women and Baseball.” Among the efforts are a Mother’s Day initiative where players use pink bats, equipment and accessories. MLB also conducts the “Honorary Bat Girl” program in which breast cancer survivors serve as a bat girl for a day. Baseball also tries to reach women via family and home-oriented marketing relationships: It announced a corporate sponsorship deal in March 2014 with New Jersey-based household products manufacturer Church & Dwight Cos. Inc. to make its Arm & Hammer and OxiClean official MLB products. Battle Creek’s Kellogg Co. did a similar deal for cereals in 2013. 䡲 Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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LOCKBOX, from Page 1: Budget shortfalls threaten governorâ&#x20AC;&#x2122;s plan

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

deal with the politics of Medicaid expansion; and two, how legislators will find the dollars to fund Healthy Michigan, especially since the state is expected to face revenue shortfalls the next two years. Nearly 20 percent of the stateâ&#x20AC;&#x2122;s population, or about 1.8 million people, are now covered by Medicaid, a number already swelled by 600,000 new enrollees under Healthy Michigan. â&#x20AC;&#x153;We have hundreds of thousands of people receiving health care coverageâ&#x20AC;? through Healthy Michigan, said Jan Hudson, a health policy analyst with the Michigan League for Public Policy in Lansing. â&#x20AC;&#x153;It is worth finding a way to continue to do it.â&#x20AC;? Because Healthy Michigan, or Public Act 107, covers expenses for people who had received services previously paid for by the state general fund, the state is projected to save $983 million from 2014 to 2023, according to a report by the Ann Arbor-based Center for Healthcare Research & Transformation. Marianne Udow-Phillips, the centerâ&#x20AC;&#x2122;s director, said the lockbox funding provision requirement dropped out of the Healthy Michigan bill in 2013 because there werenâ&#x20AC;&#x2122;t enough Republican votes. As it was, Healthy Michigan was narrowly approved in the Senate by a 20-18 vote. It was signed into law by Snyder in September 2013 and went into effect April 1, 2014. â&#x20AC;&#x153;The state can drop out of Healthy Michigan (as early as 2017) if the savings donâ&#x20AC;&#x2122;t materialize as expected,â&#x20AC;? Udow-Phillips said. Steve Angelotti, associate director of the Senate Fiscal Agency, said there is a sunset provision in the Healthy Michigan bill inserted by then-Rep. Mike Shirkey, R-Clark Lake. The provision by Shirkey, who now is a state senator, would allow the program to terminate in 2017 if state general fund spending â&#x20AC;&#x201D; the 5 percent to 10 percent matching

Healthy Michigan Under the Patient Protection and Affordable Care Act, states were allowed to expand their Medicaid programs in 2014 to people under 138 percent of the federal poverty level. The federal government agreed to pay 100 percent of the costs for three years or through 2016. Then, starting in January 2017, Michigan is required to fund about 5 percent of costs, or about $150 million per year, rising to 10 percent by 2021. So far, 603,000 Michiganders have signed up for Healthy Michigan, far exceeding the 450,000 state projections for the first two years. But for the program to continue, the state Legislature must find at least $150 million in general funds for fiscal 2017, which begins Oct. 1, 2016.

share â&#x20AC;&#x201D; on Healthy Michigan exceeds state savings in any one year. Shirkey said he believes the Legislature should have funded the lockbox to make Healthy Michigan â&#x20AC;&#x153;last as long as possible and give it a fair chance.â&#x20AC;? But Shirkey said he added the sunset provision to protect taxpayers if general fund spending exceeded state savings and the â&#x20AC;&#x153;experiment is deemed a failure.â&#x20AC;? Angelotti said, â&#x20AC;&#x153;We know at some point the general fund costs will exceed the savings, probably in 2019 or 2020. At that point, the statute reads the program would terminate.â&#x20AC;? In 2017, the general fund cost to pay for the required 5 percent matching share is estimated at about $150 million, rising to $200 million in 2018 when the state funding match increases, Angelotti said. During the first three years through 2016, state savings from Healthy Michigan were expected to total more than $780 million, averaging more than $260 million per

year. However, in 2017, annual savings start to drop significantly, Angelotti said. â&#x20AC;&#x153;By 2019, the savings and the cost are likely to be pretty close,â&#x20AC;? Angelotti said. â&#x20AC;&#x153;Everybody knew that going in.â&#x20AC;? Tim Becker, assistant director of the Michigan Department of Com munity Health , which oversees the state Medicaid program, said Snyder has wanted the health savings account for Healthy Michigan to be funded with the state savings. â&#x20AC;&#x153;The health savings account did not survive the budget process,â&#x20AC;? said Becker. â&#x20AC;&#x153;We would have liked to see it there. This governor is about making sure we have longterm funding mechanisms. He thought it was a good plan.â&#x20AC;? But because of revenue shortfalls this year, Becker said, Snyder isnâ&#x20AC;&#x2122;t recommending funding the healthy savings sub-account. Healthy Michigan savings are being used to plug budget holes, he said. However, Becker said, placing savings from Healthy Michigan into the fiscal 2017 budget will be â&#x20AC;&#x153;on our list of budget priorities.â&#x20AC;? On the other hand, while Snyder has unsuccessfully advocated for state savings to be placed in the Healthy Michigan savings account, he continues to fund the budget stabilization fund, or socalled â&#x20AC;&#x153;rainy day fund.â&#x20AC;? For fiscal 2016, Snyder is recommending $95 million to be placed in the rainy day fund. Last year, he placed $112 million in the rainy day fund, said the Senate Fiscal Agency. The fund now includes nearly $500 million, which is about halfway toward Snyderâ&#x20AC;&#x2122;s self-professed goal of having $1.5 billion in the account by the time he leaves office in 2018. Last year, Snyder drew down the fund by $195 million to contribute to the â&#x20AC;&#x153;grand bargainâ&#x20AC;? that helped settle Detroitâ&#x20AC;&#x2122;s bankruptcy case. â&#x20AC;&#x153;We have had great success with

Healthy Michigan. It is changing lives and it is important to people. We will make it work through the general fund,â&#x20AC;? Becker said. But House Minority Leader Rep. Tim Greimel, D-Auburn Hills, isnâ&#x20AC;&#x2122;t so sure Republicans in the House and Senate have a desire to continue Healthy Michigan. They can kill it by simply not providing the state matching share in 2017, he said. â&#x20AC;&#x153;Why havenâ&#x20AC;&#x2122;t they contributed the savings to the fund for Healthy Michigan?â&#x20AC;? Greimel said. â&#x20AC;&#x153;It does raise the question whether Republicans arenâ&#x20AC;&#x2122;t sincere in wanting to continue Medicaid expansion after 2017, or whether they have been fiscally irresponsible in not setting aside funds.â&#x20AC;? Greimel said he is concerned whether the Republican leadership will even allow a vote to continue Healthy Michigan in 2017. â&#x20AC;&#x153;The current Speaker of the House (Kevin Cotter, R-Mount Plesant) voted against it, and the majority of Republicans in the House and Senate voted against it (in 2013),â&#x20AC;? Greimel said. A spokesman told Crainâ&#x20AC;&#x2122;s that Cotter was unavailable. Sen. Jim Marleau, R-Orion Township, chair of the Senate Health Policy Committee, said it is too early to know whether Republicans will approve funds to continue Healthy Michigan in 2017. Marleau, who was one of eight Senate Republicans to vote for Healthy Michigan, said he supported placing its savings the past two years in the so-called lockbox. â&#x20AC;&#x153;I believe our population will be more healthy because of Healthy Michigan. Obviously there is a need there with more than 600,000 signing up,â&#x20AC;? Marleau said. â&#x20AC;&#x153;We have a lot of balls in the air. At least the funding issue in 2017 wonâ&#x20AC;&#x2122;t be a surprise,â&#x20AC;? he said. â&#x20AC;&#x153;We all know whatâ&#x20AC;&#x2122;s at stake.â&#x20AC;? äĄ˛ Jay Greene: (313) 446-0325 Twitter: @jaybgreene

INDEX TO COMPANIES These companies have significant mention in this weekâ&#x20AC;&#x2122;s Crainâ&#x20AC;&#x2122;s Detroit Business: Arborland Center ............................................ 6 Autoliv ............................................................ 22 Automation Alley ............................................27 Blue Cross Blue Shield of Michigan ............ 25 Blue Cross Complete .................................... 25 CC Consulting .................................................. 7 Center for Healthcare Research & Trans... 29 Chrysler Group .............................................. 22 Civionics ............................................................ 1 Detroit Athletic Club ...................................... 4 Detroit Tigers .................................................... 1 Dominoâ&#x20AC;&#x2122;s Pizza .............................................. 22 Dow Chemical ................................................ 22 Duo-Gard Industries ...................................... 16 Educational Data Systems .................... 12, 14 Federal-Mogul ................................................ 22 Fulcrum Edge .................................................. 13

Hudson Webber Foundation ........................ 3

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Huron Capital Partners .................................. 3

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James Group International .......................... 12

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Kelly Services.................................................. 22 Lear .................................................................. 22 Lormax Stern Development .......................... 7 Mantese Honigman & Williamson................ 11 Michigan Association of Health Plans .............. 1 Michigan Chamber of Commerce.................... 18 Michigan Community College Association .. 17 Michigan Dept. of Community Health.......... 29 Michigan League for Public Policy .............. 29 Michigan Manufacturers Association ........ 18 Michigan State University .......................... 20 MSX International ........................................ 22 Talent 2025 .................................................... 18 TechTown .......................................................... 1 TI Automotive ................................................ 22

Giarmarco Mullins & Horton ........................ 12

University of Michigan ................................ 1, 6

Grand Rapids Community College .............. 17

Urban Science ................................................ 22

Grand Valley State University ...................... 11

Wayne State University ................................ 17

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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) 446-6032 or mwise@crain.com Executive Editor Cindy Goodaker, (313) 446-0460 or cgoodaker@crain.com Managing Editor Jennette Smith,(313) 446-1622 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) 446-0344 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) 446-6059, nwitte@crain.com Editorial Support (313) 446-0419; YahNica Crawford, (313) 446-0329 Newsroom (313) 446-0329, FAX (313) 446-1687 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) 446-0416 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) 446-6042 or dwalsh@crain.com Sherri Welch, senior reporter Covers nonprofits, services, retail and hospitality. (313) 446-1694 or swelch@crain.com ADVERTISING Sales Inquiries (313) 446-6032; FAX (313) 393-0997 Sales Manager Tammy Rokowski Senior Account Executive Matthew J. Langan Advertising Sales Christine Galasso, Catherine Grace, Joe Miller, Sarah Stachowicz Classified Sales Manager Angela Schutte, (313) 446-6051 Classified Sales Lynn Calcaterra, (313) 446-6086 Audience Development Director Eric Cedo Events Manager Kacey Anderson Creative Services Director Pierrette Dagg Senior Art Director Sylvia Kolaski Marketing Coordinator Ariel Black Special Projects Coordinator Keenan Covington Sales Support Suzanne Janik,YahNica Crawford Editorial Assistant Nancy Powers Production Manager Wendy Kobylarz Production Supervisor Andrew Spanos CUSTOMER SERVICE Main Number: Call (877) 824-9374 or customerservice@crainsdetroit.com Subscriptions $59 one year, $98 two years. Out of state, $79 one year, $138 for two years. Outside U.S.A., add $48 per year to out-of-state rate for surface mail. Call (313) 446-0450 or (877) 824-9374. Single Copies (877) 824-9374 Reprints (212) 210-0750; or Alicia Samuel at asamuel@crain.com To find a date a story was published (313) 446-0406 or e-mail infocenter@crain.com Crainâ&#x20AC;&#x2122;s Detroit Business is published by Crain Communications Inc. Chairman Keith E. Crain President Rance Crain Treasurer Mary Kay Crain Executive Vice President/Operations William A. Morrow Executive Vice President/Director of Strategic Operations Chris Crain Executive Vice President/Director of Corporate Operations KC Crain Vice President/Production & Manufacturing Dave Kamis Chief Financial Officer Thomas Stevens Chief Information Office Anthony DiPonio G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Editorial & Business Offices 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS ISSN # 0882-1992 is published weekly, except for a special issue the third week of October, and no issue the fourth week of December by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Entire contents copyright 2015 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is strictly prohibited.

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CRAIN’S DETROIT BUSINESS // April 13, 2015

WEEK ON THE WEB/APRIL 4-10 Chassix gains bankruptcy court approval for $250M in financing

hassix Holdings Inc. received bankruptcy court approval to access $250 million in debtorin-possession financing. The Southfield-based automotive supplier, owned by Tom Gores’ Platinum Equity LLC, filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court for the Southern District of New York on March 12.

ON THE MOVE Brian Stewart, chairman and CEO of Farmington Hills-based Daifuku North America Holding Co. since 2013, will step down later this month, the company confirmed. Aki Nishimura, 52, will assume all of Stewart’s duties April 24. Stewart, 59, was previously president and co-CEO since 2009 at the company, previously Daifuku Webb and holder of various U.S. subsidiaries of Osaka, Japanbased Daifuku Co.Ltd. — including conveyor and baggage system manufacturer Jervis B.Webb Co. in Farmington Hills. Maggie DeSantis, founding CEO of the Eastside Community Network (formerly the Warren/Conner Development Coalition), plans to leave the nonprofit early next year. DeSantis, 64, said she plans to continue working in Detroit in the community development arena. Kim Schatzel, provost and executive vice president of academic and student affairs at Eastern Michigan University, was named the school’s interim president. She will replace Susan Martin, who will step down in July for a one-year sabbatical and then return to the faculty. Neapco Holdings LLC announced Ken Hopkins as its new president and CEO. Hopkins, 48, replaces Robert Hawkey, who retired from the Belleville-based driveshaft supplier in November. Hopkins has been COO for JTEKT North America Inc. in Plymouth Township. The Crohn’s & Colitis Foundation ofAmerica,Michigan Chapter named Melissa Greer as executive director. Greer, 36, was temporary special events manager for the Farmington Hills-based chapter, concurrent with serving as program manager of Child’s Hope in Dearborn. She succeeds Anthonie Burke, who left in September to take a sales position at Ascion LLC in Bloomfield Hills. Pat McPharlin was named director of the Michigan Department ofInsurance and Financial Services, replacing Ann Flood, who is returning to the private sector. McPharlin was CEO of Michigan State UniversityFederal Credit Union until he retired last month. Meanwhile, Marie Waalkes was named director

[SHINOLA/DETROIT LLC]

Shinola/Detroit LLC’s brand campaign takes a shot at the Apple smartwatch. of the Office ofthe State Employer. Waalkes, OSE employee health management director, replaces Jan Winters, named state personnel director in March.

COMPANY NEWS Detroit watchmaker Shinola/Detroit LLC launched a national brand campaign with print and digital advertisements in the New York Times and Wall Street Journal. The ads feature the watch company’s workhorse Runwell model, touting it as “a watch so smart that it can tell you the time just by looking at it” — a riff on the recent introduction of Apple’s socalled “smart” digital watch. The campaign was created by New York City-based studio Partners & Spade. A Wayne County judge will hear Compuware Corp.’s request May 11 to vacate an arbitrator’s $16.5 million award to former Chairman-CEO PeterKarmanos after the Detroit company terminated a consultant contract with him. Compuware attorneys contended in court pleadings that part of the award appears to include treble damages and attorney fees over and above the loss of canceled stock options. Troy-based Inteva Products LLC acquired a majority ownership in its Korean DoorSystems joint venture. Inteva boosted its ownership stake from 50 percent to 53 percent through the transaction with South Korea-based conglomerate SLCorp. Birmingham-based Gas Sta-

tion TV will make its new headquarters in the former Kresge building in downtown Detroit, Bedrock Real Estate Services LLC announced. The Detroit Lions confirmed that it and Detroit ABC affiliate WXYZ-Channel 7 jointly exercised an opt-out clause after three seasons on what had been a fouryear local deal to televise preseason games. Meanwhile, the Lions hired Jacksonville, Fla., sports merchandise giant Fanatics Inc. in a five-year deal to handle online retailing. Fanatics Inc. takes over online sales from Indianapolisbased MainGate Inc., which will continue to operate brick-and mortar sales. Ann Arbor-based RetroSense Therapeutics LLC was named one of three finalists for the top award at this week’s convention of the Angel Capital Association in San Diego. RetroSense is developing a lead product using gene therapy to restore some vision in patients suffering blindness due to retinitis pigmentosa or advanced dry agerelated macular degeneration. Connected device software company UIEvolution Inc. of Kirkland, Wash., opened its first Michigan office, in Ann Arbor. Farmington Hills-based Community Choice Credit Union closed on its merger with Wyandotte-based NuPath Community Credit Union. The two will operate under Community Choice’s name. Nuspire Networks, Commerce Township, acquired Security Confidence, a Cincinnati-based IT security and disaster recovery service company. A Nordstrom Rack will open at Novi’s West Oaks in fall 2016. Canada’s government is selling its final stake in General Motors Co., worth about $2.7 billion.

OTHER NEWS The inaugural meeting between metro Detroit’s semipro top soccer clubs will occur in the sport’s most prestigious American tournament, the Lamar Hunt U.S. Open Cup. The Michigan Bucks will host Detroit CityFC in the first round May 13 at the Bucks’ field, Ultimate Soccer Arenas in Pontiac. The Los Angeles-based production company for “Game of Thrones” actor Jason Momoa is listed on the warranty deed for the newly purchased former Planet Rock building in Pontiac. Rezoning property for a new Detroit Red Wings hockey arena and entertainment district just north of downtown remains on hold after the Detroit CityCouncil postponed its vote on the plan, AP reported. Council members said they needed more time to review the wording. The Regional Transit Authority ofSoutheast Michigan wants to start a low-cost bus route between downtown Detroit and the Detroit Metropolitan Wayne CountyAirport in Romulus, AP reported.

RUMBLINGS [COSTAR GROUP INC.]

This 183,000-squarefoot industrial building on Plymouth Road east of Evergreen was purchased by an entity with ties to Jimmy Lai.

Hong Kong tycoon tied to Detroit land purchase immy Lai, whom The New York Times has described as “Hong Kong’s most fiercely anti-Communist tycoon,” appears to be linked to the purchase of a significant chunk of property at the Wayne County tax foreclosure auction. In September 2013, Loveland Technologies, which tracks Wayne County property ownership and tax auctions, reported that buyer “7901” purchased 31 properties, mostly in North Corktown. The total price was $643,000 for a grab bag of single-family homes and vacant lots as well as industrial and retail space. MLive.com reported at the time that the winning bidder, 7901, was Joseph Cella. Cella told MLive that he represented “a Canadian-based private investment and development group, which is purchasing property across the city of Detroit.” That group appears to be headed by Lai. It all connects through an entity registered in September called 1898312 Ontario Inc. that lists several executives of Lai-owned companies as administrators. They include publishing company Next Media Ltd. and Village Hotels, an Ontariobased company that bought 7 acres of waterfront property on Detroit’s far east side last year with plans to develop it as the first residential property in its portfolio. 1898312 Ontario owns at least two properties in Detroit, according to CoStar Group Inc. Those two properties — a retail space on Woodward Avenue and industrial space on Plymouth Road — were part of Cella’s 31-property buying spree.

Opening Day celebration attracts Snyder, Moroun Gov. Rick Snyder and Matt Moroun rarely get a chance to glad-hand. But the two did on Opening Day, and perhaps exchanged some small talk about the Detroit Tigers’ 4-0 victory over the Minnesota Twins. “They are not often in the same room together,” said Matt Moroun: A Mickey day to network. Blashfield, a

spokesman for Moroun. The two political foes battled in 2012 over Proposal 6, which would have required a statewide referendum on any new international vehicle crossings in Michigan. Proposal 6, which voters shot down 59-41 percent, was specifically aimed at halting the New International Trade Crossing, which will be a competitor to the Ambassador Bridge, which is owned by Manuel “Matty”Moroun, Matt Moroun’s father. “It was really fun to enjoy the Tigers’ opening day win,” Moroun, vice chairman of Warren-based CenTra Inc., said in a statement Blashfield emailed to Crain’s. “It is always good to step outside the office briefly and cheer together at the ballpark.” David Murray, a spokesman for Snyder, said Snyder “met briefly with many, many people” on Opening Day.

Did Warren mayor speak too soon about tech center? Warren Mayor Jim Fouts may have spoken too soon at his state of the city address last week, when he outlined a potential General Motors Co. investment in its tech center of nearly $1 billion that would create 3,000 jobs or more. “Close to $1 billion investment is something any mayor of any large city Jim Fouts: Ahead would welof the game? come,” Fouts said in an interview with Crain’s. “It’s big. Equal to the biggest fireworks shot off on the Fourth of July.” GM confirmed it’s seeking tax abatements from the city on a project, but communications manager Dan Flores said the automaker isn’t quite ready to sign on the dotted line. “The deal is not done, but it’s a project we are looking at,” Flores said. “We have the mayor making these proclamations about a project that’s not approved yet. We filed for a tax abatement in the city of Warren, and if that’s approved it will be part of the business case for approval, which has not happened. The mayor is getting ahead of himself.”

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