Crain's Detroit Business, June 8, 2015 issue by Crain's Detroit Business

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CRAIN’S Readers first for 30 Years

DETROIT BUSINESS June 8-14, 2015

[CHICKEN SHACK INC.]

Shack copycat? Trademark filing raises IP law questions PAGE 3

Ford to update research hub Plan is estimated at $1 billion; RFP calls for major makeover of Dearborn campus By Kirk Pinho kpinho@crain.com

Ford Motor Co. is embarking on a 10-year plan to modernize its research and engineering hub in Dearborn and consolidate the majority of its 26,000 local employees there in reconfigured and updated office and testing space. Real estate sources who asked to remain unnamed expect Ford to embark on the estimated $1 billion reinvestment in the complex after selecting an architecture firm. While a Ford Land Development Corp. representative said Friday there were not yet specific plans to announce, the project outlined in a request for proposals document suggests building improvements and new building construction, building demolition, infrastructure upgrades, more green spaces and gathering places, and added parking. The complex includes engineering offices, testing labs, parking and ancillary buildings. The automaker plans to weigh architectural options on how to best reconfigure the campus. Brokers and architects say the space is due for a makeover. “Based on what I know about that environment and what they have accomplished since then, anything they can do to improve that core asset and development arena would be so positive for the community, for Ford,” said Mark Woods, COO of Southfield-

based Signature Associates Inc. Woods spent more than a decade as vice president of Ford Land, the automaker’s real estate subsidiary, MarkWoods: Any before leaving in improvement would 2003. be “so positive” Ford requested that bidders submit two master plan concepts: One that retains the existing dynamometer building and the Research and Innovation Center, and another without that requirement. The five-building research and engineering campus was developed in the early 1950s, and additional buildings were constructed over the years to meet increasing demand. Site review

Overall, the Dearborn-based automaker owns 71 buildings totaling about 13.1 million square feet in and around the city, according to a Ford request for fee proposals/qualifications for a new campus facility and workplace master plan that was issued in November and obtained by Crain’s last week. CoStar Group Inc., a Washington, D.C.-based real estate information service, reports the Research and See FORD, Page 23

[TOM HENDERSON]

Marysville City ManagerRandall Fernandez (left) with Randall Jostes, CEO of Environmental Liability Transfer Inc., which is responsible for slowly disassembling a former DTE Energy plant to create a prime piece of land along the water (below).

Riverfront renaissance Demolition of Marysville DTE plant will leave a hole that city officials, developers are eager to fill By Tom Henderson thenderson@crain.com

he DTE coal-fired power plant in Marysville sits brown and hulking, its 12 stories and 300,000 square feet dominating the skyline from the banks of the St. Clair River. If officials in Marysville, a city of almost 10,000 just south of Port Huron, have their way, what will rise on the site in the coming years will include a boutique hotel, condominiums, a fine-dining restaurant, a day-slip marina and perhaps a water park. Built in 1922, the 167-megawatt plant employed 250 for most of its productive life, until it went offline

in 2001. That hit to the city’s tax base has been more than made up for by the rapid expansion in recent years by SMR Automotive Systems, a tier-one auto supplier whose campus is a mile south of the DTE Energy Co. site. (See story, Page 24.) In bits and pieces, the DTE plant has started to disappear, its brick façade is being pulled off and stacked in piles, its tons of steel being torched into

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recyclable chunks. The demolition crew originally planned to topple the main body of the plant on its side later this month and finish carting off its pieces over the next six months, but now it is considering imploding the building later in the summer. It is expected to be at least 18 months before environmental remediation is complete, with groundbreaking on development scheduled for late 2016 or early 2017. The plant sits on 20 acres of prime riverfront real estate, with a deep water port and 1,800 feet of river frontage, built in an era when

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MICHIGAN

BRIEFS GM to invest $119M, add 300 jobs, in plant near GR General Motors Co. plans to spend $119 million on tools and equipment to support production of future vehicle components in its Grand Rapids operations plant in suburban Wyoming, The Associated Press reported. The investment is expected to create about 300 jobs. The plant currently employs about 500 and produces precisionmachined engine components used in Chevrolet, Buick, GMC and Cadillac vehicles. GM expects to release details later. The investment in the GM Com ponents Holdings LLC plant is part of the $5.4 billion investment in U.S. plants that GM announced in April.

Office furniture industry starts 2015 on a strong note Shipments of office furniture in the first quarter grew 9 percent to $2.39 billion compared to the first quarter in 2014, and orders increased 8 percent to $2.35 billion,

MiBiz reported, citing a study by the Grand Rapids-based Business and Institutional Furniture Manufactur ers Association. An updated association outlook, prepared by IHS Global Insight , essentially maintained an earlier projection of 4.4 percent growth in shipments this year to $10.2 billion and improved 2016 to a 7.9 percent increase to $11.0 billion. The prior association outlook, issued in March, projected 2016 shipment growth of 6.4 percent.

State explores commercial fishing in south Lake Huron The Michigan Department of Nat ural Resources plans to study the viability of commercial fishing for whitefish in southern Lake Huron, The Associated Press reported. This month, nets will be allowed in experimental fishing grounds several miles south of Harbor Beach and north of Port Sanilac. The DNR said research is planned over the next three years while the agency monitors and evaluates the

fish population and looks at the long-term potential for what it describes as “a sustainable and profitable commercial lake whitefish fishery.” The Michigan waters of southern Lake Huron haven’t been commercially fished in five decades, but commercial fishing is established in Canadian waters.

MICH-CELLANEOUS 䡲 Perrigo Co. plc, an Irish-based company with its North American headquarters in Allegan, plans to buy over-the-counter medicine brands from a recently formed joint venture between GlaxoSmithKline of the United Kingdom and Novartis AG of Switzerland, TheStreet.com reported. The deal came about because GlaxoSmithKline and Novartis needed to divest some lines of business to appease European regulators. 䡲 Leo’s Coney Island plans to open its first location in West Michigan this summer: in Cascade Township near Grand Rapids, MLive.com reported. The Birmingham-based chain has 54 locations in Michigan. 䡲 New York City-based Alcoa Inc. will spend $22 million to expand its manufacturing of advanced titanium, nickel and 3-D printed parts for the aerospace industry from its Alcoa Power and Propulsion plant in Whitehall north of Muskegon, MiBiz reported. 䡲 Amway Corp. opened the first phase of an $81 million plant near its headquarters in the Grand Rapids

suburb of Ada, MiBiz reported. The plant is one of five scheduled to open this year as part of a $332 million manufacturing expansion. 䡲 Midland-based Chemical Fi nancial Corp. closed on its $187.4 million acquisition of Hollandbased Lake Michigan Financial Corp., the parent company of The Bank of Holland and The Bank of Northern Michigan, MiBiz reported. The Bank of Holland and Bank of Northern Michigan will begin operating under the Chemical Bank name in the fourth quarter. 䡲 Grand Rapids-based Fox Motor Group LLC acquired Seif Chevrolet in suburban Caledonia. Terms were not disclosed. 䡲 Grand Rapids-based Founders Brewing Co., with help from distributor Johnson Bros. Liquor Co. , will distribute its beers in Minnesota, North Dakota and South Dakota starting this month, MiBiz reported. 䡲 The board of trustees at Michigan Technological University gave President Glenn Mroz a two-year contract extension, The Associated Press reported. He also got a raise from $315,000 to $344,000, plus a housing and car allowance. 䡲 Western Michigan University trustees approved a 3.2 percent in-

COMPANY INDEX: SEE PAGE 25 crease in tuition and fees as part of a $388 million general fund budget for the coming fiscal year, The Associated Press reported. 䡲 The owners of the Amway Grand Plaza Hotel will switch reservation systems next year, MLive.com reported. Next year, the 677-room Grand Rapids hotel will be known as … well, imagine placing a call and having the person on the other end say, “Amway Grand Plaza Hotel, Curio Collection by Hilton, this is (fill in name) speaking. How may I direct your call?” 䡲

䡲 An item on Page 19 of the May 18 Deals & Details incorrectly spelled the name of Cornish, Zack, Hill & Associates Inc. Also, the phone number, (248) 353-5850, had an extra digit.

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Is it poaching? Chicken Shack not ruffled over trademark filing By Chad Halcom chalcom@crain.com

Which came first, the Chicken Shack or the Chicken Shack sandwich? That’s a question the U.S. Patent and Trademark Office will figure out this summer. To metro Detroit chicken connoisseurs, the name conjures up the nearly 60-year history of Chicken Shack broasted chicken, a chain of restaurants created by franchisors Berkley-based Sobeck Enterprises Inc. The Sobecks own a similar trademark to the trademark name application under review by the patent of-

fice — an application filed by national fast food chain Shake Shack Inc. New York-based Shake Shack (NYSE: SHAK), the fast-growing burger and milkshake chain that raised $105 million at a January IPO, intends to identify the new trademark with chicken sandwiches, according to an April 20 application brought by SSE IP, part of Shake Shack’s parent company. The key differences in the trademark claims boil down to this: Chicken Shack holds a trademark on specific stylized renditions of its name, sign fonts and logo design, said Sobeck attorney Mark Cantor,

president of Southfield IP law firm Brooks Kushman PC. Shake Shack, meanwhile, is seeking protection of the phrase “Chicken Neil Sobeck: “It’s Shack” itself — a kind of flattering.” longshot, Cantor added, since others have failed to win that in the past. How concerned is the Berkley restaurant chain about the competing trademark application? So far, the issue hasn’t ruffled its feathers too much.

Said Neil Sobeck, vice president of the product division at Chicken Shack Inc.: “It’s kind of flattering, and definitely not something we’d ever considered might have happened. It must be a good name we have.” Sobeck is the grandson of company founders John and Iola Sobeck. Chicken Shack has 21 regional locations plus a mobile restaurant trailer the company uses at major outdoor events in the area. Two of these, in Shelby Township and Clinton Township, have opened just since March 2014 and the company is considering See CHICKEN, Page 25

Sorrell leaves MEDC; area VCs worried

Why Mexico matters Since 2012, automakers have invested or promised nearly $23 billion in new production in Mexico.

Mexican automakers

By Tom Henderson thenderson@crain.com

produced 3.2 million vehicles in 2014, making the nation the seventhlargest producer.

Exports from Mexico this year are projected to rise to a record 2.9 million vehicles. Up to seven in 10 are projected to be headed to the U.S. [ASSOCIATED PRESS]

An employee at a Honda Motor Co. plant in Celaya, Mexico, one of the plants that’s part of the $23 billion worth of new auto production either operating or promised since 2012.

Suppliers head to Mexico Car production boom the ticket to growth for local suppliers By Dustin Walsh dwalsh@crain.com

Hollingsworth Logistics Group LLC, a Dearborn-based automotive transportation and assembly supplier, plans for sales in Mexico to be a quarter of its business by 2025. That’s an ambitious target, considering none of the company’s $400 million in revenue in 2014 came from that nation. But Hollingsworth isn’t alone, as Southeast Michigan’s lower-tiered supply base is again heading south — 20 years after the North American Free Trade Agreement broke business barriers further open between the U.S. and Mexico.

[CHICKEN SHACK INC.]

Chicken Shack means chicken in metro Detroit. But does Shake Shack want it to mean chicken sandwiches?

In what local experts are calling The result is a need for a more the new automotive gold rush, aucohesive supply chain that extends tomakers such as Nissan Motor Co. farther down the tiered system, inand Mazda Motor Corp. are produccluding assemblers and distribuing a record number of vehicles in tors such as Hollingsworth. Mexico, most of them destined for “Mexico is booming, and what export. we see trending is phenomenal opSince 2012, carmakers have inportunities for us,” said Greg Marvested or promised nearly $23 billion Greg MartinezJr.: tinez Jr., director of international in new production in Mexico. In “Phenomenal sales for Hollingsworth. “It’s key for April, Toyota Motor Corp. announced opportunities” our sustainability. If we, and others, it would spend about $1 billion on its don’t make those business expanfirst car factory in Mexico, with the capacity to sions down there, the marketplace will beassemble about 200,000 Corolla compact cars See MEXICO, Page 25 annually, Bloomberg News reported.

MUST READS of the week ... This raises a question ...

No longer if they build it ...

When do you raise pay to not only keep current employees but also attract new ones? Read how three companies went about it in this week’s Second Stage, Page 13

General Sports & Entertainment will break ground this month on a $12 million baseball stadium that will be the home of a three-team developmental league, Page 18

Paula Sorrell’s resignation as vice president of the Michigan Economic Development Corp. to resume a consulting practice in Ann Arbor has revived worries among local venture capitalists about ongoing support for state-led entrepreneurship. For four years, Sorrell was MEDC’s vice president for entrepreneurship, venture capital and innovaPaula Sorrell: tion. Leaving MEDC to Her departure May 29 return to consulting comes at a time when the MEDC is under increasing scrutiny by some Republicans in the state House and Senate, who have been pressing to end funding in venture capital firms to divert some of its budget to highway repairs. Sorrell said the timing of her departure has more to do with wanting to go back to the private sector than it does politics, though the politics did reinforce her decision that the time to leave was right. “It’s time. For someone in the private sector, going to work for the government is a pay cut, and a significant one. Just ask Governor Snyder. I thought I’d do it for two years, and I stayed for four,” said Sorrell, who was recruited to the MEDC by Mike Finney after he was recruited to Lansing from heading up Ann Arbor Spark when Rick Snyder became governor in 2011. “This is a huge loss to the MEDC, in my opinion,” said David Gregorka, who got to know Sorrell when he was consulting with the See SORRELL, Page 22

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LOOKING BACK

On June 10, 1985, Crain’s reported on Mount Clemens’ efforts to bring people downtown at night. Today, the city embraces its day and night personas. More at crainsdetroit.com/30

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Michelle Weiss of the Mount Clemens Downtown Development Authority (left) and the city’s mayor, Barb Dempsey, in Mount Clemens. Thirty years after trying to wake up downtown, the city is now letting the market decide its course of development.

Office by day, entertainment by night By Laura Cassar Special to Crain’s Detroit Business

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Thirty years ago, 31 downtown Mount Clemens business owners paid $130 apiece to have their names printed on coffee mugs that proclaimed “I love Mount Clemens.” The mugs were part of a campaign to help revitalize their quiet downtown — to wake things up after the lawyers in the county seat locked up their offices for the day. Michelle Weiss still has her mug displayed on a shelf in her downtown office. “This town shut down at 5 p.m.,” said Weiss, marketing and events coordinator for the Mount Clemens Downtown Development Authority. The year of the mugs, 1985, Crain’s Detroit Business reported on the DDA’s efforts to bring people downtown at night with live entertainment and to focus on recruiting retail to complement the downtown’s predominantly office tenants. Weiss, who at the time owned Natures Accents, a floral shop, recalls today how in 1985 all the businesses on one main strip, Walnut Street, committed to staying open until 8 p.m. on Thursdays and Fridays — “for a whole year, no matter what; no excuses.” When the year ended, those business owners kept the extended hours and others joined them, in part motivated by the evening entertainment and events that now number more than 50 annually. But on the roster of downtown businesses, retail is still secondary to office space. And Mount Clemens is starting to realize that’s no longer worth worrying about. Instead, the community is em-

“I love Mount Clemens” coffee mugs were part of an effort to bring life to downtown. On the Web. Owners of a used book store, boutique, bar talk about doing business downtown, crainsdetroit.com/mtclemens

bracing its more market-driven role as a venue for daytime office space and nighttime entertainment uses. That includes finding a buyer for the vacant and bankrupt Emerald Theatre, a landmark building in the city. “You can’t change what people want,” said Kent Kukuk, the DDA’s executive director in the 1990s and 2000s. “Every town is unique. Mount Clemens is always going to be heavy on office space because of the county seat draw. It’s figuring out what your demo is asking for,” said Kukuk, who went on to work for the Michigan Economic Development Corp. and is now retired. The DDA now operates without an executive director. That “figuring it out” has taken several iterations over the past three decades. In the late 1980s and early 1990s, openings of nightclubs like Hayloft and Desperado’s led downtown leaders to realize they were an event-driven destination, Weiss said.

By the late 1990s, they were putting a focus on physical changes — adding lights, building brick streets and increasing parking to help make downtown more of a social gathering place. “People don’t expect a downtown to compete with a mall — nor do they want it to,” Kukuk said. “They were looking for a place to gather, someplace social to have a good time, a nice place to walk, so that’s what we embraced.” OU campus Having a place to gather — specifically “milling around town” — is something 82-year-old Gebran “Gabe” Anton wants to see more of. Anton, a lifelong Mount Clemens resident and business owner, and his business partner Stuart Frankel in 2010 donated space valued at about $2 million for Oakland University to open a Macomb satellite campus. Anton wants to see that campus expand. “I’m not a college graduate,” said Anton, who took over his family’s shoe business at age 17 when his father died. After selling shoes, Anton went on to operate a chain of clothing stores, Anton’s Gentlemen’s ApSee Next page

Gebran “Gabe” Anton, a lifelong resident of Mount Clemens, donated space for Oakland University to open a Macomb satellite campus.

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Remaking Mt. Clemens Selected redevelopment sites

The former Greco Title building, 118 Cass Ave.: Purchased last year by SVS Vision Optical Centers and now redeveloped into its new headquarters.

The Macomb Music Theatre, formerly the Emerald Theatre building, 31-33 N. Walnut St.: Currently vacant. The previous owner went bankrupt, and the property receiver is searching for a new owner.

The former Turning Point building, 213-215 S. Main St.: Purchased by the Macomb County Rotating Emergency Shelter Team, or MCREST, in April. It will become a shelter for abused women and children who are transitioning out of abusive situations.

The former Detroit Pub, 76 Macomb Place: Purchased by Scott Atchison and converted into Abbibo Dining & Spirits, which opened in September. John Barleycorn’s Bar and Grill, 110-112 Macomb Place: Under contract to be sold to the owners of the nearby Bath City Bistro Inc. and the Orleans Sports Café. The space will be renovated.

Sources: Crain’s research, Anton Sowerby & Associates

From Previous page

parel. He is now partner in Anton Sowerby & Associates, a real estate brokerage firm downtown. “Unfortunately, my father died and I had a family to support, but I’ve always enjoyed the environment a college town creates — like Ann Arbor or East Lansing. That’s not easy to duplicate. “When we gave OU the building, we planted a seed for that.” The satellite campus, inside the former Towne Square II building at 20 S. Main St., has 50 faculty members, 900 students and offers seven degree programs. It’s a commuter school, but the students have embraced the community, said Julie Dichtel, Oakland University-Macomb interim executive director. Students participate in downtown parades and volunteer at festivals; an alumni event brought together 350 former students during a fireworks show last summer. “There’s a lot of real estate around there, and I’m hoping OU will buy it and expand here,” Anton said. “I would like to see more students.”

BANKRUPTCIES The following businesses filed for protection in U.S. Bankruptcy Court in Detroit May 29-June 4. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation. DRS Services Inc. , 298 S. Old Woodward, Birmingham, voluntary Chapter 11. Assets and liabilities not available. Green Tech Styles Inc. , 54750 Grand River, New Hudson, voluntary Chapter 11. Assets and liabilities not available. Natalie Broda

[EDWARD MAURER]

Oakland University’s satellite campus in Mount Clemens. OU has no specific Mount Clemens expansion plans in the works. Occupancy rate Filling some of the downtown’s long-empty buildings is a priority. Isam Yaldo, president of Yaldo Construction in Farmington Hills, purchased the former Macomb Mews, a mall shuttered in 2010, for $265,000 in March. Yaldo has plans to turn the second floor into lofts — tentative plans call for about 10 units — with retail and parking on the first floor. It was his first purchase in the city; he said the price and the opportunity to use his creativity to help boost the city were what attracted him. Real estate broker Joe Sowerby, also at Anton Sowerby & Associates, said that for out-of-town buyers like Yaldo, Mount Clemens is a bargain. Sowerby said the price per square foot in Mount Clemens has not recovered the way other communities have. What might sell for $60-$80 per square foot in St. Clair Shores or Clinton Township can still be priced at $40-$50 in Mount Clemens.

LENDING

The overall downtown occupancy rate is about 65 percent: About 38 percent is office space, about 23 percent retail/restaurant, and the rest is mixed-use. The vacancies were apparent after the economic downturn of 2008. “It was a real estate tsunami,” said Sowerby, who guessed that about 100,000 square feet of business closed up around that time and that “the ripple effect could be felt through all of downtown.”

there, the impact on downtown would be huge,” Sowerby said. “That’s getting 1,200 people down here at night. It’s a vital component to this town.” The DDA is hosting a property tour of the theater and more than 15 other properties next month. Weiss said they are hoping to attract at least 25 potential investors. In addition to the DDA efforts, Macomb County is spending $65 million on a downtown revitalization plan that includes renovations to the county Circuit Court and ad-

ministration buildings, as well as replacement of a parking deck. Steve Cassin, director of the Macomb County Department of Planning and Economic Development, said Mount Clemens is one example of the county’s economy on the upswing. “With heavy investment from Oakland University in their satellite campus and the county investing in substantial building improvements, there are lots of reasons to believe that Mount Clemens will become the vibrant, happening downtown it has the potential to become,” he said.

Theater vital component Perhaps the most prominent empty building is the Emerald Theatre, designed and built in 1921 by C. Howard Crane, who seven years later went on to design the Fox Theatre in Detroit. In 2012, the building was purchased and restored by Wally Mona and Marc Beginin, who changed its name to Macomb Music Theatre. But the theater closed last fall, and the owners filed for Chapter 11 bankruptcy protection in March. The theater is for sale for $1.295 million. “If we could get the right person in

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CRAIN’S DETROIT BUSINESS

OPINION Gov. should mull Duggan’s DPS plan etroit Mayor Mike Duggan made a compelling case last month that the Detroit Public Schools’ downward spiraling enrollment is partly attributable to efforts to fix its finances through emergency managers. The problem, Duggan told attendees at the Detroit Regional Chamber’s Mackinac Policy Conference, is that massive school closings, teacher layoffs and other cuts created enough uncertainty about the system’s future that parents moved their children elsewhere. “It was a train wreck you could see coming,” he said, because emergency managers are temporary, but parents are making long-term decisions for With the mayor their children. Duggan’s solution is a riff on a and the plan put forward by Gov. Rick Snyder to house DPS debt of governor more than $400 million in the working existing school district and cretogether, the ate a new debt-free district that would be run by a seven-memnext solution ber board appointed by the govstands a better ernor and the mayor with a chance of being gradual transition to an elected board. The state would assume the one that responsibility for the debt. Duggan proposes a more imworks. mediate turn to an elected school board but with a financial review board that can veto financial decisions — similar to how the city is currently operating. He also supported the proposed creation of a citywide Detroit Education Commission that could authorize new schools and close chronically non-performing charters and DPS schools, and a centralized transportation system that would make it easier for kids to get to school. The mayor also would like it to be harder to open schools, noting that seven schools opened in Southwest Detroit in one year, which ended up destabilizing the schools already there. In the meantime, other areas of the city have virtually no schools at all. We believe the governor should consider Duggan’s proposed compromise. A series of emergency managers in DPS have worked hard and conscientiously to stabilize the district, but it hasn’t worked. The truth is that too many Detroit children are being poorly served by too large a number of unaccountable public and charter schools. What Duggan brings to the table are honed political skills that encompass knowledge of human behavior and a mindset of marshaling support by producing wins for others. The mayor and the governor appear to share a deep commitment to produce better results for Detroit families. They bring different sets of knowledge and skills to the table. Working together, the next solution stands a better chance of being the one that works.

TOM HENDERSON Reporter’s Notebook

State’s stance on morels is too picky

WEB: Crainsdetroit.com/thenderson TWITTER: @TomHenderson2

une marks the unofficial end of

J morel mushroom season — and

the unofficial end of this year’s chapter of bureaucracy gone cuckoo. Call it the Catch-22 season. Catch-22 is the classic World War II novel by Joseph Heller, the catch being that if a pilot wanted to be declared insane and unfit for duty, he had to apply, but by regulation, the act of applying meant he was sane. In Michigan, the catch would be if a state bureaucrat said you can’t sell something legally without a certification. And when you asked how you could get certified, the same bureaucrat said it was impossible, there was no certification process. Catch-22 was fiction. The state bureaucrat isn’t. For well over 100 years, foragers in northern Michigan have been picking morels and selling them at farmers markets and roadside stands and to restaurants. Up until two years ago, if you didn’t Tom Henderson shows know where to off some of his find on look for a mushroom hunting morels or didtrip to the woods with n’t have the his dog, time and energy, you could go into, say, the Cherry Street Market in Kalkaska and buy morels by the pound, picking them out of

[PHOTOS BY TOM HENDERSON]

Michigan’s woods yield a wide variety of morel mushrooms, from small and dark gray to large and yellow and all shadings and sizes in between. big baskets nearly overflowing. Depending on that year’s harvest, you might get them for $35 a pound. You might pay $65. Or you might pay less when, driving down country roads, you’d see a hand-painted sign out front of a house offering morels for sale and decide to pull in. Foraging is a way of life up north. The same folks selling morels sell wild ramps in May, raspberries in July and blackberries in August. Great for them, great for area restaurants, great for diners. But not so great for the bureaucrats. For years, the state has had a law on the books requiring mushroom sellers to be certified, but it was never enforced. Until last year, that is, when the bureaucrats, for whom leaving well enough alone is anath-

ema, interceded. They began calling on restaurants and organizers of mushroom festivals and telling them they could buy only from certified mushroom sellers. And the restaurants and festivals began telling their longtime providers that they needed to get certified or they couldn’t do business. OK, said the foragers. What do I do? Where do I go? How much does it cost? Well, there’s the catch. The state required certification, but there was no process in place. There was literally no way to get certified. So last year’s annual morel mushroom festival in Mesick, 25 miles or so south of Traverse City, had to fly See Next Page

LETTERS

Sports Hall of Fame director’s efforts appreciated Editor: I have read your article on the departure of Jim Stark as executive director of the Michigan Sports Hall of Fame (“Sports Hall of Fame cuts ties with longtime director,” June 1, Page 18). As the person who Jim Stark hired Jim in 2003 when I was chairman of the hall, I feel I must add my comments. While factually correct, the focus of the article is on the financial difficulties of the hall and the problems with the attorney general’s office

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

during Jim’s tenure. What it does not mention is that Jim labored long and hard over many years, incurring financial sacrifice by deferring a good part of his income year after year in an effort to make the hall work. He harnessed the financial support of the major professional teams and colleges, elevated the quality of the annual induction dinner and golf tournament and im-

proved the image of the hall. When I joined the board in 1995, the hall was in financial difficulties. It has been a struggle ever since. I resigned from the board at the time the plaque sale was contemplated, partly because I disagreed with the proposal but also because I despaired that the hall would never be viable financially. I have not changed my mind since then, although the current chairman, Scott Lesher, his board and Jim have worked hard to steady the ship. I just wanted to go on record to say that I appreciated Jim’s efforts in what has been a very difficult situation. Roger Faulkner Bloomfield Hills

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in morels from Oregon, which has a certification process, so the festival could live up to its name. The goal of all this is to avoid accidentally poisoning people, but morels are the easiest mushrooms to identify, both by pickers and by commercial buyers. Yes, in theory, it is possible to pick a mushroom you think is a morel and eat it and get sick. But restaurant owners and managers who have been buying morels for years aren’t going to be buying any of those. They know what real morels look like and so do the people who pick them. They are easily identifiable, and there are plenty of websites and books that point out their characteristics. There are a wide variety of morels, some small and dark gray, some large and yellow, with sizes and shadings in between. They all have dimpled caps. And the caps always hang down and are attached to the stem. With most morels, the bottom of the cap attaches to the stem. There is no space between the bottom of the cap and its stem. There is a rarer morel called the half-free. And its cap attaches to the stem halfway down, leaving a little skirt. They are taller and thinner than other morels, and taste just dandy. False morels have the dimpled top, but are shaped like an umbrella. The cap does not hang down and attach to the stem at all. The real tell, though, is that if you touch a false morel, the cap falls off. Caps don’t fall off real morels. Also, real morels have hollow stems. False morels have stems filled with white filaments. There is another mushroom called a beefsteak that is sometimes called a false morel. But it is much bigger than a real morel. With its dimpled head, it looks more like a brain lying on the ground than it does a morel. My wife and I forage for five kinds of mushrooms in northern Michigan, and none of them have poisonous look-alikes. We get morels and pheasant-back mushrooms in the spring, parasols and puff balls in the summer, and comb tooths in the fall. After last year’s season of flying morels in from across the U.S., horticulturalists and mushroom experts approached the state to actually put a certification process in place. In April, the first 32 official mushroom experts were certified at a one-day class put on by an organization called Midwest American Mycological Information, hardly enough to stop the importing of morels to satisfy commercial demand. In fact, Traverse City’s Trattoria Stella was using Oregon morels last month for lack of a certified local supplier. Another class was scheduled for Traverse City at the end of April and in Marquette in early May. And of course, being a state test,

it has to be more complicated than necessary. You can’t just get qualified to pick morels, the easiest mushroom there is to identify. You have to become expert in all 20 mushrooms Michigan allows to be sold, some of them with poisonous look-alikes that can be very tricky to distinguish. Oh, yeah, you have to pay $175, too. In the meantime, know that I’m not selling any of the mushrooms I pick. What we don’t eat right away is going in the freezer. The season has gone well enough that we’ll have morels until just about the start of next season. Unless they start making you get a license to pick — whether you’re selling or not.

TALK ON THE WEB Re: Lawmakers propose raising tipped minimum wage I guess if their wages go up enough, prices will go up, and then we will just quit tipping since they are paid a full wage. My guess is they will then make less.

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

Most civilized states already are like this. Stop punishing food servers.

think the tax credit for low-income families should be left alone, but the rest seems good. I’m even OK with them increasing registration on the cars they know will provide less revenue from fuel.

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256711

MikeInMI

Re: Michigan House committee approves road funding package

Re: Toys R Us hires ex-Michigan AD David Brandon as CEO

I think this is mostly better than the sales tax increase attempted. I

Toys R Us will soon be giving away free game systems with the

purchase of two diet Cokes. Bando

You cannot judge this man’s abilities just from his service at UM. He did an amazing job at Valassis and Domino’s. I know because he was my mentor and taught me how to succeed in my career. Tamara Nelson

Re: Panel debates killing Earned Income Tax Credit to fund roads What a stupid idea : Let’s take money from the people least likely to have a car and most in need of these funds just to eat. Shaun Nethercott

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Michigan employers awarded employees average merit raises of 3 percent this year, once again, despite competition for talent, according to a new survey conducted by the American Society of Employers for its members. The 3 percent merit raise was on par with the average raises local employers reported for 2014 and typical of the standard merit increase Raise or not. for several years How three prior, ASE said. companies This year’s handled the merit raise “ap- challenge of a pears to be on good economy: the low side, When to pay given the in- more, Page 13. creasing need to retain well-performing workers, especially when considering the corresponding findings that bonuses as a percentage of salary are up only slightly from last year,” said ASE President and CEO Mary Corrado, in a news release. “While fears of the financial fallout during Michigan’s deep recession remain, employers need to take an in-depth look not only at their wage and benefit levels but their overall menu of reward practices to determine if they are remaining competitive.” A total of 352 Michigan companies responded to the ASE’s 2015 Compensation Survey, 56 percent of them were in metro Detroit. On average, the companies responding to the online survey in January had 752 employees and a median of 141 employees, ASE said. Nearly two-thirds, or 62.3 percent, were nonautomotive employers. Among other survey findings: Companies that reported data in 2014 and 2015 reported salaries increased 2.6 percent year over year and salary increases ranged from as low as 1.5 percent for hourly, production and maintenance employees to 3 percent for supervisory, managerial and professional employees. The amount of bonus as a percent of base salary has increased slightly, rising from 9.5 percent in 2014 to 10.35 percent in 2015. Variable pay as a percent of base pay has remained stable at each level. Employees who are eligible for variable compensation could reasonably expect short-term incentives of approximately 6.1 percent, 7.8 percent, 12.2 percent and 30.6 percent for the following annual salary levels: $50,000 to $75,000; $75,000 to $100,000; $100,000 to $150,000; and more than $150,000, respectively. To read the full report, go to www.aseonline.org. Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

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SPECIAL REPORT: MICHIGAN MARY KRAMER Publisher’s Notebook mkramer@crain.com

Facing up to race: It’s a business issue, too About 25 years ago, the board of the W.K. Kellogg Foundation in Battle Creek was 100 percent white. Today, it’s 60 percent people of color. And today’s workforce of 200 employees is 44 percent nonwhite. “It was a very intentional strategy to get the perspective you need to do the work,” says current Kellogg CEO LaJune Montgomery Tabron. Since 1930, the foundation has focused on improving the lives of children, in the words of its namesake and cereal pioneer W.K. Kellogg, “without regard to sex, race, creed or nationality.” Today, Tabron believes you can’t support children without focusing on racial equity. The foundation released a report, “The Business Case for Racial Equity in Michigan,” at the Detroit Regional Chamber’s Mackinac Policy Conference last month. The report echoes what we hear around Detroit: The old ladders out of poverty — a solid K-12 education and a low-skilled factory job — no longer exist. Schools are broken and the factory jobs of old have disappeared. Children born into poverty — 50 percent are black, 32 percent Hispanic — likely will stay there. Investing now, the report says — in early childhood programs and support for strong neighborhoods with access to healthy, high-quality food — will require less investment later in prisons and other publicly funded programs. Tabron, one of 10 children growing up in Detroit, has the chops to talk business. She is a CPA with degrees from the University of Michigan and the Kellogg Graduate School of Management at Northwestern University. Kellogg Foundation trustee Rod Gillum, a partner at Jackson Lewis PC, says the business case for racial equity is obvious. “First, there are changes in the demographics of the customer base,” he said. “Second, there’s a war for talent.” Having more and diverse people in the talent pool will give companies an advantage. Kellogg has funded “America Healing” conferences and small groups that focus on “racial healing.” “The objective is to let people talk about a very sensitive subject that most people don’t want to talk about,” Gillum said. Business leaders have stepped up around “social issues” that have business implications. Early childhood programs, for example, are now embraced as the surest way to improve educational outcomes. In the wake of Ferguson and Baltimore, will business leaders step up on this issue, too?

BUSINESS “There is a sense of expansion on the corridor ... how do you coordinate that expansion?” Mark Lewis Neighborhood Ventures

[EXPERIENCE GRAND RAPIDS]

Thousands of cars and people a day travel along Michigan Street among the institutions that make up the Medical Mile. Grand Rapids would like to see more of them stick around.

Going the extra Mile GR planners want to turn Medical Mile corridor into walkable community filled with shops, lofts By Rod Kackley Special to Crain’s Michigan Business

early $1 billion in private investment helped create Grand Rapids’ Medical Mile — a roughly one-square-mile area on the northeast side of the city where 50,000 people work and study every day in the health care, educational and research institutions along Michigan Street. Now city, community and business leaders want to make it possible for those people to live in the Michigan Street corridor, whose neighborhoods to the north and south surround it. And while they are at it, Grand Rapids would love to see another billion dollars or so invested in the corridor, one of the city’s 20 business districts. “There is a sense of expansion on the corridor,” said Mark Lewis, CEO of Neighborhood Ventures, a Grand Rapids nonprofit, neighborhood-based community and economic development organization. “The question is,

how do you coordinate that expansion?” The Michigan Street Corridor Plan, which has been approved by the Grand Rapids City Commission, is a blueprint of economic development intended to provide that coordination. Driving east from downtown Grand Rapids on Michigan Street, thousands of cars go from the Medical Mile to an older, less-improved area that includes small mom-and-pop restaurants, a coffee shop or two, some national chain restaurants like Taco Bell, a car wash, substandard housing and, finally, light industrial facilities. But outside the Mile, the Michigan Street corridor is not very attractive and hardly walkable, with cars and trucks speeding by only inches away from pedestrians on sidewalks. The plan for the corridor calls for a more “vibrant community” built around a mixed-use center/transit-oriented development theme that would include a core of retail shops, services, offices, restaurants, entertainment and

apartment/loft space in new brick buildings. The corridor would be designed with more of the urban flavor that developed before mainstream use of cars and trucks. The emphasis would be on creating a more comfortable and efficient environment and experience for people walking or riding mass transit. The corridor also would have a public space where people could play and a connected street system designed for walkability. This vision for the corridor is centered on a transit line. It includes landscape planning and the development of design standards intended to draw more people to live and work along the bus lines of The Rapid transit system, in much the way that M-1 Rail is envisioned as a magnet for downtown Detroit. But for a transit-oriented development to work, it also needs enough people living in the area to make the system pay off. See CORRIDOR, Page 10

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CRAIN’S MICHIGAN BUSINESS

Senate sends a legislative toast to state craft beer makers Here’s a reason to throw back a cold one: Craft Beer Month is coming. To us, every month feels like craft beer month for Michigan’s strong and rapidly growing craft beer business; the new official state designation for July is meant to formalize that support. The Michigan Senate designated next month the official month, citing its support of the state’s agriculture industry — plus beer makers’ entrepreneurial spirit and hard work bringing about “a renaissance in handcrafted beers.” Indeed, Michigan’s craft beer industry is increasingly robust. The

LINDSAY VANHULLE Capitol Briefings lvanhulle@crain.com

mitten state ranks sixth in the nation for its number of craft breweries — 159 last year, according to Boulder, Colorado-based trade group Brewers Association . That’s

up from 131 in 2013 and includes several in the five-county metro Detroit region. Those breweries made more than 825,000 barrels last year, the 10th best output in the country, the association reported. In 2013, production reached nearly 583,000 barrels. Statewide trade group Michigan Brewers Guild estimates Michigan supports roughly 5,100 jobs at craft breweries, wholesalers and retailers, and roughly $145 million in wages. The distribution channels for Michigan-made craft brews also continue to grow, with Michigan beers turning up on more menus around the country. Closer to home,

craft beer tours are frequently a vacation theme. (See Pure Michigan guide to brewery tours and maps at michigan.org/breweries.) Comings and goings

䡲 Ron Bieber has been elected president of the Michigan AFL-CIO, replacing retiring President Karla Swift. Bieber previously worked as director of the United Auto Workers ’ Community Action Program and as assistant director of the union’s General Motors unit. Bieber is the son of former UAW President Owen Bieber. Swift was the first female Michigan AFL-CIO president when she was elected in 2011.

䡲 Heather Therrien has been named communications director of the Michigan Democratic Party. Therrien replaces Josh Pugh, who will become communication strategy director for Lansing-based political advocacy firm Grassroots Midwest in July. Most recently, Therrien worked for Washington, D.C.-based nonprofit National Democratic Institute on communications strategy training. Before that, she was a vice president for Mitchell Research & Com munications Inc., East lansing. Pugh previously worked as a communications specialist for Lansing-based Progress Michigan. 䡲

CORRIDOR,from Page 9: Grand Rapids makes plan to make corridor more of a community Where to put the people? If Michigan Street has one thing now, it is people … and traffic. 䡲 Every year, 1.25 million people visit the health care and educational institutions in the Medical Mile. 䡲 More than 28,000 people ride commuter shuttles on Michigan Street every month. One thousand board buses on The Rapid every day. 䡲 20,000 people live in neighborhoods to the north and south of Michigan Street. However, while the Michigan Street Corridor Plan found that 50,000 researchers, faculty, staff and students study and work in the Medical Mile, only 2.6 percent live in the corridor. It’s not that they don’t want to live within walking distance of Spec trum Health System , St. Mary’s Health , G r a n d V a l l e y S t a t e U n i v e r s i ty, Grand Rapids Community College or the Van Andel Institute . It’s just that there is no place to put them right now. Although specific rental vacancy rates for the Michigan Street corridor are unavailable, demand for rental housing in Grand Rapids has far outstripped supply. A Zillow study released in March found that Grand Rapids, with a vacancy rate of 1.6 percent, was the toughest city in the U.S. to find an apartment. Laurie Volk of Zimmerman/Volk Associates , a Clinton, N.J.-based real estate consulting firm, said the potential for new households in the corridor is 5,870 units over five years. That is just under one-third of the 17,750 new households expected to be created within the entire city of Grand Rapids. Close to 72 percent of these new residents in the corridor are expected to come from West Michigan, with 45 percent coming from the city of Grand Rapids. But nearly three in 10 would come from elsewhere in the U.S. The high level of demand has begun to influence the pricing of market rate units. Between 2011 and 2013, rents for studio apartments (350 to 600 square feet) rose, on average, from $695 a month to

Why the Medical Mile matters Where the Medical Mile all began: The Van Andel Institute

State University, Grand Rapids Community College and the Michigan State University School of Medicine — are publicly funded. Mary Eilleen Lyon, Grand Valley’s associate vice president of university communications, pointed out that most employer-assisted housing programs are offered by privatesector employers.

With people comes investment

[EXPERIENCE GRAND RAPIDS]

What has traditionally been known as the Medical Mile is about a mile long. The Michigan Street corridor, from Division Avenue in downtown Grand Rapids east to East Beltline Avenue, is 8.1 miles. The creation of Grand Rapids’ Medical Mile began with the creation of the Van Andel Institute in 1996. In addition, Spectrum Health System, Grand Valley State University’s Cook-DeVos Center for Health Sciences and Grand Rapids Community College’s Calkins Science Center are considered to be the anchors of the 50-acre campus of life science, health care and educational institutions. Spectrum Health’s footprint on the Mile encompasses Butterworth Hospital, Meijer Heart Center, Helen DeVos Children’s Hospital and Lemmen-Holton Cancer Pavilion. More than 50,000 researchers, faculty, staff and students study and work in the institutions on the Medical Mile. More than 1.25 million employees, patients, visitors and shoppers travel into the Medical Mile annually. Six urban neighborhoods, with nearly 20,000 residents, surround the Medical Mile and Michigan Street corridor.

$725. People who want a separate bedroom or two had better be ready to pay more than $1,000 a month, and often more than $1,100. Suzanne Schulz, the planning director for Grand Rapids, acknowledged that these rents price out of the market many of the people who work and study in the corridor. “Even Van Andel Institute will tell you not every researcher is making $100,000 a year,” Schulz said. “They are making $30,000 or $40,000. Or you have the housekeeping staff at the hospitals, and restaurant owners are saying their waitstaffs need someplace to live.”

She said housing developers are looking for low-income housing tax credits from the Michigan State Housing Development Authority to help pay for the projects. But they also are looking to create different sizes of apartments with different price points. The corridor plan also calls for development of employer-assisted housing programs to encourage employees to live close enough to their jobs to walk or ride bikes to work. That is more of a long-term goal. Three of the institutions that anchor the Medical Mile — Grand Valley

The corridor plan does not just envision an infusion of population. City officials would love to come close to an additional $1 billion in private investment. Most of the investment in the corridor has come from the institutions that have either built new facilities or expanded existing ones on the Medical Mile, Schulz said, with Spectrum Health, the Van Andel Institute, MSU and Grand Valley the primary drivers of that development. But that has started to change, Schulz said. Developers have been aggressively buying property that was held by real estate speculators and mom-and-pop companies, she said. “So the patchwork quilt of ownership is starting to fade away,” Schulz said. “There are still some holdouts, but we are seeing more unified ownership than we have in the past.” As property in the corridor moves into the portfolios of businesses interested more in development than simply holding the property, construction cranes and crews are going to work. 616 Development in Grand Rapids is investing $16.1 million to build one of those mixed-used centers that fit into the corridor plan. It will be a four-story building with 54 apartments in the top three floors and retail space on the ground floor. “There is a lot of potential on Michigan Street,” said Monica Clark, the director of development for 616 Development, “because the goal is to make it a walkable corridor that connects to the downtown area and other city neighborhoods.” Third Coast Development has cre-

ated Mid Towne Village , its largest development on Michigan Street. It exemplifies what city planners want the corridor to become. Mid Towne Village was designed to be a walkable, campuslike community. It includes a 15,000-squarefoot park and more than 200,000 square feet of building space. There is also more than 100,000 square feet of medical office space, 60,000 square feet of professional office and retail, and 40,000 square feet of Chicago-style brownstone condominiums. Third Coast is also building a hotel on the property. The corridor lost a restaurant, bank, grocery store, pharmacy and a couple of bars to the expansion of the Medical Mile. That left people who live in the corridor and its surrounding neighborhoods with only one option for many of those services: driving to the suburbs. But with people moving in, there also should be a demand for new businesses to serve the new neighbors. Those new businesses are already emerging, store by store. Third Coast Development renovated a bankrupt lumber yard on Michigan Street that was vacant for five years. It includes apartments on the second floor and a butcher shop, 24-hour gym, tavern/distillery and medical office space on the ground floor. Lewis of Neighborhood Ventures said the Michigan Street corridor is attractive to small-business owners, if only because of its traffic count. “To make it even more attractive, they need to figure out how to slow the traffic down, get customers to stop and then give them a good experience,” he said, “and ultimately get them to the point where they might want to open their own business.” Said Brad Rosely, a Third Coast principal: “The Michigan Street Corridor is a ‘node’ of downtown Grand Rapids, much like Brooklyn, Soho and Tribeca are ‘nodes’ of New York. If you don’t want to live downtown downtown, you have Michigan Street just three or four blocks away.” 䡲

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CRAIN’S MICHIGAN BUSINESS

Health care costs rise 3% for midsize firms Survey: Lowest rate rise in more than 10 years By Jay Greene

Cost containment strategies

jgreene@crain.com

Despite ongoing concerns that the Affordable Care Act will lead to higher insurance costs, midsize employers this year are enjoying historically low health care cost increases, averaging 3 percent after making plan changes. That is the lowest rate in more than 10 years and less than the national average of 4.6 percent, according to a new survey by Troy-based Marsh & McLennan Agency LLC. The surveyed companies ranged from 100 to 10,000 employees. To lower costs, employers are using high-deductible health insurance plans, wellness programs tied to incentives, telemedicine programs and aggressive prescription drug management, according to more than 450 employers that participated in Marsh & McLennan’s 12th annual Southeast Michigan Mid-Market Group Benefits Survey. Shifting costs to employees through higher deductibles, co-insurance and co-payments appears to have picked up this year, although not all companies increased cost shifting to employees, said Rebecca McLaughlan, vice president with Marsh & McLennan. For example, Rebecca monthly emMcLaughlan: ployee contribuBiggest cost tions to benefit changes in HMO, plans for family prescription plans PPO coverage increased as a percent of premium to 28 percent this year from 27 percent last year, and up to 26 percent from 23 percent for single PPO coverage, the survey found. Family HMO coverage rose slightly higher to 30 percent of premium, up from 25 percent in 2014. Single HMO coverage also rose to 23 percent this year from 21 percent. “HMO and prescription drug plans saw the greatest change,” McLaughlan said. For example, 68 percent of HMO plans now include a deductible, up from 59 percent in 2014. “We saw more changes to pharmacy plans targeted at higher-cost brand and specialty drugs,” she said, noting brand drug formulary copays rose to $40 from $35 and brand non-formulary copays increased to $70 from $60. Generic drug copays stayed steady at $10. Last year, overall employee benefit costs increased for employers an average of 7 percent, primarily because Obamacare fees kicked in for the first time, boosting costs 3 percentage points, McLaughlan said. “Those fees are (absorbed into cost structures now) and we are back to where we were in 2013” at 3 percent, she said.

One of the main strategies used by employers to slow costs continues to be consumer-directed health plans, such as health care savings accounts, or high deductible plans, McLaughlin said. In 2015, 43 percent of employers are offering high-deductible health plans, up from 38 percent in 2014. Nationally, high-deductible plans jumped to 48 percent of employers compared to 39 percent last year. During the early 2000s, Farmington Hills-based Logicalis Inc. experienced double-digit rate increases for its fully insured plans, said Mark Jenkins, vice president of human resources. During this period, Logicalis began offering lower cost high-deductible health plans. It also began to roll out cost-containment programs, including a wellness program and higher copayments for prescriptions and emergency care. Over the past five years, Logicalis has enjoyed health cost increases of 3 percent or less, Jenkins said. Last year’s increase was only 1 percent. McLaughlan said high-deductible health plans are popular among employees because they typically are less expensive than other plans and can feature a taxfree health savings account or health reimbursement account. Some 60 percent of Logicalis’ 600 Michigan employees who opt for company health insurance are in high-deductible health plans through Blue Cross Blue Shield of Michigan, Jenkins said. The company also offers 90 percent and 80 percent coverage plans, which means the employee is responsible for 10 or 20 percent of remaining costs. “We have incented people to be in high-deductible plans with very low premiums,” Jenkins said. “They are responsible for 100 percent of costs up to $3,000 for individuals and up to $6,000 for families.” Logicalis charges employees an extra 30 percent of premium to be in the 90-10 plan and 20 percent premium surcharge for the 80-20 plan. Reversing last year’s decline in use of wellness programs, 80 percent of employers said they offer at least one wellness program, up from 78 percent in 2014. And 31 percent of them tie incentives to achievement of a targeted health goal, up from 27 percent in 2014. Another cost containment device is telemedicine, whose use this year has exploded to 20 percent from 4 percent last year, McLaughlan said. An additional 27 percent of employers use health advocacy programs — assistance by phone for employees with questions on claims, coordination of care and navigating the health care system — up from 14 percent in 2014, the survey found. 䡲

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Autoliv Inc. Based: Auburn Hills Operations: Office, tech center, manufacturing plant and engineering centers in Bangalore and manufacturing plants in Mysore and Manesar. Employees: 1,200 Products: Airbags, seatbelts, and steering wheels Clients: Suzuki, Hyundai, Tata Group, Mahindra and Mahindra Ltd., Nissan, Ford, General Motors, Toyota Top executive: Suresh Nandagopal, president for Autoliv India

[ALTAIR ENGINEERING INC.]

The Bangalore office of Altair Engineering,employs 600 in India.

Altair Engineering Inc. Based: Troy Operations: Offices in Delhi, Pune, Hyderabad, Bangalore and Chennai Employees: 600 Products/services: Proprietary software and services, including engineering simulation software, software for on-demand computing, software for industrial design, and engineering services Top executive: Pavan Kumar, managing director Clients: Tata Motors, Mahindra, General Motors, John Deere, General Electric, Hyundai, Maruti Suzuki, Larsen & Toubro, Hindustan Aeronautics Ltd., Tata Consultancy Services, Hero MotoCorp, TVS Motor Co., Bajaj Auto, Ashok Leyland, Bharat Heavy Electricals Ltd., Caterpillar, Airbus, United Technologies, Honeywell, Robert Bosch, Volvo, and Mercedes Benz

warehousing Top executive: Hillary Kwan, director of business development in South Asia Clients: General Motors, Bosch, Stryker

Cooper-Standard Automotive Inc. Based: Novi Operations: Manufacturing facilities in Bawal, Chennai, Ghaziabad, Hosur, Mumbai, Pune and Sanand, and one manufacturing, design and engineering facility in Manesar Employees: 1,958 Products/services: Sealing and trim systems, fluid transfer systems, fuel and brake delivery systems and anti-vibration systems Top executive: Prashanth Doreswamy, managing director for India Clients: FCA, Ford, General Motors, Mahindra & Mahindra, Maruti Suzuki, Renault-Nissan Alliance, Tata Motors, Toyota, Volkswagen

DataFactZ Based: Northville Operations: One offshore services facility located in Gachibowli Employees: 150 Products/services: Offshore delivery of business intelligence, data warehousing and big data analytics services. Top executive: Bala Chivukula, vice president and COO of India operations

[DATAFACTZ]

Con-Way Inc.

DataFactz employs 150 in India.

Based: Ann Arbor Operations: Warehouses in Ahmedabad, Bangalore, Chennai, Faridabad, Gurgaon, Kolkata, Morinda, Mumbai, New Delhi, Pune and Vadodara. Multi-client warehouses in Chennai, Mumbai, Gurgaon and Pune and one supply chain office in New Delhi Employees: 743 Products/services: Third party logistics and supply chain management, transportation management, value-added services and finished vehicle logistics and

Domino’s Pizza Inc. Based: Ann Arbor Operations: 887 pizza stores in 196 cities and a master franchise company based in New Delhi. Employees: 24,000 Products/services: Pizza and side items customized to the Indian palate including many vegetarian options, paneer and lamb. Top executive: Ajay Kaul, president of Domino’s India (part of Jubilant FoodWorks) More information: India is Domino’s

INDIA

New Delhi

Mumbai Pune

Bangalore Chennai

With a 2014 GDP of $2.05 trillion, India is the world’s fourth-largest economy. Its open market economy includes everything from traditional village farming and handicrafts to modern agriculture and information NEP AL technology services, according to the CIA World BANGLADESH Factbook. India’s major exports are petroleum products, machinery, iron and steel, precious stones, chemicals, apparel and vehicles. Its major export partners are the United States (12.4 percent), the United Arab Emirates (10.2 percent), China (4.7 percent) and Singapore (4.3 percent). India’s major imports are crude oil, chemicals, iron and steel, fertilizer, machinery and precious stones.

Crain’s World Watch report showcases companies that are leaders in global markets and those that are expanding. Each World Watch features a different country. If you know of a Michigan company that exports, manufactures abroad or has facilities abroad, email Jennette Smith, managing editor, at jhsmith@crain.com.

Coming up July: Turkey 䢇 August: Philippines largest and fastest-growing market outside the U.S, opening more than 500 stores in the past four years.

Dow Chemical Co. Based: Midland Operations: Headquarters in Mumbai, a sales office in Noida, two centers of excellence and four manufacturing sites located around Mumbai and Chennai, and three customer application centers in Govandi, Kalwa and Taloja Employees: 900 Products/services: Paints and coatings, building and construction, plastics and packaging, water and health, food and pharmaceutical, automotive, electronics, agro-sciences, and renewable energy verticals Top executive: Sudhir Shenoy, CEO of Dow India More information: Dow India employees have volunteered for

almost 7,500 hours since 2009.

Federal-Mogul Corp. Based: Southfield Powertrain division operations: Eight manufacturing facilities, one technical center, one sales office and one corporate office located throughout India Motorparts division operations: One manufacturing facility, one distribution assembly center, four regional sales offices and one corporate office throughout India Employees: 7,100 Powertrain division products: Pistons, piston rings and liners, engine bearings, sealing and systems protection products, ignition products, valve seats and guides Motorparts division products: Pistons, piston rings, engine bearings, gaskets, brake products Top executive: Andreas Kolf, vice president of Federal-Mogul Powertrain India; Sanjeev Singh, director aftermarket for India

International Automotive Components Group

[DOMINO’S PIZZA INC.]

Domino’s Pizza has nearly 900 stores in 196 cities in India.

Based: Southfield Operations: Two plants and a technical, engineering and sales center in Chakan, and two plants in Manesar Employees: 700 Products: Components including instrument panel and cockpit assemblies, headliners and

overhead systems, glove box assemblies, front grilles, doors, door trim, floor consoles, wheel liners, passenger car and heavy truck exterior trim and components Top executive: Gajanan Gandhe, vice president of South Asia

Inteva Products LLC Based: Troy Operations: One manufacturing facility in Pune and one technical center in Bangalore Employees: 480 Products/services: Latches, window regulators and motors, engineering support for roofs, closures, motors and electronics product lines, as well as local and global purchasing functions Top executive: Sanjay Kataria Clients: Hyundai, Volkswagen, Ford, Mahindra & Mahindra and Tata Group More information: Inteva is expanding to a new, larger technical facility in Bangalore in August 2015.

TI Automotive Ltd. Based: Auburn Hills Operations: Manufacturing and sales facilities in Bangalore, Vadodara, Manesar, Pune, and two in Chennai Employees: 1,000 Products/services: Automotive fluid systems technology such as fuel tank systems, fuel delivery systems and fluid carrying lines Top executive: T. Ravibabu, managing director Clients: Toyota, Mahindra, General Motors, Hyundai, Nissan, Tata Group, Maruti Suzuki, Fiat

Visteon Corp. Based: Van Buren Township Operations: Two global technical and services centers in Chennai and Pune, and one manufacturing facility in Chennai Employees: 1,100 Products/services: Instrument clusters, audio and infotainment, climate controls for India and global customers, global and regional customer support, design support and development such as human-machine interaction graphics, and product development including mechanical, electrical, CAD, software, validation and product assurance Top executive: Amit Jain, country leader of electronics for India and customer group leader for India and Southeast Asia C l i e n t s : Hyundai , M a h i n d r a & Mahindra, Ford, Honda Motorcycle & S c o o t e r , T a t a G r o u p , Renault Nissan Alliance , Volkswagen Group , Škoda Auto

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SPECIAL REPORT

SECOND STAGE

AMY HAIMERL Reporter’s Notebook

Program matches help, money with small biz

Amy Haimerl’s last day as Crain’s entrepreneurship editor and city of Detroit reporter was June 3. Contact Jennette Smith, managing editor, with story ideas, jhsmith@crain.com

ISTOCK PHOTO

Applications to participate in the city of Detroit’s new small-business development program, Motor City Match, opened last week. The program will offer $500,000 in grants, loans and technical assistance to a variety of firms, from those in the idea phase to those needing help to build out their space. “Business owners tell us there are two main problems: finding the right space and getting all of the funding together to open,” said Rodrick Miller, CEO of the Detroit Economic Growth Corp., which administers the program. The effort to help business owners is just one half of Motor City Match. It also seeks to work with landlords to increase the number of properties ready to build out so small-business owners can open up in them. This year, Motor City Match took applications from property owners who needed help getting their buildings ready for tenants or marketing their properties. Those accepted into that “building track” will be matched with the business owners needing space who were selected in the “business track.” The business track of Motor City Match has four segments: 䡲 Get Ready: Up to 50 businesses in the planning stage are eligible for free business planning courses. 䡲 Make a Match: Up to 25 businesses searching for space will receive 1-to-1 matchmaking with the top 25 properties in the building track. 䡲 Make a Plan: Up to seven businesses that already have identified properties will receive design-and-build assistance, financial planning assistance and priority permitting. 䡲 Match Your Cash: Those who just need access to financing to open are eligible for up to 10 matching grant awards of up to $100,000 per project. There are three challenge rounds of business tracks, starting with this one. 䡲 Round 1 applications are due July 1. 䡲 Round 2 applications will be available Sept. 1 and due Oct. 1. 䡲 Round 3 applications will be available Dec. 1 and due Jan. 1. Building owners will have one more shot at participating. The new round of applications will open Aug. 1 and close Sept. 1. Find all the rules and details at motorcitymatch.com. 䡲

Raising the question %

of U.S. companies expect to increase wages at least 3 percent in the next 12 months

How 3 companies handled the big challenge of a good economy: When to pay more By Gary Anglebrandt

3 companies that paid it forward

Special to Crain’s Detroit Business

ith the recession well in the rearview mirror, many companies are bracing for problems that occur when the economy is healthy, such as the big decision to increase pay. Duke University’s Fuqua School of Business and CFO Magazine recently published results of an outlook survey of 547 U.S. companies, and it showed that 70 percent as of March expected to increase wages at least 3 percent in the next 12 months. Tech, services and consulting, manufacturing and health care led the way. The reasons given for the upward pressure: “Difficulty hiring and retaining qualified employees, improved corporate financial performance, labor market pressures and pressures from employees and their representatives.” In particular, employers are pursuing workers possessing skills formed from the study of science, technology, engineering and math, to the point of many decrying a talent crisis. Pay for skilled manufacturing workers, to take one example, has been rising for the past 18 months, said Todd Palmer, president of Troy-based Diversified Industrial Staffing Inc. Jobs like CNC programming and manufacturing equipment repair have seen wages go up $3 to $5 an hour. This month, Crain’s looks at three companies that have increased their payroll, both by

Clarity Communication Advisors Inc.: When silence followed job postings, the Southfield company knew it had a problem, Page 14 DWM Holdings Inc.: The Warren manufacturer knows all about the talent crunch, and its compensation reflects that, Page 15 Friedman Integrated Real Estate Solutions: When new hires started leaving after a month or two for the auto industry, the Southfield company took action, Page 16

number of employees and by how much they pay their workers, as they fend off suitors that might poach their existing talent or soak up prospective new hires. One manufacturer with 74 employees, DWM Holdings Inc., has experienced the tightened availability of skilled trades workers. Manufacturers say that trend is worsening as baby boomers retire while the generations behind them have been steered toward four-year degrees and office work. Similarly, Clarity Communication Advisors Inc., an information technology business, has struggled to find network technicians. Over the past two years, both companies have increased pay to attract and retain workers. It’s not only manufacturers and tech

[JOHN SOBCZAK]

Gary Goerke, CEO of Clarity Communication Advisors, raised pay and improved recruiting strategy to find the talent his company needs. companies feeling the pinch. Friedman Integrated Real Estate Solutions in Farmington Hills has had to bump up pay to keep the auto industry from sucking up its financial and tech workers. But increasing pay is a big step. Plenty of companies resist taking this step when they need to, said Mary Welsh, a Warren-based human resources consultant. They have a mind-set of “I can get a body to fill a position,” she said. “You can have a warm body, but that warm body is not fully engaged and won’t have the same commitment you want.” Business owners who MaryWelsh: A automatically resist “warm body” not increasing pay should keep in always “engaged” mind that people require continued investment, just as equipment, marketing, technology and other regular business processes do. “When the economy was crumbling, people were desperate for jobs,” said Gary Goerke, president and CEO of Clarity. “Companies could bring the wage scale really low. Some companies had to do it, while others capitalized because they could do it. “We’re not there anymore. The best candidates have better choices they didn’t have a few years ago.” 䡲

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SPECIAL REPORT: SECOND STAGE

Silence for job openings telling, so phone service biz raised pay By Gary Anglebrandt Special to Crain’s Detroit Business

GET IN ON THE CONVERSATION CAPITOL BRIEFINGS WITH LINDSAY VANHULLE Keep up with Lindsay at crainsdetroit.com/blogs

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Clarity Communication Advisors Inc. in Southfield knew it had a problem when silence followed postings for jobs that once triggered a deluge of resumes. “Two years ago, we would post on Craigslist and get a ton of resumes of very qualified people, and that started to wane,” said Gary Goerke, president and CEO of Clarity, which provides telephone services over the Internet to small and midsize businesses. Fewer people were looking, and those who were expected more pay, even if they were less qualified. Clarity then stopped putting pay ranges in its postings, asking candidates for ranges instead. The responses were “significantly higher than what we had been posting,” Goerke said. Clarity had a sharp need for support staff trained in network technology but also adept at handling customers. Experienced businessto-business salespeople who understood small and midsize businesses were also hard to come by. The company gave up trying to find software developers altogether, choosing instead to outsource. “We were burning through people like you could not believe,” Goerke said. The message was clear: Pay was too low. Since January 2014, Clarity has increased pay across the board by 14 percent, and the cost of benefits has shot up 81 percent. Tech support staff wages went up 14 percent; proj-

CEO Gary Goerke spent weeks with his CFO taking stock of Clarity’s situation and redesigning its financial model. ect managers, 15 percent; administrative support, 8 percent; programmers and network technicians, 14.5 percent; and salespeople, 39 percent. The change was a matter of recognizing a new economic climate, Goerke said. “It’s not 2008 anymore,” he said. “Even with a 14 percent increase, we’re not overpaying.” At the same time, employee count climbed from 17 at the beginning of 2014 to 28 now. Besides boosting pay, Clarity also sharpened its recruiting. “We don’t just post a job ad and wait for resumes to show up,” Goerke said. The company looks at people employed, unemployed and still in school. Clarity didn’t make the pay decision rashly. Goerke spent weeks with his CFO taking stock of the company’s situation and redesigning its financial model. When they needed extra help, they went to a local CPA and to the Elance (now Upwork) website, where they hired MBAs willing to work on the one-time project. “We had to make sure this wasn’t going to put us upside down,” Goerke said.

The company invested in new software to automate some processes and improved its training to make sure it was getting the most for its new expenses. Goerke said he didn’t feel the need to sit down with employees to explain that with better pay comes bigger expectations. “If I had to have that conversation, it means I probably didn’t have the right people on the team to begin with,” he said. For salary research, Clarity used U.S. Department of Labor data, Glassdoor and Salary.com while also keeping an eye on other companies’ job postings. Customer acquisition and retention were the areas that would receive the biggest increases, and the tweaking never stops. There was temptation not to do any of this. Clarity executives knew competitors were outsourcing technical support or eliminating it altogether, but they thought the investment in people would give them an edge in support and service. Goerke was confident an increase in business would follow, and justify, the increased costs. “That mitigated some of the concern of paying people more,” he said. “We didn’t have to take a defensive position.” Goerke’s only regret is that he didn’t make the change sooner. “Either you take the risk that you give an increase and overpay, or you take the risk of losing people who keep the company going,” he said. “You choose which risk.” 䡲

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Pointers on pay

authorizing practice.

Not sure you’re ready to increase compensation?

employees move on. Bonuses happen repeatedly.

Labor costs are among the biggest expenses for companies. Raising them isn’t something they’re going to do without good reason. Risks come with doing it too late and also too early.

䡲 Stick to promises made: Palmer said he has placed people at companies that promise raises that keep up with inflation, along with other enticements like lunches, a staff softball team or air conditioning on manufacturing shop floors. The employees come back later saying none of the promises were kept. This turns into a credibility problem for employers, he said. “Machinists are like doctors: They hang out together, they talk. You will get poached. That’s the first risk you run.”

Grand Valley’s Detroit Center at 163 Madison Avenue supports our charter school staff and our small business support services, which helps new and existing small businesses to succeed, creating jobs and economic stability here in Detroit. We also offer seven master’s degree programs to our charter school teachers in Detroit as well as over 100 specialized training sessions for teachers, charter school staff, and school board members.

Some points to consider when making the decision:

䡲 Look at employee surveys — and the employees themselves — to gauge their dissatisfaction and readiness to bolt. “If you’re surveying your employees, you’re hearing it,” said Mary Welsh, who runs Warren-based human resources consultancy WBHR Consultants Inc. Welsh also recommends watching employees for signs of disengagement, such as showing up late and doing the minimum amount of work necessary.

Visit us online at gvsu.edu/cso or call (616) 331-2240 to learn more about how Grand Valley State University is helping to shape a resurgent Detroit. Grand Valley’s Charter Schools Office located at 163 Madison in downtown Detroit.

䡲 Other obvious signs: Jobs that are unfilled after six months and prospective employees turning down offers are pretty clear signs, said Todd Palmer, president of the Troy staffing firm Diversified Industrial Staffing Inc. 䡲 Do benchmarking: Look at what competitors pay and weigh that against your current bottom line and the growth potential of your company. If the numbers don’t work out just yet, maybe other perks, such as flexible scheduling, can do the trick in the meantime, Welsh said.

gvsu.edu/cso

䡲 Temporarily bump pay with bonuses and contests: These don’t “absorb the bottom line forever,” Welsh said. Bonus pay also carries extra psychological punch. Raises happen one time, get absorbed, and

䡲 Think of the opportunity costs … A lot of small and midsize manufacturers fret over investing in people who will leave, Palmer said. But idle machines cost a lot more. “There’s a $75-per-hour opportunity cost for an empty machine,” he said. “Any M&A guy will say that. They’re tripping over dollars to save nickels.”

䡲 ... And the business costs. Outsiders notice excessive turnover, and it does not instill confidence. “People may not want to do business with you,” Welsh said. “If every time they call in they talk to somebody different, they don’t like that.”

䡲 As for that issue of paying newcomers more than existing workers, Welsh said, some differentiators should be identified to justify the difference. Look for people who bring educational variances, new skill sets or customer lists. But the best solution is to increase the pay of the loyalists who’ve been around longer. Otherwise, “it’s really hard to say to that longer-term employee that they’re valued.” — Gary Anglebrandt

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For light pole maker,it paid to plan for raises By Gary Anglebrandt Special to Crain’s Detroit Business

Warren-based DWM Holdings Inc. manufactures streetlight poles under an array of brand names. It is work manipulating steel and aluminum. For that, the company needs machinists and welders — people who are in short supply these days. On DWM’s shop floor are general laborers, welders, powder-coating specialists, drivers, quality specialists and people who can run specific pieces of equipment, such as an automated welding cell or a robotic plasma cutter. DWM has increased its staff from 55 at the beginning of 2013 to 74 now. Payroll has increased 25 percent, which reflects the added number of people as well as increases in pay for individual positions, said Ryan MacVoy, the second-generation CEO of the company, which is a union shop. Pay levels for workers across the board increased 7 percent to 15 percent, depending on position, during the last contract negotiations that set wages for 2014 and 2015. MacVoy expects to increase compensation again when the next round of negoti-

ations begins at the end of this year. The talent crunch is definitely real, MacVoy said. But not everyone has gotten the hint. Ryan MacVoy: Many manuNeed to understand facturers carry what motivates an old-school employees mindset and have the habit of paying low for new talent, those who work in the industry say. They don’t want to invest in people who might leave or not show up, even if those people went to school to get a certificate. It’s not hard to find job postings for welders that demand experience and certification, yet pay only $12 to $15 an hour. “I just don’t think you’re going to get the talent you need to put out a quality product at that dollar amount,” said MacVoy, whose company starts welders at $18.32 an hour. To find workers, DWM uses a recruiter and also has developed relationships with people at Macomb Community College ’s applied science department and Michigan

Technical Education Center . For office workers, DWM works with Walsh College. Having a strong grip on the business numbers is essential before making a decision to raise pay, MacVoy said. Costs and selling prices — profit margins — were the main considerations that came with that decision. As a union shop, DWM negotiates contracts for two or three years out. Executives are called on to pre-

dict the future. Increased labor expenses have to be more than offset by the amount of revenue the company expects it will be able to bring in by having more workers. DWM works through productivity numbers with the union to determine levels of pay increases based on performance and the pipeline of future business. “Nobody in the company should be paid based on longevity,” MacVoy said. “It’s all about productivity.”

If DWM weren’t a union shop, it still would pay what it does now, even using annual contracts because it keeps things stable. [ISTOCK PHOTO]

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Reviews and open communication help managers stay on top of what motivates workers. “Having a psychology degree would be very useful,” MacVoy said. “You need to understand the motivating factors of the people that move your company forward. For some people, the factor is increasing pay; for others it isn’t necessarily.” A leading cause of the shortage in skilled trades workers is the lack of young people heading into those careers. Younger people have shown a keen interest in career development, so DWM began shouldering the cost for continuing education at Macomb Community College and part of the cost to attend four-year schools. In return, the employee is not obliged to stay at DWM for a set amount of time. If DWM weren’t a union shop, MacVoy still would pay what he does now, he said, even using annual contracts because it keeps things efficient and stable. “We’re going to get higher-skilled people than our competition,” he said. “It goes right back to providing a predictable result for your customer.” 䡲

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SPECIAL REPORT: SECOND STAGE

Real estate biz compensates to fend off auto firms By Gary Anglebrandt Special to Crain’s Detroit Business

You wouldn’t think a real estate business would compete with automotive companies. But in Southeast Michigan, that’s how things go sometimes. Once the economy started getting back to normal, Friedman Inte grated Real Estate Solutions in Farmington Hills began having a harder time finding accountants, information technology employees and property managers, pulled as they were by the gravity of the reenergized auto industry. This put extra human resources pressure on the real estate business, which already has a harder time than many. “We are not an industry that people necessarily seek out,” COO Chuck Delaney said. Friedman had to step up its compensation to not only attract people but also to keep the ones it had. Toward the end of 2011, the company

would hire someone, only for the worker to give notice a month or two later. “They were going off to Ford and Chrysler ,” Chuck Delaney: Delaney said “At New hires would that time, the leave after two auto industry months. was paying more for similar positions. … So we started adjusting compensation at that time to better compete with the auto industry. “The key for us was recognizing that early on and making those adjustments.” The pressure began in 2012 and has tightened since. During that time, Friedman has increased overall compensation about 5 percent a year, with variations according to job. “More entry-level positions and less technical positions, those

Friedman looked at benchmark reports from its industry as well as the local economy to determine how much of an increase it would give.

Delaney said, making the decision about pay an even weightier one. There’s a balancing act to perform in order to identify the right number of people to support growth without falling onto the side of unjustified expense. One tactic Friedman used was to make its operations more efficient through technology upgrades, which reduced HR costs in one area and freed money in others. Before doing anything, the company looked at benchmark reports from its industry as well as the local economy to determine how much of an increase it would give. This allows Friedman to measure competition both within its industry and outside it. Then, to gauge the usefulness of its money, Friedman stepped up its employee reviews along with compensation. Where it once gave only annual reviews, it now also does multiple midyear reviews. Employees know greater pay has to be met

salaries have stayed the same or haven’t increased at the same rate,” Delaney said. That compares with flat pay levels during the recession, when the company, close to the forefront of the real-estate-driven crisis, “didn’t know if we’d be in business in a year or two,” he said. Employees, who now total about 300, are the biggest expense in the property management business,

with performance. When the big annual review comes up, there are no surprises. For greener employees with less work experience, Friedman ties intermittent pay increases with reviews during the employee’s first year. More established employees typically get annual pay bumps. The accelerated review schedule lets HR managers catch problems before all they’re seeing is the backs of employees walking out the door. Benefits such as 401(k) matches and health insurance also have gotten a shot in the arm, and Friedman runs engagement activities such as work parties, charitable committees and recognition programs. It’s unclear where the company would be if it hadn’t made these changes, Delaney said, but it wouldn’t be as strong. “If we had not adjusted accordingly,” he said, “we’d still be working and surviving but maybe not thriving.” 䡲

Nominees sought for Health Care Heroes Crain’s Detroit Business is seeking nominations for Health Care Heroes, a special report on health care professionals that will run in the Aug. 17 issue. The program will honor top-notch medical innovators and patient advocates dedicated to saving lives or improving access to care.

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A panel of health care judges will choose the winners. Questions? Contact Jay Greene at (313) 446-0325 or jgreene@crain.com The deadline for nominations: Monday, June 22

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SPECIAL REPORT: SECOND STAGE

Firm overhauls IT system,avoids logistical nightmare By Gary Anglebrandt Special to Crain’s Detroit Business

RPM Freight Systems LLC in Royal Oak is in the logistics business. But it doesn’t own any trucks or warehouses. RPM’s business is built on software systems, people and relationships, CEO Barry Spilman said. RPM uses software to wring out inefficiencies in shipping by matching holes in the chain with needed shipments. Customers include both shippers and those with things to ship. “There’s nothing to this business except the systems,” Spilman said. Problem: RPM’s information technology systems were unable to keep up as the company grew. Customers that ship vehicles wanted the ability to track not just those shipments but specific vehicles within shipments. They wanted to use vehicle identification numbers to track individual vehicles while in transit. RPM’s systems were such that if staffers wanted to track one vehicle, they had to track 10. Spilman and Chief Strategy Officer Al Samouelian knew they needed a system that would adapt with the business. RPM is targeting revenue of $45 million this year, compared with $16 million last year. “Our goal is not to hire 1,000 peo-

RPM Freight Systems Location: Royal Oak Description: Logistics brokerage CEO: Barry Spilman Employees: 50 Revenue: $16 million in 2014

Barry Spilman: It’s all about the IT systems

ple,” Spilman said. But revamping an entire company’s IT system is no small matter. That’s even more true when that system is its business. RPM’s backoffice systems are integrated with the systems it uses to serve customers. This project would be fullblown, “from identifying leads to collecting cash,” Spilman said. These overhauls can take two years, and that’s not even a worstcase timeline, he said. Spilman and Samouelian wanted to bring that time down dramatically. Solution: At this point, many companies would call on an IT consulting firm or hire an IT officer. Then they might build the system

Al Samouelian: Gave vendor a detailed plan

in-house and employ an army of programmers to serve as caretakers. RPM didn’t want to buy an offthe-shelf system but didn’t want to build one, either. So it hired a vendor to supply one and customize it. That’s hardly novel, but RPM made sure to make its expectations clear — namely, that it wanted this done fast. “We gave very specific requirements of how the software needs to work, what is automated and what info is displayed,” Samouelian said. “Most software out of the box doesn’t do what you want it to do. We provided them a detailed plan.” RPM knew its executives would be hands-on with the project, working extra hours to get it done. The company needed the same level of commitment from a vendor. “We set the tone with the partner

firm from Day One,” Samouelian said. Compensation was arranged as a monthly fee rather than up front. On RPM’s end, its executives took on some of the work that an IT outsourcing firm would have done. They also set up training for staffers while the overhaul was going on. RPM assigned four people to be “super users” who learned the new system and then trained others to use it, with those training teams working off-hours and weekends. Getting the vendor took two months. The actual overhaul took six months, with the rollout coming at the beginning of this year. Risks and considerations: IT overhauls expose a business to downtime, blown deadlines and unnecessary costs. But the main concern RPM had was about employee morale should the project falter upon rollout. The point of the new system was to improve the ability of staff members to get things done faster. A bad rollout could cause them to lose enthusiasm. While there have been some snags and work continues on the system, it has done the job that prompted the project — track shipments by a single VIN.

“It has reduced our workload 10 times,” Spilman said. Expert opinion: Eric Fornasiero, a Rochester Hills-based consultant to small and midsize businesses, said another useful tactic when giving performance-based contracts is to provide a bonus at the end for a job well-done, especially when the vendor is being pushed hard to finish early. He also recommended contracting for continuing support after the project is completed. For projects that are under intense deadline Eric Fornasiero: pressure, it’s Most important, smart to have an “make sure it works” operating plan for the point at which the project is 95 percent done. In the case of a software project, that plan would cover how the system would be used while the final kinks are being worked out. Finally, Fornasiero offered a word of caution about pushing too hard: “People will remember a good job, whether it was done quickly or slowly. The key at the end is to make sure it works.” 䡲

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With most details in place, Utica baseball stadium breaks ground By Bill Shea bshea@crain.com

A ceremonial groundbreaking on a $12 million professional baseball stadium in Utica is scheduled for 11 a.m. June 23. The project, announced last August, is led by Rochester sports entrepreneur Andy Appleby and is entirely privately financed through his General Sports & Entertainment LLC. The stadium will be home to a three-team independent developmental baseball league that Appleby is concurrently organizing for players ages 22-26 who have not yet made it into Major League Baseball’s minor leagues. The groundbreaking will be on the project site east of Moscone Drive and north of Auburn Road. It runs parallel to and north of M-59. Construction is expected to take 12 months, so the ballpark will be ready for play in June 2016, Appleby said. “I know it sounds ambitious, and it is,” he said, adding that he’s relying on his past baseball ownership experience. The site is a former household waste AndyAppleby: “It dump, and soil sounds ambitious, testing last year and it is.” revealed the stadium will need additional reinforcement. That added about $2 million to the project cost, Appleby said. To help offset costs, naming rights for the stadium and the new league have been sold, Appleby said, but the buyers’ identities likely won’t be disclosed until the groundbreaking. The ballpark will have a 2,000seat grandstand and another 1,500 seating spots in picnic and lawn areas. Planned are 12 private patio suites, five dugout-level suites, and five penthouse suites, Appleby said. His business plan is to generate revenue from the baseball games — ticket, concession, merchandise and suite sales revenue — and to lease the ballpark and site for public and private events such as fireworks, concerts, graduation ceremonies, Little League games, youth soccer games and high school sports. This isn’t General Sports’ first baseball project: For several years it owned a Single-A minor league team in Fort Wayne that was part of the San Diego Padres’ farm system. It was unsuccessful in an effort to build an independent league baseball stadium in Troy in the mid2000s. “I fell in love with minor league baseball,” Appleby said of his time owning the Fort Wayne Wizards. Appleby said the Utica project’s intent is less to make money than to provide a fun, safe place for families

to enjoy, and to create new baseball fans — his gift to a community he said has benefited him for 30 years. “This is such a wonderful platform to do that,” said Appleby, a former Palace Sports & Entertainment executive who currently is a director and co-owner of the English professional soccer club Derby County. Although General Sports has an artificial turf division, the playing field in Utica likely will be natural grass, and there will be grass areas for events and kids play areas, Appleby said. An additional 6.5 acres will be used for a 500-space parking lot that General Sports will share with the city for public use. A second phase, which will be built at a date yet to be determined, is a retail and condo development just across the Clinton River on 1.4 acres. Utica’s Downtown Development Authority, which owns the entire 15.7 acre project site, will lease the land to General Sports for $1 annually under a 30-year lease that includes two 10-year options. General Sports will own the stadium. The project’s general contractor is Rochester-based Frank Rewold & Son Inc., and Kansas City-based Pendu-

lum is the architect. Pendulum’s local current Detroit work is as designer of the proposed $15.5 million, 20,000-square-foot Detroit Police Athletic League headquarters and training facility at the old Tiger Stadium site. The Utica stadium will have Wi-Fi throughout the ballpark, and green aspects such as LED field lighting, separate trash and recycling receptacles, reusable cups for beverages, and waterless urinals in restrooms. Appleby said the project has all of its required government approvals and permits. The site has all the needed utilities. The team names and geographic affiliations are still in the works, Appleby said, and the league could expand in the future to include more teams and locations. Rosters will be 22 to 25 players per team, and they’ll play a May-September schedule. Dates could be added to the end of the 2016 season because of the ballpark’s expected June opening, Appleby said. Each of the three teams will play a 50-game season, which means 75 games at the new stadium. 䡲 Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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ACQUISITIONS & MERGERS HR Impact LLC, Royal Oak, a newly formed subsidiary of HRPro Inc., Royal Oak, has acquired the assets of Management Impact, Grosse Pointe, a human resources consulting firm. Website: hrpro.biz. Hazen Final Mile LLC, Taylor, a transportation company and a division of Hazen Transportation Inc., was acquired by TransForce Inc., Saint-Laurent, Quebec, a transportation and logistics provider. Hazen Final Mile will operate as a separate division of Dynamex U.S., also a TransForce company. Hazen Final Mile will retain its own brand, employees and headquarters in Taylor. Websites: hazentransport.com/final-mile; dynamex.com; transforcecompany.com.

DEALS

& DETAILS Submit news to cdbdepartments@crain.com

Livonia, as the supplier for the amphitheater’s audio system for the 2015 concert season. Websites: freedomhill.com, thunderaudioinc.com.

Doeren Mayhew Capital Advisors, Troy, acted as exclusive financial advisers assisting Renaissance Manufacturing Group LLC, Milwaukee, in acquiring the foundry operations of PurePower Technologies Metalcastings Group, Waukesha, Wis. The new entity is Renaissance Manufacturing Group Waukesha Foundry LLC. Websites: doeren.com, purepowertechnologies.com.

Michigan Emergency Department Improvement Collaborative, a collaboration between the University of Michigan, Ann Arbor, and Blue Cross Blue Shield of Michigan, Detroit, selected ArborMetrix Inc.’s RegistryMetrix cloud-based analytics to develop a data infrastructure and reporting system to improve emergency care for children and adults. MEDIC plans an initial hospital enrollment of eight to 10 pediatric and general care emergency departments for a launch in the first quarter of 2016, with more from across the state to be added in the future. Websites: arbormetrix.com, medicqi.org.

Freedom Hill Amphitheatre, Sterling Heights, selected Thunder Audio Inc.,

Leader Dogs for the Blind, Rochester Hills, agreed to provide orientation

CONTRACTS

and mobility services for the Pennsylvania Association for the Blind, Mechanicsburg, Pa., a nonprofit that provides programs and services for people with visual impairments. Websites: leaderdog.org, pablind.org. iDashboards, Troy, a supplier of business intelligence dashboard solutions, has contracted with U.S. Department of Veterans Affairs, VA Tennessee Valley Healthcare System, to create a customized dashboard to take paper-based information and share it internally, identifying internal needs. Website: idashboards.com.

Pie Five Pizza Co., a subsidiary of RAVE Restaurant Group Inc., Dallas, has opened a franchise at 24532 W. 12 Mile Road, Southfield. Website: piefivepizza.com.

MOVES Wright & Filippis Inc., Rochester Hills, moved its Dearborn office from 15044 Michigan Ave.to 22850 Michigan Ave. Phone: (313) 5840070. Website: firsttoserve.com.

Tebis America Inc., Troy, a software company specializing in CAD/CAM systems for the tool, die, mold, aerospace and automotive manufacturing industries, is launching its TEB-110 4.0 software that features a new visual design, self-explanatory icons and more feedback for the operator. Website: tebis.com.

NAME CHANGE Harrington Dragich PLLC, has changed the name of the law firm to The Dragich Law Firm PLLC. Also, the office has moved from 21043 Mack Ave., Grosse Pointe Woods, to 17000 Kercheval, Suite 210, Grosse Pointe. Telephone: (313) 886-4550.

NEW SERVICES Altair Engineering Inc., Troy, announced that GeonX S.A., Charleroi, Belgium, has joined the Altair partner alliance bringing access to Virfac, a welding simulation software, to users of Altair’s HyperWorks platform. Website: altair.com.

NEW PRODUCTS Burroughs Inc., Plymouth Township, a provider of check scanners for the financial community, announced the addition of ultraviolet check fraud security to the SmartSource Professional Elite check scanner, providing improved UV image quality and enhanced fraud detection. Website: burroughs.com.

EXPANSIONS Lear Corp., Southfield, a global supplier of automotive seating and electrical distribution systems, plans to open a new automotive plant to produce seat covers in Gostivar, Macedonia, this summer. Website: lear.com.

cost-effective battery. Website: bipolarbatterplate.com.

ElectriPlast Corp., Canton Township, a subsidiary of Integral Technologies Inc., announced the company’s invention of a patent pending, highly conductive plastic bipolar plate that will be developed into a lightweight, moldable and

Michigan Business & Professional Association, Warren, is offering Michigan businesses a complimentary Department of Labor audit guide that can be downloaded. Website: michbusiness.org/hcrc/compliance and click on DOL compliance. 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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PEOPLE

ON THE MOVE

Send news cdbdepartments@crain.com Send newsitems itemsand andphotos photostoto cdbdepartments@crain.com

SPOTLIGHT

STEFAN SPINDLER, CEO Industrial, Schaeffler AG Stefan Spindler, 53, has been named CEO industrial and member of the board of managing directors at Schaeffler AG in Troy. Previously, Spindler was a member of Spindler the executive board at Bosch Rexroth and responsible for the mobile applications business division. He succeeds Robert Schullan, who left to pursue other opportunities. Spindler studied mechanical engineering at the Technical University of Munich where, in 1992, he also obtained his doctorate in internal combustion engine technology alongside his work as a research and development engineer at MTU Friedrichshafen. From 1992 to 1999, he was chief engineer for MTU in the U.S. before returning to Germany to assume the position of after sales department manager. In 2000, Spindler joined Liebherr Machines, Switzerland, as head of the company’s engine product sector and deputy technical manager.

GOVERNMENT Lyn Roberts to director of fiscal services, City of Southfield, from deputy CFO, Wayne County, Detroit.

SERVICES Mia Anderson to senior director, profit analysis, FordDirect, Dearborn, from director of cash management and financial analysis. Also to senior director from director: Luke Fricker, DealerConnection platform; David Grandy, dealer operations; Erik Marlin, technology; Teresa Meehan, digital advertising, from advertising director; Manu Misra, architecture; Harish Ram chandani, strategy and Lincoln personalized online experience; Marcia Sorensen, OEM operations, from Ford and Lincoln enterprise director; and Keith Spondike, consumer marketing. To director: Heather Blunt, select dealer region and training initiatives, from training manager; Laquita Carpenter, consumer marketing, from senior manager, consumer marketing; Darlene Deeg, accounting, from accounting and finance manager; Emily Eldridge, consumer marketing, from dealer relations manager, consumer marketing; Brett Moore, Lincoln customer engagement, from advertising manager; and Marina Safroniy, consumer marketing platform, from manager.

SUPPLIERS Hunter Coe to president, Coe

Press Equipment Corp., Sterling Heights, from cut-to-length business manager. Also, Jim Ward to director of engineering, from general sales Coe manager; Jeff Grivas to director of sales, from director of sales, Easom Automation Systems Inc., Madison Heights; and Dave Boissonneault to CFO, from CFO and COO, SteriMed Medical Waste Solutions Inc., Farmington Hills.

TECHNOLOGY Joni Jones to marketing director, iDashboards, Troy, from freelance marketing, sales and creative director, J. Jones Design LLC, South Lyon. Matthew Jones Carstens to vice president and general counsel, utility operations, legal, ITC Holdings Corp., Novi, from senior counsel and practice group leader, legal department, ITC Midwest LLC, Cedar Rapids, Iowa.

People on the Move announcements are limited to management positions. Email cdbdepartments@crain.com. Include person’s name, new title, company, city in which the person will work, former title, former company (if not promoted from within) and former city in which the person worked. Photos are welcome, but we cannot guarantee they will be used.

CALENDAR WEDNESDAY JUNE 10

The Talmer Bank Story: Concept. Acquisitions. Marketing. 8-10:30 a.m. Marketing and Sales Executives of Detroit. Talmer Bankcorp Inc. Chairman Gary Torgow will share how purchasing troubled banks in the middle of the recession enabled the organization to grow nearly 8,000 percent. Management Education Center, Troy. $35 MSED members, $50 nonmembers. Website: msedetroit.org.

THURSDAY JUNE 11

Small Business Unlocked Morning Mingle 7:30 a.m. Detroit Regional Chamber. Interact with potential business clients and strengthen relationships with other chamber professionals. Flagstar Bank, 2050 W. Big Beaver Road, Troy. Cost: Free for chamber members, $595 for future members. Contact: Marianne Alabastro, (313) 596-0479.

Upcoming events A2 Tech Trek Innovation Open House. 3-7 p.m. June 12. Ann Arbor Spark. Features open houses at downtown

Crain’s honors 20 in their 20s, Class of 2015 Join Crain’s in honoring its 10th class of 20 in their 20s: the best and brightest up-and-coming businesspeople in Southeast Michigan. The event is 5-9 p.m. June 29 at HopCat Detroit , 4265 Woodward Ave., Detroit, and include 2015 honorees, friends, family, past recipients, food and an open bar. Tickets are $50 individual, $45 each for groups of 10 or more, $40 for alumni. Preregistration closes at 9 a.m. June 26 . If available, walk-in registration will be $60 per person. For information, contact Kacey Anderson (313) 446-0300; email: cdbevents@crain.com; website crainsdetroit.com/events.

Ann Arbor’s technology companies and organizations. Start at Menlo Innovations, MLive Media Group or Ann Arbor Spark. Free. Contact: Jenn Cornell, (734) 765-0174; email jenn@jenncornell.com; annarborusa.org

Trade Fair — Supplier Diversity Matchmaker. 8 a.m.-noon. June 12. Michigan Hispanic Chamber of Commerce. Event brings together suppliers, corporations and tierone companies with diversity growth targets. The Henry, Dearborn. $150. Contact: Barbara Lange (248) 792-2763 ext. 101; email: blange@mhcc.org; website: www.mhcc.org Young Leader Conference. Noon5 p.m. June 16. Detroit Economic Club. Professional development designed by young leaders for young leaders. Cobo Center. $90. Contact: Paige Narins (313) 9638547, ext. 115; email: pnarins@econclub.org Calendar guidelines. Visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. 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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Dickinson Wright opens office in Reno, expands in Las Vegas

Dustin Walsh: (313) 446-6796 Twitter: @dustinpwalsh

By Tom Henderson thenderson@crain.com

Detroit-based Huron Capital Partners LLC, annually the busiest private equity firm in the state, has completed its 11th and 12th acquisitions of the year, which are its seventh and eighth deals in the past nine weeks. Huron has acquired Lexington, N.C.-based Carolina Drawers as an add-on for one of its platform companies, Georgetown, Ontariobased Olon Industries. And Huron has acquired Nexus Technical Services Corp. of Oakbrook Terrace, Ill., for another platform company, Jensen Hughes Inc. of Baltimore. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve been clicking on all cylinders. Weâ&#x20AC;&#x2122;ve had a good year,â&#x20AC;? said Huronâ&#x20AC;&#x2122;s managing partner, Brian Demkowicz. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve got a number of companies in due diligence that we expect to close on in the next two months, both new platform companies and add-ons for current platform companies. â&#x20AC;&#x153;We had a goal of 15 acquisitions

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this year, and weâ&#x20AC;&#x2122;ll easily exceed that. But it hasnâ&#x20AC;&#x2122;t been easy because multiples are so high,â&#x20AC;? he said, referring to the ratio, in what is generally considered an overheated market, of acquisition price to EBITDA, which is earnings before interest, taxes, depreciation and amortization. Private equity firms are often paying multiples of eight or nine times EBIDTA, multiples Demkowicz says he tries to limit. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve had to be very disciplined. Weâ&#x20AC;&#x2122;re finding most of our deals off the beaten path. Most of our deals didnâ&#x20AC;&#x2122;t have a broker on the other end, which makes them more cost-effective,â&#x20AC;? he said. This is the first add-on for Olon this year and second overall. Carolina Drawers is a leading manufacturer of solid wood and plywood drawers for the U.S. kitchen and bath cabinet and furniture industries. It also sells a line of Baltic birch plywood products and has operations in Indiana, Illinois and Ontario. Olon makes a wide range of fur-

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Rainbow regrowing day care center business By Chad Halcom chalcom@crain.com

Sometimes, a $100 million opportunity for one business can come in the framework of its legal agreements with another. When Patrick Fenton sold a previous version of his Rainbow Child Care Center Inc . to Learning Care Group Inc . in 2008, the Novi-based day care giant absorbed his nearly 50 care centers and Fenton became a regional developer for the new owners. As such, he had an agreement to build new Rainbow centers that would transfer into Learning Care Group on completion, as well as a noncompete agreement barring him from operating any day care business of his own. But about a year later, Learning Care terminated the development agreement in a changing market — but his noncompete clause went away with it, and the Rainbow brand name returned to him. The previously sold locations have all rebranded to Childtime Learning Cen ters, a Learning Care chain with 25 Michigan locations today. That left Fenton, CEO of Rainbow, with eight to 10 project sites in various stages of development that were his to keep, and a chance to rebuild the chain he’d originally founded in New Jersey in 1986. The Troy-based day care company now expects to have 110 locations in 12 states before the end of the year. Scott Eisenberg, managing part-

ner of the Birmingham-based investment banking firm of Amherst Partners LLC , said there are several reasons why the day care industry can grow in an area like Southeast Michigan, where population is stagnant. First, “This is a real estate play, too, like investing in nursing homes or assisted living centers. They’re a business built around real estate, and that provides a yield,” he said. Second, he said those who have left the workforce in recent years have tended to be older workers, with a high percentage of younger families having both parents working and in need of day care. Third, he said millennials are waiting until they are older to get married, and by the time they have children they are better able to afford child care. Finally, “There’s a focus now on giving your kids the best, no matter what it costs,” he said. The investor interest in Rainbow has been strong — and also helped the company conquer an experience gap in acquisitions. In 2010, New York private equity firm Spire Capital Partners LP acquired a stake in Rainbow, and since then, Fenton said, the company has been growing by a mix of new construction and acquisitions. Rainbow expects to gain a certificate of occupancy within the next month on a new Orion Township location, and it opened a new center in Murfreesboro, Tenn., a few

“(Spire Capital) was a good team to work with because what we didn’t know how to do well yet was acquisitions. They pretty much knew nothing but acquisitions.” Patrick Fenton, Rainbow Child Care Center

weeks ago. “(Spire) was a good team to work with because what we didn’t know how to do well yet was acquisitions,” he said. “They pretty much knew nothing but acquisitions, and we knew nothing but greenfield (development). And both were very important.” Rainbow stresses a “sense of continuity between home and school” and exceeding accreditation or quality standards in the states where it operates, as well as a focus on reassurance of a comfortable routine at its centers. The company also launched a Montessori method preschool program at its Troy center on John R Road over two years ago, and the company hopes to have half a dozen similar programs within the year. Fenton said care centers can

house up to 125 children each, meaning each site’s yearly revenues can approach $1 million. Fenton declined to provide total gross revenue but because all care centers are corporate-owned and operated, that means revenue companywide would likely exceed $100 million this year. While Rainbow is still growing, Fenton said there are no plans to become a nationwide player in the day care market, like Learning Care or Oregon-based KinderCare Learn ing Centers LLC. Instead, he wants to focus on a localized development model and quality standards. The company made a sizable expansion in early 2014 by acquiring Crescent Springs, Ky.-based Little Red School House Inc. for about $28 million, adding 13 care centers in Kentucky and southern Ohio into its network. Fenton says the company is in discussions on three comparably sized acquisition deals, at least one of which could close this year. A day care market research report published this month by IBISWorld estimates the U.S. day care market had an aggregate value of $45 billion, about flat with its size in 2010 — but predicted economic recovery will greatly benefit the industry. Fenton said each care provider finds its own niche, but it remains highly fragmented. “Even if you figure conservatively (the size of the) market, the top 10 to 15 companies together wouldn’t hold much more than 10 percent of it. It’s a

highly fragmented market,” he said. “And we want to focus more on the quality of care and our services, and on our distinguishing factors.” Rose Alberty, president and coowner of Canton-based Rosey’s Romper Room LLC, said her company used to have a second location in South Lyon but shuttered it in 2010 following the bankruptcies of the U.S. automakers that employed many of her customer families. Fortunes changed and the company began growing again around 2013, amid the state’s economic recovery, she said, and now she is considering growing outside Canton once more. “We’re looking again at South Lyon, but not in the city this time. We’ve just been looking at various locations, possibly a site near to the freeway (I-96),” she said. “We’ve just got to find the perfect location and something that fits for us.” Fenton said many of the executives of the former Rainbow chain have since returned to the company as it rebuilt, and he considers the team an asset. “What we have that we like here is our culture, and our people. Everybody here has the same attitude and culture,” he said. “We are going to succeed, and we just look at how and what we can each do to make that work.” Tom Henderson contributed to this report. Chad Halcom: (313) 446-6796 Twitter: @chadhalcom

SORRELL, from Page 3: Venture capitalists worried after MEDC vice president resigns tech transfer office at the University of Michigan before he was named last year to run the Ann Arbor office of Chicago-based Baird Ventures . “She understands entrepreneurs. She’s a very quantitative, very focused person who gets the job done.” He said he, like other local venture capitalists, worries what her departure means in terms of continued support for the VC community by the MEDC. “It is certainly a concern, but it hasn’t played out yet. It depends on what the MEDC does moving forward,” he said. Leadership changes Sorrell’s departure also comes at a time when area venture capitalists are worried that Finney’s replacement as CEO of the MEDC, Steve Arwood, wants to reduce the Steve Arwood: MEDC’s focus on Pledges support of venture capital entrepreneurship through such state-funded programs as the Venture Michigan funds and the 21st Century Investment Fund.

Arwood pledged his ongoing support for entrepreneurship in an e-mail to Crain’s last week. “A vital and strong entrepreneurial ecosystem is, and must remain, a critical component of Michigan’s economic development strategy,” he said. “Without a robust network of business incubators and a broad set of entrepreneurial support services, Michigan will not realize the full economic potential of its worldclass research, development and entrepreneurial talent. “Paula was, and will remain, a huge asset to that ecosystem in Michigan. We are sad to see her leave, and wish her the best of luck in the private sector. We feel confident that her work at MEDC will continue to provide the necessary support for Michigan entrepreneurs for many years to come.” In March, Arwood told Crain’s he was open to further financial support by the state for VC firms, but that his top priority was training workers to fill the openings for skilled jobs that established companies have trouble filling. Sorrell said she left the MEDC on good terms. “It was a great ride. They asked me to stay on, but it was just time.” Some disappointment

Sorrell did admit to being irked at lawmakers who question state funding for early-stage tech companies. “For every dollar the state invested, we saw a 35-to-1 match,” said Sorrell. “That’s venture capital investment, angel investment, large federal SBIR grants, bank loans and first revenue following product launch. It wasn’t just a long-term return, it was shortterm return.” And she acknowledged disappointment that there seems to be a reduced focus by the MEDC on entrepreneurship. “I carried a card around with me all the time that had the strategic plan for the MEDC on it, and it had entrepreneurship at the top of the list,” said Sorrell. “The most recent plan had entrepreneurship at, like, number eight.” When Finney recruited her to the MEDC, Sorrell had been teaching commercialization courses to would-be entrepreneurs at Spark, TechTown in Detroit and Automation Alley in Troy. Sorrell, who has an MBA from Central Michigan University, began her marketing career as head of marketing in 1997 for Polyphasic, a Michigan State University spinoff

that created mapping software for the Web. In 1998, she joined another East Lansing company, Voyager Net Inc., as vice president of marketing. She left the company in 2002, after it went public, and helped launch the state’s Small Business and Technology Development Centers. Sorrell said she already has one contract in place, to consult with the technology transfer office at the University of Miami in Florida. Its director is James O’Connell, who used to work with Sorrell when he was with the tech-transfer office at the University of Michigan. She said she is negotiating a contract with a nonprofit in San Francisco that supports earlystage tech companies, and has talked to local venture capitalists and companies about helping them with marketing and commercialization strategies. Response by local venture capitalists to Sorrell’s return to consulting has been effusive. “I think the world of her. She has been a strong driver of entrepreneurial efforts in Michigan,” said Jan Garfinkle, co-founder and managing director of Ann Arbor-based Arboretum Ventures LLC , one of the most successful VC firms in the state in recent

years. Garfinkle particularly pointed out for praise the MTRAC program Sorrell helped launch in 2012. Its full name is Jan Garfinkle: the Michigan Praises Sorrell’s Translational work on M-TRAC Research and Commercialization program and was funded by the state’s 21st Century Jobs Fund to accelerate technology transfer at state research universities. Jim Adox, who manages the Ann Arbor office of Madison, Wis.based Venture Investors LLC and is chairman of the Ann Arbor-based Michigan Venture Capital Associa tion, praised Sorrell for helping the MVCA fund an entrepreneur-inresidence program and a program for helping companies recruit Clevel executives. As for the name of her company, Paula LLC, Sorrell said: “Yes, it’s pretty informal. I don’t have to spell it for anyone, and the URL is pretty easy. My business is typically from referral, and most of my clients will be past clients.”䡲 Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

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FORD,from Page 1: ‘Substantial changes need to occur’ to research and engineering campus Engineering Center comprises 1.9 million square feet. “We regularly evaluate ways to maintain, upgrade and improve our campus facilities to meet the needs of the business,” said Dawn Booker, communications director for Ford Land. “At this time, there are no specific improvement plans to discuss or announce.” However, the RFP provides insight into what could come to the center, which is across the street from Edsel Ford High School in the triangular area bounded by Rotunda Drive, Village Road and Oakwood Boulevard. “To accommodate the increased number of employees at the REC, substantial changes will need to occur throughout the campus,” the RFP states. Workplace features

The project also would redesign the space with more modern amenities, ranging from gathering hubs in the offices to outdoor walking paths. The center, which currently has about 13,000 Ford employees working there, would require redesigned spaces to reflect “the latest workplace trends and changing technologies in order to improve employee retention and the attraction of new talent.” Ford is not the only Detroit automaker undertaking such a large overhaul of space. In May, General Motors Co. announced a $1 billion investment at its Warren Technical Center that is expected to create 2,600 jobs as part of a $5.4 billion investment plan at U.S. operations. Work at the 60-year-old campus — the nerve center for GM’s global vehicle development that is home to engineers, designers, information technology workers and other employees — is expected to be complete by 2018. It’s not clear from the RFP when the Ford engineering campus work would begin, or a final target budget, but it is envisioned as a 10-year plan. The Ford RFP also says that the master plan must make the campus pedestrian-friendly and include “safe and attractive gathering places.” Walking paths, water features and other green spaces and landscaping are to be incorporated into

[COSTAR GROUP INC.]

The request for proposals for Ford MotorCo.’s research and engineering campus envisions a design that includes walking paths, water features and other green spaces.

Plans for Ford’s Research and Engineering Center A Ford Motor Co. RFP summarizes what a redeveloped campus and master plan for the automaker’s Research and Engineering Center in Dearborn should look like. It’s envisioned as a 10-year plan, but a specific construction timeline hasn’t been disclosed. Among the work expected:

Improvements to office and testing space Building demolitions Infrastructure improvements, ranging from features that reduce energy use to walking paths

Construction of new, state-of-the-art buildings More parking Consolidation of employees into a more densely occupied campus A phased redevelopment plan that ensures operations can continue smoothly for product development and testing during construction Source: Ford Motor Co. Request For Proposals/Qualifications, November 2014

the design. Modern work sites The GM and Ford projects are examples of automakers adapting to more competition for talent and other factors, architects said. Bob Kraemer, principal of Detroit-based architecture firm Kraemer Design Group PLC ., said employers are Bob Kraemer: increasingly Renovation helps considering with recruitment. workplace design as a key factor in attracting and retaining employees. “We have, for about 20 years, over and over heard that when we do ren-

Miller Canfield nets 10 from Chicago rival Miller, Canfield, Paddock and Stone PLC announced Friday it is expanding its Chicago office with the hiring of 10 attorneys from Chicago-based competitor Kubasiak, Fylstra, Thorpe & Rotunno PC. The hiring is part of the Detroitbased firm’s expansion strategy in the region, Michael McGee, CEO of Miller Canfield, said in a press release. “Chicago is a strategic priority based on client needs and continues to be a key market in our business growth plan as the largest economic and financial center in the Midwest,” McGee said. Joining the firm from Kubasiak

Fylstra are partners Gerald Kubasiak, Raymond Fylstra, Steven Rotunno and David Schaffer as well as six other attorneys. The new additions join three other new hires this year in Miller Canfield’s Chicago office. Kubasiak will serve as the comanaging partner of the office, which now employs 32 attorneys. Todd Holleman and Darryl Davidson are the other co-managing partners of the office. Miller Canfield generated $112 million in revenue in 2014, according to The American Lawyer’s 2015 Am Law 200 rankings. — Dustin Walsh

ovation of office spaces, after the fact, it helps with recruiting and retention,” Kraemer said. “It wasn’t done for that purpose, but it was def-

initely a side effect, and today, we actually pitch concepts that way.” He said automotive companies are actually “the furthest behind (in updating their spaces) because of the legacy thinking.” Ford’s move to renovate and modernize its space is a shift in the right direction for the 112-year-old company, said Matt Rossetti, president of Detroitbased architecture firm Rossetti Associates Inc. , which has done interior design for Ford in the Matt Rossetti: past. Ford had been “Ford, just like “unbelievably all the autos, had boring.” forgotten about design and quality,” Rossetti said. “They were so unbe-

lievably boring, French vanilla spaces, tall cubicles.” Rossetti said that on one Ford project, with a limited budget, his company came up with a “really inventive solution that came in on budget.” But Ford didn’t react well, Rossetti said. “They said the design was too interesting, that it looks like they spent money, and they don’t want their shareholders thinking that they spent money on themselves,” Rossetti said. That’s not the right mentality to project; an inferior working environment sends a message to workers that they don’t merit the investment, Rossetti said. “How could you possibly expect productivity to be anything other than terrible? I’m being a little dramatic, but frankly, the results are pretty much the same.” When Kraemer Design Group was talking with Covisint Corp. , a spinoff of Compuware Corp. , about its new headquarters in the Travelers Towers II building in Southfield, space that could be used as a recruitment tool was an active selling point, Kraemer said. It was the same with the Archdiocese of Detroit, which moved its 200 employees into the former United Way building at 1212 Griswold St. in downtown’s Capitol Park this year. “It was the exact same situation,” he said. “They were in old space and they were having trouble recruiting people.” Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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MARYSVILLE, from Page 1: Demolition of DTE plant fuels ideas for riverfront renaissance riverfront meant industrial, not recreation, when housing values increased as you got farther away from water. “We’re going to make this a destination-type site. We’ll create a riverfront with a town-square feel,” said Randall Jostes, CEO of St. Louisbased Environmental Liability Trans fer Inc., which is responsible for turning what is a brownfield today into a greenfield ready for development. “This is the future of Marysville,” said Mayor Daniel Damman.

when it gets going,” Damman said. Post-industrial vision

A river runs next to it It’s easy to pass through Marysville without knowing it. It has no central business district and seems to be just a southern district of Port Huron, its larger neighbor immediately to the north. Marysville’s main thoroughfare — Gratiot Boulevard, the northernmost stretch of the Detroit street of the same name — runs through town on its way to Port Huron’s historic downtown and lakefront beaches farther on. Until now, there hasn’t been much reason to stop there. City officials hope the DTE development will give people in nearby counties an excuse to drive to Marysville instead of through it, to give them a weekend retreat far closer than Traverse City or Mackinac Island, and to give Canadian citizens coming over the Blue Water Bridge to shop a reason to head a few miles south and make a weekend of it. With I-94 and I-69 both just minutes away, Marysville is an hour’s drive away or less for millions of Michigan residents. David Di Rita, a principal of The Roxbury Group , the Detroit-based real estate developer that renovated the old Globe Building on the Detroit River into the Department of Natural Resources’ Outdoor Development Center, said that a marina on the DTE site will be crucial. He said he is familiar with the DTE plant because as a kid his family drove past it on the way to Lexington in the summer. He said the Army Corps of Engineers built a break wall in Lexington in the 1970s that alDavid Di Rita: An lowed for a large on-site marina marina, “and would be important that put Lexington on the map.” He added: “Absolutely, the key is opening up the waterfront. Creating more opportunities to interface with that property from the water is necessary.” Boaters in Lake St. Clair, for example, will have more of an excuse to pilot up the St. Clair River and make a weekend of it by having a place to dock, get a room for a night and have a nice dinner. “Water brought DTE to Marysville, and it can bring people there now. You create a demand,” he said. “Marysville is not that far away, and obviously the water there is beautiful.” “It takes a lot of vision to trans-

[TOM HENDERSON]

Demolition is underway on a DTE coal-fired power plant in Marysville, which is 12 stories and 300,000 square feet and dominates the skyline from the banks of the St. Clair River.

Suppliers keep Marysville tax base strong For a city of fewer than 10,000, Marysville can boast a strong industrial tax base, even with the closing of the DTE Energy Co. power plant and the loss of its 250 jobs in 2001. In April, SMR Automotive Sys tems, part of U.K.-based Samvardhana Motherson Reflectec Group Holdings Ltd., a tier-one auto supplier, announced it would create 200 new jobs and invest $18.6 million to buy 4 acres of land and build an 85,000-square-foot expansion of its growing complex on Busha Highway on the south side of the city. SMR makes exterior mirrors and blind-spot detection systems at the complex. It was the third expansion in Marysville by SMR in the past two years. When this project is done, the company will have more than 400,000 square feet at the site and employ almost 1,000, making it one of the largest employers, and the largest manufacturer, in St. Clair County. St. Clair County will administer a Community Development Block Grant of $2 million to train new hires for the expansion, with Marysville considering a tax abatement on new construction as part of the required local match

form an industrial riverfront,” said Mark Wallace, president and CEO of the Detroit Riverfront Conservancy. “It’s usually had so much hard use you have to remind yourself that it was once a natural place. “In Detroit, we took a very blighted area and turned it into one of the best parks in America. It’s great to see cities like Marysville taking a look at their riverfronts, too.” Wallace formerly was the Detroitbased director of Hines Interests LP who managed Bayside, a 13-acre residential and commercial-use waterfront development in Toronto and was project manager of River Point, a 1.3 million-square-foot mixed-use development on the Chicago River. Jostes has engaged Sitetech Inc. of Grafton, Ohio, to tear down the plant and handle the massive recycling involved. Tons of steel will be sold as scrap. Some bricks have gone to DTE to distribute to former

for the block grant. SMR confirmed that at least 102 of the new jobs will go to low- to moderate-income applicants, with the average wage at $11 an hour. The Michigan Department of Transportation approved a grant of $1 million to put in bypass lanes on the highway that goes past the complex to ease congestion when shifts start and end, with construction now underway. In 2013, SMR announced a $40 million, 30,000-square-foot expansion of its paint building, creating what was projected to be 366 new jobs, and last fall it announced a building expansion of 15,000 square feet. SMR also bought a 100,000square-foot warehouse in Port Huron last year. The expansion of the paint building was accompanied by an announcement that a job training grant of $500,000 by the Michigan New Jobs Training Program would fund training by St. Clair Community College for 90 of those new jobs. German tier-one supplier, ZF Friedrichshafen AG , employs about 600 at a 6-year-old axle plant in the city. A Chrysler Mopar parts plant employs about 300. — Tom Henderson

workers as souvenirs. Many of the bricks now in large mounds on the site will be ground up and used as landfill on the site after coal-contaminated soil has been removed. Environmental Liability shares ownership and some management with Commercial Development Co. Inc. of St. Louis, which began talks with DTE about buying the site in December 2012 and which closed on the deal in December 2013. CDC was founded in 1985 to buy vacant industrial properties and either retrofit them into big-box distribution centers or do demolition and brownfield site reclamation. CDC has since bought nearly 100 industrial sites in the U.S. with a total of about 54 million square feet, including a 100-year-old G. Heileman Brewery in Frankenmuth after the brewer declared bankruptcy in 1991. That site is now home to the River Place Shops, an outdoor German-

PORT HURON

69 MARYSVILLE

LAKE ST. CLAIR [PIERRETTE DAGG/CDB]

themed mall with 40 shops and attractions. Jostes said CDC has engaged a firm that will begin marketing the DTE site to hotel and restaurant developers after further clean up. He said that an architectural design firm will be hired soon to do renderings of possible development at the site, a mixed-use project that will include retail, too. Jostes said his firm will do utility relocations and handle all the rezoning, turning the site into what he described as a pad-ready greenfield. He said CDC would prefer to then sell the land to a developer, although it could develop the property itself if necessary. Fernandez said talks have begun with firms in Wisconsin that manage water parks about an installation on the DTE site. More than $5 million in waterfront grants have already gone to improve the city’s waterfront, funding a new kayak launch south of the DTE plant, a boardwalk along the river and a new fish-cleaning station for anglers. Fernandez said he is working on a grant for a fishing pier, too. “A casino is on our wish list, too, although that might be difficult to get through the Legislature,” said Fernandez. The No. 1 project for the development, though, is the boutique hotel. According to Daniel Casey, CEO of the Economic Development Al liance of St. Clair County , the hotel occupancy rate in the county is 60 percent, compared to 55 percent statewide, a rate that is expected to go higher with the opening in April of a new 43,000-square-foot convention center in Port Huron, under the Blue Water Bridge that connects Port Huron to Sarnia, Ontario. “They just cut the ribbon. We won’t have enough hotel rooms

Marysville officials credit DTE with making sure it found a buyer that would have a 21st century vision for what riverfront property could be, especially property on some of the bluest river water in the world, just a few miles downstream from Lake Huron. “We’d been worried,” Damman said. “There were rumors a scrapmetal recycler would buy the site and use it to load freighters going to the Pacific Rim. But DTE was keenly aware what that site meant for the region. You can’t overstate what an exceptional partner DTE has been. They really worked hard to find the right suitor for the site.” “We all knew from the get-go that we had to do our due diligence and make sure it was developed right. It was very critical in doing our due diligence and in the bidding that we keep the city involved in every step of the process,” said Ron Chriss, regional manager for DTE. DTE continues to be active in Marysville. The DTE Community Foundation has donated $25,000 to start fundraising for the new Marysville Community Endowment Fund, which will formally launch during an event at Marysville High School at noon on Friday, June 12. The end of an era Although the community looks forward to new development, the plant evokes nostalgia as an iconic part of Marysville’s past and its sole landmark. It will be missed. “That plant is an icon here. It employed hundreds of people, and it provided a huge tax base to the city,” Fernandez said. “People will always associate that site with Edison.” Ryan Cooley, the founder of O’Connor Realty Detroit LLC, and his brother, Phil, the owner of Slow’s Bar BQ in Corktown, grew up in Marysville. Their grandfather, Francis O’Connor, worked for Edison as a tree trimmer before retiring in the early 1970s to found O’Connor Realty Inc. Ryan Cooley said some of his fondest memories are of the plant. “It’s my first memory. My grandfather had access to the plant grounds, and we’d go fishing there. He always had time to take us fishing. Ryan Cooley: We’d catch perch Plant a childhood and walleye. fishing spot They’re special memories. “I always thought the plant was a beautiful building architecturally, though others may have seen it differently. I look at it the way I look at the (Michigan Central Depot) across the street from where we’re at. I’m happy to just have it sit there and be able to look at it, and I’d have been happy to see the DTE plant stay there, too, though I’m glad to see them developing something like this on the river.” 䡲 Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

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CHICKEN, from Page 3: Trademark office to settle naming issue future locations in northern Ohio, Sobeck said. Patent attorneys also aren’t clear on whether there is any real meat yet to Shake Shack’s chicken expansion plans. At the moment, there may not be much to worry about, said Cantor. “The issue is, nothing is happening in real life right now,” he said. “The only activity we’re seeing is at the trademark office.” Food industry chatter Sobeck said once national stories began to appear in May about rumors that Shake Shack planned to launch a line of chicken products or a spinoff restaurant, customers have begun asking the Berkley company about it. “So many people in our restaurants sent emails or mentioned it to our family or the employees asking what we were going to do about that,” he said. “Our customers are very loyal, and working at the store you see a lot of them all the time and get to know them. So you devel-

[BUCK ENNIS/CRAIN’S NEW YORK BUSINESS]

A Shake Shack in Manhattan.The chain has 40 U.S.locations – but none in Michigan. op a rapport with then, and they’re brand-loyal.” But again, Shake Shack has not started using Chicken Shack as a brand or even obtained the trademark it wants — and even if it did there would only be a potential legal problem if it caused some confusion or “diluted” the market for the local chain’s customers or suppliers, Cantor said. Shake Shack did not respond to voicemail or email requests for comment on this story last week.

Robin Silverman, an IP attorney for the company at Golenbock Eiseman Assor Bell & Peskoe LLP in New York, deferred comment to her client. Shake Shack has 40 U.S. locations (and 27 stores overseas) but none is in Michigan or Ohio. And currently, the only chicken menu item at Shake Shack is the chicken dog, a hot dog made with chicken, apple and sage sausage. If the trademark name battle did come to Chicken Shack’s own market, it may not be a question of legal standing as much as financial stamina, said Kenneth Dalto, owner of Farmington Hills-based Kenneth J. Dalto & Associates and a consultant in several industries including restaurants. “Shake Shack did an IPO not even six months ago and they are sitting on some money right now,” he said. “It could hire a very powerful New York law firm if it’s intent on the brand, and Chicken Shack is a good family company, but maybe it doesn’t compete on that level. “If it does get into litigation, right

and wrong is hard to sort out sometimes. You’re still able to get the other company’s mind off of running its business and even if you lose it’s still a two-year battle.” A simple beginning Sobeck said perhaps the biggest irony is in how Chicken Shack itself came by the company name, when John Sobeck was still building the first restaurant in Royal Oak and discussing possible names with a friend. “He was talking about different names at the time and his friend pointed out there was a pretty wellknown Army-Navy surplus shack near there. They were known as the surplus shack, and the guy said you should just call your place the chicken shack. He did, and the name stuck,” he said. “It’s interesting when you think about how much other companies put into market research and testing out names before they settle on something like that.”䡲 Chad Halcom: (313) 446-6796 Twitter: @chadhalcom

MEXICO, from Page 3: Small local suppliers heading for the border come much smaller.” Rapid expansion Hollingsworth — minorityowned and controlled by Stephen Barr, who is of American Indian decent — is bidding on four programs in Mexico for distribution services and commodity management for FCA US LLC , Ford Motor Co. and Bombardier Inc., Martinez said. Mike Wall, director of automotive analysis for Southfield-based IHS Automotive Inc. , said that the tier structure in Mexico is “vastly underdeveloped” but that the projected volume coming out of the country is forcing automakers and suppliers

to ensure their chain is more robust. “The volumes are there, and as more automakers go down to Mexico, an infraMike Wall: “The structure is volumes are there” being created in Mexico that can support more suppliers down the line,” Wall said. “New plants are coming on board in the next few years, and they are already quoting that business. “The reality is, if you want that business, you’ve got to be down

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: Altair Engineering Inc. .................................... 12 American Society of Employers .................... 8 Anton Sowerby & Associates ........................ 5 Arboretum Ventures LLC .............................. 22 Archdiocese of Detroit .................................. 23 Autoliv Inc. ........................................................ 12 Blue Cross Blue Shield of Michigan ................ 11 Brooks Kushman PC ........................................ 3 Chicken Shack Inc. ............................................ 3 Clarity Communication Advisors Inc. .......... 13 Commercial Development Co. Inc. .............. 24 Compuware Corp. .......................................... 23 Con-Way Inc. .................................................... 12 Cooper-Standard Automotive Inc. .............. 12 CoStar Group Inc. .............................................. 1 Covisint Corp. .................................................. 23 Kenneth J. Dalto & Associates .................... 25 DataFactZ ........................................................ 12 Detroit Economic Growth Corp. .................... 13 Detroit Riverfront Conservancy .................. 24 Dickinson Wright PLLC .................................. 21 Diversified Industrial Staffing Inc. ................ 13 Domino’s Pizza Inc. .......................................... 12 DTE Community Foundations ...................... 24 DTE Energy Co. ............................................ 1, 24 DWM Holdings Inc. .......................................... 13 Econ. Develop. Alliance of St. Clair County 24 Environmental Liability Transfer Inc. .......... 24 Federal-Mogul Corp. ........................................ 12 Ford Land Development Corp. ........................ 1 Ford Motor Co. .................................................... 1 Friedman Integrated Real Estate Solutions 13 General Motors Co. .................................... 2, 23 General Sports & Entertainment LLC .......... 18 Golenbock Eiseman Assor Bell & Peskoe ....25 Gordon & Silver Ltd. ........................................ 21 Hines Interests LP .......................................... 24 Hollingsworth Logistics Group LLC ................ 3 Huron Capital Partners LLC .......................... 21 IHS Automotive Inc. ...................................... 25 Int’l Automotive Components Group .......... 12

Inteva Products LLC ........................................ 12 Kraemer Design Group PLC .......................... 23 Kubasiak, Fylstra, Thorpe & Rotunno PC .... 23 Logicalis Inc. ...................................................... 11 Macomb Community College ........................ 15 Macomb Cty. Plan. and Econ. Develop. .......... 5 Macomb Music Theatre .................................. 5 Marsh & McLennan Agency LLC ......................11 Michigan AFL-CIO ............................................ 10 Michigan Brewers Guild .................................. 10 Mich. Economic Development Corp. .............. 3 Michigan Venture Capital Association ........ 22 Miller, Canfield, Paddock and Stone PLC .... 23 Mt. Clemens Downtown Develop. Auth. ...... 4 Neighborhood Ventures .................................. 9 Nexus Technical Services Corp. .................... 21 O’Connor Realty Detroit LLC ........................ 24 Oakland University .......................................... 5 Olon Industries ................................................ 21 Paula LLC .......................................................... 22 Plante & Moran PLLC ...................................... 25 Polyphasic ...................................................... 22 Rossetti Associates Inc. ................................ 23 The Roxbury Group ........................................ 24 RPM Freight Systems LLC .............................. 17 Shake Shack Inc. .............................................. 3 Signature Associates Inc. ................................ 1 Sitetech Inc. .................................................... 24 SMR Automotive Systems ............................ 24 SSE IP .................................................................. 3 St. Clair Community College ........................ 24 616 Development ............................................ 10 Third Coast Development .............................. 10 TI Automotive Ltd. .......................................... 12 U.S. Patent and Trademark Office .................. 3 Utica Downtown Development Authority .. 18 Venture Investors LLC .................................... 22 Visteon Corp. .................................................. 12 Voyager Net Inc. .............................................. 22 W.K. Kellogg Foundation .................................. 9 Zimmerman/Volk Associates ...................... 10

there because automakers aren’t looking for parts to be shipped in anymore.” Automakers in Mexico produced 3.2 million vehicles in 2014, surpassing Brazil’s 3.1 million to become the seventh-largest producer of vehicles. China and the U.S. remain the largest producers of cars in the world. Production in Mexico is projected to top 4 million in 2017, according to IHS, as it gets closer to the country’s plans to reach 5 million units by 2020. This would move them ahead of India and South Korea in production. Labor costs Low labor costs and favorable trade agreements with more than 45 countries make Mexico an attractive location for Southeast Michigan suppliers looking for global expansion. An average unskilled laborer in Mexico costs $8 an hour, including wages and benefits, according to data from the Ann Arbor-based Center for Automotive Research . Comparatively, similar workers for General Motors Co. cost $58 an hour. Although cheap labor is a benefit, Wall said, labor rates will rise. “I don’t think the move to Mexico is just a labor solution; it’s not the endgame,” he said. “Just as labor cost is rising in China, the whole labor cost benefit in Mexico will turn on its head eventually.” Alejandro Rodriquez, country manager for Southfield-based Plante & Moran PLLC in Monterrey, Mexico, said constraints on the labor force will occur as the need for skilled workers and engineers rises. “There’s already more demand than supply for the highly skilled workers,” Rodriquez said. “It’s a complete misconception that labor is inexpensive overall. … There’s a huge

gap between skilled and unskilled labor.” For instance, suppliers and automakers are likely to pay more for a plant manager in Mexico than in the U.S., Rodriquez said, because fewer people are qualified for those positions in Mexico. That creates demand that raises pay. The next labor challenge in Mexico will be retaining talent — a familiar challenge to Southeast Michigan suppliers, Rodriquez said. “You can’t manage your operations in Mexico with just expats; you must build a culture there,” Rodriquez said. “Not everything is about money for Mexicans. They want to feel part of something larger, just like their American counterparts.” While issues with labor are bound to crop up, it’s Mexico’s expansive trade agreements with more than 40 countries that have driven the global auto industry into the country, experts said. Mexico’s strong agreements allow exporters duty-free access to markets that contain 60 percent of the world’s economic output, The Wall Street Journal reported this year. Automotive exports from Mexico this year are projected to rise to a record 2.9 million vehicles, more than 87 percent of its projected production, according to the Mexican Automobile Industry Association. As much as 70 percent of those exports are projected to be going to the U.S. For Hollingsworth, exporting isn’t one of its options, but the increased exports from Mexico are a welcome catalyst to its own growth. “Customers are looking for suppliers that can deliver their services on an international level,” Martinez said. “If we’re not down there as soon as possible, we’re not going to be able to compete long term.” 䡲 Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

CRAIN’S DETROIT BUSINESS www.crainsdetroit.com Editor-in-Chief Keith E. Crain Group Publisher and Editor 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 Assistant Managing Editor Kristin Bull, (313) 446-1608 or kbull@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 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 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 Lindsay VanHulle, Lansing reporter. (517) 6572204 or lvanhulle@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

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CRAIN’S DETROIT BUSINESS // June 8, 2015

WEEK ON THE WEB/JUNE 1-5 Harvard Drug Group sells for $1.12 billion

hio-based Cardinal Health

Inc. said it will buy Livonia-based Harvard Drug Group from Court Square Capital Partners for $1.12 billion to increase its distribution of generic drugs, Bloomberg reported. Cardinal Health will fund the acquisition with cash and new debt. The purchase will add more than 15 cents to earnings per share from continuing operations in fiscal year 2016, it said. Harvard Drug Group, a distributor of generic drugs and over-thecounter remedies, had revenue of about $450 million last year, according to a statement. The purchase will also bolster Cardinal Health’s telesales capabilities and add specialized packaging options for hospitals.

ON THE MOVE 䡲 Sports agent Arn Tellem is joining Palace Sports & Entertainment as vice chairman. Telem will be responsible for business strategy, public affairs, planning and development, and strengthening the connection between the Pistons and Palace Sports and the community. The hiring was announced last week by Tom Gores, who owns the Detroit Pistons and the Palace. 䡲 Curtis Farmer , 52, has been named president of Dallas-based Comerica Inc. and Comerica Bank. He replaces Ralph Babb , 66, who retains the titles of chairman and CEO of both organizations. Farmer will continue to manage Comerica’s retail bank and wealth management. He adds oversight of the business banks. 䡲 Rofin-Sinar Technologies Inc. , a maker of high-performance lasers and laser components that is co-headquartered in Plymouth and Hamburg, Germany, announced that Thomas Merk will succeed Gunther Braun as president and CEO, effective July 1. Merk is COO of the company’s Laser Micro and Marking Group since 2005 and will succeed Braun as director of the company.

COMPANY NEWS 䡲 Google Inc. is leasing about 90,000 square feet in the 696 Cen tre building on Farmington Road in Farmington Hills. The Internet giant is expected to move an unknown number of employees into the 264,000-square-foot building just north of I-696 in the fourth quarter, according to a real estate source. The building is owned by Bloomfield Hills-based Alrig USA. The lease comes one month after Google announced it will be moving into about 140,000 square feet of space outside of downtown

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

140

The number of employees Southfield-based Federal-Mogul Holdings Corp. is consolidating into its Plymouth Township technical center from operations in Cleveland, Ann Arbor and Southfield. The supplier plans to invest $9 million to expand the center.

$150 million

The planned investment by Redico LLC to redevelop the 57acre former women’s Robert Scott Correctional Facility at Five Mile and Beck Road in Northville. The firm plans a hotel, 150 residences and retail space on the property.

covered by the supplier’s recall of nearly 34 million U.S. vehicles, Automotive News reported. 䡲 As part of a digital strategy shift to more short-form videos online instead of text stories, Southfield-based Fox Sports Detroit is among the Fox network’s regional sports outlets that will lay off its online reporters as of June 30. The network’s website, FoxSports.com/Detroit, provides coverage of Detroit Tigers, Red Wings and Pistons games, along with stories about other sporting events. 䡲 Alidade Capital LLC, a Bloomfield Hills private equity firm, has bought the Madison Office Building at 1900 St. Antoine St. downtown. Alidade purchased the mortgage note, $11.84 million, on the building, which was previously owned by Southfield-based Etkin LLC , in January. 䡲 Livonia-based A123 Systems LLC plans to double battery cell capacity at its three manufacturing plants, including its plants in Livonia and Romulus, in a $200 million investment.

OTHER NEWS

441

The address on West Canfield in Midtown that will be home to a Third Man Records store. Third Man owner and White Stripes frontman Jack White partnered with Detroit-based Shinola to buy the 52,000-square-foot building. White’s other record store and label is in Nashville.

Ann Arbor in the third or fourth quarter next year. 䡲 Chicago-based Baker Tilly Virchow Krause LLP has signed an agreement to buy the Detroit-based accounting and consulting firm of Wolins k i & C o . CPA Marina Marina Houghton: PC . Will join Baker Tilly. Houghton, Wolinski’s founder and president, will join Baker Tilly as managing partner of Baker Tilly’s Michigan practice, which is based in Southfield. Baker Tilly will retain Wolinski’s office downtown and about 20 employees. Terms were not disclosed. 䡲 The U.S. Army Tacom Life Cycle Management Command in Warren awarded $57 million in new contracts to General Dynam ics Land Systems ($28.3 million) and BAE Systems Inc. ($28.9 million) for research, development, testing, modeling and simulation and concept development in Sterling Heights on the Future Fighting Vehicle. 䡲 Takata Corp. has committed to stop producing the “bat wing” style of driver-side inflators, one of multiple types of airbag inflators

䡲 Detroit-based Compuware Corp. is appealing a Wayne County judge’s ruling in a $16.5 million award to former Chairman-CEO Peter Kar manos , but could not obtain a stay on PeterKarmanos the ruling last week while the dispute is pending. Circuit Judge Daniel Ryan denied the company’s request for a stay while it asks the Michigan Court of Appeals to review the court case. 䡲 Michigan lawmakers approved a $54.5 billion state budget Wednesday, passing modest funding increases for roads ($400 million total) and education (a $70 to $140 in traditional per-pupil funding for K-12 schools) along with new initiatives designed to boost early literacy and training for jobs in the trades. 䡲 Detroit native and Groupon co-founder Brad Keywell , 45, and his wife, Kim, of Chicago, have taken the Giving Pledge, made famous by billionaires Warren Buf fett and Bill Gates, agreeing to give away at least half their wealth. 䡲 Dennis Archer Jr. will chair the 2016 Mackinac Policy Conference, said Sandy Baruah, Detroit Regional Chamber’s president and CEO. Archer is founding principal and president of Archer Corporate Services and CEO of Ignition Media Group.

RUMBLINGS IPO prep? Toys R Us acts like public co. avid Brandon ’s new job as chairman and CEO of Toys R Us is to take the chain public at some point in the future, but the company is already providing financial disclosure. Last week, it was announced that Brandon would take the helm of the toy retailer in July. Brandon has two successful IPOs already under his belt, which came before his 5-year tenure as the University of Michi gan’s athletic director. Wayne, N.J.-based Toys R Us continues to file public financial reports with the Securities and Exchange Commission despite being taken private in July 2005 by Bain Capital, KKR & Co. LP and Vornado Realty Trust. That’s because it has publicly traded high-yield debt, which means Toys R Us must file financial reports with the SEC. Those filings show a $292 million loss last year, which was an improvement over the $1 billion loss for the year ended Feb. 1, 2014. On the bright side, the fourth quarter ending Jan. 31 saw $265 million in net income, the first profitable quarter in at least two years. The earnings statements mean Brandon’s work as top executive will be available for public scrutiny before the company goes public again, likely in the next year to 18 months. Financial information can be found at toysrusinc.com. Bain and its two co-investors paid $6.6 billion for the company in 2005, and its final share price was $26.74. Its peak was $45 per share in 1993. Brandon managed his first IPO when he was CEO of Valassis Communications Inc. in March 1992, raising nearly $376 million at $17 per share. Its shares stood at $34 when it went private again last year. Brandon’s second IPO was with Domino’s Pizza Inc. in 2004, which went public at $14 a share and raised about $337 million. Bain

owned the pizza chain at the time.

Michigan native to help lead SBA effort Michigan native Mike Muse , cofounder of independent record label Muse Recordings LLC , will serve as the Small Business Administration ’s My Brother’s Keeper Millennial Entrepreneurial Champion, a White Houseled initiative. Muse, 34, who grew up in Lansing and graduated from Mike Muse the University of Michigan with an engineering degree, is now a hiphop, radio and TV personality. He plans to speak to millennials about translating entrepreneurial dreams into viable businesses. Muse said he wants young people to walk away from his talks “equipped to launch ventures on their own terms.”

Take your cocktails to/from new Tigers bar Detroit Tigers fans have taken a liking to the latest eatery at Comeri ca Park, stadium officials say. The 171-seat The Corner Tap Room had a soft opening May 8, and fans have been filling it on game days, said Robert Thormeier, general manager of Buffalo-based Delaware North Sportservice, the team’s stadium concessionaire. Part of the reason is that fans can bring beer or cocktail to or from the bistro, which replaced a Leo’s Coney Island on the ballpark’s Witherell Street side. A sampling of food offerings: cayenne dusted pork rinds; grilled PB&J; sirloin steak; and a baconwrapped foot-long hot dog.

OBITUARIES 䡲 Kathleen Antonini, wife of former Kmart Corp. chairman and CEO Joseph Antonini , died Monday at her Bloomfield Hills home. She was 66.

[BILL SHEA]

The Corner Tap Room at Comerica Park replaced Leo’s Coney Island on the ballpark’s Witherell Street side.

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DO YOU KNOW A HEALTH CARE HERO? Crain’s Detroit Business is seeking nominations for Health Care Heroes, a special report in the Aug. 17 issue. The program will honor top-notch medical innovators and patient advocates dedicated to saving lives or improving access to care.

CATEGORIES INCLUDE: Corporate achievement in health care: Honors a company that has created an innovative health benefits plan or solved a problem in health care administration. Advancements in health care: Honors a company or individual responsible for a discovery or for developing a procedure, device or service that can save lives or improve quality of life. Physician: Honors a physician whose performance is considered exemplary. Allied health: Honors an individual from nursing or allied health fields who is deemed exemplary by patients and peers. Trustee: Honors leadership and distinguished service on a health care board.

Statewide nominations accepted. For details, visit CrainsDetroit.com/nominate • NOMINATION DEADLINE: JUNE 22

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