Crain's Detroit Business, May 4, 2015 issue by Crain's Detroit Business

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CRAIN’S

[DWIGHT BURDETTE/WIKIMEDIA COMMONS]

Readers first for 30 Years

DETROIT BUSINESS May 4-10, 2015

Sakthi sees the pros of hiring ex-cons PAGE 3

‘Golden corridor’ – but slow as molasses

Brighton firm’s coating clearly has potential

Why Kroger had Hiller’s Markets on its shopping list,

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DVP pushes aside rumors of trouble Hermelin: ‘Early-stage investing is messy. … We’re here for the long haul’ By Tom Henderson

the long haul,” he added.

thenderson@crain.com

[LARRY PEPLIN]

Drivers inch their way along Hall Road.The amount of traffic is both a blessing and a curse for merchants along the corridor that some call Hell Road.

M-59 gridlock drives traffic talk in Macomb Officials see no quick cure to the curse of the Hall crawl By Doug Henze Special to Crain’s Detroit Business

Slogging through stop-and-go traffic on northern Macomb County’s main east-west thoroughfare — four lanes deep in exhaust and exhaustion — it’s easy to understand why some locals have dubbed it “Hell Road.” For the business district along the stretch of M-59 officially known as Hall Road, that gridlock has become both blessing and curse. The area has seen a major development push in recent decades, but the traffic backups can also be a deterrent to visitors. “I refer to M-59 as Macomb County’s Golden Corridor,” said Joe Sowerby, president of com-

Special Report: Macomb County’s economy is revving up from the last recession, with tech jobs helping drive a resurgence in manufacturing, Page 11

mercial real estate brokerage Anton, Sowerby & Associates in Mount Clemens. “Everybody wants to be on M-59. That traffic is the lifeblood of businesses in the busy commercial district.” Borrowing a line made famous by Yogi Berra, parts of M-59 have become so crowded “nobody goes there anymore.” “There have been a number of restaurants that have come and See GRIDLOCK, Page 19

$2 a copy. $59 a year.

Trying to build something When the trio founded DVP, there were no early stage investors in Detroit. It was a barren landscape for venture capital, and Gilbert was ready to try and build something. “We’d been losing our best and brightest for years,” Hermelin said. “They’d been starting companies, but they’d been starting them in San Francisco.” They raised their first fund, which has $55 million under management and of which $30 million has been committed to portfolio companies. Brian Hermelin: And, critically, the only institutional “Relax. DVP is money in the fund is $2.25 million doing fine.” from the Pure Michigan Venture De velopment Fund . That means not having to answer to foundations or pension funds that See DVP, Page 21

Living through giving A. Alfred Taubman left a legacy in education, health care, galleries and research into diseases. His philanthropy is expected to live on through his children and the Taubman Foundation, Page 7

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Rumors have been swirling in the local venture-capital community that Detroit Venture Partners is in trouble. Five years after being founded by Dan Gilbert, Josh Linkner and Brian Hermelin as a way to invest in earlystage technology companies, DVP is yet to have any big wins. Meanwhile leadership has been in flux, there have been layoffs at several portfolio companies, and some founders abandoning Detroit for the fertile grounds of San Francisco. “Confidence in DVP by the venture community has been lacking,” said one area venture capitalist who asked not to be named. “Rumors have been swirling.” Hermelin, who is DVP’s managing partner, has a message to those who doubt: Relax. DVP is doing fine. “Early-stage investing is messy,” he said. “It’s hard. It’s hand-to-hand combat. We’re about where we should be four-and-a-half years in. We’ve got some really promising companies we like a lot. We’ve got some companies we hope can get some wind behind them. And we have some that are tough. “We didn’t get in this for a quick return. We’re here for

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MICHIGAN

BRIEFS Walbridge to manage Bell’s Brewery bottling expansion Bell’s Brewery Inc. selected Detroit-based construction firm Wal bridge Aldinger Co. to expand its Comstock bottling operation. As part of a multiyear $35 million expansion, Walbridge will be construction manager for the build-out of a new bottling hall, keg storage building and warehouse. The expansion will increase Bell’s annual production capacity to 1 million barrels of craft beer. Bell’s, based in Galesburg east of Kalamazoo, plans to produce 410,000 barrels of beer in 2015, founder Larry Bell told Crain’s this year. The bottling hall and warehouse are expected to be completed in November and December, respectively. The entire project is expected to be completed by February 2016. — Dustin Walsh

Flint ends 4 years under emergency management Calling it a “new day” for the long-troubled city, Gov. Rick Snyder

declared an end to Flint’s financial emergency after the state approved a $7 million loan to eliminate a budget deficit. Flint has been run by emergency managers since 2011. The city is returning to local control, although a five-member transition board will review major contracts and budgets. A budget that starts July 1 will have no deficit for the first time in a decade, The Flint Journal reported. The state says long-term liabilities have been reduced to $240 million from $850 million. In other good news for Flint, Kettering University is getting $4 million from General Motors to build an automotive proving ground and powertrain test lab, The Journal reported. GM owned the Flint school, previously known as the General Motors Institute, until the 1980s.

MICH-CELLANEOUS 䡲 Refusing to take “no” for an answer, Mylan N.V. raised its offer to acquire Perrigo Co. plc to nearly $32.7 billion, MiBiz reported. The unsolicited offer is the third that the English company has made for Perrigo,

Macomb County is a hub of economic growth and we are proud to be an integral part of the area’s dynamic business environment. We are the largest Michigan law ﬁrm with a presence in Macomb County. Our attorneys are deeply involved in the community: they support important causes and serve on the boards of hospitals, colleges, chambers of commerce and other civic organizations. By helping companies and individuals thrive in one of Michigan’s most economically vibrant regions, we provide a better partnership.

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which is domiciled in Dublin, Ireland, to benefit from lower taxes but retains its headquarters in Allegan. 䡲 Midland-based Dow Chemical Co. will sell its Agrofresh food-packaging business to Boulevard Acquisition Corp. for $810 million, Bloomberg News reported. Agrofresh will become a stand-alone company that trades on the Nasdaq system. Dow still will own about 40 percent of Agrofresh. 䡲 The quarterly office furniture index compiled by Michael A. Dunlap & Associates was the third-best recorded since July 2007, MiBiz reported. “We reaffirm our prediction that the industry remains on course to achieve its best year in more than a decade,” said Michael Dunlap, who heads the Holland consultancy. 䡲 The commercial fishing industry’s total catch last year in Michigan was slightly lower than 2013’s at about 3.4 million pounds, The Associated Press reported. But the Michigan Department of Natural Resources said the estimated wholesale dockside value was more than $5.8 million before processing, marketing and retail sales, up $300,000. 䡲 Marysville-based SMR Auto motive Systems plans to add 200 jobs as part of an $18.6 million expansion, The Times Herald in Port Huron reported. The Michigan Eco nomic Development Corp. approved a $2 million grant to St. Clair County for job training. The plant currently employs 796. 䡲 A recent report by Grand Valley

State University estimated the school’s annual economic impact in Kent, Ottawa and Muskegon counties at $730 million during the 201314 fiscal year. Grand Valley determines the amount using the number of its employees (more than 3,200) along with spending and taxes paid by its 25,000 students. 䡲 Byron Center-based Spartan Nash Co. plans to buy the six-store Dan’s Supermarket chain in Bismarck-Mandan, N.D., The Associated Press reported. Terms of the deal haven’t been disclosed. Dan’s sold its two Dickinson, N.D., stores to SpartanNash in December 2013. 䡲 Joel Wilson, 32, was sentenced to up to 10 years in prison and must pay $6.5 million in restitution for defrauding investors of millions of dollars in what prosecutors de-

INSIDE THIS ISSUE BANKRUPTCIES . . . . . . . . . . . . . . . . . . 6 BUSINESS DIARY . . . . . . . . . . . . . . . . 16 CALENDAR . . . . . . . . . . . . . . . . . . . . . . . 15 CLASSIFIED ADS . . . . . . . . . . . . . . . . 17 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . . 8 MARY KRAMER . . . . . . . . . . . . . . . . . . . 8 OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . 8 OTHER VOICES . . . . . . . . . . . . . . . . . . . 9 PEOPLE . . . . . . . . . . . . . . . . . . . . . . . . . 15 RUMBLINGS . . . . . . . . . . . . . . . . . . . . 22 WEEK ON THE WEB . . . . . . . . . . . . . . 22

COMPANY INDEX: SEE PAGE 21 scribed as a Ponzi scheme, the Bay City Times reported. Wilson formerly owned The Diversified Group Advisory Fund LLC. 䡲

Corrections 䡲 An editorial on Page 8 of the April 27 issue should not have included Oakland County Executive L. Brooks Patterson as a supporter of the Proposal 1 road funding initiative. Patterson does not support the ballot proposal. 䡲 In the General and In-House Counsel Awards section in the April 27 issue, a profile of Michelle Busuito, assistant general counsel for the Suburban Mobility Authority for Regional Transportation , should have said it costs $490, not $49, to test each of the DNA rape kits that were found in 2009 in an abandoned Detroit police storage unit. 䡲 Because of incorrect information supplied to Crain’s, an item in the April 27 People on the Move incorrectly listed Nicole Sokloski’s job title as event manager at the Display Group , Detroit. She is actually an account executive. 䡲 An item in the Michigan Briefs on Page 2 of the April 27 edition should have said a proposed fine against Grand Rapids Plastics for safety violations would be the largest issued by the Michigan Occupational Safety and Health Administration for a fatality case in more than a decade.

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Sakthi builds up company, parolees Supplier hires ex-offenders for major expansion project in Detroit By Dustin Walsh dwalsh@crain.com

Sakthi Automotive Group USA Inc. is in the nascent stages of a massive expansion project on the Southwest Detroit waterfront — one that could bring an investment of more than $60 million. But to steadily hire the workers it needs to ramp up castings production, it is betting big on a nontraditional sort of workforce: convicted

felons. The subsidiary of India conglomerate Sakthi Group is hiring many of metro Detroit’s recently paroled convicted felons. Sakthi’s expansion plans include the hiring of nearly 400 workers over the next two years. Sakthi is projecting revenue of $58 million in 2015, up to $150 million in 2016 and $450 million by 2020. As part of that growth, Sakthi committed to hire two recently

paroled Michiganders per month over the next two years, said CEO Lalit Verma. That’s at least 48 ex-offenders. Sakthi hired four parolees earlier this month, and they were outperforming their peers, so it returned to hire four more last week, Verma said. “We’re seeing they (hired parolees) are more motivated and productive because they know this is their second chance,” Verma said. “I’ve met

with each of them personally and have told them they need to go the extra mile to show the community they are worth this Lalit Verma: “They chance.” know this is their The parolees second chance.” are hired under the same conditions as regular employees, Verma said, including pay and benefits.

The parolees have been hired as CNC operators, assembly machine operators and general laborers. The workers make $11 per hour to $13.50 per hour to start, Verma said. U.S. Labor Secretary Thomas Perez toured Sakthi’s Detroit plant last month and met with Gov. Rick Snyder about the state’s parolee jobs training programs, which were signed into law last December. That law required the Michigan See SAKTHI, Page 18

Kroger: Deal for Hiller’s stores adds niche foods By Sherri Welch swelch@crain.com

See KROGER, Page 18

[PHOTOS BY CARTER SHERLINE]

Nanovere Technologies founderTom Choate (above) sprays a layer of Nano-Clear,which he says preserves surface gloss and resists scratches and oxidation. Compare the side on the left without coating to the side on the right with it (inset,above).

Chemist’s coating defies the elements Brighton firm doubles revenue as formula attracts cruise lines, other clients By Bill Shea bshea@crain.com

homas Choate loves research and development. He loves to experiment, tinker, invent. He’s at home in the laboratory. As founder and chief technology officer of a small Brighton-based protective industrial surface coating maker called Nanovere Technologies, he’d love to get back to

full-time R&D as a polymer chemist. There’s just one problem: He used nanotechnology to create a long-lasting anticorrosion coating that protects new surfaces and restores those already damaged by exposure to sun and air — a development that has caught the interest of major global clients, and Choate must instead run a business that’s annually doubling its revenue. What customers are buying is Choate’s

Nano-Clear coating, which comes with a 10year warranty to preserve surface gloss while being heavily resistant to scratches and oxidation from ultraviolet light and chemicals. Such a guarantee cuts down on the expensive lifecycle maintenance costs for companies that have products exposed to the elements — vehicles, ships, boats, bridges — almost anything. Nanovere and its vendors now have orders to See NANOVERE, Page 20

MUST READS of the week ... Why they call it a ‘liquid asset’

LOOKING BACK: Bay Harbor’s captain

It’s a $10 billion-plus commercial waterway. Heck, it’s why Detroit is where it is. And what the Detroit River is now is alive. Dustin Walsh dropped a line, and look what he came up with? Read his fish tale, with photos, crainsdetroit.com/walsh

Crain’s weekly look back on 30 years of Detroit stories catches up with David Johnson, who developed Victor Center and Victor Corporate Park — then turned an old cement plant into the Village at Bay Harbor (right). Page 4

[DUSTIN WALSH/CDB]

[BAY HARBOR]

The Kroger Co. of Michigan’s acquisition of Hiller’s Markets will not only bring Kroger more market share, it will provide entrée to the specialty and ethnic food products the smaller chain is known for, the company and industry watchers say. Kroger said Friday that it had reached an agreement to acquire Hiller’s Markets and its seven metro Detroit stores. Terms of the deal, set to close in July, were not disclosed. Kroger has long admired Hiller’s, President Jayne Homco said. The chain has a great reputation in the market and shares similar values Jim Hiller: Grocery around things biz future is for big such as supportcompanies. ing the community. Hiller’s is also a great fit, given Kroger’s goal to move into providing more ethnic foods, she said. The regional chain is sharing its suppliers for all of its product lines, she said. “We’ll be able to utilize that and learn from them and serve that diverse customer.” “We’re fortunate to have been of-

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LOOKING BACK

Crainâ&#x20AC;&#x2122;s May 6, 1985, issue reported on developer David Johnsonâ&#x20AC;&#x2122;s new Victor Center in Southfield. Johnsonâ&#x20AC;&#x2122;s passion remains finding the right piece of land. More at crainsdetroit.com/30

Accident hasnâ&#x20AC;&#x2122;t kept developer from building his lifelong dream By Kirk Pinho kpinho@crain.com

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The diagnosis: A sixth cervical vertebra shattered into 13 pieces. But in the weeks, months and years that followed David Johnson hearing that news after a 1978 swimming pool diving accident, he didnâ&#x20AC;&#x2122;t become bitter about his life, or â&#x20AC;&#x153;greenâ&#x20AC;? â&#x20AC;&#x201D; that is, envious of people who didnâ&#x20AC;&#x2122;t go through the same ordeal. Johnson, now 65, just became greener. David Johnson: Instead of deTrue to the â&#x20AC;&#x153;heart veloping large flutterâ&#x20AC;? method swaths of pristine land as densely as possible to maximize profit and propagate cookie-cutter subdivisions, he said, he builds less than what he is allowed â&#x20AC;&#x153;to maximize the physical beautyâ&#x20AC;? of his projects. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m notorious for saying that I buy land by what I call the â&#x20AC;&#x2DC;heart flutterâ&#x20AC;&#x2122; method,â&#x20AC;? he said. â&#x20AC;&#x153;It has to be emotionally compelling land, physically beautiful.â&#x20AC;? And over the years, his company, which developed the Victor Center in Southfield 30 years ago and spearheaded the Victor Corporate Park mixed-use complex in Livonia, has made a lot of green, as well. Victor International Corp. had $112.4 million in revenue in 2014, down slightly by 1.8 percent from the previous yearâ&#x20AC;&#x2122;s $114.4 million, according to company-provided figures. Through March, it had $42.7 million in revenue. Johnson, chairman of the Clarkston-based company known for developing luxury residential and resort communities, spends about 10 months out of the year in the Oil Nut Bay resort community he developed on Virgin Gorda in the British Virgin Islands. Thatâ&#x20AC;&#x2122;s because, due to his injury, he doesnâ&#x20AC;&#x2122;t â&#x20AC;&#x153;handle the cold very well,â&#x20AC;? he said. â&#x20AC;&#x153;I love the water, so I am able to spend the winters in the warm climate and with a sense of adventure,â&#x20AC;? said Johnson, adding that it took about six months for him to become mobile again. â&#x20AC;&#x153;I didnâ&#x20AC;&#x2122;t want to go play golf in Florida.â&#x20AC;? Johnson, speaking last month from his office in the 88-residence community on 300 acres, said he very quickly recalibrated his thinking 37 years ago immediately after the accident. â&#x20AC;&#x153;When youâ&#x20AC;&#x2122;re told youâ&#x20AC;&#x2122;re never

[PHOTO COURTESY OF BAY HARBOR]

Before it became a resort community,Bay Harbor was the site of an abandoned cement plant (inset).Now,it features a nautical center,dining and lodging facilities,boutiques and an equestrian center.

How a cement plant became a Lake Michigan community When David Johnson was planning the Village at Bay Harbor , he knew it was going to be big. â&#x20AC;&#x153;There was five miles of Lake Michigan shoreline,â&#x20AC;? he said. â&#x20AC;&#x153;The only problem was that it had the largest abandoned cement plant in the world on it.â&#x20AC;? But Johnson said he could see the potential for a large, multifaceted community. It was planned for 800 units, and 724 are currently completed. It also features a nautical center with 227 completed docks and another 150 planned, plus six miles of non-motorized trails connecting Charlevoix to Petoskey. Bay Harbor also includes a downtown area with dining, boutiques, lodging, golfing and an equestrian center. The development began to tan-

going to walk again and youâ&#x20AC;&#x2122;re laid up there â&#x20AC;&#x201D; God, money and friends get put into perspective very quickly,â&#x20AC;? he said.

gibly materialize in 1994 with then-Gov. John Engler on hand when the cement plant smokestacks were demolished in front of thousands of people. Bay Harbor also is the site of what is currently Johnsonâ&#x20AC;&#x2122;s most pressing work: Construction of the Great Lakes Center for the Performing Arts, a $50 million performing arts center expected to begin next year. It will be 25,000 square feet and include a 400-seat sloped floor theater and private box areas. â&#x20AC;&#x153;It will be a game-changer for performing arts centers for the greater northern Michigan area, the Midwest and the United States,â&#x20AC;? Johnson said. â&#x20AC;&#x153;It will be comparable to Interlochen (Center for the Arts) and many great facilities that are around.â&#x20AC;? â&#x20AC;&#x201D; Kirk Pinho

â&#x20AC;&#x153;My goal was to do 10 percent of the housing in the U.S. per year, and See Next Page

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it was then to do one-of-a-kind communities.” Johnson has accomplished that, not only in the Caribbean, but also in Southeast Michigan and across the rest of the state. There is the $400 million Turtle Lake development in Bloomfield Township featuring 112 estate home sites on 256 acres off Square Lake Road west of Telegraph Road. Victor International’s Heron communities — Heron Bay, Heron Point and Heron Woods — in Bloomfield Township sit on about 150 acres and have about 100 homes. Heron Bay was the first residential community where individual lots — not homes — sold for more than $1 million. The $50 million Copperwood community in South Lyon Township has 110 units sitting on about 100 acres, while the $100 million Parks at Stonewood community in Clarkston has 217 homes out of 300 units in the master plan sitting on about 100 acres. And what the company bills as what was then the largest land reclamation project in American history was its $1 billion development of the Village at Bay Harbor on the Lake Michigan shoreline, consisting of 1,200 acres that was once the site of a sprawling cement plant and mining operations. (See related story, Page 4.)

But in 1985, it was another development of his that was attracting his attention and that of Crain’s Detroit Business: The 125,000-square-foot Victor Center at 27400 Northwestern Highway east of Telegraph, construction on which was completed that year. Named after Johnson’s father, Victor Center is owned by Plante Moran Cresa LLC, the real estate arm of Southfield-based Plante Moran PLLC. Victor International also assembled 11 different parcels of land totaling 95 acres for the Victor Corporate Park at Seven Mile Road and I-275. “Victor Corporate Park pioneered the I-275 corridor in the 1980s,” said Johnson, a Michigan State University graduate. “I used to fly potential tenants up in a helicopter, sit at 144 feet (12 stories) and say, ‘This is your view from the top of your building.’ ” But still he ended up on Virgin Gorda not only because of how it keeps far away from the harsh Michigan winters, but also because it was part of a life-long dream. “My long-term goal was to do a development in the Caribbean, and I spent 10 years looking for the ideal location,” he said. “I bought it to make it the Nantucket of the west.” Dominic J. Moceri, who has known Johnson for 25 years and is partner of Auburn Hills-based residential developer Moceri Cos., called

Johnson a “highly imaginative developer who puts exceptional curb appeal in everything he does.” “He is forward-thinking with deed restrictions he places on his developments, which grant protection to those that invest in his communities,” said Moceri, whose company has developed 55,000 residential units in southeast Michigan, including the $137 million luxury Pinnacle subdivision in Oakland Township. “Someone that purchases a home there, or a builder who buys lots, they are going to be protected on what goes on, saying that next door to them will be of the same or greater quality.” “We don’t allow one-upmanship,” said Johnson, who employs about 200 people worldwide. “We don’t want people showing off how rich they are.” Moceri, who also called Johnson “gregarious” and “genuine,” said the spinal cord injury “only sped him up, not slowed him down.” “When you have bolts go in your head and you’re paralyzed from the shoulders down,” it changes your perspective on life, Johnson said. “I do yoga. I ride horses for freedom of movement. I have residual damage on my left side, but every day is the best day of my life. “And I work every day because I love what I do.” 䡲 Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

Wayne works to control ‘rogue spend,’ save $10M By Kirk Pinho kpinho@crain.com

Wayne County hopes to save $10 million per year by overhauling its procurement process. To do that, the Wayne County Commission would contract with a vendor to create a platform that staff would use to find the suppliers with which the county negotiated the best prices, terms and conditions, said Lloyd Jackson, director of communications for County Executive Warren Evans. Jackson said the system will control what the administration refers to as “rogue spend” — which is spending with suppliers whose rates have not been negotiated. It would take effect within 90 days of the commission awarding the contract. Hugo De Campos, an assistant professor of supply chain management at the Wayne State University School of Business who spent a decade in supply chain management at General Motors Co., said Wayne County is going to a model the private sector has been adopting for years. “We (at GM) achieved over 20 percent cost improvements by globalizing or ‘commonizing’ the horns” in GM vehicles in different

countries, he said. “Everyone was buying their own horns, so we picked the best supplier globally. The overhaul is part of Evans’ plan to address the county’s structural deficit, which has averaged $52 million in the past four years. Last week, he also proposed eliminating health care benefits for future retirees; a 5 percent pay cut for all employees except for police officers, prosecutors and nurses; and a change in health care options for retirees who retired before 2007. Wayne County’s pension system is just 45 percent funded and needs $910 million to become fully funded. If the county does nothing, in five years the accumulated deficit is expected to balloon to $171 million and the county could run out of cash by August 2016, according to Evans. With full implementation of Evans’ plan, he said, surpluses are expected at $78.5 million in 2015 (due to a transfer from the county’s Delinquent Tax Revolving Fund); $17.1 million in 2016; $5.5 million in 2017; $4.5 million in 2018; and $9.6 million in 2019. 䡲 Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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It may not be a GreatLand, but it could still become a different one for metro Detroit cable and Internet subscribers, even after market leader Comcast Corp. backed off on a $45 billion deal to acquire Time Warner Cable Inc. Analysts are wondering what other acquisitions are in the offing for the cable industry â&#x20AC;&#x201D; including for St. Louis-based Charter Communications, which was to co-own and operate GreatLand Connections Inc. and inherit Comcast customers in this region under a side deal to the Comcast buy. Thomas Rutledge, president and CEO of Charter, told analysts in an earnings conference call Friday that talks are ongoing with Advance/Newhouse, parent company of fellow cable operator Bright House Networks LLC . Charter had previously offered to buy Bright

House for $10.4 billion, but it was another of the industry side deals that were contingent on a Comcast purchase closing. â&#x20AC;&#x153;Obviously weâ&#x20AC;&#x2122;re disappointed that our transaction did not closeâ&#x20AC;Ś,â&#x20AC;? Rutledge said. â&#x20AC;&#x153;Our agreement with Advance/Newhouse requires that we (continue to) negotiate in good faith upon a termination of the Comcast transaction, and weâ&#x20AC;&#x2122;re doing that.â&#x20AC;? Rutledge declined to elaborate. Syracuse, N.Y.-based Bright House operates in Farmington, Farmington Hills, Livonia, Novi and Redford Township, according to its website. Charter operates in the Detroit, Flint, Grand Rapids, Marquette, Saginaw and Traverse City markets, according to its website. But for most local communities, Philadelphia-based Comcast is here to stay, even if the deal raised questions about how committed the

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BANKRUPTCIES

YOUR BACKBONE FOR BUSINESS F I BE R â&#x20AC;˘ COL OCATI ON â&#x20AC;˘ VOI C E â&#x20AC;˘ W I R E L E SS

company is to a community it has already tried to leave. â&#x20AC;&#x153;Community commitment has always been a big and well-known part of the values and culture of Comcast, especially here, and it was unknown what culture the new spinoff company might have. So the fact theyâ&#x20AC;&#x2122;re going to stay for the foreseeable future is a good thing ,â&#x20AC;? said Matt Friedman, a TV industry veteran and cofounder of public relations firm Tanner Friedman in Farmington Hills. Michelle Gilbert, vice president of public relations for the Heartland region at Comcast, said the company continued investing in its local network and its community relations programs while the deal was pending. In March the company awarded more than $120,000 in scholarships to 118 Michigan high school students under its annual Leaders and Achievers Scholarship Program. â&#x20AC;&#x153;From a community relations position, we operated from a businessas-usual perspective,â&#x20AC;? Gilbert said. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve continued to collaborate with nonprofit organizations, and when we started event planning we were operating from the assumption that the deal was going through. Yet weâ&#x20AC;&#x2122;ve continued to make that community commitment.â&#x20AC;? The proposed Comcast acquisition had called for the industry giant to shed more than 3 million subscribers nationwide, including most of southern Michigan. Customers in metro Detroit, Minneapolis and elsewhere were to belong to GreatLand Connections, which Charter would have managed and partly owned in a separate deal contingent on the purchase. But Comcast withdrew from the deal after government officials raised concerns on the effects for broadband Internet customers. Andy Winnie, owner of eBuy Media Inc. in Plymouth, said he followed reports of the Comcast offer and its withdrawal, but he never expected the deal to affect his company or other local media buyers. â&#x20AC;&#x153;The only thing that would have changed is the names, although maybe some upper management might have changed with it. But we would be working with more or less the same people,â&#x20AC;? he said. äĄ˛

866.460.3503

123. NET

The following businesses filed for protection in U.S. Bankruptcy Court in Detroit April 25-30. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation. äĄ˛ F&W Holdings LLC, 77 S. Main St., Mt. Clemens, voluntary Chapter 7. Assets and liabilities not available. äĄ˛ Kay Bee Kay Properties LLC, 1487 Hubbard St., Detroit, voluntary Chapter 11. Assets and liabilities not available. â&#x20AC;&#x201D; Dustin Walsh

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Taubman family to continue legacy of giving By Sherri Welch swelch@crain.com

There’s no question Al Taubman’s philanthropic legacy will live on. And some of the details on just how that will happen are starting to emerge. Educational and health care buildings and art museum galleries and wings across the campuses of several institutions, including the University of Michigan , College for Creative Studies , Lawrence Techno logical University, Harvard University’s Kennedy School of Government and the Detroit Institute of Arts, bear his name. Other legacies include an impact on medical research and literacy. The gifts Taubman made may one day lead researchers at the A. Alfred Taubman Medical Research Institute at UM to a cure for deadly diseases — or spur architectural students influenced by his curriculum input to create magnificent designs. Then there’s his work to support Reading Works , a Detroit-based nonprofit working to improve adult literacy in Metro Detroit. The philanthropy of Taubman, the real estate developer who died April 17 at 91, will be carried on through his children and the Bloomfield Hills-based Taubman Foundation. A “substantial amount of funds” is expected to move from Taubman’s estate into the foundation as affairs are settled, said Chris Tennyson, a spokesman for the family and Taubman Cos. for more than 30 years.

Taubman gifts Selected gifts to local institutions: 2014: $12.5 million to the University of Michigan for renovations to architectural college facilities.

For fiscal 2014 ended Jan. 31, the foundation disbursed a reported $850,079 in contributions and a few dollars more, leaving it with $157 in net assets/fund balances at year’s end after expenses. Taubman’s children — Gayle Taubman Kalisman, Robert Taubman and William Taubman — will serve as the foundation’s trustees, with his daughter as president. “He brought his children along with him in his philanthropy not just to get the benefit of their talents while (he) was alive, but to ensure there was continuity beyond that,” Tennyson said. “This next generation ... I think they have their own ideas ... desires and vehicle for ways they’ll give,” he said. “(Taubman) wanted it that way. “He believed very strongly that along with monetary support come dedication, creativity and commitment that his children can bring to the table as they go forward with their own loves and interests.” Taubman graduated from Pontiac High School and entered UM, but his freshman year was cut short by a call to serve in the Army during World War II. He returned to UM on the GI Bill to study art and architecture but transferred to night school at Lawrence Tech closer to home after proposing to his college sweetheart.

He didn’t finish at Lawrence Tech either, though he was awarded an honorary doctorate in architecture from the Southfield-based university in 1985. “But he had great love and appreciation for both institutions and credited both with changing his life, giving him all sorts of tools to be successful,” Tennyson said of Lawrence Tech and UM. In 2010, Taubman organized a graduate-level course at LTU, “Real Estate Practice: Land Development.” He was the lead lecturer and also brought in guest lecturers with international reputations, among them Michael Graves. During his lifetime, Taubman’s largest gifts went to UM. Taubman was present just days before his death at the UM ribboncutting ceremony for the renovation and expansion of the Alfred Taubman College of Architecture and Urban Planning facilities. He made a lead gift of $12.5 million to the project last year, following his $30 million gift 15 years earlier to the college — the single largest gift ever made to an architecture program in the U.S. at that time, UM said. Taubman also made gifts to the University of Michigan Museum of Art and UM health care institutions. But his largest gift to the university was a $100 million pledge in 2007 to

fund the A. Alfred Taubman Medical Research Institute, the largest donation in the history of the Univer sity of Michigan Health System at Mary Sue the time. He had Coleman: “I so made gifts toadmired ... his ward that pledge intentional in 2007, 2008 engagement.” and 2011, said Judy Malcolm, senior director executive communications in UM’s Office of University Development. In all, with his gift to fund renovations of the architecture buildings last year, Taubman donated $154.7 million to UM for medical research, health care and the arts. At the time of his death, Taubman had been serving as vice chairman of UM’s $4 billion Victors for Michigan campaign and co-chairing the campaign council for the health system’s portion of the campaign. He was also co-chairman of the Taubman Institute’s leadership advisory board with his daughter, who will continue in that role, Tennyson said. “One of the things I so admired about Alfred was the degree of his intentional engagement in every single project he got involved with,”

said former UM President Mary Sue Coleman, who stepped down last July after 12 years. He talked with UM scientists all the time about what they were working on, Coleman said, with a particular interest in research around neurodegenerative diseases. “He was a pretty demanding task master, but he made us better,” Coleman said. In the early 1980s, he became a major proponent of UM’s Replacement Hospital Project, serving on the building committee. His business savvy saved UM millions of dollars when he urged the administration to buy steel while prices were down. Taubman’s children already have many civic leadership roles. Robert, who is chairman, president and CEO of Taubman Centers Inc. , serves on the boards of Beau mont Health System and Cranbrook Educational Community, the South eastern Michigan Council of Govern ments and on the University of Michigan Investment Committee. William Taubman, COO of Taubman Centers, has served as chairman of New Detroit for several years, Tennyson said, noting the city of Detroit was one of Al Taubman’s first loves. 䡲 Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

Detroit, we’re In Your Corner.

2013: $11 million to Lawrence Technological University for the Taubman Complex and Marburger STEM Center. 2009: $15 million to the College for Creative Studies for the A. Alfred Taubman Center for Design Education. 2007: $100 million to the University of Michigan Health System to establish the A. Alfred Taubman Medical Research Institute. 2006: $3 million to Wayne State University toward planning and construction of the Damon J. Keith Center for Civil Rights. 2004: $4 million to Lawrence Technological University for the construction of the A. Alfred Taubman Student Services Center. 2001: $50 million to the Detroit Institute of Arts, a gift made jointly with the late Josephine Ford and Richard Manoogian, chairman emeritus of Masco Corp. 1999: $30 million to UM for the A. Alfred Taubman College of Architecture and Urban Planning.

Summer 2015 ■

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CRAIN’S DETROIT BUSINESS

OPINION These cuts needed

f Wayne County can avoid a trip to bankruptcy court to repair its broken balance sheet, it’s a win for residents and taxpayers. Last week, Wayne County Executive Warren Evans unveiled his “recovery plan” with proposed cuts not terribly draconian: A 5 percent wage reduction for most county employees, elimination of health care benefits for future retirees, and a new graduated pension eligibility scale for early retirement. Yes, these are tough cuts for those affected, but the savings improve the county’s ability to invest in things like roads and new technology because higher bond ratings translate into cheaper borrowing costs. Restructuring is a tall order; the county’s pension fund is only 45 percent funded, the unfinished jail on Gratiot Avenue is a liability with a $200 million bond to repay. The accumulated deficit has surged to more than $157 million. These financial facts should be clear to county commissioners and to labor unions that represent county employees. This isn’t easy work, but if it means the county can avoid state intervention and bankruptcy, it is work that must be done.

Kudos for convention When the American Society of Association Executives agreed in 2009 to hold its high-profile annual meeting in Detroit, it was more than a small leap of faith. The win was based on the promise that Cobo Center improvements would be complete and the city’s local restaurant and hotel scene would improve. As it turns out, Detroit has over-delivered. About the only thing the city still needs to do to attract more big-time conferences, according to ASAE CEO John Graham, is add more hotel rooms. And with occupancy rates climbing and a handful of boutique hotels in the works, more rooms may be on the way. The ASAE meeting coming to Detroit in August is a big deal. It’s considered the “Super Bowl” of association conferences. About 6,000 executives will be in town, and the conference has a long-standing history of leading to follow-up conferences held by the individual association heads who use the conference as a way to “test-drive” locations for future meetings. So the impact of this one event could be an immediate $10 million in spending this summer and could easily top $500 million over the next 10 years with future conferences that result. Kudos to Larry Alexander, CEO of the Detroit Metro Convention and Visitors Bureau, for bagging this win.

MARY KRAMER

Publisher mkramer@crain.com ast-moving — and fast-chang-

F ing — bills that allegedly would

reform Michigan’s no-fault insurance laws pit insurance companies against health care providers. But hospitals and rehab programs battling for dollars to support long-term care of people injured in automobile accidents have tapped their most powerful advocates — their patients. People with brain and spinal injuries, in wheelchairs and on ventilators, have been lobbying fiercely for Michigan’s gold standard of coverage. In other states, whether some things are covered depends on whether an injured motorist was at fault — or if he or she has a good lawyer. If passed, the bills would set price controls on services, including residential programs that offer many services Medicare wouldn’t pay for. And it would shift responsibility ultimately for long-term care from the

Money seems to be the driver for no-fault change auto insurer to a new state catastrophic care fund. The existing Michigan Catastrophic Claims Association fund has a piggy bank balance north of $18 billion to cover all current and future claims. That seems like a huge sum, but consider that the costs of caring for severely injured people who are “ventilator dependent,” could cost up to $1,000 a day, says Bill Buccalo, president of Livonia-based Rainbow Rehabilitation Centers. The organization operates residential, outpatient and home care services across Southeast Michigan. For people with brain injuries that lead to neurological and behavioral issues, care costs can be $500 to $700 a day. That’s eye-popping, even for some of us who have had relatives in intensive care units for non-auto related emergencies — or who have helped parents consider their longterm retirement options that could eventually include assisted living and nursing home care.

Lawmakers who favor change say hospitals have milked the system for years by charging triple their normal fees to patients covered by auto insurance. And certainly, the fees vary wildly. Oakland County Executive L. Brooks Patterson, who was injured in an auto accident in 2013, thinks lawmakers are rushing things. He also told Detroit Free Press columnist Mitch Albom that the key to the speed is insurance companies wanting to tap the $18 billion Michigan Catastrophic Claims Association fund, which was built on premiums all motorists pay. There’s a rule of thumb in journalism: When you’re trying to figure out the “why” of something, follow the money. That seems to be the case here. Catch Mary Kramer’s take on business news at 6:10 a.m. Mondays on the Paul W. Smith show on WJR AM 760 and in her blog at www.crainsdetroit.com.

TALK ON WEB Re: Kroger to acquire Hiller’s Markets in metro Detroit

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

Glad to hear my two favorite stores are merging . I hope that Kroger is committed to upholding Hiller’s commitment to customer service and Michigan products.

fixed incomes. Got income? Got house.

Wondering

258779

I am so disappointed to hear this. I am an avid Hiller’s shopper and appreciated their quality meats, produce and all the unique specialty goods. Kroger may have some lower prices, but they definitely don’t have the quality and selection.

Good intentions, but a recipe for disaster . Just accept the fact that many of these loans will never be re-paid.

Jeanette Schneider

Re: New mortgage program will help homebuyers fix city homes This is awesome . A disabled veteran such as myself could move to Detroit and buy a house in a nice neighborhood and fix it up. This program is great for people with

John md

With this new program now I am seriously considering moving back into the city. BigWill

Re: Moroun, city to swap parkland for second span effort Wow, this is quite a different pic ture than a few years back with all the legal disputes. Duggan seems to

get things done. John

Re: No-fault bill: $1 billion to be pulled from health care? The proposed bill does not provide any long-term benefit. Further, it does not provide an answer to where the funds will come from after the $545,000 claims fund is exhausted. The system in place is not broken. People are getting services necessary for quality of life after a catastrophic injury. If this passes, we don’t have a vote, and people with catastrophic injuries will not have the options that exist today. In addition, state and federal financial resources already beleaguered will dwindle further. We will end up paying the shortfall through taxes. We pay premiums and hope to never use the benefits. When we do, shouldn’t the carrier and the MCCA be there for us? Scott Silver

Tough decisions have to be made in Wayne County KEITH CRAIN I am not sure that Warren Evans knew what he was getting into as far as the financial situation for Wayne County. His predecessors, from all outward appearances, left the county in near bankruptcy. Last week, the county executive announced some measures that are sure to get him lots of disgruntled employees in the county but ap-

plause from the residents there. Desperate measures require tough, stern measures to try and counteract the financial neglect of the past few decades. These problems facing the county didn’t appear overnight but have been accumulating for years. Rather than try to continue to cover up the financial mess, Evans has chosen to try and address the chaos before we, the residents of Southeast Michigan, would be forced to face another bankruptcy. It’s not pretty, and it’s going to be

painful to a lot of employees of Wayne County who have benefited from lax financial controls and now must pay the piper. These are the kind of issues that should have been addressed over decades. Simply giving benefits to employees that Wayne County cannot afford — and doesn’t have the money to pay for — has brought the it to the brink of financial disaster. We are lucky to have elected an official who is willing to take the very unpopular task of putting the county’s financial house in order.

It’s simply too soon to bring back Kevyn Orr for another round of bankruptcy. It is becoming far too common in America for municipalities to promise benefits that the communities simply can’t afford and letting someone in the future worry about how they’re ever going to pay for them. It is a lot easier to make promises to employees and unions that might not be anything but a liability on the financial books for a couple of decades than the alternative — facing the unpopular decision that the

municipal government simply can’t afford to accept those liabilities that will eventually bankrupt the government. Wayne County is by no means alone in the United States. But on the heels of the Detroit bankruptcy, it’s obvious that something had to be done, popular or not. Evans didn’t create this financial mess, but he is left with the unpopular task of cleaning it up. The county is doing what has to be done. It’s not easy, but it sure is necessary. 䡲

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Public-private partnerships a needed path to project funding OTHER VOICES Joe Neussendorfer Joe Neussendorfer is an affiliate member of the American Society of Civil Engineers, a member of the Engineering Society of Detroit and a member of the American Bar Associationâ&#x20AC;&#x2122;s forum on construction law.

he National Governors Associa-

Ttion Center for Best Practices, in

partnership with the National Conference of State Legislatures and the Center for Excellence in Project Finance at the American Association of State Highways and Transportation, recently held a workshop to assist state teams exploring how public-private partnerships, often called P3s, might be used to improve transportation infrastructure at a time when taxes alone will not provide all of the money needed for such a daunting task ahead. What is a P3? A definition is a single private-sector or a group of privatesector partners who provide upfront financing for a capital project, and designs and builds the project based on criteria from a public entity, such as a state highway department, then operates and maintains the project for a specified time in exchange for a combination of user fees or other government transfer payments. There have been many discussions and some movement regarding the use of P3s in Michigan, primarily in the governorâ&#x20AC;&#x2122;s office and the Michigan Department of Transportation. But so far the average Michigan citizen does not have background information about the concept. This needs to change. There have to be discussions by all legislative and taxpayer stakeholders so there is an understanding that P3s offer a great alternative to just raising taxes. There are not enough tax dollars to go around. Not just transportation infrastructure, but all state capital projects, will have to be a combination of tax dollars and private resources. Everyone has to contribute to the effort. Moving forward At least two states, Arizona and Pennsylvania, are moving forward with major initiatives. The Arizona Department of Transportation has established an Office of P3 Initiatives, using best practices and lessons from other states as the basis of building a strong P3 program. The Pennsylvania Department of Public Transportation has established an Office of Public-Private Partnerships. In Michigan, Gov. Rick Snyder has appointed Joseph Pavona as a special adviser for P3s. In an email to me, Pavona wrote, â&#x20AC;&#x153;Michigan has a statewide P3 vision that fosters economic development by addressing our stateâ&#x20AC;&#x2122;s infrastructure deficit and leveraging public and private assets.â&#x20AC;? He went on to write that P3 efforts are coordinated through the executive office and, in turn, coordi-

nated through state agencies that have experts on various subjects. When I asked if there are any legislative structures or state statutes in place regarding P3s, he said: â&#x20AC;&#x153;Our current efforts have not required any sort of legislative action. We may reach a point where we will need to work with our partners in the Legislature to expand opportunities for the stateâ&#x20AC;&#x2122;s residents to benefit from P3 initiatives.â&#x20AC;? MDOT Director Kirk Steudle told me: â&#x20AC;&#x153;We actually have quite a bit of P3 work going on currently. We also have some older projects that are close to a P3. We have a partnership with Meijer

for carpool lots; we did two design, build, finance projects, which helped us really move into other innovative contracting options. â&#x20AC;Ś â&#x20AC;&#x153;One is currently on the street for a 15-year contract for freeway lighting in Southeast Michigan, all 14,000 lights for design, build, finance, maintain and operate. There also is the Detroit Intermodal Freight Terminal, where we have over half the funds provided by the railroads and the rest by the state.â&#x20AC;? Clear on concept The Council of the Great Lakes Region has an exciting P3 initiative

underway. It recently announced it will perform an in-depth study of policies and laws governing P3s in other regions of the United States and Canada to identify best practices for the private sector to design, build, finance, operate and maintain public infrastructure. CEO Mark Fisher said that the hope is â&#x20AC;&#x153;to create a blueprint for the regionâ&#x20AC;? to follow. I believe the public and the Legislature should get involved with this concept. Perhaps there is a forward-thinking state senator or representative who would like to get the ball rolling with legislation

that would create a P3 authority to look at alternatives to financing not just transportation infrastructure but all state capital projects. In addition, Snyder should consider sponsoring a statewide P3 conference with Business Leaders for Michigan and other private-sector stakeholders to discuss ways that the private sector can assist Michigan and its limited resources in addressing future funding needs. As the insightful Crainâ&#x20AC;&#x2122;s Detroit Business editorial on Feb. 23 stated: â&#x20AC;&#x153;The good news: The spotlight on the P3 model may lead to its use in other projects.â&#x20AC;? äĄ˛

ITâ&#x20AC;&#x2122;S NOT HOW WELL THEY WORK FOR US. ITâ&#x20AC;&#x2122;S HOW WELL THEY WORK FOR YOU. Eric W. Dietz

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Presbyterian Villages, Homestead form JV By Sherri Welch swelch@crain.com

A nonprofit senior housing developer has teamed up with an athome care provider to provide those services to seniors throughout the state. Presbyterian Villages of Michigan and Homestead Home Health Care Inc. have formed a joint venture. The new limited liability company, yet to be named, will enable Southfield-based PVM to expand further into in-home and senior community-based care and services. Meanwhile, the venture allows Northville-based Homestead to expand statewide. The joint venture company will serve an eight-county area that includes Southeast Michigan, Genesee County, and the Saginaw and Petoskey areas. For-profit Homestead will serve as the general manager, and a representative of the nonprofit PVM will chair its governing board, the companies said. “We see this as an area of tremendous unmet needs,” said PVM President and CEO Roger Myers. “We know seniors by and large want to remain in their homes. ... We think through this joint venture we can meet part of that demand.” Southfield-based PVM is oper-

Menu of services Homestead Home Care Inc. and Presbyterian Villages of Michigan expect to offer the following services:

Private duty home health and personal care services, such as medical assistance.

Coordination of skilled care, endof-life care, physician and pharmacy services, care transition programs and telehealth programs. Meal preparation and nutritional/dietary monitoring. Personal shopping and services such as errands, housekeeping, laundry, home repairs, maintenance, lawn care and snow removal. Outings,wellness and other activities. ating on a budget of about $65 million for 2015, Myers said. Carl Simcox, owner of Homestead, said the projection is the joint venture will have $500,000 to $1 million in new business the first year and continue to grow substantially after that. “We expect that we will be hiring quite a few people,” Simcox said, with nurses and others providing direct in-home care for private pay customers and those approved for Medicaid

waiver-funded care. The joint venture expands on a contractual relationship between the two agencies. For five years, RogerMyers: ”We Homestead has see this as an area been providing of unmet needs.” services to residents of PVM’s Village of Westland senior community, Myers said, adding that inspired a strong sense of trust in the quality of Homestead’s services. The joint venture will serve not only PVM senior living communities, but the broader community as well, Myers said. PVM serves more than 4,300 seniors and operates 25 senior living communities across the state. It also provides community-based health care and other services for seniors living near its two PACE (Program of All-Inclusive Care for the Elderly) Southeast Michigan centers in Detroit, operated with Henry Ford Health System. The centers provide a nationally recognized comprehensive adult day care and health services program for seniors living in surrounding communities. Homestead and its affiliates provide services for more than

2,000 clients, including home care, facility management of independent and assisted living communities, care coordination and client advocacy. The joint venture is the latest example of a senior living community organization expanding into in-home and community-based services. As Crain’s reported in January, Chelsea-based United Methodist Retirement Communities paid $1.3 million to acquire a 50 percent stake in Glacier Hills Home Care Inc., gaining entry into home health care. The deal created a new company, Caring Partners Home Health Inc. Through the deal, Glacier Hills was able to expand its Ann Arbor home health care subsidiary outside of Washtenaw County, its president and CEO, Ray Rabidoux, said at the time. The plan is to expand Caring Partners’ services — such as chores — to support seniors staying in their homes, he said, spurred by changes in Medicaid policies to expand reimbursements of in-home senior services. Like PVM, United Methodist operated PACE centers for the elderly in Jackson, Ypsilanti and Lansing before the acquisition. Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

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Oakland County predicted to add 48,500 jobs in next three years By Kirk Pinho kpinho@crain.com

Oakland County will add 48,500 jobs in the next three years, University of Michigan economists project, 38 percent of which will be high-wage professional and business services. Testing lab (5,700 jobs) and engineering services (4,800 jobs) will make up the bulk of the knowledge-economy jobs, according to George Fulton and Don Grimes, both of the UM Institute for Research on Labor, Employment, and the Economy. “Along with company management, which adds more than 1,000 jobs over the next three years, these industries form the core of the white-collar auto industry,” Fulton said. Here’s how the rest of the job gain projections for Oakland add up by industry: Health care, 12 percent Leisure and hospitality, 11 percent Manufacturing, 7 percent Construction, 6 percent Financial activities, particularly real estate, 5 percent Wholesale trade, 5 percent “On the whole, Oakland’s recovery continues to be supported by a U.S. economy that expands through 2017 and by increasing Detroit 3 vehicle sales, as well as by the county’s strong economic fundamentals,” Fulton said. Fulton and Grimes said last week at the Oakland County Economic Outlook luncheon that the county has added close to 80,000 jobs in the past four years and that 87 percent of the jobs lost from mid-2000 to the summer of 2009 have been replaced. This year, the county’s unemployment rate will match the national average of 5.3 percent and fall to 5 percent in next year and 4.6 percent in 2017, according to the re- L.Brooks port. In addi- Patterson: “When tion, the you get below 5 average real percent unemploywage is ex- ment, you’ve pected to reached full emgrow 4.6 per- ployment.” cent from 2014-17 to an annual average of $58,266. Said County Executive L. Brooks Patterson: “When you get below 5 percent unemployment, you’ve reached full employment, and we’re not that far off.” This year’s report was unveiled at the Detroit Troy Marriott in Troy. Kirk Pinho: (313) 446-0412 Twitter:@kinkpinhoCDB

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SPECIAL REPORT DUSTIN WALSH Reporter’s Notebook WEB: crainsdetroit.com/walsh TWITTER: @dustinpwalsh

MACOMB COUNTY

County eyes ways to boost shorelines In 2012, Macomb County Executive Mark Hackel and local governments committed to boost the county economy by addressing obstacles to waterfront redevelopment on Lake St. Clair and the Clinton River. Called the Blue Economy Initiative, the coalition set forth a plan to redevelop abandoned marinas, improve and grow local beaches and develop a marketing strategy for the county’s shorelines. The goal is to increase accessibility that has been long cut off by private fishing and boating groups. “We have a tremendous freshwater advantage,” Hackel said. “Over the years, our waterfronts, Lake St. Clair and the Clinton River, had developments that blocked public access. We’re now starting to see that change.” The 430 square miles of freshwater in Lake St. Clair alone has a $1.7 billion economic impact to the region, but increased public access could bring many more dollars. Fishing and recreational boating and paddling, provide the greatest opportunity, said Gerrard Santoro, program manager of land and water resources for Macomb County. “Many people don’t know that Lake St. Clair happens to be one of the national’s best fishing lakes,” Santoro said. “None of its 19 species are stocked by the Department of Natural Resources. and it’s really putting us on the map across the nation.” Lake St. Clair was named the best bass fishing lake in the U.S. by Bassmaster Magazine in 2013. To increase access to boaters and anglers, communities in Macomb County are acquiring former marinas. New Baltimore is assessing the purchase of Schmid Marina to transition the property into a public dock rental and a possible recreation facility to give boaters access to its downtown restaurants and other attractions. Harrison Township and St. Clair Shores are assessing similar opportunities, Santoro said. The initiative, with the Clinton River Watershed Council, is publishing a guide to paddling sports on the Clinton River called the Blue Water Trail in late May. “A lot of local governments are refocusing their attention to the river as a resource instead of a dumping ground, like it was in the past,” Santoro said.

[PHOTOS BY LARRY PEPLIN]

One majorMacomb County employer, General Motors Co.,plans to create up to 2,600 jobs as part ofan expansion ofits Tech Centerin Warren (above).Defense contractors such as BAE Systems (above,inset) remain one ofthe top county employers.And with a growing population,residential building permits have surged (belowleft).

Macomb makeover Old drivers (manufacturing) join new (tech) to restart county’s economy By Dustin Walsh dwalsh@crain.com

hen the Warren City Council last month approved a 12-year tax abatement for a major expansion and renovation of General Motors Co.’s Tech Center, it marked an economic development win for the county. A big one. The $419 million expansion could create up to 2,600 jobs. GM is already the city’s largest taxpayer. If the company invests as big as expected at the Tech Center, that helps move ahead a trend of manufacturing and research and development investment in the county. Manufacturing investments in the county totaled $561 million between 2011 and 2014, according to an economic forecast released this year by Macomb Community College President

Jim Jacobs. While parts of Macomb County remain bedroom communities for a blue-collar workforce, its tech and services sectors — like Jim Jacobs: Found those GM Tech Center $561 million in jobs — continue to grow. iinvestments Meanwhile, Macomb’s workforce and population base are changing as well. For one thing, its population is growing. But challenges to the county’s economic evolution include a skills gap between available jobs and workers trained to fill them, and the ebb and flow of contract wins and sales for big employers — such as automakers and their suppliers, defense contractors, health care providers and professional service firms.

A unified force One of the drivers of an improved regional perception of Macomb County is a realignment at the top, with a new county governance structure, plus more cohesion in the business community. Reducing the amount of commissioners to 13 from 26 and electing a single county executive in 2011 allowed Macomb to construct a single economic development strategy and streamline efforts, county and Mark Hackel: “We business leaders say. “People and businhave something special here.” esses are starting to realize we have something special here,” Macomb County Executive Mark Hackel said. See MACOMB, Page 12

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MACOMB, from Page 11: It’s not the ’90s, but county’s economy is good to grow “We’ve improved our image. We’ve seen major investments, and the county is really now setting itself up for future opportunities we weren’t getting before.” Recent investments led to a nearly 45 percent reduction of unemployed residents since 2010, lowering the unemployment rate from 12.4 percent in November 2010 to 6.8 percent in November 2014. But the jobs figures don’t tell the whole story, Jacobs said. Although there has been a pickup of more than 17,000 manufacturing jobs, with the 2014 tally at 68,656, that’s still 35.5 percent below 2000. “None of this means the jobs growth is going to be anywhere near where it was in the height of the 1990s,” Jacobs said. “We’re not going to re-create those jobs, but the jobs (created) are better jobs with better pay and requiring more education.” Craig Sherman, CEO of the Clinton Township-based staffing and recruiting firm Omega Talent LLC, said the hiring equation has flipped. “Where there used to be more

candidates than jobs, we now have far more job orders than qualified candidates to fill them,” Sherman said. “The good candiCraig Sherman: dates are workNow more jobs than ing, so we have to job candidates identify those candidates and sell them on the opportunity.” To handle the influx of new orders, Omega Talent, which employs 12, is setting up a program to help recruit new graduates through higher education or skilled trades programs, Sherman said. “Right now, we spend a lot of time with lateral hires,” he said. “But as the demand keeps growing, we see ourselves going in the direction of finding fresh employees.” The defense industry, another Macomb County staple, also foresees a steady demand for talent. Despite a steep reduction in orders because of the winding down of

wars in Iraq and Afghanistan, the U.S. Army Tacom Life Cycle Management Command in Warren remains one of the top employers in the county. Tacom employs 7,500 and supplies as much as 65 percent of the systems, soldier support and ground vehicles to brigade units stationed across the globe, said Maj. Gen. Gwen Bingham, who assumed command of Tacom last year. Tacom, a division of the U.S. Army Material Gwen Bingham: Tacom “busy with Command , contributes $2.6 bila capital ‘B’ ” lion locally, including expenditures on payroll, taxes and contracting. In 2014, Tacom executed $5 billion in contracts, with $1.6 billion going to Michigan companies. For the 2015 fiscal year, Tacom projects $6.2 billion in contracts, Bingham said. Those figures are down sharply

“None of this means the jobs growth is going to be anywhere near where it was in the height of the 1990s. ... But the jobs (created) are better jobs with better pay and requiring more education.” Jim Jacobs, Macomb Community College

from 2008, when the unit executed $30 billion in contracts. “If a soldier eats it, wears it, drives it or shoots it, we oversee that,” Bingham said. “While our numbers have gone down with workload, we are busy with a capital ‘B,’ underscored, bold. There’s not a single thing that happens inside our gates without our partners outside the gates, and that means a great economic impact to the region.” Bingham also said new orders are on the horizon, which translates into more business to the Macomb County and regional economies. Population gains

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The promise of new jobs and a county on the rise has contributed to some small gains in the number of residents. Population grew 2.3 percent, to 860,112, from April 1, 2010, through July 1, 2014, according to the U.S. Census Bureau. That’s higher than the population change in Wayne County, which shrank 3.1 percent during that time, but lower than Oakland County’s 3 percent growth. However, Macomb County outpaced its peers in residential building permits in 2014, according to data from the Southeast Michigan Council of Governments. Macomb issued 1,680 new residential building permits — single family, apartments and condominiums — in 2014, up from 1,205 in 2012. Oakland County issued 1,405 permits in 2014, according to SEMCOG. At First State Bank , home purchase transactions are up significantly year over year, said Eugene Lovell, president and CEO of the 11-branch community bank based in St. Clair Shores. “We anticipate 2015 to be our best year for Eugene Lovell: mortgage activiFirst State expects ty since the fia big mortgage year. nancial crisis,” Lovell said. “Also, reflecting continued improvement in housing values, we have seen strong growth in home equity lend-

ing.” Mortgage work is up across the region, Lovell said, with many in Macomb moving northward within the county. Plus, newcomers to the county are settling in southern Macomb. First State Bank’s loan portfolio increased 9.5 percent in 2014, to $374 million from $344 million. Most of the increase came from commercial and industrial lending, Lovell said. The flood of new residents in the county is raising all ships, said Terry Hamilton, president of St. John Ma comb-Oakland Hospital in Warren and Madison Heights. “There’s no question that Macomb County is a great place to be right now,” Hamilton said. “More people have insurance, people are moving back and investment activity is good. The general effect is: Let’s move ahead.” St. John Macomb-Oakland employs more than 4,000 in the county with an annual payroll of $150 million. The hospital spends $100 million annually on equipment, technology and services and serves 30 percent of the county’s residents, Hamilton said. That doesn’t mean St. John hasn’t consolidated some Macomb operations. The former St. John North Shores Hospital in Harrison Township closed in 2010 after outpatient services were transferred. Frank Henke, executive partner in the Clinton Township office of Grand Rapids-based Warner Norcross & Judd LLP, said the rapid rate of expansion and investment in Macomb County has led to an increased need for sophisticated business services. Warner Norcross plans to expand from 12 attorneys to as many as 30 in the coming months in Clinton Township to take advantage of new opportunities, Henke said. The same goes for UHY Advisors Inc. in Sterling Heights. The accounting firm hired an additional 20 people in 2014 and expects to increase headcount as much as 15 percent in the next 12 months, said Tony Frabotta, chairman and CEO. “Businesses in the county are demanding a lot more professional services of a more technical nature,” Frabotta said. David Girodat, president and CEO of Fifth Third Bank Eastern Michigan, said the increased affluence of the region is presenting the bank its own opportunity for growth. Fifth Third expects to grow from 6 percent market share in metro Detroit to 10 percent in the next few years and expects to reach that goal in Macomb County before the neighboring counties, Girodat said. “We’re no longer slicing the pie into smaller pieces in Macomb County,” he said. “There’s enough growth to allow all of us to grow.” Disparity across communities

But Macomb County is not withSee Next Page

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SPECIAL REPORT: MACOMB COUNTY

[PIERRETTE DAGG/CRAIN’S DETROIT BUSINESS] From Previous Page

out its challenges. That’s because the uptick in jobs and income isn’t uniform across the county, Jacobs said. “Clearly, there is a considerable difference, economically, between the northern end and the southern end of the county,” Jacobs said. “While younger families are moving into the southern communities, those incomes tend to be lower than those previously living there, and their needs are different. How do we integrate the interests of both groups?” Communities such as Eastpointe, Roseville and St. Clair Shores haven’t seen as quick of a recovery as communities farther north, Jacobs said. Household income in Macomb County has dropped sharply since before the Great Recession, surpassed only by Wayne County. David Girodat: Median houseFifth Third expects to hold income add market share. dropped to $52,978 in 2013 from $71,979 in 1999, a decrease of 26.2 percent, according to the U.S. Census. During the same period, household income dropped 23.9 percent in Oakland County and 28.5

percent in Wayne County. County Executive Hackel doesn’t see the gap as a problem. “A lot of our growth in population in the southern communities is from the city of Detroit,” he said. “They are backfilling our residents as they migrate north, and there’s nothing wrong with that. “These residents are finding affordable homes, and we’re happy to provide opportunities for everyone at every economic level. In fact, it’s critical we supply it because all of our futures are linked.” Another source of population growth is from immigrants. Those from Iraq and from India account for the largest increase, according to data from the U.S. Department of Homeland Security. Between 2003 and 2011, 18,260 Iraqis and 16,372 Indians came to Macomb County. That immigrant population could become a boon for the county, Jacobs said. “Most of the new Americans are coming with skills which will be important for the future growth of the county — in particular, entrepreneurial skills,” he said. “Most of the (immigrant population) are part of families with young children, so there is a future generation growing up in Macomb County.” 䡲 Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

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Kosch Hospitality takes over operation of Blossom Heath Inn By Sherri Welch swelch@crain.com

Rochester-based Kosch Hospitality LLC has assumed management of Blossom Heath Inn , a city-owned banquet and events center in St. Clair Shores, under a new 10-year contract. The revamped venue is part of the company’s overall growth strategy for this year. Kosch took over operation of the center from Oak Management , which had managed the venue for more than 30 years until Kosch won the contract in January. During the first quarter, Kosch secured the liquor license for the property and invested nearly $200,000 in interior renovations to the historic banquet center on Jefferson Avenue between Nine Mile and 10 Mile along the city’s Nautical Mile. Blossom Heath Inn opened in 1911 as a roadhouse. During prohibition, it was an “infamous speakeasy,” Kosch says on its website. Evidence of basement bars and hidden walls still exist. Interior renovations were aimed at taking the building back to its roots, but with modern conveniences, said Gordie Kosch, who coowns Kosch Hospitality with his brother Gary. “Little to no resources had been put into the facility for decades, and it showed,” he said, noting that his

wife, Julie, and sister-in-law led the renovations. The restoration included new carpeting and paint, lighting upgrades, original hardwood restoration, ballroom dome restoration, new high-tech audiovisual equipment, a new bar and bar room, restoration of the patio, new furniture and, in the bar area, a wall mural by local artist Dan Melendez, said Kosch, 56. Exterior renovations and landscaping are also underway. A May 8 grand opening fundraiser, including automobiles from the 1920s and ’30s, is sold out. Kosch, which began as a tavern and restaurant operator in Sterling Heights in the early 1980s, today manages onsite dining operations for several area companies and parks, ranging from the Huron-Clin ton Metroparks to Troy Community Center, Walsh College, Monroe County Community College and private and public golf and country clubs. It also caters events and operates restaurants in northern Michigan, including Alpine Tavern & Eatery in Gaylord, Trout Town Tavern & Eatery in Kalkaska, and The Boathouse near Traverse City. The company employs 400 and posted $12 million in revenue last year, its owner said. “We were up last year about 15

percent, and we’re projecting about the same (increase) for this year,” Kosch said, noting the northern Michigan operations have done particularly well. At Blossom Heath, Kosch Hospitality hosted a handful of events as the renovations were progressing, he said. And it’s booked about two dozen weddings and an equal number of other events. He projects the new venue will gross about $300,000 this year from events, but that’s less than half of what he is projecting for 2016 from the venue: $800,000 Both event catering and contract dining are up, said Ryan Angott, corporate marketing director at Troy-based Continental Services. As employers bring on more people, food sales are rising and corporations are hosting more events. The number of private events and amount spent on them are also picking up as the economy improves, he said. The cost of the average wedding in Michigan has increased in the past three years from about $27,000 to about $31,000, Angott said. Like Kosch, Continental is projecting the market will increase again this year. “People are loosening their belt a little bit; it’s nice to see and definitely a trend,” Angott said. 䡲

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PEOPLE

SPOTLIGHT

ON THE MOVE Send news items and photos to cdbdepartments@crain.com

ARCHITECTURE Jerry Attia to principal, Rossetti Associates Inc., Detroit, from director of marketing development and project management, SORG Architects, Washington, D.C. Also, Kirk Phillips to architectural design lead, from director of hospitality design, Hamilton AnderAttia son Associates Inc., Detroit, and Mike Shea to senior project manager, from senior project manager, Hamilton Anderson Associates Inc.

CONSULTING David Kauppila to principal, Fulcrum Edge Inc., Bloomfield Hills, from globPeople on the Move announcements are limited to management positions.Email cdbdepartments@crain.com.Include person’s name,newtitle,company,city in which the person will work,former title,formercompany(ifnot promoted from within) and formercitywhere the person worked.Photos are welcome; we cannot guarantee theiruse.

al manufacturing engineering director, Thermal Systems Division, Delphi Automotive plc, Troy.

FINANCE Jim Jahnke to director, Blue River Financial Group Inc., Bloomfield Hills, from managing director, Palisade Capital Management LLC, Fort Lee, N.J.

Jahnke Vince Callaghan to manager, Blue River Financial Group Inc., Bloomfield Hills, from CEO, Business Problem Solvers, Berkley. Also, Scott Sharp to manager, acquisition support group, from CEO, S. Lawrence & Co. LLC, Flint; and George Petrulis to managing director, acquisition support group, from managing director, McLean Group LLC, Chicago.

MANUFACTURING Paul DiLisio to senior vice president of automotive and industrial original equipmentsales, Dayco LLC, Troy, from director of sales and marketing, automotive division, SKF USA, Northville.

GEORGE PHIFER: Director, Huron-Clinton Metroparks George Phifer has been named director of the Huron-Clinton Metroparks. As director, he serves as CEO and is responsible for day-to-day operations of the Huron-Clinton Metropolitan Authority. Phifer had been deputy Phifer director and COO of the Huron-Clinton Metroparks. In 2010, Phifer was appointed executive secretary to the Board of Commissioners, serving as a staff officer of the agency while maintaining his responsibilities with the Metroparks Police Department as police chief, a position he has held since 2008. Phifer, 51, worked for nearly 20 years at the Pontiac Police Department. He retired from the department as a captain in 2004. He earned his master’s degree from Eastern Michigan University, a bachelor of business leadership from Baker College and an associate of applied science degree in criminal justice from Oakland Community College. He is also a graduate of EMU’s Police School of Staff and Command.

CALENDAR THURSDAY Population Healthcare Management: Strategies That Work. 7:309:30 a.m. Modern Healthcare. Speakers include Joe Mullany, CEO, Detroit Medical Center; Bruce Muma, chief medical officer, Henry Ford Physician Network; and Thomas Simmer, senior vice president and chief medical officer, Blue Cross Blue Shield of Michigan. Maureen McKinney, editorial programs manager, Modern Healthcare, moderates. MGM Grand, Detroit. $95. Contact: Jenna Trautman, (312) 649-5238; email: jtrautman@ modernhealthcare.com; website: modernhealthcare.com/detroit. Collaboration for Power and Profit Breakfast and Symposium II. 8:30-11 a.m. The Black Advantage III Business Conference Biz To Biz Match. Scheduled panelists: Eric C. Williams, program director, Entrepreneurship and Business Law at Wayne State University; Brian Ellison, principal of Intersection Consulting Group LLC.; the Rev. Elreta Dodds, author and publisher; Paul K. Rozier, “serial entrepreneur,” re-engineering strategist, and business educator. Greater Grace Temple, Detroit. Tickets: $25, collaborationforpower.eventbrite.com.

FRIDAY CEO Business Roundtable Luncheon. Noon-2 p.m. Michigan Association for Female Entrepreneurs. A discussion with Camille Jayne, president of

Crain’s 2015 M&A Awards

the GEM’s garage.

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. The event 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.

The 2015 Tigers. 11:30 a.m.-1:35 p.m. May 13. Detroit Economic Club. Speakers are David Dombrowski, president, CEO and general manager; and Brad Ausmus, manager, Detroit Tigers. MotorCity Casino Hotel, Detroit. $45 DEC members, $55 guests of members, $75 nonmembers. Ticket sales end at noon May 12. Contact: (313) 963-8547; email: info@econclub.org; website: econclub.org.

The Jayne Group, on personal and corporate branding and marketing strategies. Bastone Brewery, Royal Oak. $35. Contact: Tonya McNealWeary, (866) 490-6233, email: info@mafedetroit.org.

APACC 14th Annual Dinner Celebration. 5:15 p.m.-midnight May 16. Asian Pacific American Chamber of Commerce. Keynote speaker is Bill Imada, chairman and chief collaborative officer, IW Group . MGM Grand Detroit. Tickets $200 members, dinner only ($350/couple); $350, dinner and VIP reception ($650/couple); $250 dinner only for nonmembers ($400/ couple); or $400 dinner and reception for nonmembers ($700/couple). Registration ends May 8. Contact: Erin Mclin, (248) 430-5855; email: erin@apacc.net; website: apacc.net.

UPCOMING EVENTS Learn About High-Profile Redevelopments. 11:30 a.m.-2 p.m. May 12. Commercial Real Estate Women, Detroit. Program features a panel discussion about the Detroit Packard Plant, Michigan State Fairgrounds, Village of Bloomfield and M-1 Rail. Gem Theatre, Detroit. $45 for CREW members and $65 for nonmembers. Lunch is included; parking will be available in

Calendarguidelines. Visit crainsdetroit.com and click “Events” near the top of the home page.Then, click “Submit Your Events” from the drop-down menu.Fill out the submission form,then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

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16 ACQUISITIONS & MERGERS InfuSystem Holdings Inc., Madison Heights, a provider of infusion pumps and related services for the heath care industry, announced it has closed the acquisition by its subsidiary of substantially all of the assets of Ciscura Holding Company Inc., Alpharetta, Ga., and its subsidiaries. Website: infusystem.com. Great Expressions Dental Centers PC, Bloomfield Hills, has acquired a dental practice at 30260 Cherry Hill Road, Suite B, Garden City. Website: greatexpressions.com.

CONTRACTS Rubicon Genomics Inc., Ann Arbor, a provider of kits to improve the performance of genomic analytical platforms, has extended to three years its clinical supply agreement with Agendia, Amsterdam, for use of its TransPlex whole genome RNA amplification technology. Websites: rubicongenomics.com,. agendia.com. ZipLogix, Fraser, a real estate technology company, announced contract expansions and extensions with three East Coast associations: Greater Capital Area Association of Realtors, Rockville, Md., and Washington, D.C.; Greater Hartford Association of Realtors, Hartford, Conn.; and Roanoke Valley Association of Realtors, Roanoke, Va. Website: ziplogix.com.

DEALS

offices in Birmingham and Naples, Fla. Website: ckcagency.com. Ally Financial Inc., Detroit, and Mitsubishi Motors North America Inc., Cypress, Calif., announced that Ally will become the preferred financing source for Mitsubishi Motors in the U.S., replacing the brand’s captive finance company, Mitsubishi Motors Credit of America Inc. Websites: ally.com, misubishicars.com.

& DETAILS Submit news to cdbdepartments@crain.com

Nederlander Detroit, part of Nederlander Organization Inc., New York City, has renewed its relationship with Fiat Chrysler Automobiles (FCA US LLC), Auburn Hills, and its Chrysler brand to sponsor the 2015-16 Broadway in Detroit season. This the fifth consecutive theater season the automaker has sponsored. As part of the sponsorship, the latest Chrysler vehicles will be on display at the Fisher Theatre, Detroit. Website: broadwayin detroit.com. Talmer Bancorp Inc., Troy, has retained Assets International LLC, Southfield, as its asset recovery firm. Websites: talmerbank.com, assetsinternational.com. Robert Dresner, owner of Focus Realty Inc., Southfield, and Lawrence Quick, owner of Reliable Realty Group LLC, Royal Oak, have agreed to collaborate to provide services to the multifamily sector of investment real estate. Telephone: Dresner, (248) 877-9033, or Quick,

(248) 200-6181. AVL Powertrain Engineering, Inc., Plymouth Township, has been awarded a $17 million project by the National Advanced Mobility Consortium to collaborate research and development work with the U.S. Army Tank Automotive Research, Development and Engineering Center, Warren, for an opposed piston, two-stroke single cylinder advanced combat engine technology demonstrator. The work will be performed at AVL’s Plymouth Township facility. Website: avl.com. CKC Agency, Farmington Hills, a full-service public relations and media services firm, has added five new accounts to its client roster: National Kidney Foundation of Michi gan, Ann Arbor; City of Auburn Hills; KLA Laboratories Inc., Dearborn; Motor City Comic Con 2015 in Novi presented by Motor City Conventions, Farmington Hills; and Beth Rose Real Estate & Auctions, headquartered in Maumee, Ohio, with

Altair Engineering Inc., Troy, a provider of computer-aided engineering and computing software and services announced that Airbus Defense and Space, a division of Airbus Group NV, has joined the Altair Partner Alliance, bringing Strength2000, for performing strength and stability analyses to meet aerospace standards. Websites: altairalliance.com, airbusdefenceandspace.com. American Society of Employers, Livonia, a trade association that provides people-management information and services to Michigan employers, has contracted with McLean & Co., London, Ontario, a division of Info-Tech Research Group Inc., to provide human resources services to member organizations. Websites: aseonline.org, hr.mcleanco.com.

EXPANSIONS PolyFlex Products Inc., Farmington Hills, a provider of custom reusable trays, returnable containers and other packaging products, an-

nounced it has established PolyFlex Products UG, Dusseldorf, Germany. The new firm will provide sales, engineering, technical support and manufacturing capabilities to customers in Germany and the European Union and U.S. companies with German affiliations. Website: polyflexpro.com. Con-Way Freight, Ann Arbor, a less-than-truckload carrier and subsidiary of Con-Way Inc., announced the opening of its newest service center in Joliet, Ill. The $12 million, 41,600-square-foot freight facility will serve as a local hub from which the company will provide daily commercial freight pickup and delivery services throughout the greater Joliet region. Website: con-way.com. Attorneys Title Agency LLC, Farmington Hills, a real estate title insurance company, has opened an office at 125 Ottawa Ave. NW, Suite 350, Grand Rapids. Telephone: (616) 965-3330. Website: atatitle.com.

MOVES Display Group, an event management company, has moved from 1700 W. Fort St., Detroit, to 6235 Concord Ave., Detroit. Website: displaygroup.com. Dr. Gary Burnstein Health Clinic has moved from 90 W. University Drive, Pontiac, to 45580 Woodward Ave., Pontiac. Telephone: (248) 309-3752. Website: garyburnsteinclinic.org.

NAME CHANGE

LENDING

TREASURY MANAGEMENT

BANKING

BUSINESS SERVICES

The Magic Stick, Detroit, part of the Majestic Entertainment Complex, owned by Dave Zania, has been renovated and opened as Populux Detroit, an electronic music venue, coowned by Zania and Amir Daiza. Website: populuxdetroit.com.

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Gravity Software LLC, Southfield, an online cloud business management software company, has launched Gravity Software. Website: go-gravity.com. Autism Alliance of Michigan, Southfield, has launched MiNavigator, a personalized resource and case management program specific to Michigan and provides up-to-date information for services, support and resources. Website: autismallianceofmichigan.org. ManagedWay, Southfield, a provider of cloud services and collocation, has launched the Noction IRP (Intelligent Routing Platform) software, an Internet optimization system engineered by Noction Inc., Sunnyvale, Calif. The new technology is designed to direct customer traffic to the best performing route. Websites: managedway.com, noction.com. Deals & Details guidelines. Email cdbdepartments@crain.com. Use any Deals & Details item as a model for your release, and look for the appropriate category. Without complete information, your item will not run. Photos are welcome, but we cannot guarantee they will be used.

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New bike shops in paceline for Detroit openings By Gary Anglebrandt Special to Crain’s Detroit Business

Welcome to Detroit Bike City. This spring, five new bike shops are slated to open within greater downtown Detroit, starting this week with Detroit Bikes 1216 and its grand opening inside The Albert building in Capitol Park. It will be the first retail location for Detroitbased bike manufacturer Detroit Bikes LLC. “We can’t wait for people to see it,” said Detroit Bikes President and founder Zak Pashak. “Detroit Bikes 1216 is beautiful and evokes the city’s rich cycling history.” When the 1,200-square-foot store opens on May 8, it will carry only Detroit Bikes’ two lines of bicycles, both of which sell for $699, as well as a line of accessories. Meanwhile, in Corktown, Shayne O’Keefe is struggling against construction delays to Metropolis Cycles LLC before prime cycling weather. The 2,300-square-foot store, located across Michigan Avenue from Slows Bar BQ , will carry new bikes in the range of $200 to $2,000, from brands such as Bianchi and Raleigh, but no used bikes. It will also feature accessories and parts as well as full repair services. Downtown Ferndale Bike Shop, which has been open for six years, plans to open a Downtown Detroit Bike Shop in Midtown as soon as ongoing construction is finished. An opening planned for April 1 was postponed, and owner Jon Hughes

[ARA HOWRANI]

Detroit Bikes founder Zak Pashak: “Detroit Bikes 1216 is beautiful and evokes the city’s rich cycling history.” now hopes to open June 1. This will be Hughes’ second go at downtown Detroit. His first attempt, a shop in Eastern Market, lasted the summer of 2013, but the long winter, nonfunctioning heat and bathrooms — and a landlord who wanted to raise rents amid such conditions — led to a short stay, he said. His 1,400-square-foot shop will be at Cass Avenue and Peterboro Street in the same building where The Peterboro, a planned Chinese restaurant, is scheduled to open this fall, as well as a tattoo shop and craft beer business. Bike prices will range from $300 to $10,000. New and used bikes will be in stock, along with accessories, parts and clothing. Full repair

services will be offered as well. Hughes is upbeat about the downtown market, despite the Eastern Market episode. “It’s growing so fast, if I could have been down there last summer I would have been there,” he said. In fact, he signed a 10-year lease. Other plans are underway for Eastern Market to get some bike retailers. Wheelhouse Detroit LLC , which runs a bike rental and retail spot on the RiverWalk, plans to open a location in the Market after the extension of the Dequindre Cut walkway is finished. And Motorless City LLC is planning a custom bicycle retail and repair store this spring on the East Fisher Freeway service drive, behind the building that houses Zef’s Coney Island Restau rant and Supino Pizzeria. Motorless City will offer retail and repair in the front of its 1,500-squarefoot store and do custom metalwork, visible through windows to shoppers, in the back. Bikes will retail from $300 to $1,200. It also will do a pickup and delivery repair service. Business partners Chris Kiesling and Al Schlutow planned to open a year ago, but their first real estate deal fell apart. Kiesling couldn’t help but laugh at how a year later he finds himself with so much company. “It’s hilarious. ... Fast forward, and now everyone is opening,” he said. While bicycles are undoubtedly more popular now than they have

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KROGER, from Page 3: ‘No way a small grocer like Hiller’s would be able to compete’ fered this opportunity,” Homco said. “We’re working closely, hand in hand with Jim Hiller.” CEO Jim Hiller said that as he looks to the future of the supermarket business, it belongs more to companies like Kroger than it does to companies like his. “There’s no way a small grocer like Hiller’s would be able to compete pricewise on national brands and private labels,” he said. Kroger has succeeded in doing what virtually no other grocery has, Hiller said. “While they bring the pricing advantages of a national grocery store, they are intimately involved and supportive of local growers,” just as Hiller’s is. “What do I say to my customers? I’ve got a Kroger (Plus) card, and so should you.” The decision to sell was one his family as a whole made, he said. In striking the deal, “we had in mind the future and security of our employees, and as a family, the ability to kind of untie ourselves from our business which has been so integral for our family for 75 years.”

Sid Hiller opened the downtown Detroit butcher shop that started it all in 1941. Ten years later, he opened the family’s first grocery store in Berkley, Jim Hiller said. Fast forward a few decades, and the company reported 2013 revenue of $168 million, ranking No. 100 on Crain’s 2014 list of the largest 200 privately held companies in metro Detroit. The Hiller’s stores in West Bloomfield, Ann Arbor, Northville, Plymouth, South Lyon and two in Commerce Township will become part of Kroger’s Michigan division in July when the deal is finalized. Kroger said it will assume the lease for the Hiller’s store at 3010 Union Lake Road in Commerce Township, but it will close the store there, given that its own recently built store and fuel center is across the street. Kroger had been looking to enter the Commerce Township area even prior to the deal with Hiller’s, said Communications Manager Ken McClure, who was a COO of Hiller’s before joining Kroger in January 2014. It had already submitted a site

plan for a marketplace format location near the second Commerce Township Hiller’s location, prior to the Hiller’s deal, he said, noting, “the plan at this point is to maintain that Hiller’s location.” The Hiller’s locations will be rebranded as Kroger stores and merge into Kroger’s Michigan division, adding to its current 123 stores and 64 fuel centers in the state. The stores, which range from 30,000 to 70,000 square feet, will fit nicely with Kroger’s format, given that its average Michigan division store is 55,000 square feet, Homco said. Staffing situation Kroger plans to interview and hire as many of Hiller’s 800 employees as possible, Homco said. There are 900 job openings right now across the company’s Novibased Michigan division, “and there will be more because of our growth,” she said. The Hiller’s acquisition enables Kroger to obtain locations in popular, dense markets at grandfathered lease rates, said Emily Todebush, client strategist at Southfield-based retail consulting firm JGA Inc. in an email. “I think Hiller’s was an interesting choice for Kroger to acquire, in that it fits nicely into the Kroger model, but helps them expand into some

specialty and ethnic food markets that Kroger hasn’t seemingly been too successful in penetrating.” Hiller’s has been a leader in the “upscale” grocery market specializing in their meats, seafood and specialty food items such as organic, healthy products, said retail consultant Cindy Ciura, principal of CC Consulting LLC in Bloomfield Hills. Many customers shopped Hiller’s specifically for those items and did general shopping at stores like Kroger, Meijer and Wal-Mart, she said. “As Kroger has been expanding and inching into Hiller’s upscale markets — Commerce, for example — there is a huge emphasis on the healthy section of the store called Simple Truth.” With the rising popularity of this Kroger brand, the chain’s continued emphasis on meat and seafood special pricing and new, expanded organic areas in the produce departments, “it became harder and harder for Hiller’s to compete as a smaller grocer without the huge buying power that Kroger has.” Retaining customers How does Kroger plan to retain the customers who were loyal to Hiller’s as Kroger customers? After Crain’s posted news of the acquisi-

tion plans online Friday, some readers weighed in with concerns about whether the quality of specialty goods and produce could be maintained under the Kroger flag. But Kroger has a very fresh reputation and also sells many local products, like Hiller’s, Homco said. “The ethnic piece is something we hope to learn from Hiller’s. “Hopefully, we’ll do a good job of transitioning those stores.” Kroger plans to do some minor updates to the Hiller’s stores, largely on the front-end systems since it uses more technology, Homco said. The Northville store may need a little more remodeling, she said, and may take a little longer to reopen after ownership transfers. Kroger will spend $150 million on new stores, remodels and expansion in the Michigan division this year, the most it’s ever spent in a single year, Homco said, noting it sees opportunity in the Michigan market to fill those “pockets of void.” Aside from the site plan it submitted in Commerce Township, Kroger has site plans pending for a store in Royal Oak at 12 Mile Road and Stephenson Highway, and another in the Grosse Pointe-to-Roseville shopping area, McClure said. 䡲 Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

SAKTHI, from Page 3: Supplier hires ex-offenders

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Department of Corrections to provide parolees with certificates of employability, detailing which educational programs they completed, conduct history and work record. The law also established legal protections for employers who hire ex-offenders. The corrections department spends, on average, $30 million annually on re-entry services for parolees, which include a mandatory GED program if they did receive a high school diploma as well as training services, said Chris Gautz, the department’s public information officer. “As a department, we have been designing programs that encourage the input of specific employers who have specific needs for skills their future employees need to have,” Gautz said. “We also work with local and regional partners to identify emerging sectors so that we can position our parolees for jobs in those fields by training them for those types of jobs while they are incarcerated.” Gautz previously worked as Crain’s Lansing correspondent. The corrections program offers classes in business education, auto tech, building trades, custodial maintenance, food tech, horticulture, optical, welding and machine tooling. Julie Fream, president of the Troy-based Original Equipment Sup pliers Association , said the organization isn’t aware of other suppliers making a formal commitment to hire parolees, but does see this as

part of the growing social progressiveness of the industry. “This is part of the changing demographics of our business Julie Fream: A community,” trend toward “social Fream said. “As commitment” more millennials — which see social commitment as instrumental in choosing a company — come into the workforce, we’re going to see this more and more.” Sakthi’s desire to hire ex-offenders stems from its rapid growth in Southeast Michigan, as well as supporting the community, Verma said. The auto supplier received a $1.5 million grant in 2012 to establish the Detroit location, a former ArvinMeritor plant. The state will make the final payout for that grant in June, the Michigan Economic De velopment Corp. said. Sakthi entered the North American market in 2012 after acquiring the former ArvinMeritor plant on West Fort Street. The supplier acquired the plant for $7.6 million, according to real estate information database CoStar Group. The Michigan Strategic Fund awarded Sakthi with a $1.5 million grant toward the plant. Now, Sakthi is doubling down in Detroit with the planned $31.9 million expansion. The project, supported by a $3.5 million performance-based grant

from the MSF, is expected to create 350 new jobs, the MEDC said last week. Sakthi is expanding to produce its aluminum castings,which it will supply to North American and transplant tier-one suppliers and automakers. Sakthi plans to shift 90 percent of its aluminum castings work, which is currently done oversees, to its Detroit plant. The city of Detroit is also planning to recommend a Renaissance Zone tax exemption for the expansion, as well as a property tax abatement. Sakthi is also planning to redevelop the abandoned former Southwestern High School through a newly created joint venture. Verma said the plans are not solidified, but the project will include retrofitting the school to include office space, an educational aspect tied to the community and warehousing space. Verma said $10 million will be spent on the redevelopment, but that figure could shoot up to $30 million if Sakthi sees opportunity for warehousing products tied to the construction of the New International Trade Crossing Bridge near its site. Preparation work for the $2.1 billion publicly owned bridge project, funded by the Canadian government, has already begun. “We see so much opportunity in Detroit,” Verma said. “We have good support, are finding good people and are finding the success to help rewrite this city’s history.” 䡲 Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

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[PIERRETTE DAGG/CDB]

GRIDLOCK, from Page 1: Congestion tarnishes Macomb County’s ‘Golden Corridor’ gone” on Hall Road, Sowerby said. “Some of that is because of the intense competition, and some of that is because if you want to go out for a casual dinner, not everyone wants to fight the traffic. M-59 is optional if you’re going out (to eat). “It’s the yin and yang of being on a powerful corridor. Merchants don’t like the traffic, but they love the people.” The average daily traffic count on M-59 near M-53 — the busiest section of the road, according to the Michigan Department of Transporta tion — is 102,700 vehicles. While that falls short of the 128,300 vehicles that travel I-696, about nine miles due south, M-59 offers many more entrance and exit points than its controlled-access cousin. And that means one thing: slow traffic. In terms of moving traffic smoothly, sometimes Hall Road works and sometimes it doesn’t, said Robert Hoepfner, director of the Macomb County Department of Roads. “It probably carries more traffic at rush hour than it was designed for,” said Hoepfner, whose agency does not have authority over the state road. “I would prefer not to travel it on rush hour. If you’re not in rush hour, it’s a great road.” The most sluggish section seems to be from Garfield Road to just east of Romeo Plank Road, Hoepfner said. “The cause of this, in my opinion, (is) there are a lot of traffic signals there,” he said. “When you build large traffic generators, this is what you get.” Solutions are limited, since there’s little room for widening, he said. Road improvements? Get in line MDOT, which does traffic light timing studies every couple of years, recognizes the issues and is readying to take a stab at improving traffic flow. But businesses and drivers are in for a wait before they get any major relief. While road crews have been patching pavement since the beginning of April, the next major reconstruction project in the congested corridor won’t begin until 2017. That’s when MDOT expects to begin a $30 million effort to rebuild the two-mile stretch of Hall from Delco Boulevard, just east of M-53, to Hayes Road in both directions. MDOT expects to finish the design phase of the project, which will begin in June, in December 2016. It’s too early to determine whether rebuilding that part of the road, which is four lanes in each direction, will take one or two years, said Colin Forbes, the MDOT projects and contracts administration engineer who oversees work in that

Development continues on east edge Hall corridor The Macomb County portion of the M-59 corridor extends all the way from Dequindre Road to just east of I-94, with the bulk of the development and congestion concentrated between Van Dyke Avenue and Romeo Plank Road. Communities along that stretch include Utica, Sterling Heights and Shelby, Macomb and Clinton townships. While much of the Hall Road corridor is fully developed, areas on the eastern edge are still filling in. For example, development continues at Chesterfield Corners, a shopping center north of Hall and east of Gratiot Avenue. Kicking off in 2001 with construction of Wal-Mart, the development now includes Menards, Bob Evans, Hampton Inn, Holiday Inn and other businesses. Colin Forbes, the Michigan Department of Transportation projects and contracts administration engineer who oversees work in that section of Macomb County, recalls that just a few decades ago Hall Road was mostly farmland. “It’s just amazing, the last 25 years, how it has built up,” he said.

section of Macomb County. When it’s done, it should improve traffic flow, he said. “Reconstruction is going to help with mobility,” Forbes said. “We’re going to look at pretty much everything. If we can improve right turn lanes, median lanes — we’re going to look at all of that.” MDOT decided to tackle that stretch of Hall as part of its regular evaluation of roads it maintains. The agency determined patchwork fixes would no longer be cost-effective. “Every year, we review our road conditions, countywide and regionwide,” Forbes said. “The road is showing some significant deterioration over the last five years. There comes a point when it doesn’t make sense to spend significant dollars on repairs.” The reconstruction of Hall from M-53 to Hayes could lead into a future phase of road improvement, but MDOT hasn’t made any definite plans, Forbes said. That $36 million phase would involve the two-mile stretch from Hayes to Romeo Plank.

“We’re going to be reviewing the need to increase capacity,” Forbes said of the span, which carries 60,000 vehicles a day. At Garfield Road, headed east, Hall decreases from four lanes to three. MDOT is considering adding a fourth lane there. The agency also would look at improving traffic signal timing. MDOT will design the expansion at the same time as the M-53 to Hayes project, Forbes said. But the second project will have to overcome several hurdles — including completion of an environmental impact assessment and getting input from business owners who would be affected by a major reconstruction project. The project’s biggest challenge, though, will be MDOT’s ability to secure funds. With a crumbling infrastructure and a Tuesday ballot measure to increase road funding uncertain to get voter approval, the state is in a cash crunch. “Hayes to Romeo Plank is not in

our five-year plan now,” Forbes said. Alternate routes? In the near term, MDOT is focusing on its night and weekend pavement repair program, which is expected to end in mid-July. Crews are working on both sides of Hall between Elizabeth Road and I-94. MDOT is conducting the work from Friday evenings to 5 a.m. on Mondays to minimize the impact on traffic, Forbes said. Because the section of road is east of Hall’s restaurant district, business owners are less impacted by construction, he said. Bottom line, there is no easy way to make a major fix to gridlock, said Mike Labadie, a transportation engineer and group manager in the Farmington Hills office of Fleis and VandenBrink . The Grand Rapidsbased company is a consultant for MDOT, township government, developers and others. Creating a northern I-696, a below-ground freeway using service drives to reach businesses, would be prohibitively expensive, he said. “(And) think of the impact on the businesses that rely on passerby traffic,” he said. Other solutions could be to create limited-access lanes near the median for express traffic or to create higher-capacity, alternate routes north or south of M-59. With limited funds and serious road safety problems, though, the state’s first priority won’t be improving traffic flow, he said. “When you’ve got bridges falling down, maybe you better fix those first,” he said. A mature market The corridor has been taxed by decades of population growth, and

the resulting development boom of the 1990s and early 2000s. The county’s population increased from about 788,000 in 2000 to an estimated 860,000 in 2014 — a 9.1 percent increase, according to U.S. Census figures. Sowerby, the broker, has helped move that growth along. In the past year, he has done three major deals on Hall: 䡲 Crest Automotive Group’s sale of its dealership between Groesbeck Highway and Gratiot Avenue to Causley Automotive Group LLC , which now operates Causley Hyundai Mazda. 䡲 Scottsdale, Ariz.-based Stonegate Properties’ sale of 6.5 acres of land between Card Road and Elizabeth Road in Clinton Township to All Pro Motors LLC, of New Jersey, for the planned All Pro Nissan dealership. 䡲 Sale of the closed Stu Evans Lincoln Mercury dealership near Romeo Plank in Clinton Township to Scottsdale, Ariz.-based Spirit Capital LLC. The site now is home to an LA Fitness gym. Because the M-59 corridor is largely mature, much of the development going forward will be repurposing tired properties. “What you’re seeing now is what I just did with LA Fitness,” Sowerby said. “You don’t see any big bang going on, but you see a lot of stuff getting recreated.” Only about three or four large parcels remain undeveloped in the corridor — including a 9.2-acre site east of the Causley dealership. Sowerby has the site listed. That means further development isn’t likely to ratchet up the gridlock much more, Sowerby said. “The good news is, I don’t think the traffic is going to get any worse.” 䡲

[LARRY PEPLIN]

The average daily traffic count on M-59 nearM-53 – the busiest section ofthe road – is 102,700 vehicles.Furthercomplicating traffic: There are many exit and entrance points.

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NANOVERE, from Page 3: Chemist’s coating defies elements, doubles company revenue apply Nano-Clear to passenger ship lifeboats from the world’s major cruise lines, such as Cunard , Royal Caribbean, P&O Cruises and Holland America , Choate said. More cruise lines are interested. Additionally, Southport, Conn.based industrial shipper Principal Maritime Management LLC will use Nano-Clear on its fleet of Princemar crude oil tankers, he said. On land, Chicago-based GATX Corp. is among the rail car companies using Nano-Clear to preserve thousands of tanker cars crossing the country. “The environment on a train, with all the chemicals they’re carrying, is pretty harsh,” Choate, 49, said. Japanese elecThomas Choate: tronics giant “It’s not magic pixie Toshiba Corp. has dust or snake oil. It used Nano-Clear is real science.” for factory safety applications, according to Nanovere’s client list. Off the shelf: $269 a gallon Such clients are fueling the small company’s growth: Nanovere’s revenue in 2014 was $1.3 million, Choate said, and he’s estimating $2 million for this year and $4 million for 2016. He predicts it will keep doubling annually as the company expands its production space and adds more clients. Some revenue is derived from the licensing of polymers for coatings produced by other companies such as Nippon Paint , Choate said, but most comes from the sale of Nano-Clear. It retails for $269 a gallon but is sold to distributors in bulk at wholesale prices. For the cruise line industry, it takes 1 to 2 gallons of Nano-Clear to coat a standard commercial lifeboat, Choate said. Lifeboats can be coated in 24 hours and air-dried, he said, meaning they can do a ship’s inventory of boats in about a week. (Two lifeboats at a time is typical while a vessel is in dry dock.) Today’s typical cruise ship, with several thousand passengers and crew aboard, has anywhere from 18 to 26 lifeboats. They usually seat 150 people (and for anyone doing the math, the ships have dozens of large inflatable life rafts to complement the traditional lifeboats). Marine paints and finishes were a $430 million business domestically in 2010, according to the most recent data available from a U.S. Cen sus Bureau’s industrial report via the Washington, D.C.-based American Coatings Association. The products are a niche in the $5.3 billion coatings industry, the association said. The vendors using Nano-Clear sing its praises. “Look at any cruise ship lifeboat, and its orange is badly oxidized. It’s the same problem for any gel coat surface,” said Dave Ashley, director of Nanotech Marine Services, based in the English port of Southampton. The British office of cruise giant

How Nano-Clear works

of dollars. There are far more oxidized surfaces than new products.”

Nano-Clear is an anti-oxidant industrial top coat that fights the corrosive effects of long-term exposure to air, sunlight and chemicals. The application also is extremely hard, helping resist chipping and abrasion.

From lifeboats to oil rigs

The material is very dense, has low viscosity, deeply penetrates the surface, and exceeds automotive OEM standards. Without revealing his scientific trade secrets, founder Thomas Choate said the key to Nano-Clear’s protective and restorative properties comes from his lab work reducing the size of the polymers within the coating’s molecular makeup, along with its ability to react to the surface to which it adheres. “We start with the architecture of the polymer,” Choate said. What sets the product apart from similar coatings is that it can be applied directly to already oxidized surfaces, not just new ones. Since most surfaces in need of protection already are out in the world, that’s a huge potential market.

Carnival Corp. & plc hired Ashley’s company last year to solve the lifeboat oxidation issue for the company’s vessels based in the United Kingdom. Nanotech Marine specializes in high-end finishes for yachts and boats, but a conversation between Ashley’s son and a Carnival executive whose boat was being refinished eventually led to a successful test of the Nano-Clear coating on the liner Queen Elizabeth’s lifeboats during Mediterranean cruising. Nanotech had previously searched for a product that would provide long-lasting oxidation resistance, and eventually settled on Nano-Clear after experimented with it, Ashley said. “We were quite skeptical at first. It’s not an easy product to apply,” Ashley said. “Many boat yards don’t allow spray finishes.” Instead, they had to perfect a method of applying the coating with rollers. Nanotech opted to use NanoClear for the test on the Queen Elizabeth, a Carnival vessel operated by its upscale Cunard Line. “We applied a patch on one of the boats they suggested, and we left it with them. After four months, they observed the Nano-Clear coating working, while the surface around the test patch was already starting to fail and show oxidation,” Ashley said. Everyone involved was pleased, and the market opened for Nanotech and Nano-Clear. “They’ve indicated they want all of the lifeboats done. They want Queen Mary 2 done early next year,” Ashley said. “Once we got those guys on board, we found it would be much easier to penetrate the market.”

Dental roots One of Nanovere’s major selling

[NANOVERE TECHNOLOGIES]

Dave Ashley,director of Southampton,England-based Nanotech Marine Services, inspects a lifeboat from the cruise ship Queen Victoria after it was coated with Nano-Clear from Brighton-based Nanovere Technologies. points for refinishing products like lifeboats is gloss protection. In the case of lifeboats, keeping the finish bright and shiny is a safety necessity. The gloss loss for Nano-Clearcoated surfaces over 10 years is just 4 percent to 5 percent, Choate said, while other coatings result is a 30 percent to 40 percent loss of shine over that time. “It’s not magic pixie dust or snake oil. It is real science, real chemistry, validating by companies around the world,” Choate said. It’s also science that Choate started learning about early in his career — very early. As a teenager, Choate got his start in R&D by creating dental materials such as crowns and dentures, and eventually created a dental supply and manufacturing firm. “I saw gaps in the dental industry from a materials standpoint,” he said, adding that as a teenager he was creating teeth for the Detroit Pistons and then for professors while a student at the University of Michigan. He later sold his dental company to Pennsylvania-based American Dental Supply and used undisclosed the proceeds — along with his own assets, but no borrowing — to launch Nanovere in 2003. “I took everything that I could and didn’t borrow from anyone, and changed my lifestyle to reduce expenses, and I put everything into focusing full time on the research and development,” he said. He used more than cash from the dental business to create Nanovere; he said his experience in creating distribution channels and creating relationships gave him a road map for the new company. He also used his knowledge of surface protections from dentistry and applied them to industrial surfaces. “I took from the concepts of the dental industry, including high abrasion resistance, and developed the materials (for the coatings company),” he said. After launching Nanovere and spending years experimenting with polymers, he eventually developed a series of industrial coatings in conjunction with BASF, Bayer MaterialSciences and Alcoa. Choate said he spent Nanovere’s first decade mostly concentrating

on research and design before moving into selling the products. “In the last three years, we focused on taking our own intellectual property and presenting it to the marketplace,” he said. Including Choate and his wife (Katie, vice president of operations), the company had eight employees. Choate said he’s the primary chemist, and the manufacturing processes are kept secret. Nanovere has a handful of investors who own 20 percent of the company after buying in for about $1 million, Choate said. He owns the remaining 80 percent, and said he’s tried to buy out his investors, but they refuse because of the rapidly improving financial success of the company. Some of Nanovere’s other industrial coatings are manufactured under license in China for the Asian market, but Nano-Clear is solely produced in Brighton at the firm’s 3,000-square-foot facility. It can make about 1,000 gallons a day. The plan is to find a 6,000- to 10,000-square-foot building in 2016 because of increased production needs, Choate said. Because the company is small, and demand is growing, the business plan is to eventually find a global company that needs to fill a gap in its product line, he said. “As we scale, we’ll partner with leading paint formulators,” Choate said. As revenue increases, he intends to add a CEO to handle the business aspect of Nanovere, he said, because he knows running the company isn’t what he does. “For now, I’m focusing on being the CEO, running the company, building out the revenue,” he said. “But at the end of the day, my core competency is in the laboratory. I know I’m not the guy long term. I have a family. I want work-life balance. I’m not the guy to bring this to a billion dollars.” Choate said he’s open to a sale, but it’s premature now. He would sell once revenue has increased significantly. “It’ll take far more revenue,” he said. “The value of this tech in the global marketplace is in the billions

What broke the market open for Nanovere was getting into that cruise ship market. Lifeboats on cruise ships typically are re-polished or repainted every four months, Choate said, but the vessel owners are paying to shine a material that’s not designed to last in the sun — increasing maintenance lifecycle costs. “The problem was that the polish only lasts a few months. The material is not designed to have long-term UV resistance,” Choate said. Oxidation is the enemy. In simple terms, oxidation is the when a surface is exposed to oxygen and over time the interaction causes a loss of electrons — causing rust, spoiled fruit, or the dulled surface of a lifeboat hull. Sunlight hastens the reaction. Ship and boat hulls are exposed not only to salty sea air, but relentless sunshine, especially cruise ships in the bright Caribbean. Hence, the glossy orange (or yellow) and white hulls of lifeboats — intended to be sharp colors that contrast against the darker sea water to visually aid rescue — soon fade. And that’s a costly problem for ship owners, especially those hauling hundreds of thousands of passengers for whom safety is a priority. “It affects appearance and safety. A lightly oxidized boat is not as bright,” Choate said. “Everything needs to be immaculate on that ship.” The coating eventually could be used to seal the entire hull of ships, Choate said. The 26 lifeboats of the Carnivalowned Azura, sailing under the P&O Cruises brand, are getting Nano-Clear treatments this year. It’s not an overnight revenue windfall, however. Cruise ships typically do a full re-fit, including freshening the lifeboats, every three to four years, Ashley said. Nanotech Marine has an upcoming contract to coat the 18 lifeboats from the Queen Victoria, the sister ship of the Queen Elizabeth and Queen Mary 2. Germany’s Fassmer GmbH & Co. KG , whose maritime services include manufacturing commercial lifeboats, intends to use Nano-Clear (via Nanotech Marine’s services) on an order of 64 lifeboats for a cruise line in 2017-18, Ashley said. Other shipping lines and even oil rig firms have been calling his office to ask about Nano-Clear, he added. “Really, Tom’s product is the only coating quite like it,” he said. Dennis Haag, owner of Lennox Twp.-based Strategic Visionary So lutions LLC , called Nano-Clear a “paradigm shift” in lifecycle maintenance budgeting. His firm is using Nano-Clear to refinish the epoxy coating in some of Michigan State University’s pools. “Everyone has a corrosion problem. It’s a fact of life,” Haag said. 䡲 Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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DVP, from Page 1: VC entity reaffirms investment pace, focus might demand quick returns. “Our limited partners all have a long-term view of this business and what we’re trying to accomplish, and what it takes to grow an ecosystem,” said DVP partner Jake Cohen. That has allowed DVP to grow the local industry to the Jake Cohen: point where VC Growing an activity here “ecosystem” eclipsed Ann Arbor, the state’s normal hotbed of VC activity, in 2014. Detroit ranked 38th nationally, according to National Venture Capital Association, with $106.1 million invested in 18 deals. Ann Arbor was No. 46, with $67.2 million in 21 deals. “I give them credit,” said a venture capitalist who asked to remain anonymous. “They got the VC community, which can be cynical, excited about what was going on in Detroit.” The question is whether they will continue to look at Detroit if DVP isn’t stable. Said a second area venture capitalist, who also asked not to be named: “People are worried that if DVP becomes inactive, Detroit will stop being a place you can go to get a deal done.” Hermelin reiterated Gilbert’s commitment to Detroit. “Dan views entrepreneurship and the tech startup environment is one of the key legs on the stool that is going to reposition Detroit for economic growth, and we’re going to continue to invest in it.” That may be because Gilbert has objectives beyond just reaping profits. For example, said one venture capitalist, many of the companies pay rent in Gilbert-owned buildings and bodies in seats help Gilbert sell Detroit as a place that is open for business. A couple of departures When Linkner left DVP in November, he told Crain’s he wanted to pursue his own entrepreneurial interests, primarily his book writing and speeches. Subsequently he launched Fuel Leadership , a oneday leadership conference that had its debut in Detroit in April and which Linkner, who co-founded

Companies closed or sold by DVP HiredMYWay: Closed in 2013. Started as a hiring site but closed after several reinventions. Chalkfly: Sold last November. At the time of the sale, Jake Cohen declined to say whether the deal could be considered a successful exit for DVP. Sources familiar with the deal say the company was sold as a way to salvage something for its investors. StyleCaster: Sold. A New York-based fashion site for young women. Sociocast: Sold. A New York-based data analytics company. Flud: Closed. A California-based social news site. Miso: Closed. A music education app.

Success stories from the DVP portfolio LevelEleven, which makes sales motivation software, was one of 12 companies nationwide that presented at the annual Google Demo Day in Silicon Valley in April, winning the Game Changer award. Detroit Labs, which designs custom smartphone apps for customers, longago outgrew its incubator space in the Madison Building and keeps adding to its space in the 1520 Woodward building. In January, iRule closed on an investment round of $2.5 million. The round was led by Kramer Electronics Ltd., a large Israeli company that will distribute iRule’s products for controlling high-end home and office entertainment. Are You A Human began as a project by University of Michigan students to create simple games that websites could use to replace captchas, the often indecipherable string of letters and numbers that site visitors are supposed to identify. The company now uses algorithms to identify which visitors to sites are humans and which are bots. Last week, it announced a contract with PK4 Media that will allow the Los Angeles-based company to charge a higher rate by being able to show its clients that ads are only shown to humans, not bots. Marxent Labs designs 3-D product demos for manufacturers and retailers. Marxent Labs launched in June 2011 with an app that allowed anonymous social chat. Marxent now operates as a company that develops iOS and Android-augmented reality apps and games for retail customers and marketing campaigns.

ePrize Inc. in 1999, wants to take worldwide. Linkner is still a limited partner in DVP and told Crain’s last week: “I continue to be Josh Linkner: “I excited at the continue to be impact DVP is excited” by DVP. making in the Detroit entrepreneurial scene and remain optimistic that the fund will deliver a positive outcome.” At the time of Linkner’s departure, Hermelin said he would replace Linkner as interim CEO and managing partner. Now, though, he says DVP is not actively seeking a replacement CEO and for now he is content to spend more time at DVP as its managing partner.

Hermelin also remains as managing partner of Detroit-based Rockbridge Growth Equity LLC, a private equity firm he co-founded in 2007 with Kevin Prokop and Gilbert. Another departure from DVP in December fueled more speculation. Partner Ted Serbinski, a member of the Crain’s class of 40 under 40 last year, announced in December he was leaving to join Techstars , the Boulder, Colo.-based organization that provides mentoring and seed money for tech companies. Serbinski is heading up Techstars Mobility, an accelerator program that will be based in downtown Detroit and hopes to launch 30 transportation-related startups. The timing of Serbinki’s move, coming on the heels of Linkner’s departure, was coincidental, say Hermelin and Cohen. Batting .300 is the goal

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: Anton, Sowerby & Associates ...................... 1 Blossom Heath Inn ........................................ 14 Blue Economy Initiative ..................................11 Continental Services ......................................14 Detroit Bikes .................................................. 17 Detroit Venture Partners ................................ 1 Downtown Detroit Bike Shop ...................... 17 EBuy Media........................................................ 6 Fifth Third Bank .............................................. 12 First State Bank .............................................. 12 Fleis and VandenBrink ....................................19 General Motors ................................................ 5 Hiller’s Markets ................................................ 3 Homestead Home Health Care .................. 10 Honey Baked Ham ..........................................18 Kosch Hospitality .......................................... 14 Kroger Co. of Michigan .................................... 3 Lawrence Technological University .............. 7 Macomb Community College ........................11 Macomb County Department of Roads .... 19

Metropolis Cycles .......................................... 17 Michigan Department of Corrections ..........3 Michigan Department of Transportation .. 19 Moceri Cos. ........................................................5 Motorless City ................................................ 17 Nanovere Technologies....................................3 Omega Talent .................................................. 12 Original Equipment Suppliers Association .. 18 Presbyterian Villages of Michigan .............. 10 St. John Macomb-Oakland Hospital .......... 12 Sakthi Automotive Group USA ..........................3 Tanner Friedman ............................................ 6 Taubman Foundation .................................... 7 UHY Advisors ................................................ 12 U.S.Army Tacom Life Cycle Manage. Comm. ..12 University of Michigan .............................. 7, 10 Victor International ........................................ 4 Warner Norcross & Judd .............................. 12 Wheelhouse Detroit ...................................... 17

DVP, however, has been paring down its portfolio companies. Cohen said DVP currently has 15 active companies, having shut down three firms and sold off three others that were struggling. Those six accounted for 29 percent of DVP’s portfolio at its peak. “The nature of seed-stage investing is if you bat .300, you’re in the Hall of Fame, like baseball,” said Cohen. That is in line with national expectations. According to a 2012 study by Shikhar Ghosh, a senior lecturer at Harvard Business School, more than 30 percent of firms receiving VC funding between 2004

and 2010 failed outright, with their assets being liquidated. Since that includes later-stage as well as seed-stage investing, the percentage of failure is likely higher for seed-stage companies. “Not all your early-stage investments are going to work out. At some point you have to say, ‘That company is not going to make it,’ and move away. DVP is doing just what it needs to do,” said Adrian Fortino, the former Invest Detroit vice president who opened the Ann Arbor office of the Houston-based Mercury Fund last year. But it was the collapse of a funding round for another highly touted DVP company, Ginkgotree Inc., that really fueled DVP rumors. The firm was founded in Georgia but company cofounder and CEO Scott Hasbrouck moved it to Detroit, and into Gilbert’s Madison Building, in 2013 after getting a DVP-led investment of $750,000. Last fall, Hasbrouck told Crain’s he was about to sign documents for a funding round of $6 million for his company. It has licenses with book publishers to allow university professors to craft their own course material at a fraction of the price to students compared with traditional textbooks. One Ann Arbor venture capitalist who asked not to be named had committed to the deal, which he thought was imminent, only to be told the deal had collapsed. Hasbrouck told Crain’s that a book publisher had verbally committed to invest $2 million in that round, but changed its mind after a bad quarter. A difference of opinion with DVP executives in how to fund the company on an interim basis while it tried to put the $6 million round back together led Hasbrouck and his co-founder and wife, Lida, to leave the company late last year. They are in the process of moving to San Francisco, where he has cofounded a new company, Convoy, which provides consumer electronics technical help. Cohen said that DVP still has hopes for Ginkgotree and has started two pilot programs with new customers. Cohen said the perception that DVP has slowed down its pace of investing is mistaken. He said the company invested $12 million last year, the most in its three full years of investing. However, most of that went to Detroitbased LevelEleven , iRule LLC and Dayton, Ohio-based Marxent Labs. DVP invested in just one new company last year, Detroit-based Spirit Shop, an online provider of officially licensed merchandise. And so far it has made one investment this year: market analytics firm Reach Influence. Still, that may be the smarter pace, say local VCs, and Hermelin doesn’t bristle at the feedback. “DVP was a startup, and with any startup you can say, what would you have done differently?” asked Hermelin. “There are things we would do differently. ... But we wanted to establish companies on the ground quickly. We wanted to get some momentum.” 䡲

CRAIN’S DETROIT BUSINESS 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) 4461621 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 orshill@crain.com Web Producer Norman Witte III, (313) 446-6059 or 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) 4460416 or ahaimerl@crain.com Chad Halcom Covers litigation and the defense industry. (313) 446-6796 or chalcom@crain.com Tom Henderson Covers banking, finance, technology and biotechnology. (313) 446-0337 or thenderson@crain.com Kirk Pinho Covers real estate, higher education, Oakland and Macomb counties. (313) 446-0412 or kpinho@crain.com Bill Shea, enterprise editor Covers media, advertising and marketing, the business of sports, and transportation. (313) 446-1626 or bshea@crain.com Dustin Walsh Covers the business of law, auto suppliers, manufacturing and steel. (313) 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

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WEEK ON THE WEB/APRIL 25-MAY 1

RUMBLINGS

MSX to move North American operations base to Southfield

Root Restaurant duo to open farm-to-table spot in Hazel Park

SX International Inc. plans to relocate its North American operations center and 325 employees from Warren to Travelers Towers in Southfield during the third quarter. The new, 36,000-square-foot location will provide 30 percent more space, the company said. The move follows MSX’s relocation of its global headquarters with about 15 of its executives to Ally Detroit Center, formerly One Detroit Center, in downtown Detroit from Warren in 2013.

ON THE MOVE 䡲 The Grosse Pointe War Memorial Association named University of Michigan fundraiser Ann Rock, 60, its first vice president of institutional advancement. Rock, who will be the organization’s chief fundraising officer, had been director of development for the UM William L. Clements Library. 䡲 Crain’s Detroit Business and Bridge Magazine hired Lansing State Journal business reporter Lindsay VanHulle, 29, as Lansing correspondent in a joint venture for the publications. Bridge is a thrice-weekly online news-andanalysis publication of the Ann Arbor-based nonpartisan nonprofit Center for Michigan. VanHulle begins her post May 4.

COMPANY NEWS 䡲 The Detroit Lions sought to bolster their offensive line in the first round of the 2015 National Football League draft by making a trade with the Denver Broncos that netted two guards. For the 23rd overall pick, Denver sent 2007 Lions draftee Manny Ramirez back to Detroit, along with the 28th pick, a fifthround pick this year and a 2016 fifth-round selection. The Lions then took Duke University’s Laken Tomlinson with the 28th pick. 䡲 Aston Martin Lagonda Ltd. named Detroit-based Ally Financial Inc. as its preferred U.S. auto lender to help the United Kingdom-based maker of luxury sports cars expand sales, Bloomberg reported. 䡲 Leader Dogs for the Blind launched the public phase of its $14.5 million campaign to renovate its canine kennel and care center in Rochester Hills. The campaign is the largest Leader Dogs has undertaken since its 1939 founding. The quiet phase of the campaign, during which the nonprofit sought larger-dollar gifts from major supporters, has raised $12.3 million since November 2013. Leader Dogs expects to finish work on the canine center in 2016. 䡲 Budapest-based automotive navigation software supplier NNG LLC last week celebrated the

grand opening of its North American headquarters in Birmingham. The new office had a quiet opening in December. 䡲 Livonia-based Trinity Health struck a definitive agreement to acquire 451-bed St. Joseph’s Hospital Health Center in Syracuse, N.Y., Modern Healthcare reported. 䡲 On Monday, the second group of what J.P. Morgan Chase & Co. calls its Detroit Service Corps starts work with four metro Detroit nonprofits: the Detroit Land Bank Authority, Youth Development Commission, Eastside Community Network and Accounting Aid Society of Detroit. Three Chase professionals from around the world will be embedded at each nonprofit for three weeks.

OTHER NEWS 䡲 Michigan Gov. Rick Snyder said he wants to break the troubled Detroit Public Schools into two entities and will ask the Legislature to contribute more state funding to resolve nearly a half-billion dollars in operating debt, AP reported. On the day of Snyder’s announcement April 30, classes were canceled at 18 Detroit schools after teachers failed to show up. 䡲 The Nuclear Regulatory Commission approved DTE Energy Co.’s proposal for a new nuclear power plant in Southeast Michigan, although the Detroit-based utility said it has no immediate plan to build a third unit at the Fermi plant in Monroe County, AP reported. Opponents say regulators haven’t done enough to assess environmental impacts. 䡲 Nearly 20 downtown Rochester boutiques and salons are sending a clear message to shoppers: Feel free to bring your dog with you. The Rochester Downtown Development Authority has designated the dog-friendly businesses with a window cling featuring an icon of a dog (left). 䡲 As George Hynd was officially inaugurated as president of Oakland University, he reiterated his commitment to liberal arts education. Hynd also expressed the need for OU to invest resources into community outreach, expand resi-

Detroit Digits A numbers-focused look at the week’s headlines:

$5 million The amount of cash Detroit International Bridge Co. owner Manuel “Matty” Moroun will give the city of Detroit to rehab Riverside Park in exchange for the 3 acres it needs for a second Ambassador Bridge span.

150,000 The number of helmets Xenith LLC, co-owned by Dan Gilbert, could produce through 2016 at its new manufacturing space on West Fort Street. The Massachusettsbased company announced it would move production of its concussion-fighting football helmets to Detroit last week.

$27.8 million The potential price the Fisher Building and the Albert Kahn Building in Detroit’s New Center could each fetch at a June auction. The buildings fell into default last year on a $27 million mortgage.

$430,000 The amount of the Michigan Strategic Fund grant to support the renovation of a vacant building in Detroit’s Paradise Valley that will become the new home of the Michigan Chronicle newspaper.

17 The day in May known as Flower Day at Detroit’s Eastern Market, which is dedicated to selling flowers ahead of locals’ spring beatification projects. The market is also celebrating an $8.5 million expansion of Shed 5.

dence life and diversify international opportunities for students. 䡲 Former Detroit Tigers outfielder Kirk Gibson, who joined the team’s local TV broadcast booth as an analyst this season, has been diagnosed with Parkinson’s disease. The Tigers and Fox Sports Detroit announced Gibson’s condition; the broadcaster said Gibson will return to the air when he can. 䡲 Nancy Schlichting, CEO of Henry Ford Health System in Detroit, and Patricia Maryland, former CEO of St. John Providence Health System and now COO of Ascension Health in St. Louis, are included in the Top 25 Women in Healthcare by Modern Healthcare, a sibling publication of Crain’s Detroit Business.

[COURTESY OF FUSCO, SHAFFER & PAPPAS INC.]

Leader Dogs for the Blind began work to upgrade its kennel in Rochester Hills last August and expects to complete work on its canine center in 2016.

elebrity chef James Rigato and business partner Ed Mamou have targeted Hazel Park for their next restaurant venture. The pair, partners in the successful The Root Restaurant & Bar in White Lake Township, will open 40seat Mabel Gray later this summer at John R and Woodward Heights in the storefront at 23825 John R that most recently was Liza’s Place and Ham Heaven. The fare will be a truncated version of the Root’s traditional American offerings (along with Korean, Chaldean and Italian touches) that are Michigan-sourced, but with a farm-to-table menu that rotates much more often, Rigato told Crain’s. It will have a full bar. Rigato, 30, who appeared on Bravo’s “Top Chef” last season, and Mamou will spend up to $300,000 for the location, which includes the Rigato price of the building and a build-out of the narrow building’s coney island-style interior. It will be kept intentionally imperfect, he said. Roman Bonislawski of Birminghambased architects Ron & Roman Concept & Design is creating the interior. The Mabel Gray name comes from a folklore legend about a Lake Michigan ghost, and a seafaring folk song.

Quicken legal team gets busy Managing partner Jeffrey Morganroth of Birmingham law firm Morganroth & Morganroth PLLC and Thomas Hefferon of Boston-based Goodwin Procter LLP will represent Quicken Loans Inc. in dueling lawsuits with the U.S. Department of Justice over loans insured by the Federal Housing Administration. Morganroth, perhaps best known in recent years as an attorney for former Detroit mayoral Chief of Staff Christine Beatty and for the late assisted suicide advocate Jack Kevorkian, brought Quicken’s April 17 lawsuit in Detroit against Justice and the U.S. Department of Housing and Urban Development. He and Hefferon, of Goodwin’s Washington office, are plaintiff’s counsel in that case as well as defense counsel in the April 23 civil suit that Justice brought against Quicken at a federal court in Washington, D.C. Both cases stem from a three-year investigation of FHA-insured loans originated by Quicken starting in 2007. The government alleges Quicken initiated hundreds of such loans between 2007 and 2011 that were not eligible for the program. Quick-

en alleges violations of the federal Administrative Procedures Act and claims that the government wanted Quicken to pay an exorbitant settlement and “publicly admit to wrongdoing that the company did not commit,” to avoid litigation.

‘SNL’ alum rounds out cabaret’s season “Saturday Night Live” alum and Broadway star Ana Gasteyer will headline the grand finale to Cabaret 313’s second season this weekend. Gasteyer’s “Elegant Songs From a Handsome Woman,” on stage at the Boll Family YMCA’s Marlene Boll The atre, will be the latest installment in what began as a passion project for producers Sandi Reitelman and Allan Nachman, who had the idea two years ago to bring award-winning cabaret performers to intimate venues throughout Detroit. “We wanted to help the city in its rebuilding effort in some small way by adding a genre of music that hasn’t been part of the cultural scene,” said Nachman, Cabaret 313 managing producer, who is counsel at Butzel Long and a real estate developer. Nachman and Reitelman, the past director of corporate gifts for the Detroit Symphony Orchestra, scout the city for intimate performance spaces. Like the upcoming night with Gasteyer, Cabaret 313 usually presents two shows in one evening; artists typically do a meet-and-greet and CD signing after each show. Shows are at 7 and 10 p.m. Friday. Ticket prices range from $25 to $125. For details, call(313) 405-5061 or visit cabaret313.org.

Busted glasses mean new biz Every inventor has an “aha moment” story to tell. For Birmingham entrepreneur Nancy Oram, that story begins three years ago in a Palace of Auburn Hills bathroom. She was taking a break at a Detroit Pistons game when her favorite pair of sunglasses slipped off her head and crashed to the floor. After the game, Oram, who works in purchasing at Ford Motor Co., began researching gripping materials. That’s how she came up with StaysOnEyewear — sunglasses and reading glasses that douOram ble as headbands. Oram, 48, has invested $90,000 in Nancy Oram Design LLC, through which she secured a licensing agreement with a company based in New York which manufactures the line of glasses and headbands that sell for $19.99. See Staysoneyewear.com.

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REACH CRAIN’S MOST INFLUENTIAL AUDIENCE OF THE YEAR! Crain’s Annual Mackinac Edition | ISSUE DATE: June 1 | EARLY CLOSE: May 14 The Detroit Regional Chamber Mackinac Policy Conference, May 26–29.

Bonus distribution on Thursday at the Governor’s speech

Reach the area’s most influential business, civic and government leaders, plus thousands of Crain’s Detroit Business readers who can’t attend the Detroit Regional Chamber Mackinac Policy Conference. This special edition includes two other powerful features:

Crain’s tenth class of 20 in their 20s — spotlighting

Page M51 CRAIN’S DETROIT BUSINESS June 2, 2014

ce 2014 Mackinac Policy Conferen

the distinct accomplishments of the area’s newest generation of business

ng small Growing large by thinki d by big business alone it can’t be fuele If entrepreneurship is to revive Detroit, BY AMY HAIMERL

visionaries still in their twenties.

TECHTOWN BY THE NUMBERS Between 2007 and 2013

CRAIN’S DETROIT BUSINESS

, which 䡲 Served 866 companies jobs and raised

believe in entrepreneurs. if That is what I would say I were on the old NPR show “This I Believe,” where a contributors talked about to range of topics that spoke the their souls, from ghosts to power of diversity. My food critic friend Jason Sheehan recorded one of the show’s most popular missives: I believe in barbecue. I’ve always wondered what I would I besay if asked. I know now: lieve in entrepreneurs.

created 1,155 more than $103 million in follow-on investment

Building numbers 26 䡲 Physical tenants: )

(82% occupancy and 䡲 Mailbox tenants (mailbox and access to conference rooms support services): 24 (share desk space 䡲 Co-workers 17 off the lobby):

tech The venture capital-fueled startups toiling away in Dan Gilbert’s incubator and acceleralaudtor are doing important and lead hopefully able work that will bringto huge successes. They are showing sexy back to Detroit by Moing the world a very different seen they’ve tor City than the one ons. But in the ruin-porn compilati of while they are a critical piece fuel our future, they alone cannot City. bethe resurgence of the Motor I believe in their hustle. I in It will take an entrepreneurial lieve in their drive. I believe deculture of entreprea and INC. spirit, TECHSHOP OF their unwillingness to accept COURTESY foto neurship, rather than a myopic feat. I believe in their ability region. the opportunities needed in the over cus on one industry, to grow welding and other skilled trades pick themselves up and start in MichiTechShop in Allen Park provides economy and create jobs in the again. I believe in their willingand checked shirts sitting othsuccess gan. Anything else is an old-school Robin profits. The result of that ness to see opportunity where Madison Building,” said ent. has jobs that allow people to support model of economic developm the urban — of being big — is that small of ers only see challenges. chairman owners. Boyle, bethese small business nt “To put all our money in one I believe in the men and women not been celebrated. However, beplanning and studies departme deThe Detroit Regional Chamber thing, that is the classic whating small leads to more disruptive commercializing new medical so at Wayne State University. “That’s Boyle. startleads to lieves in them, too. So much the enwe’ve-done-in-the-past,” said innovations. Being small vice innovations and the ones a presented in the media as busileads to I believe that it made entrepreneurship that’s “We throw big money at big being nimble. Being small ing new auto-body shops. Politrepreneurial spirit, and That to who are tenet of this year’s Mackinac ness that will come there. creativity. Being small leads in the food entrepreneurs to many people.” alienating soe. vegand Conferenc cy world is gone. We need a more new possibilities.” turning jams and sausage we’re trying to do here is approach.” eurial busi“What denser entrepren and thriving d and into small phisticate Being an delicacies eurts this really have a different culture When the idea of entrepren also has the ability to remake nesses. I believe in the immigran Sandy ent But their mindset in Michigan,” said ship as an economic developm state, and revive our cities. who move to our shores with eurship is about so “We Entrepren chamber. the to of as d CEO neur” drive. Baruah, and codtool was formally introduce only if we define “entrepre entrepreneurial spirit and much more than optimism s it seemed own need to make being an entrepreand the region six years ago, I believe in high-tech companie someone who sets his or her path ing skills. It’s about growing vithinkers. neur a much more celebrated g like a crazy idea to many destiny, rather than the narrow developing products we never a starting a business, supportin the in that has for individuals. This has been Even those who did embrace sion of small tech startups even knew we needed. I believe adding jobs, building for family, your successful been has feed that state that g your captured the zeitgeist. neighborhood businesses See Next Page wealth. It’s about controllin to be culbeing big. “Entrepreneurship tends our communities and our Big future. beards fast“Big companies. Big unions. presented as four kids with tures. And I believe in the noncreate government, and even big growing companies that

Starting small

MARY KRAMER: MACKINAC ISLAND — Leave it to Detroit to find the downside in a $100 million gift. That was my first reaction to hearing negative comments about the $100 million commitment to Detroit revitalization that J.P. Morgan Chase Chairman Jamie Dimon announced in Detroit on May 21. At the policy conferDemocrat ence here, a prominent mortgage told me that given the on Demeltdown’s traumatic effect speaking troit, many people he was

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ment Time for talk about real engage with believed $100 million was hardly enough. After all, the bank settled with the feds late last year for a record $13 billion over its role in poor-quality selling mortgage-backed securities at the core of the mortgage mess that helped to decimate Detroit’s neighborhoods. But what do you do? Leave the Chase money money on the table? Or take the of it to and hope to leverage more d? finance Detroit’s turnaroun What Clearly, I think it’s the latter.

t Detroit needs most is investmen the city’s and jobs. Without both, turnaround chances are dim. of I was out of town the week the but Chase’s announcement, hugely media coverage I saw was Michigan positive. One exception: ThompChronicle editor Bankole gesture son, who framed the Chase vs. good” “public of in the context “public relations.” ’s The Chronicle is Michigan in the leading media voice ty. communi African-American role — Thompson raised Chase’s s it acor the role of companie crisis. quired — in the mortgage ment The $100 million announce

g since was somewhat surprisin in Chase has been a quiet presence stature Detroit, clearly not in the of its ancestor, NBD Bank. is At the very least, Thompson million hopeful that Chase’s $100 fingercould spur others “whose present prints are absent or barely , on Detroit’s economic landscapea out of to now act in goodwill, and .” crucial need to make a difference As he concluded in the column: ility “Corporate social responsib ga should go beyond just sponsorin more than banquet or a dinner. It is have your writing a $5,000 check to … It name mentioned at an event. and conshould mean taking part

better in tributing to making lives some of the communities in which these institutions operate.” arThompson offers a reasoned nt, gument for genuine engageme s companie for But beyond cash. who listen to some of the communiout ty chatter, it is tough to figure being just what to do without or called a carpetbagger, interloper worse. nt. We Detroit needs investme on the can’t afford to leave money is This investors. table — or vilify ion that definitely a conversat convene needs to happen. Who will Crain’s it? Maybe Thompson and can help start it.

3OXV

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