Crain's Detroit Business, June 15, 2015 issue by Crain's Detroit Business

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CRAIN’S Readers first for 30 Years

DETROIT BUSINESS June 15-21, 2015

DTE plans public park near its downtown HQ PAGE 3

Olga’s in bankruptcy: Too much debt over downtown store Page 3

Meridian plans to double workforce Posts range from senior level to call center consulting By Jay Greene jgreene@crain.com

Meridian Health Plan has been on a rapid growth trajectory for the past three years. Now, the company’s hiring spree is going into overdrive. The company, which operates Medicaid health plans and provides other health services, expects to triple revenue to $3 billion this year. As part of that

growth, it’s doubling its workforce this year as it hires more than 1,275 employees — including more than 700 in Detroit — by December. Last week, Meridian posted job opportunities for 827 new employees, including many entry-level positions in its fast-growing call center, to add to its current 1,215 workforce. Some 1,085 are in Michigan.

Prevailing wage hits a prevailing wind lvanhulle@crain.com

LANSING — Inside the Capitol, lawmakers this spring debated whether to repeal Michigan’s prevailing wage law. Outside, high atop the dome, construction workers were erecting scaffolding, preparing to repair damaged and corroded decorative features on the façade of the 136-year-old building. The $6.4 million project is the first such

operations, said Sean Cotton, Meridian’s chief administrative officer. “Mostly (the hirings) are to support Medicaid in Michigan, Illinois and Iowa,” Jon Cotton said. “We have added 130,000 in Michigan, much more than we expected. We added 100,000 in Illinois, and now we are the largest there with 250,000 Jon Cotton: (members).” Meridian this year already has hired Meridian also will raise minimum See MERIDIAN, Page 19 wage to $17 an hour

What’s next for Garden Fresh founders?

But would repealing it save money? The research isn’t clear By Lindsay VanHulle

The company also announced it will increase its minimum wage to $17 per hour to attract the best qualified and also to reward its current staff, said Jon Cotton, president and COO of Meridian Health Plan of Michigan, the state’s largest Medicaid health plan with 422,000 members. But other mid- to senior-level positions will include those in finance, legal, nursing, case management, care coordination, information technology and corporate

restoration since 1992. As is required on all building projects funded with state dollars, its contractor — Lansing-based Christman Co. — pays its workers a prevailing wage, defined as union-scale wages and benefits. In Ingham County, a laborer earns $32.92 per hour under the county’s prevailing wage, according to the Michigan Department of Licensing and Regulatory Affairs . A painter earns $31.74 per hour. An operating engineer’s hourly wage ranges from $37.60 to $51.50, depending on the type of machinery they use.

Aronsons plan high-pressure food processing firm tinue to pay it forward with a new business to help other food manufacturers grow. Garden Fresh Gourmet’s founders are planWhat do you do after selling your Ferndalebased food company to a Fortune 500 company ning a new business to provide cold water, highpressure processing to small fresh food manufor a cool $231 million? If you are Garden Fresh Gourmet founders Jack facturers in the region. The process extends shelf and Annette Aronson and partner and Vice life without the need to freeze the product or to Chairman Dave Zilko, you conadd preservatives. As an example, Garden Fresh salsa Next course: that has not gone through the process Plans for salsa can last in the refrigerator, sealed, for 55 brand under days. After going through the process, it Campbell’s, can last 100 days, Aronson said. Page 22 Yet to be named, the new operation will be based in Ferndale and be the first “high-pressure tolling” operation in Michigan, Jack Aronson said, enabling small food processors of items such as juice and beverages, seafood and meats, ready-to-eat meals and produce to use the technology without incurring out-of-state costs. High-pressure tolling refers to exposing the food to high pressure at low temperatures in a bottle to kill By Sherri Welch swelch@crain.com

See PAY, Page 20

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See GARDEN FRESH, Page 22

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GARDEN FRESH GOURMET

Garden Fresh Gourmet’s owners plan a new business to help small fresh food manufacturers extend shelf life of their products without freezing the product or adding preservatives.

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MICHIGAN

BRIEFS Northwood University to sell Florida campus Midland-based Northwood University is selling its 31-year-old campus in West Palm Beach, Fla., a year after shutting its residential campus near Dallas, Crain’s sibling publication Automotive News reported. The nation’s pre-eminent auto retailing school is also restructuring operations to improve revenue. The moves in part are a response to recent poor financial results. Keiser University will buy the West Palm Beach campus in a deal announced March 18 and expected to close around July 1. Northwood, now with a sole campus in Midland, has alumni in positions as dealer principals and senior dealership managers across the country. Northwood filings with the government show the school has struggled with growing losses in recent years. In 2013, the most recent year for which data are available, total revenue minus total functional expenses produced a loss of $5.3 million,

after a loss of $3.9 million in 2012. On the revenue side, contributions, gifts and grants to Northwood dropped sharply in 2012, then rebounded just slightly in 2013. The school’s fundraising events also lost money in both 2011 and 2012 and made a scant $1,284 in 2013. Bill Gagliardi, Northwood’s associate vice president of marketing, communications and public relations, blamed the poor financials on a lagging recovery in higher education after the 2008-09 recession. He also noted that the school recently completed a five-year capital campaign that raised $73 million, topping the goal of $70 million.

Woman-owned firms in Mich. trail U.S. in revenue Michigan ranked ninth nationally for the number of woman-owned businesses, but growth as measured by new entrants, revenue and overall employment continues to lag, MiBiz reported. The national report was released last month by Ameri can Express Open and compiled by

Womenable Inc. , an Empire-based research consultancy. From 1997 to 2015, womanowned businesses in Michigan ranked 49th out of 50 states and the District of Columbia in percentage growth in sales revenue. While woman-owned firms nationally increased revenue 78.7 percent, woman-owned businesses in Michigan grew 27.4 percent. Michigan has an estimated 289,300 woman-owned businesses employing 254,700 and generating combined sales of about $33.7 billion.

Kellogg plans to offer snacks-by-mail service Battle Creek-based Kellogg Co. is looking to start a subscription snack service, according to Bloomberg News, which helpfully referred to it as “Netflix-like noshing.” Kellogg would compete with London-based Graze.com, which expanded to the U.S. last year — resulting, no doubt, in U.S. individuals expanding last year. Graze customers use a website to customize snack boxes featuring individual portions of nuts, dried fruits and other items. Graze sends $6 boxes by mail once a week, every other week or monthly. General Mills Inc. discontinued its Nibblr subscription snack offering this month after about 1½ years.

MICH-CELLANEOUS The Racer Trust, set up by the

and sell former General Motors Co. properties, sold the GM Flint Ware house to Johnston’s Enterprises LLC, MLive.com reported. Under its new owner, the warehouse is expected to employ about 150 drivers, 35-40 office workers and mechanics and 25 warehouse staffers. Calgary, Alberta-based En bridge Energy reached an agreement with the U.S. Environmental Protection Agency on repairs to a pipeline near Marshall, a month after a deal with the state. A spill released more than 800,000 gallons of oil from a broken pipeline in 2010. Five years later, state regulators say any remaining oil is minimal and at the bottom of the river or in the banks. In a 2-1 decision, the Michigan Court of Appeals rejected a claim by the Little River Band of Ottawa Indi ans that federal labor law doesn’t apply to the tribe because of a claim to sovereignty, The Associated Press reported. The tribe operates the Little River Casino Resort in Manistee with about 900 employees, most of whom don’t belong to the tribe. The Teamsters union filed an unfair-labor-practice suit against the Little River Band,

COMPANY INDEX: SEE PAGE 22 which prohibits strikes by casino workers. Injection molder Klein Plastics will move from Rockford near Grand Rapids to Mansfield, Texas, Crain’s sibling publication Plastics News reported. Parent company Klein Tools Inc. is expanding its manufacturing headquarters there. The Rockford plant employs 96. California-based Sequenom Inc. is closing its Grand Rapids laboratory and moving its operations to Raleigh-Durham, N.C., MLive.com reported.

A story on Page 8 of the June 1 issue incorrectly said that the Detroit-based law firm Honigman Miller Schwartz and Cohn LLP reports its revenue to The American Lawyer. The paper annually publishes an estimated revenue figure for Honigman.

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BANKRUPTCIES . . . . . . . . . . . . . . . . . . 7 CALENDAR . . . . . . . . . . . . . . . . . . . . . . . 16 CAPITOL BRIEFINGS . . . . . . . . . . . . . . 8 CLASSIFIED ADS . . . . . . . . . . . . . . . . 17 DEALS & DETAILS . . . . . . . . . . . . . . . 15 MARY KRAMER . . . . . . . . . . . . . . . . . . . 6 OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . 6 PEOPLE ON THE MOVE . . . . . . . . . . 15 RUMBLINGS . . . . . . . . . . . . . . . . . . . . 23 WEEK ON THE WEB . . . . . . . . . . . . . . 23

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INSIDE THIS ISSUE

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BY THE NUMBERS: THE MICHIGAN ECONOMY

High-tech, high turnover

DTE Energy Co.plans to put a park directly across the street from the Grand Army of Republic – aka GAR – Building. No official name has been announced.

By Dustin Walsh dwalsh@crain.com

Technology and the Internet of things are ubiquitous in global business, and it’s no different here in Southeast Michigan. These advancements have led to new careers and strong demand for workers skilled in information technology. But, like in engineering and skilled labor, demand far outweighs the stable of qualified workers in the region. Colby Cesaro, director of research for Detroit-based Workforce Intelligence Network for South east Michigan , said the bottleneck has created an ultracompetitive market where employee poaching is commonplace as the labor force plays catch up. “There is high turnover in SE Michigan IT jobs; poaching among firms is a big problem,” Cesaro said. “Unfortunately, you can’t train a world-class IT worker in a day … it takes longer for these workers to gain the skills employers need and the talent pipeline of younger workers choosing IT as a career needs to grow. But the system is responding.”

DTE ENERGY CO.

DTE to create public park downtown By Kirk Pinho kpinho@crain.com

A plan for a second significant central business district city park is taking shape from what is now a collection of surface parking lots — dotted with heavy equipment and mounds of dirt — and owned by DTE Energy Co. The DTE park, not yet officially named, is planned for the DTEowned triangular parcel bounded by Grand River Avenue, Plaza Drive and First Street and directly across the street from the Grand Army of the Republic Building , commonly known as the GAR building. For now, it’s piles of dirt and heavy equipment dedicated to new Detroit Red Wings arena and related con-

struction that Dave Meador sees when he looks down from his 24th floor office window at DTE headquarters. To Meador, Dave Meador: it’s a large chunk 1.5-acre park would of western downcost $5 million to town not living $10 million up to its potential. But while no one should expect Detroit-based DTE, of which Meador is vice chairman and chief administrative officer, to become the next Dan Gilbert or Chris Ilitch, See DTE, Page 18

Cost of Olga’s downtown location led to bankruptcy

$ $ $ $ $

By Dustin Walsh and Kirk Pinho $

dwalsh@crain.com

Making a big bet on a high-traffic downtown restaurant location ultimately led Olga’s Kitchen Inc. into bankruptcy court. The Troy-based Mediterranean restaurant chain opened its downtown Detroit location in the Compuware building (One Campus Martius) in 2012, but the high occupancy costs and stiff competition for fast-casual dining directly led to the company’s Chapter 11 bank-

$ $ $

LIST OF LARGEST IT COMPANIES IN STATE: CRAINSDETROIT.COM/ITLIST

MUST READS of the week ... An appetite for wellness Foundation helps spread the gospel of health throughout Chelsea, Page 9

Just-in-time didn’t just happen In this week’s installment of our Looking Back series, coinciding with Crain’s 30th anniversary, we look at how a change in state law transformed the pace of deliveries in the auto industry, Page 17

ruptcy filing last week, a company executive said in a Friday interview. Michael Kosloski, COO of Olga’s, said the bankruptcy filing, posted in U.S. Bankruptcy Court in Detroit on June 11, was mainly meant to buy the chain time in hopes of selling the 45-year-old restaurant business. “We’ve been able to turn around the company, and now, all 28 restaurants are profitable, but we couldn’t continue to service the debt, ...” Kosloski said. “We needed See OLGA’S Page 21

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Working together can be good. But it can also be bad â&#x20AC;&#x201D; especially when venturing into uncharted territory with ethical considerations. Those lessons from the front lines were heard loud and clear last week as attorneys from all over Michigan gathered as part of the fifth Crainâ&#x20AC;&#x2122;s General & In-house Counsel Summit. Hereâ&#x20AC;&#x2122;s when collaboration can be good: corporate attorneys playing nice in the sandbox with their corporate partners. There were perspectives from a CEO, a CFO, a chief technology officer and a corporate purchasing executive about how to work better with their legal partners. The message: Preventing legal trouble at a company needs to be part of the culture, with people communicating. Merely writing contracts wonâ&#x20AC;&#x2122;t save anybody. A more strategic general counsel helps with efforts to drive revenue, manage growth and other high-level goals. When collaboration can be bad: Watergate â&#x20AC;&#x201D; or other kinds of political or business scandals where everyone at the center of the decision-making has much to lose. Keynote speaker John Dean (President Richard Nixonâ&#x20AC;&#x2122;s inside counsel) offered a first-person take on the historic tale of Watergate. He told the stories of the collusion that occurred, and the posturing, as Nixonâ&#x20AC;&#x2122;s inner circle sought new and inventive ways to hide their wrongdoings. In the end, Nixon resigned the presidency in 1974 when faced with near-certain impeachment. Dean even played recordings for the audience of some of the historic tape-recorded conversations. â&#x20AC;&#x153;Little microphones pick up my voice very well,â&#x20AC;? he joked after a temporary audio break during his presentation. Deanâ&#x20AC;&#x2122;s biggest takeaway message: If you think you are in the midst of a brewing scandal, get an outside opinion. A mistake turns into a scandal when the people in the midst of it think they can find their way out. The event also featured a number of breakout sessions on hot law topics. Below are some highlights:

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In preparing for a panel discussion on what a CEO expects of a legal team, Mike Heneka, president of Faurecia North America, ducked into the office of his general Mike Heneka: counsel the Collaboration is key. morning of the event. â&#x20AC;&#x153;I said â&#x20AC;&#x2DC;hey, Iâ&#x20AC;&#x2122;m doing this panel, what are some things that I do that

Lessons from the GC Summit President Richard Nixonâ&#x20AC;&#x2122;s in-house counsel, John Dean: â&#x20AC;&#x153;A mistake turns into a scandal when the people in the midst of it think they can find their way out.â&#x20AC;? AARON ECKELS

might drive you crazy,â&#x20AC;&#x2122;â&#x20AC;? Heneka said. â&#x20AC;&#x153;My GC said â&#x20AC;&#x2DC;Um, this.â&#x20AC;&#x2122; Dropping in at the very last minute and asking for something.â&#x20AC;? Overall, Heneka was part of a discussion on how a legal team can work with other executives to manage the up-and-down nature of the automotive cycle. The key: collaboration among the finance, sales and legal departments.

Winners, finalists Crainâ&#x20AC;&#x2122;s honored attorneys from across the state as winners of the General Counsel of the Year awards during the June 10 ceremony portion of the legal summit. Those attorneys recognized included: Private company over $1 billion Winner: Lois Bingham, vice president, general counsel, secretary and compliance officer, Yazaki North America Inc. Finalist: Janet Kelley, senior vice president, general counsel, Meijer Inc. Public company over $1 billion Winner: Kirsten Hewitt, senior vice president, corporate affairs, general counsel and corporate secretary, Whirlpool Corp. Finalist: Carlos Herrera, chief IP counsel, General Motors Co. Private company $100 million to $1 billion Winner: Daniel Follis Jr., former senior vice president, general counsel and secretary, Compuware Corp. Rising star Winner: Sean Etheridge, legal counsel, Stryker Corp. Finalist: Christina Flint, senior corporate counsel, Diplomat Pharmacy Inc. Pro bono Finalist: William Coughlin, president and CEO, Ford Global Technologies, assistant general counsel, Ford Motor Co. Winner: Michelle Busuito, assistant general counsel, Suburban Mobility Authority for Regional Transportation

A case study with view of Woodward Ave. When enough money is involved, any public company can turn private in an instant. Thatâ&#x20AC;&#x2122;s why the inside stories of taking Compuware Corp. from public to private, as a case study, drew attention. The $2.4 billion deal brought in private equity firm Thoma Bravo LLC last December. Daniel Follis Jr., former senior vice president, general counsel and secretary at Compuware, said that Thoma Bravo liked the company and its products and wanted to keep the company in Detroit. Follis said that when Compuwareâ&#x20AC;&#x2122;s shareholder base started to change dramatically in 2012 with hedge funds, such as New York-based Elliott Management Corp., buying shares, â&#x20AC;&#x153;It wasnâ&#x20AC;&#x2122;t a huge surprise, but it was a little alarming, because we knew what tactics they used and what the end game might be.â&#x20AC;?

Watch what you tweet Can you call your boss a bad word in a tweet or on Facebook and still have a job the next morning? According to rules outlined by the National Labor Relations Board, if that profane name-calling is accompanied by a specific call to action that youâ&#x20AC;&#x2122;re trying to communicate to coworkers, the answer is likely â&#x20AC;&#x153;yesâ&#x20AC;?. Terry Morgan, regional director for the NLRB, explained in a panel on social media and the workplace that federal law gives an employee the right to band together with coworkers to improve the workplace; that includes communicating with them in cyberspace. Panelist Adam Bloomenstein, managing counsel to Yazaki North America Inc., compared it to 25 years ago, when employees would use bulletin boards (the corkboard kind) to post messages calling for votes against or in support of a union. Panelists urged legal counsels in attendance to not necessarily try to keep up with the ever-changing platforms of social media, but to instead focus on clear policies äĄ˛ Contributors: Kristin Bull, Daniel Duggan, Dustin Walsh, Tom Henderson

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Macomb only dissenting vote as water authority approved By Chad Halcom chalcom@crain.com

The regional Great Lakes Water Authority voted 5-1 Friday to approve leasing assets of the Detroit Water and Sewerage Department for 40 years, at $50 million a year. After nearly running up against a firm deadline for the authority, the necessary approving board votes were reached late last week. “What I can tell you is, Oakland had some of the same concerns for a while that Macomb did,” said Brian Baker, finance director for Sterling Heights and the sole dissenting vote as Macomb County’s representative on the regional water board. “And for whatever reason, in the end they decided that it was a better deal to support the agreement than we felt it was.” Baker would not elaborate, citing a previous gag order that was lifted last week but still covered some past proceedings of the board. Robert Daddow, the board chairman and Oakland County representative, said it was no secret that Oakland had reservations. Much of the final authority deal was completed toward the end of the negotiation timeframe, he said.

“I and others in the (Oakland County Executive L. Brooks) Patterson administration were not going to sign off on a resolution until we were satisfied it met our understanding of the terms of the (regional leaders’) memorandum of understanding and the articles of incorporation. To that end, we were not ready to support it at first,” he said. “But we finally agreed that it did.” U.S. Bankruptcy Judge Thomas Tucker also has ordered that U.S. District Judge Sean Cox’s authority as mediator overseeing authority discussions continue until Jan. 1. All major decisions of the sixmember authority board require a five-vote supermajority to pass, meaning Detroit can essentially veto any decision with its two representatives — but so can two or more suburban representatives, or one in collaboration with the state’s board member. Baker said suburban ratepayers could receive nearly a 10 percent rate increase next year and in 2017, over and above a substantial DWSD rate increase this year, and that customers haven’t had transparency. Detroit’s water system serves about 700,000 city residents and 4

million people regionally, or 43 percent of the state population, across a 1,079 square-mile water service area and more than 120 communities. Detroit continues to own the water-sewer system under terms of the deal, which needed to be in place by Sunday under terms of the city’s bankruptcy exit plan. As part of the change, a new $4.5 million assistance fund will also help low-income families with water-sewer bills. Macomb County Executive Mark Hackel said regional customers who expected a 4 percent cap on rates may be in for a surprise next year, and the deal calls for suburbanites to shoulder an unfair share of Detroit’s legacy costs. The authority and the DWSD will pay almost $43 million per year for nine years into an employee pension system, according to a report from Plante Moran PLLC. “It shouldn’t have been done during the bankruptcy, because then that becomes the whole focus of it,” Hackel said. Daddow said the 4 percent limit is and always has been a cap on “revenue requirements” or aggregate revenue from all rates charged.

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CRAIN’S DETROIT BUSINESS

OPINION Paying it forward also can create jobs T

here was a collective intake of breath around metro Detroit this past week when it was announced that Garden Fresh Gourmet was being sold to Campbell Soup Co. for $231 million. The Ferndale-based company, after all, is a homegrown success story, a company that started small and grew in place. Even though a sale to a larger company is a common way for companies to gain resources to grow, a purchase by an out-of-town conglomerate can feel threatening. The Garden Fresh acquisition will help boost Campbell’s fresh food division, an important company priority. But it is also true that there is no guarantee Campbell will always own it or that local operations will never be affected. But it’s also true that isn’t all of the story. Garden Fresh founders Jack and Annette Aronson and partner Dave Zilko always have been pay-it-forward types, and that isn’t going to change post-sale. As Sherri Welch reports on Page 1, the three plan to continue helping to incubate food startups through a nonprofit they launched this spring with Eastern Market. They also are planning a new business in Ferndale to provide local access to high-pressure processing, which enables longer shelf-life for fresh food without the use of preservatives, for food startups. And they’ll continue to mentor small businesses. Aronson attributes much of his own success to grocer Jim Hiller, who gave the company an early contract to sell Garden Fresh products in his stores. Hiller sold his stores to Kroger last month. Hiller, Aronson has said, inspired him and his wife to help make other local food producers successful. Now they’ll have more time and money to do it. Our take-away from all of this is that gratitude and a sense of community are a part of the job-creation ecosphere waiting to be better leveraged. The example of the Garden Fresh team should serve as its own inspiration — and challenge — for others.

A step forward regionally The Great Lakes Water Authority became official on Friday when it approved long-term leases of the sewer and water assets owned by the Detroit Water and Sewerage Department. The vote was 5-1, with Macomb County dissenting. The authority is important for several reasons, including providing $50 million a year to upgrade infrastructure and giving suburban communities more say in water rates for their residents. Also importantly, it’s another opportunity to operate regionally. Five of the authority’s six members must agree on major decisions. That prevents one member from exercising veto power, but still gives an incentive for everyone to work together for the good of the whole. Southeast Michigan has made strides in that regard, but we can still use the practice.

Safety at 24-hour gas stations needs to get pumped up MARY KRAMER: Publisher What’s a business owner’s responsibility to ensure the safety of customers and employees? In too many Detroit gas stations, the answer is: not much. Carjackings have declined dramatically since 2008, when Detroit was logging more than three a day for a total of 1,231. In 2014, that dropped to 525. But some dramatic crimes in recent weeks prompted Detroit Police Chief James Craig to recommend that residents be wary of buying gasoline at gas stations late at night. That drew critics from community activists who said Craig was “afraid” of buying gas at night in the city and from industry leaders who defended owners of 24-hour gas stations as delivering a public service. But Terri Miller, executive director of HEAT, a crime-fighting nonprofit that battles auto theft, thinks Craig had the right idea and that gas station owners — and other busi-

nesses open 24 hours — can do more to fight crime by installing surveillance cameras and discouraging customers from loitering. Too many gas stations sell “loosies,” breaking cigarette packs open and selling cigarettes individually. That practice is illegal, but some retailers do it anyway, Miller said, drawing people who hang out at the station to drink and smoke. Such a clientele, she said, can include “some who might be tempted to take advantage of a lone customer in a car.” Like Crimestoppers, HEAT rewards anonymous tips to (800) 242HEAT with cash if they lead to arrests and convictions. Cash awards can run as high as $10,000. A recent breakup of a chop shop in a Detroit neighborhood came from a tip to HEAT. Over 30 years, HEAT has paid out more than $4 million and recovered $58 million in vehicles and property, Miller said. Last year, Craig expanded Project Lighthouse from downtown to neighborhood stores and gas sta-

tions that are open late at night or 24/7. The businesses agree to post a green light, improve lighting and add security cameras in and around their businesses, refrain from selling loosies, provide use of a telephone and bathroom for residents and communicate regularly with community policing officers. Only a handful of stations carrying the BP, Mobil and Marathon brands have enrolled in that program, Miller said. That seems like an opportunity for stakeholders — station owners, petroleum distributors and police — to build up participation. Better enforcement of existing laws could make gas stations and other neighborhood retailers safer for customers. And could make for fewer tragic headlines in newspapers. 䡲 Mary Kramer is publisher of Crain’s Detroit Business. Catch her take on business news at 6:10 a.m. Mondays on the Paul W. Smith show on WJR AM 760 and in her blog at www.crainsdetroit.com.

TALK ON THE WEB Re: House OKs road fund plan Much is being said about warranties as if the problems are caused by the contractors building the roads. Perhaps someone should take a closer look at the Michigan Department of Transportation. MDOT is responsible for the design of the roads and the specifications for the concrete and asphalt mix designs. They also observe the contractors’ operations and are responsible for soil, concrete and asphalt testing. After construction is completed

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

Re: Demolition for Wings arena Thank God we finally have the mayor, City Council and everyone else on the same page. James

the contractor has no control over the use or maintenance of the roads. Perhaps MDOT should take a look at the specifications used in Ontario and Ohio. They have the same weather but not the same problems road durability issues. It is strange that MDOT has been silent on the road problems. Duane Perry

Re: CE loses Navy account What a kick in the pants for an iconic company that was already down on its luck. Ugh! My thoughts go out to those who will lose their jobs, and to the leadership that will need to figure out how to recover from this blow. MikeInMI

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Software finds weak links in supplier chain By Dustin Walsh dwalsh@crain.com

Southfield-based Alderney Advi sors LLC today launched an analytical software tool designed to assess the financial health of auto suppliers in a manufacturerâ&#x20AC;&#x2122;s supply chain. The tool, called the Alderney Scorecard, is designed to increase transparency through a manufacturerâ&#x20AC;&#x2122;s supply chain to identify financially distressed suppliers, said Alicia Masse, managing director and cofounder of the consulting firm. Flagging these suppliers early gives the manufacturer a headsAlicia Masse: up that the supMiddle-market plier may manufacturers are become troublethe target. some in the future. The product is meant as a more affordable way for manufacturers to assess looming problems quickly. Masse and her partners created the part-survey, part-financial modeling tool at the request of a local automotive supplier client. Masse declined to identify the client, citing a nondisclosure agreement. A team from Alderney retrieves financial information â&#x20AC;&#x201D; including profitability, liquidity and liability â&#x20AC;&#x201D; and runs that information through a proprietary algorithm to assign a financial health score to each supplier. The scores range from â&#x20AC;&#x153;healthyâ&#x20AC;? to â&#x20AC;&#x153;health in jeopardyâ&#x20AC;? to â&#x20AC;&#x153;very distressed.â&#x20AC;? Alderney created the algorithm internally, based on data sets from previous clients. â&#x20AC;&#x153;What this tool does is help customers mitigate risk,â&#x20AC;? said Masse, a former managing director at BBK Ltd. and North American finance operations manager for Ford Motor Credit Co. â&#x20AC;&#x153;With the tool, they can get with their buyers and prepare contingency plans.â&#x20AC;? The firm expects significant revenue growth from the product by customers looking to assess their supply chains and suppliers in the chain performing internal audits with the tool, Masse said. Alderney is marketing the scorecard to middle-market manufacturers with revenue below $2 billion, she said. Short Hills, N.J.-based Dun &

BANKRUPTCIES The following businesses filed for protection in U.S. Bankruptcy Court in Detroit June 5-11. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation. MetroCom LLC, 32450 Dequindre Drive, Warren, involuntary Chapter 7. Assets not available; liabilities: $142,424.96. Natalie Broda

Bradstreet Inc. and New York Citybased McKinsey & Co. operate similar measurement products but are too expensive for many manufacturers, Masse said. Alderney charges a base rate of $200 for each supplier evaluated as part of the custom scorecard, Masse said. Supplier-tracking software is the latest trend in the industryâ&#x20AC;&#x2122;s quest for efficiency, response time and risk mitigation. Other local examples: The Southfield-based Automotive Industry Action Group launched

a Web-based database last year for identifying the physical movement of finished goods, parts and materials through the automotive supply chain. Auburn Hills-based BorgWarner Inc. last year launched proprietary software to track orders, deliveries and cancellations from its supply base to find efficiencies. The Birmingham-based advisory firm Conway Mackenzie Inc. also performs financial health reviews of the supply base but does not use a specific scorecard software tool, Execu-

tive Director Fred Hubacker said. Determining the pitfalls of the supply base is critical as local manufacturing is growing, he said. â&#x20AC;&#x153;Certainly, the financial health of any enterprise is one of the critical elements in terms of understanding how much business you can afford to do with that supplier,â&#x20AC;? Hubacker said. â&#x20AC;&#x153;You donâ&#x20AC;&#x2122;t want to overtax them or undervalue their ability to perform to produce the products you need.â&#x20AC;? Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

â&#x20AC;&#x153;What this tool does is help customers mitigate risk. ... They can get with their buyers and prepare contingency plans.â&#x20AC;? Alicia Masse, Alderney Advisors LLC

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LANSING — At least two groups hope Michigan voters will legalize recreational use of marijuana next year. Organizers of two ballot committees — the Michigan Cannabis Coali tion , based in Pontiac, and East Lansing-based Michigan Compre hensive Cannabis Law Reform Com mittee — say they soon will start to collect nearly 253,000 signatures from registered voters in order to make the November 2016 ballot. The Board of State Canvassers last week gave both groups the OK to proceed by approving their petitions. The proposals would make it legal for people 21 and older to grow, possess, sell and use marijuana. Marijuana remains an illegal drug under federal law. The Michigan Cannabis Coalition’s spokesman is Matt Marsden, a former spokesman for Republican Senate Majority Leader Randy Richardville and a partner in Pontiac-based Revsix Data Systems , which offers data services to political campaigns and organizations. The coalition has not disclosed names of its members. The Michigan Comprehensive Cannabis Law Reform Committee consists of attorneys and marijuana decriminalization advocates. Its chairman is Jeffrey Hank, an East Lansing attorney who helped lead a successful ballot initiative in May to overturn East Lansing’s local ordinances regulating marijuana use. Both petitions would authorize the state to collect tax revenue, but differ in how much and how it would be used. They also have different requirements on how many plants home growers could have for personal use.

Comings and goings 䡲 Former House Speaker Jase Bolger has been named to the board of directors of Lansing-based Great Lakes Education Project , the group announced. Bolger, a Republican from Marshall, is the founder of Tusker Strategies LLC, a consulting firm focused on politics and public policy.

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PEOPLE IN

SPECIAL REPORT

HEALTH CARE

Submit news items and photos to cdbdepartments@crain.com.

䡲 Henry Lim, M.D., chairman of the department of dermatology at Henry Ford Hospital, has been elected president of the American Lim Academy of Dermatology, effective March 2017.

Read more health care news and sign up for our Health Care newsletter at crainsdetroit.com/healthcare

䡲 William O’Neill, M.D., a cardiologist at Henry Ford Hospital, has been named a master fellow by the Society for Cardiovascular Angiography and Interventions. O’Neill is one of 26 master fellows among the society’s 4,500 members. 䡲 Earl Hecker, D.O., a thoracic surgeon and section chief for surgical critical care at Beaumont Hospital Farmington Hecker Hills, has received the Walter F. Patenge Medal of Public Service from the Michigan State University College of Osteopathic Medicine. 䡲 James Bagian, M.D., P.E., director of the Center for Healthcare Engineering and Patient Safety and a professor in the medical school and college of engineering at the University of Michigan, has been named one of 50 experts in patient safety by Becker’s Hospital Review.

䡲 Bethany Thayer, R.D.N., M.S., director of the Center for Health Promotion and Disease Prevention at Henry Ford Health, has been named president Thayer of the Michigan Academy of Nutrition and Dietetics.

䡲 Karen Harris, M.S.N., R.N., has been promoted from VP of patient care services and chief nursing officer to chief nursing and operations Harris executive at Henry Ford West Bloomfield Hospital. 䡲 Ritu Zacharias, M.D., a physical medicine and rehabilitation physician in the department of neurosurgery at Henry Ford Health System, Zacharias has been appointed director of the department’s medical spine services and physiatry.

A healthy expansion Chelsea-Area Wellness Foundation grows to 4 centers, looks to increase membership by 5% By Jay Greene jgreene@crain.com

he Chelsea-Area Wellness Foundation , a nonprofit spinoff from the sale of Chelsea Community Hospital to Ann Arbor-based St. Joseph Mercy Health System in May 2009, has grown the past six years from a single wellness center to four. As part of the hospital merger, St. Joseph agreed to contribute $25 million to fund a foundation to support programs to improve health and wellness in the hospital’s fivetown service area, said foundation CEO Amy Heydlauff. The foundation also took over the 50,000-square-foot Chelsea Wellness Center , which St. Joseph opened in 2001, said Heydlauff, a nurse who was director of utilization at Chelsea Community before moving to the foundation. The hospital is now named St. Joseph Mercy Hospital Chelsea. “The board quickly realized how important the wellness center was to the community, and we decided to expand the centers to the five communities we serve,” said Heydlauff. “The wellness strategy was born.” Nancy Graebner, CEO of St. Joseph Mercy, said the Chelsea foundation has been instrumental in encouraging the formations of

local community coalitions in their service area that recommended wellness centers be formed. “Over the past six years, the Chelsea Wellness Foundation has created a comprehensive approach to improve the health and wellness of our five local communities, including Chelsea, Dexter, Manchester, Stockbridge and Grass Lake,” Nancy Graebner: Graebner said. Creating a compreIn Michigan, hensive approach there are at least 12 wellness centers, including one in Ann Arbor sponsored by Washtenaw Commu nity College and another operated by Beaumont Health in Rochester Hills. Joan Phillips, vice president for clinical support services at Beau mont Hospital, Troy , said medical wellness centers are growing in popularity because of the need to reduce hospital costs through prevention and help people recover from illness. “The health care system is focusing on population health and keeping people out of the hospital,” Phillips said. “We have a medically

Chelsea-Area Wellness Foundation CEO Amy Heydlauff says the center is important to the community.

based fitness center that we use to look at the whole person.” Like most wellness centers, the 98,000-square-foot Beaumont Health and Wellness Center offers services that include exercise programs, weight management, physical therapy, occupational therapy, yoga and aqua therapy, she said. It also offers integrative medicine, rehabilitation Joan Phillips: services and a Looking at the pain clinic. whole person Last year, more than 3,000 people used the Beaumont center, a number that has steadily grown since the 2011 opening, Phillips said. Growth in Chelsea When the Chelsea foundation took over the wellness center, 6,500 people used the Chelsea Wellness Center with 170,000 visits annually. Over the past year, Chelsea’s 6,900 members, about 15 percent of the population of the immediate market, made 400,000 visits to the four centers. In 2012, the foundation opened the Manchester Wellness Center ,

PHOTO/CARTER SHERLINE

and in 2013 the Stockbridge Well ness Center and the Dexter Wellness Center began operations. Heydlauff said the foundation’s goal is to increase memberships by 5 percent to 7,240 later this year. While Chelsea’s four wellness centers traditionally have lost money on operations — primarily because of free and discounted wellness memberships — Heydlauff said the goal is to break even by increasing membership. “What others consider Wellness Center losses, we consider missionfocused community investment,” said Heydlauff. For the first nine months of fiscal 2014, Heydlauff said revenue for the four centers totaled $3.34 million with losses of $1.1 million. In 2013, Chelsea wellness centers collected $3.8 million in membership fees and had $4.9 million in expenses. Individual rates are $72 per year with membership free for those earning less than two times the poverty level. “We are closing the gap in losses,” she said. “We do spend money every year on our mission. Part of (the mission) is subsidizing memberships so we can get more people into the centers. The more people we get, the more revenue stream we have.” See HEALTHY EXPANSION, Page 10

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SPECIAL REPORT: HEALTH CARE

HEALTHY EXPANSION, from Page 9: Wellness foundation looks to grow membership One of the initiatives to increase membership is the drive to boost corporate membership arrangements with employers. So far, three school districts in Chelsea, Dexter and Manchester have signed up with more than 650 of their employees using the centers, Heydlauff said. While wellness services at the centers are not directly reimbursable by health insurers, Heydlauff said some health insurers allow members to turn in their receipts for their memberships. “I think insurance companies will become more interested in keeping people well through wellness programs like ours in the near future,” she said. While not a money-maker, the foundation’s biggest initiative is its “Next Steps” program, launched in 2013 to help patients with chronic diseases, prepare for surgery or another medical procedure. “We want to focus on medical integration with wellness because this is an opportunity for people to improve health through prevention,” she said.

For example, “If you are 58 and have a right knee that doesn’t work too well because of arthritis or if you have high cholesterol, your provider could recommend you take advantage of a wellness or exercise program,” Heydlauff said. So far, 300 people have used the program, which was developed by Power Wellness, a management company based in Chicago that manages the foundation’s wellness centers. Next Step covers patients with nine chronic conditions, including

cancer, diabetes, cardiac conditions, pulmonary, weight management, transitional care and orthopedic injuries or surgery. To participate in the eight-week Next Steps program, patients need a provider referral from one of about 50 physicians affiliated with the University of Michigan family practice group. Participants can also be referred by a nurse, nutritionist, physical therapist or pharmacist. To encourage participation, the foundation subsidizes membership costs for Next Steps and charges

only $99. The program itself costs about $220 per participant. Last month, St. Joseph MercyChelsea Cancer Center, which opened last December, agreed to send their cancer patients to the foundation’s Next Steps program. The foundation agreed to give the patients “scholarships,” which waives the usual charge for the program. In 2013, the Chelsea Wellness Center became the first wellness center in Michigan to be certified as a medical fitness facility through the Medical Fitness Organization, a

new association that has certified 30 centers nationally the past several years, Heydlauff said. In 2013, the Chelsea-Area Wellness Foundation had net income of $538,086 on revenue of $7.4 million compared with income of $1.2 million on revenue of $5.7 million in 2012. Total assets rose to $53.2 million from $40.7 million in 2012, primarily because the foundation opened the Dexter center. 䡲 Jay Greene: (313) 446-0325 Twitter: @jaybgreene

Nominees sought for Health Care Heroes program 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.

Winners will be from five categories:

䡲 Corporate achievement in

health care: Honors a company that has created an innovative health benefits plan or solved a problem in health care administration.

䡲 Advancements in health care: Honors a company or individual responsible for a discovery or for

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developing a procedure, device or service that can save lives or improve quality of life.

䡲 Trustee: Honors leadership and distinguished service on a health care board.

䡲 Physician: Honors a physician whose performance is considered exemplary.

A panel of health care judges will choose the winners.

䡲 Allied health: Honors a person in

Questions? Contact Jay Greene at (313) 446-0325 or jgreene@crain.com

nursing or allied health who is deemed exemplary by patients and peers.

Nominations deadline: June 22

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SPECIAL REPORT: HEALTH CARE

Hospitals save green by going green with Healthier Hospitals By Jay Greene jgreene@crain.com

t. Joseph Mercy Health System in Ann Arbor has taken advantage of low fuel oil and gas prices the past year and saved more than 20 percent through advanced bulk purchases. Beaumont Health System has cut electricity usage by at least 10 percent, saving at least $1.4 million last year, by purchasing more efficient LED (light-emitting diode) lights and converting to variable frequency air conditioning units. Oakwood Healthcare — before it became part of the new eight-hospital Beaumont Health — launched a recycling program last year and has eliminated 100 percent of its recyclable trash, or 50,000 pounds, and saves about $100,000 per year. St. Joseph Mercy, Beaumont and Oakwood are part of the Healthier Hospitals Initiative, which includes more than 60 of the state’s 120 hospitals and more than 2,000 nationally. Healthier Hospitals encourages hospitals to create a more sustainable business model by reducing energy and water usage, choosing safer and less toxic products, recycling and serving healthier food. “Sustainability in health care is touching on mainstream from an operations standpoint,” said John Ebers, associate director of the facility engagement in energy program with Reston, Va.-based Practice Greenhealth and Healthier Hospitals. “Health care organizations are reaching a tipping point with the technologies that have developed to the point where there is a financial payback on sustainability.” Other hospitals participating include Henry Ford Health System, St. John Providence Health System , McLaren Healthcare , University of Michigan and Detroit Medical Center. Each of the participating hospitals has various environmental and public health projects underway that also save money. “We are seeing the general culture of hospitals change where people want to work for sustainable companies,” said Ebers, who is based in Grand Rapids. “There is either an executive or someone on the board who is driving changes within the organization. Clinicians

“Health care organizations are reaching a tipping point with the technologies ... to the point where there is a financial payback on sustainability.” John Ebers,Healthier Hospitals Initiative

and physicians want to work for these type of systems.” Tom Tocco, St. Joseph Mercy’s vice president of support services and capital projects, said reducing energy costs and improving the environment are twin goals for St. Joseph, which is part of Livoniabased Trinity Health. “Hospitals use a lot of fuel oil because of our generators and we make large purchases and store a lot in underground tanks,” Tocco said. “We will buy ahead, even into the Tom Tocco: St.Joe next year, bewants to save on cause the prices energy, improve are so favorable.” environment Buying on the spot natural gas market, Trinity Health has saved millions of dollars in natural gas, water and sewer and electricity, Tocco said. Despite rising utility prices and adding nearly a half million in square footage to its footprint, St. Joseph Mercy’s Ann Arbor hospital has reduced water use by 51 percent, natural gas use by 29 percent, electricity by 20 percent and cut annual spending to $7.5 million in fiscal year 2012 ended June 30 from $10 million in fiscal 2005, Tocco said. Among other projects, St. Joseph Mercy also operates its own 25-acre farm, which provides produce to be included in patient meals, sold at the hospital’s farmers market and donated to food banks. In 2011, Beaumont embarked on a strategic plan to become a more sustainable company with Practice

Greenhealth, a healthy food program, when it established a farmers market for patients and employees, said Kay Winokur, Beaumont’s vice KayWinokur: “We president of don’t save more, quality and probut we have a fessional servicbetter product” es. Beaumont now purchases about $540,000 annually from local farmers and beverage manufacturers. In the process, it reduced meat purchases by 20 percent and purchased 20 percent more healthy beverages. “We don’t save more, but we have a better product, healthier with less pesticides,” Winokur said. Overall, the healthy foods program was so successful, Beaumont asked teams of employees to look for other opportunities to save on energy and water costs, Winokur said. Teams suggested boiler room up-

Applications received

䡲 Saint Joseph Mercy-Brighton , Brighton: Construct a two-story, 8,400-square-foot addition and renovate 50,000 square feet of clinical space on the first and second floors; $26.7 million. 䡲 Livingston Care Center II, Howell: Add 20 nursing home beds to a newly constructed leased space; $2 million. 䡲 Camelot Hall Convalescent Center, Livonia: Replace 114-bed nurs-

ing home and move six beds from Autumnwood of Livonia ; $11.3 million. 䡲 Wellbridge of Clarkston, Clarkston: Operate a new nursing home by replacing 90 beds at a new site at Sashabaw and Clarkston roads; $10.8 million.

of the first health care organizations in Michigan to go landfill free, officials said. Oakwood’s four hospitals and other trash-generating operations now practice 100 percent recycling. Oakwood uses special recycling technology to convert the trash and waste products to energy. One example of Oakwood’s recycling and energy savings is this: Oakwood recycles 13.5 tons of paper each month and 390 tons of cardboard each year. “To put those numbers in perspective, 1 ton of cardboard saves 390 kwh of energy, 46 gallons of oil and 6.6 BTUs of energy,” said Alissa Bachnak, Oakwood’s regional manager of environmental services. “If we took all our trash to a landfill, it would consume 1,450 cubic yards of space every 30 days, so we’re simultaneously reducing our carbon footprint and making a positive impact for our patients.” 䡲 Jay Greene: (313) 446-0325 Twitter: @jaybgreene

SOMETIMES EVEN HEALTHCARE HEROES NEED A CHAMPION Healthcare professionals and executives rely on our attorneys to obtain the right results in the boardroom and courtroom, so they can stay focused on their patients and business.

CON REPORT The following are selected certificate of need filings for May 13-June 10.

grades and replacing flush bulbs. Savings have totaled 1.5 million gallons of water. Overall, Beaumont cut electricity usage by 3 percent, water by 15 percent and saved a total of about $3 million the last three years, she said. “We do return on investment for capital projects and right now we have a 1.5 year to two year ROI,” she said. For example, adding LED lights to its north parking garage cost $110,000. Recycling projects — cardboard, batteries, lamps, plastics, sterile equipment, coffee grounds and compost — save about $100,000 per year in lower landfill costs. Winokur also said efforts to reduce the use of toxic chemicals have improved the health of patients and employees. “We have moved to green cleaning products. It is healthier for staff and patients and we are budget neutral,” she said. “It helps with staff time off because (someone’s) asthma flares up after they waxed the floor.” Last year, Oakwood became one

Licensure Actions Q Transactions Q Medical Liability Q CON Managed Care Contracting & Disputes Q Medicare & Medicaid Q Compliance Q

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䡲 Amica Park, Trenton: Begin operating a new nursing home with 39 special pool TBI/SCI nursing home beds in a renovated space; $3.1 million. Approved. 䡲 Natalie Broda

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CONSUMER PRODUCTS

WINNER

For these game changers, vision is only the beginning. EY has long celebrated the entrepreneurial spirit of men and women who have followed and achieved their dreams. Over almost three decades, we have applauded their commitment to innovation and perseverance in the face of enormous risk. They saw a different future and made it happen. The EY Entrepreneur Of The Year® Program provides an enduring legacy to these dynamic leaders, recognizing their vision and impact. By uniting them in a lasting network of peers who thrive, we have helped to build an afÖm]flaYd [geemfalq g^ innovative entrepreneurs. Each June, we host celebrations in 25 US cities to toast the vision and impact of the men and women who Yj] j]_agfYd ÕfYdaklk& L`]k] leaders have changed the lives of countless others by building their businesses and giving back to their communities. Join us in celebrating their passion, innovation and tireless pursuit of business excellence. Congratulations to all of our ÕfYdaklk Angie Kelly Assurance Partner Entrepreneur Of The Year Program Director

Mark Sellers Owner BarFly Ventures Grand Rapids Prior to opening HopCat Grand Rapids in 2008, Mark Sellers had visited bars in 48 of the 50 states, as well as 33 other countries. This passion drove exponential growth over the years. The company has opened seven HopCat locations, including one in Detroit, as well as three other bars and restaurants.

TECHNOLOGY Finalists:

EDUCATION AND TRAINING Finalists:

Mark St. Peter Managing Director and CEO Computing Source, Madison Heights “Go big or go home.” This is the philosophy that Mark St. Peter has built into Computing Source’s core values. The Õje `Yk ]f\mj]\ log ][gfgea[ j][]kkagfk lg develop one of the Midwest’s only full-service legal computing services organizations. St. Peter is now preparing to expand its service offerings, from record retention to investigative services.

Lorna G. Utley CEO Goodwill Industries of Greater Detroit, Detroit In her six years as CEO of Goodwill Industries, Lorna Utley has redesigned the company’s business model of retail outlets, relocating them to locations with higher income levels so they could Z][ge] egj] hjgÕlYZd]& K`] ak Ydkg ^g[mk]\ on opening a last-chance store in Detroit that consolidates unsold items and offers them at discounted rates. Nominated by: Tanner Friedman

Finalists: Mark Rieth Owner Atwater Brewery, Detroit Craft breweries weren’t as common in 2002 as they are today, but that didn’t stop Mark Rieth and his partners from creating the Atwater Brewery. Guided by a very simple mission statement, “remember, beer is good,” the brand has grown, including the forthcoming line of Detroit-made spirits. Nominated by: Merrill Corp. Aaron Morse Owner and CEO Dark Horse Brewing Company, Marshall Aaron Morse’s passion for `ge]%Zj]o]\ Z]]j Õjkl Z]_Yf af )11/$ when his family opened a brewpub. The business closed three years later, but it was the jumping-off point for his own brewing facility after he purchased the equipment and license. His dedication has noticeably paid off though, with barrel production rising from ,(( af *((( lg *($((( af *(),&

Hannan Lis Executive Chairman Firebolt Group Inc., Wixom It all began with a simple conversation, as an acquaintance of Hannan Lis’ described a new technology he had invented – known as “writing with light” through the use of LEDs with programmable chips. A company was founded and the patented LED strips were developed in a rented garage in Ann Arbor. The strips are now manufactured entirely with Michigan-made products. Nominated by: Citizens Bank Michael Jennings CEO K][mj]%*,$ DD;$ Kgml`Ô]d\ With a passion for computing engineering, Michael Jennings founded two technology companies prior to being named CEO of Secure-24. With that background, he brings a vision to be the world’s best provider of managed services. EDUCATION AND TRAINING

WINNER

FAMILY BUSINESS

WINNER Jason Grobbel President E.W. Grobbel Sons, Inc., Detroit E. W. Grobbel Sons found alk]d^ gf `Yj\ lae]k af l`] ea\%)10(k$ jgm_`dq )(( q]Yjk Y^l]j alk ^gmf\af_& Al oYk Y time for the family’s fourth generation, Jason Grobbel, to step up, striking a deal to buy out the other family members’ interests and become president. Since then, he’s grown the [gehYfq l`jgm_` ]^Õ[a]fl eYfY_]e]fl Yf\ large accounts, keeping the family business culture. Nominated by: Citizens Bank

TECHNOLOGY

WINNER Al Siblani President, CEO and Chairman EnvisionTEC Inc., Dearborn Twelve years ago Al Siblani purchased a small, German-based company with his business partner Sasha Shkolnik. 9l l`] lae]$ al gfdq `Y\ Õn] ]ehdgq]]k$ Zml it has expanded considerably over the past decade to now employ 200. The 3D printing company now has locations in the U.S., U.K., and Germany.

Bridgett Tubbs-Carlon Founder and CEO Gilden Woods Early Care and Preschool, Grand Rapids Impacting one person’s life is an accomplishment – what about 20,000? That’s how many people Bridgett TubbsCarlon estimates she has impacted through l`] )/ [`ad\[Yj] []fl]jk k`] `Yk gh]f]\ as founder of Gilden Woods Early Care and Preschool Nominated by: Inforum Finalists: Chris McCuiston CEO ?gd\Ôk` Koae K[`ggd Franchising, LLC, Birmingham As the father of four young children, Chris McCuiston understands how important it is for children to learn basic swimming skills. ?gd\Õk` klYjl]\ oal` gf] ^Y[adalq af *((.$ Yf\ oYk ^jYf[`ak]\ af *((1& L`]j] Yj] fgo )0 franchised locations, with an estimate of 80 more by 2024.

Jason Teshuba CEO Mango Languages, Farmington Hills Mango Languages has developed from a small startup into one of the language learning software market’s most successful organizations under the direction of CEO Jason Teshuba. The company’s software can be found in roughly 1( h]j[]fl g^ hmZda[ daZjYja]k oal` dYf_mY_] hjg_jYeeaf_$ Yk o]dd Yk .(( Y[Y\]ea[ institutions, and federal and governmental organizations like The Pentagon, U.S. Food and Drug Administration and the Marines. AUTOMOTIVE SUPPLIER

WINNER Jason Luo President and CEO Key Safety Systems ( KSS), Sterling Heights Jason Luo has overseen a kl]Y\q jak] af Zmkaf]kk kaf[] *((1 Yk C]q KY^]lq Kqkl]eÌk [mklge]j ZYk] \an]jkaÕ]\ and expanded. Luo anticipates double-digit growth in the near future, maintaining one outlook in particular: “Change is the way of life. Change fast.” Finalists: Steven B. Phillips President, and CEO Detroit Technologies, Inc., Bingham Farms Steven Phillips began his career at Detroit Technologies Inc. as director of design. Six years later, he acquired an equity investment in the company and l`]f$ af *()($ `] Z][Ye] l`] kgd] gof]j& Since then, he has integrated three separate companies to brand as a group of businesses known as ConForm, to achieve long-term growth. Nominated by: Foley & Lardner LLP

Lon Offenbacher Founder, President, and CEO Inteva Products, Troy Established in 2008 from a division of Delphi Corp., Inteva Products has become a worldwide leader in automotive latches, door modules and motors, and roof systems. Part of the formula is culture, as President and CEO Lon Offenbacher sets the tone to work hard, be honest and be someone people can trust. Nominated by: Foley & Lardner LLP

2015 JUDGING PANEL

Brian Demkowicz Managing Partner Huron Capital Partners LLC

Willie Geiser CEO Allshred Services

Doug Grimm President and CEO Grede Holdings LLC and Co-President MPG Inc.

Kim Kaplan Arvind Pradhan President and COO CEO K-Limited Carrier Ltd. Camaco LLC

Amy Proos CEO, Proos Manufacturing Inc.

Ron Shahani President and CEO Acro Service Corporation

Bob Verdun President Computerized Facility Integration LLC

DBpageAD_DBpageAD.qxd 6/9/2015 2:06 PM Page 1

AUTOMOTIVE SUPPLIER Finalists:

DIVERSIFIED SERVICES

Laurent Bresson President and Global COO Nexteer Automotive, Saginaw Under the leadership of Laurent Bresson, Nexteer’s outlook on the market has shifted from a divisional view to a global view; a change that will help Nexteer respond to their customers in all markets. Oal` gh]jYlagfk af )) [gmflja]k$ F]pl]]j Automotive is a global leader in advanced steering and driveline systems. Nominated by: Foley & Lardner LLP and WJR

Robert H. Kurnick Jr. President Penske Automotive Group, Inc.; Penske Corporation, :dggeÔ]d\ @addk Robert Kurnick Jr. has led both Penske Automotive Group and Penske Corp. through ka_faÕ[Yfl _jgol`$ lYcaf_ l`] ^Yeadq g^ businesses to the next level and equipping his team to be successful leaders. He’s brought a “can-do” attitude as well as a foundation of honesty and integrity. Nominated by: Citizens Bank

CREATIVE SERVICES

Finalists:

WINNER Robert Hake CEO MyLocker.com, LLC, Detroit Robert Hake’s entrepreneurial spirit began in high school when he created a custom T-shirt for his senior spring break. That led him to create his own custom T-shirt business, which d]\ lg l`] a\]Y g^ [geZafaf_ hgdYj Ö]][] ^YZja[ with waterproof vinyl. Now MyLocker places over 4,000 new orders of this product daily, along with other clothing items. FINALISTS: Stacey Coopes CEO FordDirect, Dearborn When the chance to take control of FordDirect was presented to Stacey Coopes four years ago, she seized it with an audacious plan lg af[j]Yk] j]n]fm] af Y khYf g^ Õn] q]Yjk& Reaching that goal means expanding and diversifying revenue streams. FordDirect, a joint venture between Ford Motor Co. and Ford and Lincoln dealers, is now poised to be a digital marketing and advertising solution provider for the future of automotive consumerism. Craig Erlich President and CEO pulse220, Ferndale In a down economy, business meetings and events Yj] g^l]f l`] Õjkl lg _]l [ml& L`gk] [mlZY[ck in the economy became something that pulse220 was able to overcome. The secret? Hard work, dedication and innovation. For example, the agency has begun a mass integration of social media applications, allowing it to streamline its products and steadily increase its customer base. Nominated by: Fuel Leadership Tim Smith CEO Skidmore Studio, Detroit Tim Smith joined Skidmore Studio as a consultant in 2000, and acquired a majority interest from the creative studio’s founding family e]eZ]jk )( q]Yjk dYl]j& L`] Õje$ jggl]\ af automotive illustration, now has expanded services such as interactive design, marketing strategy, motion graphics and copywriting. Nominated by: Fuel Leadership

WINNER

Leon Richardson President and CEO ChemicoMays LLC, Kgml`Ô]d\ Leon Richardson decided to develop his own company, ChemicoMays, in )101& Kaf[] l`]f$ `] `Yk _jY\mYddq ]phYf\]\ the business from a small startup to a highly successful chemical management company, oal` dg[Ylagfk af ;YfY\Y$ E]pa[g$ Yf\ )0 states. Michael Kulka CEO PM Environmental, Inc., Lansing KlYjlaf_ af )11* oal` Y kaf_d] truck and some business cards, Michael Kulka and Pete Bosanic have grown PM Environmental to a company that works with banks, government agencies and numerous other businesses throughout the United States as an environmental risk expert. SERVICE PROVIDERS

WINNER David T. Provost President and CEO Talmer Bancorp, Inc., Troy <mjaf_ l`] Õn]%q]Yj klj]l[` ^jge *((1 lg *(),$ LYde]j Bancorp has become one of the country’s fastest-growing banking companies after acquiring seven banks. Much of this success has been associated with the leadership of David Provost, whose extensive network and previous experience at The Private Bank has been crucial. Nominated by: Merrill Corp. Finalists: Courtney Morales Hofmann President E;E KlY^Ôf_$ Madison Heights When Courtney Morales @g^eYff Õjkl ^gmf\]\ E;E KlY^Õf_ af *())$ k`] gfdq `Y\ log ]ehdgq]]k& Fgo she has nearly 30, as her clientele base is steadily rising. The difference-maker has been the culture she’s created as well as innovative offerings, such as a vendor management system. Nominated by: Citizens Bank

SERVICE PROVIDERS Finalists: Kent Sharkey President and CEO Ulliance, Inc., Troy An entrepreneur since he was a teenager, Kent Sharkey initially founded Ulliance Inc., an Employee Assistance Program provider, with the funds he secured from selling his former lawn mowing business. The company has steadily grown ever since, while acquiring business from large corporations like Lear Corp EMERGING

DISTRIBUTION AND MANUFACTURING Finalists: Roger Betten President MFP Automation Engineering, Grandville <mjaf_ l`] *((1 ][gfgea[ recession, Roger Betten was named president of MFP Automation Engineering. Lg Z]ll]j k][mj] l`] [gehYfqÌk ÕfYf[aYd future, he set out to diversify the company from automotive to a wide range of industries. As a result, the company’s business has been expanded.

WINNER Veronika Scott Founder and CEO The Empowerment Plan, Detroit Veronika Scott’s vision for The Empowerment Plan began as a class project: design of a self-heating, waterproof coat that transformed into a sleeping bag for homeless people. Now, a full-scale company, Scott employs homeless men and women to produce the coats. Along the way, production `Yk ljahd]\ Z]lo]]f *()* Yf\ *(),& Nominated by: Fuel Leadership and Crain’s Detroit Business Finalists: John Kello CEO MatchRX, Royal Oak 9k l`] Õjkl [gehYfq lg ever offer an Internet-based marketplace for independent pharmacies to quickly buy and sell their prescription drugs, MatchRX is growing at a rapid pace. There are 4,000 pharmacies currently listed as e]eZ]jk$ Yf\ Yfgl`]j )- lg *( bgafaf_ l`] website every month, on average. Royce Neubauer Founder, president and CEO Service First Logistics Inc., Rochester Although this multistate freight brokerage company began as a oneeYf gh]jYlagf af *())$ Jgq[] F]mZYm]j sees it becoming one of Michigan’s top-three hjg\m[] k`ahh]jk Zq <][]eZ]j *()-& Lg\Yq$ there are 40 employees as the company services a niche in the market: Shipping content which requires refrigeration. DISTRIBUTION AND MANUFACTURING

WINNER Aaron J. Zeigler President Zeigler Auto Group, Kalamazoo Aaron Zeigler was named president of his father’s regional automotive dealership network, Zeigler Automotive Group. He wasted no time, and pursued an aggressive growth strategy that involved acquiring \]Yd]jk`ahk Yf\ Õf\af_ ][gfgea]k g^ k[Yd]& Af Y decade, it has gone from seven locations in two states to 20 locations in four states.

Finalists: Mark Groulx President Falcon Asphalt Repair Equipment, Midland In 2004, Mark Groulx started Falcon Road Maintenance Equipment to help those repairing roads do more with less. It led to a patent for technology to enable pothole repairs to be made with recycled asphalt. Today, Falcon asphalt recyclers are used in seven countries, in seven Canadian provinces and in 48 US states including 30 state departments of transportation.

Winner: Daniel S. Carmody President Eastern Market Corporation, Detroit Kaf[] *((/$ <Yfa]d Carmody has overseen the Eastern EYjc]l ;gjhgjYlagf$ Y fgfhjgÕl that develops southeast Detroit’s regional food systems, and supervises the city’s public markets. During his tenure, Carmody has overseen initiatives to improve the Eastern Market neighborhood’s economy by creating the seasonal Tuesday Market and Sunday Street Market, and implementing the Eastern Market +.( Zdm]hjafl& L`] Zdm]hjafl oadd provide residents nutrition education, new jobs, and better access to food, resulting in a healthier regional food economy. Nominated by: Foley & Lardner LLP

Winner: Rick DeVos Founder and CEO Start Garden, Grand Rapids As the founder of ArtPrize, Spout.com, and other projects, Rick DeVos inherited his sense of entrepreneurialism from his grandfather, Rich DeVos, Amway [g%^gmf\]j& Af *()*$ <]Ngk ^gmf\]\ another company, Start Garden, which originally rewarded other entrepreneurs by investing $5,000 into two new ideas every week. The company is now focused on investing in developing companies, some of which were previously funded as startups. Kaf[] *()*$ )1/ a\]Yk `Yn] Z]]f ^mf\]\ Ç ,1 g^ o`a[` `Yn] j][]an]\ additional investment. Nominated by: Crain’s Detroit Business

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CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS // June 15, 2015

CRAIN'S LIST: LARGEST PHYSICIAN ORGANIZATIONS

$ $

$ Rank ) "

# ! * +

Omar Khan CEO

$ , &

$ ! (

! ! (

% % $ '

2,303 NA

147,033 731,385

Group practice

Michael Williams United Physicians Inc. 30600 Telegraph Road, Suite 4000, Bingham Farms 48025 president and CEO Deborah Tasich (248) 593-0100; www.updoctors.com Withrow executive vice president and COO

2,295 NA

IPA

The Physician Alliance LLC 20952 12 Mile Road, Suite 130, St. Clair Shores 48081 (586) 498-3555; www.thephysicianalliance.org

Michael Madden president and CEO

2,164 NA

IPA

University of Michigan Faculty Group Practice 4101 Medical Science Building I, Ann Arbor 48109-0624 (800) 211-8181; medicine.umich.edu/medschool/patientcare/um-physiciansfgp

David Spahlinger senior associate dean for clinical affairs

1,962 1,796

50,874 2,097,086

NA 7

Group practice

Henry Ford Physician Network 1 Ford Place, Detroit 48202 (313) 874-1466; henryfordphysiciannetwork.com

Charles Kelly president and CEO

1,750 NA

40,000 3

IPA

Wayne State University Physician Group 1560 E. Maple Road, Troy 48083 (877) 978-3627; www.wsupgdocs.org

Beaumont Health System, Children's Hospital of Michigan, Crittenton Hospital Medical Center, Detroit Receiving Hospital, DMC Surgery Hospital, Doctors' Hospital of Michigan, Garden City Hospital, Harper University Hospital, Henry Ford Health System, Huron Valley-Sinai Hospital, Hutzel Women's Hospital, Karmanos Cancer Center, McLaren-Macomb, McLaren-Oakland, Oakwood Healthcare System, Rehabilitation Institute of Michigan, Select Specialty Hospital, SinaiGrace Hospital, St. Joseph Mercy Health System, St. Mary MercyLivonia, St. John Providence Health System, Triumph Hospital Detroit, UM Health System, Vibra Hospital of SE Detroit, others Beaumont Health System, Beaumont Health-Farmington Hills, Children's Hospital of Michigan, Crittenton Hospital and affiliates, Detroit Medical Center hospitals, Doctor's Hospital of Michigan, Garden City Osteopathic Hospital, Henry Ford Health System, Karmanos Cancer Center, McLaren Health System, Oakland Regional Hospitals, Oakwood Healthcare, Select Specialty Hospitals, St. John Providence Health System, St. Joseph Mercy Health System, St. Mary Mercy Hospital of Livonia, Triumph Hospital of Detroit, UM Hospital, others St. John Hospital and Medical Center, Providence Hospital, Providence Park Hospital, St. John Macomb-Oakland Hospital, St. John River District Hospital, Children's Hospital of Michigan, Detroit Receiving Hospital, Beaumont Health System, Henry Ford Health System, McLaren-Macomb, Harper Hospital, Henry Ford Health System, Karmanos Cancer Institute University of Michigan Health System

Henry Ford Health System, others. Includes 1,220 employed physicians in the Henry Ford Medical Group

This list of physician organizations encompasses physician hospital organizations and independent practice associations and is an approximate compilation of the largest such groups in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. IPA = Independent practice association. PHO = Physician hospital organization. ACO = Accountable care organization. It is not a complete listing but the most comprehensive available. Unless otherwise noted, information was provided by the organizations. NA = not available. LIST RESEARCHED BY SONYA D. HILL

An expanded version of this list may be purchased at crainsdetroit.com/section/data_lists

GET IN ON THE

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HEALTH CARE, ENERGY AND THE

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CRAIN’S DETROIT BUSINESS // June 15, 2015

PEOPLE

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

ENTERTAINMENT

SERVICES

Kelli Cadenas to curator, Sea Life Michigan Aquarium, Auburn Hills, from senior aquarist.

MARKETING Angela Hal beisen to vice president, pulse220, Ferndale, from account executive. Also, Robyn Glasser to controller, from inHalbeisen terim director of accounting, BullsEye Telecom Inc., Southfield.

NONPROFITS Steve Raymond to associate director, Manresa Jesuit Retreat House, Bloomfield Hills, from shareholder, Butzel Long PC, Bloomfield Hills.

Lichtenberg

John Lichtenberg to chief marketing officer, Fuel Leadership LLC, Detroit, from executive vice president, chief marketing officer, Learning Care Group

Inc., Novi.

TRANSPORTATION Rick Palmer Jr. to president, Hazen Transport Inc., Taylor, from COO. Mark Schenkel to controller, Pentastar Aviation LLC and Pentastar Aviation Charter Inc., Waterford Township, from controller MCM Management Corp., Bloomfield Hills.

DEALS

Droste Group Inc., Troy, a leadership and organization development firm, has opened an office at 303 Wyman St., Suite 300, Waltham, Mass. Telephone: (877) 550-5100. Website: drostegroup.com.

& DETAILS

Belle Tire Distributors Inc., Allen Park, has opened a store at 590 W. Ellsworth Road, Ann Arbor. Telephone: (734) 548-8582. Website: belletire.com.

Submit news to cdbdepartments@crain.com

ACQUISITIONS & MERGERS ManagedWay, Southfield, a cloud services provider, has acquired Waveform Technology LLC, Troy, a data center and Internet solutions provider. Terms were not disclosed. Waveform’s technical assets, administrative processes and all staff will be integrated with ManagedWay. The new company will retain the ManagedWay name and become a provider of data center services including co-location and public and private clouds. Websites: managedway.com, waveform.net. Huron Capital Partners LLC, Detroit, announced that its auto auction portfolio company, the XLer-

ate Group, Indianapolis, has acquired Greater Kalamazoo Auto Auction, Schoolcraft. XLerate has a group of dealer-centric auctions with physical and satellite sale operations in Michigan, California, Texas, Florida, South Carolina, Mississippi and Wisconsin. GKAA features fleet, lease, financial institution and dealer consignment sales at its Michigan location, south of Kalamazoo. Websites: huroncapital.com. xlerategroup.com.

EXPANSIONS Cy Laser America LLC, Sterling Heights, a subsidiary of Cy Laser S.r.L., Schio, Italy, has opened a new technology center, 6110 15 Mile Road, Sterling Heights. Website: cy-laser.us.

NEW SERVICES Domino’s Pizza Inc., Ann Arbor, has launched new ordering platforms in the U.S. offering customers the option of ordering via tweet and emoji. Customers who add their Twitter handle to their Domino’s Pizza Profile will be able to re-order their Easy Order by tweeting #EasyOrder or the pizza emoji @Dominos. Website: dominos.com. Deals & Details guidelines. Email cdbdepartments@crain.com. Use any Deals & Details item as a model for your release, and look for the appropriate category. Without complete information, your item will not run. Photos are welcome, but we cannot guarantee they will be used.

SPOTLIGHT DAN MUNRO, COO, Community Choice Credit Union Dan Munro has been appointed COO of Community Choice Credit Union, Farmington Hills. Previously, Munro, 52, served as chief information officer, overseeing the information Munro technology and branch operations of the credit union. He has been with Community Choice for more than 10 years. As COO, Munro will be responsible for the administration of the credit union’s business functions, including branch operations, compliance programs, lending and information technology. Munro has been in the credit union industry for more than 30 years. Before joining Community Choice, he was vice president of information technology at Research Federal Credit Union and director of technology at Credit Union One. Munro holds a master’s degree in administration from Central Michigan University and a bachelor’s degree in administration from Cleary College.

People on the Move announcements are limited to management positions.Email cdbdepartments@crain.com.Include person’s name,newtitle,company,cityin which the person will work,formertitle, formercompany(ifnot promoted from within) and formercityin which the person worked.Photos are welcome,but we cannot guarantee they will be used.

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CRAIN’S DETROIT BUSINESS // June 15, 2015

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Public-Private Partnership Forum. 11:30 a.m.-3:30 p.m. Urban Land Institute. Event includes best practices in public-private partnerships through panel and roundtable discussions and exploration of specific topic areas. University Club of Michigan State University, Lansing. Cost: ULI members: $75 private sector; $50 public sector/nonprofit. Nonmembers: $125 private sector; $100 public sector/nonprofit. Onsite registration will be available the day of the event. Website: michigan.uli.org.

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Midyear Economic Forecast and State of the Industry Luncheon. 10:30 a.m.-2 p.m. Construction Association of Michigan and Home Builders Association of Southeastern Michigan. Keynote speakers: Jim Baird, CIO, Plante Moran Financial Advisors; and W. Jay Wortley, director of the office of revenue and tax analysis, State of Michigan. Suburban Collection Showplace, Novi. $50. Contact: HBA, (248) 862-1002; CAM, (248) 972-1000; or visit cam-online.com.

UPCOMING EVENTS Health Care Access. 5:30 p.m. June 19. Michigan Universal Health Care Access Network. Peter Hammer, director of the Damon J. Keith Center for Civil Rights, will be speak on “Health for All: The Ongoing Struggle for Access and Justice in American Healthcare.” Tabernacle Missionary Baptist Church, Detroit. $40. Website: michuhcan.org/dinner.

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An evening with Zack Urlocker. 5:30-8:30 p.m. June 24. TIE Detroit and Ann Arbor Spark. Urlocker, COO at Duo Security, a venturebacked startup in Ann Arbor, will talk about how to scale your business. Spark Central, Ann Arbor. Free. Contact: (248) 254-4043; email: sarahm@kyyba.com. Doing Business in Mexico. 8-11:30 a.m. June 25. Automation Alley. A discussion on the changing dynamics of doing business in Mexico, Michigan’s largest export market. Speakers: Noel Nevshehir, director of international business, Automation Alley; Juan Manuel Solana, Consul of Mexico, Consulate of Mexico; Eve Lerman, senior international trade specialist, U.S. Department of Commerce; David Newhouse, international trade development manager, Michigan Economic Development Corp. Preregistered members: $20; nonmembers: $40; foundation: free; walk-in members: $30; walk-in nonmembers: $50. Preregistration closes at 1 p.m. June 23. Automation Alley, Troy. Contact: (800) 427-5100; email: info@automationalley.com.

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.

Veterans: The Untapped Talent Pool. 10 a.m.-1 p.m. July 14. Automation Alley. Season 2 of the “Michigan’s Got Talent” event series is a seminar focused on hiring veterans. David Dunckel, Roush Veterans Initiatives Program manager, will speak about the program. Automation Alley headquarters, Troy. $20 members, $40 nonmembers, walk-in member $30, walk-in nonmember $50. Preregistration closes July 10. Contact: (800) 427-5100; email: info@automationalley.com. A New Automotive Era. 11:30 a.m.-1:30 p.m. July 15. Inforum. In her book Road to Power: How GM’s Mary Barra Shattered the Glass Ceiling, author Laura Colby describes the personal character, choices and leadership style that steered Barra’s career trajectory to become CEO of General Motors. Westin Book Cadillac. Inforum members $40; non-members $55; students $25; table sponsor $500 (includes table of 10 with preferred seating and recognition in event presentation). Website: inforummichigan.org.

Crain’s 2015 CFO of the Year Awards. 7:30-10 a.m. July 23. Crain’s Detroit Business. A panel discussion with the top financial executives from Detroit’s four major professional teams. The Henry, Dearborn. Individual ticket: $75; reserved table of 10: $800. Preregistration closes at 9 a.m. July 21. If available, walk-in registration will be $90 per person. Contact: Kacey Anderson, (313) 446-0300; email: cdbevents@crain.com. 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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CRAIN’S DETROIT BUSINESS // June 15, 2015

LOOKING BACK

On June 17, 1985, Crain’s reported how a change by manufacturers to just-in-time delivery led to Michigan reforming its intrastate trucking laws. More at crainsdetroit.com/30

Just-in-time delivery changed trucking rules By Bill Shea bshea@crain.com

You’d think trucking parts from the manufacturer to the assembly plant would be no big deal. After all, it’s common sense, right? It wasn’t always so in Michigan, where anti-competitive regulations had legal protections for decades. Thirty years ago, a story in the June 17, 1985, issue of Crain’s Detroit Business reported on an uptick in trucking licenses granted by the state to companies hauling parts to the automakers in the wake of reform to Michigan’s intrastate trucking laws. From 1983 to 1984, the Michigan Public Service Commission — it regulated trucking within the state back then — authorized 70 con-

tracts within the state to move parts for General Motors Corp., Ford Motor Co., and Chrysler Corp. That was a big number. The number of licenses authorized annually before a 1983 change to the state laws governing trucking within Michigan was “negligible,” the story reported. The rules were changed because the automakers and other manufacturers had begun adopting justin-time delivery methods aimed at reducing supply chain costs and creating other efficiencies. “The auto industry especially wanted to get to a competitive trucking market,” said John Taylor, chairman of the supply chain management department at Wayne State University ’s School of Business Administration.

Just-in-time delivery was nearly impossible under the old rules, and shippers sometimes had trailers filled with parts sitting at factories that sometimes never got used. As rapid advancements in computerized tracking and other technologies opened the logistics industry to new efficiencies, the automakers were constrained by out-dated state and federal trucking laws that protected monopolies. Under state law at the time, trucking companies had to prove to the Public Service Commission there was a need to ship goods between two places. Thanks to authority from the federal Interstate Commerce Commission, states controlled shipping routes, permitted trucking companies to stymie new applications and

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entrants, and also protected the industry’s price fixing. “All the carriers would get together in a room and fix prices,” Taylor said. ICC-approved rate bureaus approved the rates, and allowed very little fluctuation without government approval. Pricing fixing wasn’t just to make money, Taylor said. Weirdly, truckers had to have high prices to persuade the state to authorize shipping contracts. “Once you got your authority, you had to prove your prices were high enough,” Taylor said. “It was insane.” The theory at the time was that discounted rates meant trucking companies would be cheap, unsafe operations, Taylor said, and too

much competition would deteriorate service. Discounting was illegal, so manufacturers paid the costs and passed them along to consumers. “Carriers argued that if you allowed more competitors in, no one would service rural markets and the Upper Peninsula, and they had to keep prices high to ensure safety,” said Taylor, who in the 1990s was part of a coalition that successfully sought to end state trucking controls. The myth about rural service exploded when UPS and Federal Ex press sought to deliver to such places, and finagled federal approval to do so. Studies showed that deregulation wasn’t unsafe. See TRUCKING, Page 18

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DTE, from Page 3: Park planned across from HQ the company is playing a role in transformative development in this corner of downtown. By turning a 1.5-acre parcel directly in front of the headquarters into a new park, the project is akin to what the 2.5acre Campus Martius Park has meant to the area at the core of downtown. “A park like this and a green space like this can really change people’s perspective on this area,” Meador said. Meador wouldn’t disclose exact project costs but said it would be in the $5 million to $10 million range. Groundbreaking is planned for later this summer to create the 56,000-square-foot park, which is expected to have a visitor capacity of about 3,000 when it is completed in the spring.

Long-term impact

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The DTE park could be a development catalyst for an area that Robert Gregory, senior vice president of the Downtown Detroit Partner ship, called a “sea of gray parking lots.” The DDP will operate and manage the park Robert Gregory: under its Detroit Public spaces vital 300 Conservancy subsidiary, the to “vibrant cities” same entity that manages Campus Martius. Plans for the second park, on land owned by DTE, were first announced in 2013, with the programming and other details under wraps until now. “In a five- to 10-year window, I think the west side of downtown is going to see more development,” he said, pointing to Joe Barbat’s Briggs House redevelopment of the former Park Apartments building (also the former Hotel Briggs) at 114 W. Adams St. as an example of ongoing projects. “Development is and will be moving in that direction,” Gregory said. Public spaces like parks, public squares and plazas are critical to city-building overall, he said. “Vibrant cities, they are packed with people in squares, parks and

DTE ENERGY CO.

Groundbreaking on the DTE Energy Co. public park is expect to take place this summer and be completed in the spring. It’s expected to have room for 3,000 visitors at a time. plazas,” Gregory said. “You go back to downtown in 2000 … for several decades … it was devoid of people, and the offices, retail and restaurants moved out, so the sidewalks were empty, which is not vibrancy or economic sustainability. “In the case of Detroit, we were so devoid of people that we really had to generate significant amounts of activity” in Campus Martius, he said. “I think we’ll keep this activity going long-term.” The park would sit in the shadow of the Olympia Development ’s new hockey arena for the Red Wings, which is now under construction, and five planned distinct neighborhoods surrounding the $535 million arena. There is also expected to be at least $200 million in ancillary development as part of the arena district project, first announced in July. “We want to do this in a way where, with the stadium and entertainment district, that there’s a connection there,” Meador said. “My hope is that something like this is that it is a catalyst for change and economic development. When (investors) see this park come together, it would encourage them to do something that they might not do otherwise.” The park would also include a 50seat restaurant — the operator of which has yet to be identified — that could be expanded by attaching tents to the side of the building for larger events. Other project highlights include outdoor café space, entertainment spaces for live music, movies and theater, free high-speed Wi-Fi, public restrooms, gardens and green space, and bike parking, according to DTE.

The regular rotation of entertainment programming that is scheduled at Campus Martius will be replicated at the new DTE park. Gregory said that a wide range of park programming can be expected, from food trucks and live music during the day for DTE employees to half-field games of soccer, Frisbee and others. DTE plans a crowdsourcing exercise with a website to help solicit ideas for names for the park, which is not the first company project in the area.

Other real estate holdings DTE has a number of other significant Detroit sites. It redeveloped the 31,000-square-foot former Sal vation Army building that it bought from Syndeco Realty Corp. in 2012 for $350,000 and rebranded as Navitas House (“navitas” is the Latin word for “energy”). The building, which had been closed since 2004, now houses about 140 information technology employees. In the East Jefferson neighborhood, DTE is studying how to best use the Conners Creek Power Plant site along the Detroit River west of Maheras-Gentry Park. Built in 1915, the plant featured seven 350-foot exhaust stacks (sometimes called the “Seven Sisters”); a portion of it was imploded in 1996 after being closed in 1983. A remaining portion of the plant, built in 1951, has the “Two Brothers” exhaust stacks. What remains of the plant is intended to be repurposed rather than demolished as part of campus redevelopment. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

TRUCKING, from Page 17: Just-in-time delivery In the end, the trucking industry realized the monopolies imposed growth limitations. For example, haulers could get state approval to move individual types of products between two places, but often couldn’t get approval to ship similar goods. “You could haul toilet paper but not paper towels,” Taylor said. At the federal level, the push began in the 1970s to bring common sense to the logistics industry, but the effort faced fierce opposition from the trucking companies and organized labor. Finally, interstate trucking deregulated nationally with the federal Motor Carrier Act of 1980, and it led to a boom in competitive hauling across the country. Literally hun-

dreds of thousands of trucking companies were created, compared to just 18,000 federally approved to do business in 1975. Michigan-based trucking companies found themselves sending goods out of state — making the service interstate hauling covered by federal rather than state law — to more effectively move goods. Trucking within individual states had to be reformed one by one. Various legal challenges chipped away at the vestiges of Michigan’s rate controls and other archaic rules through the 1990s, Taylor said. Today, the state can regulate only safety and insurance, and that falls to the Michigan State Police Motor Carrier Division rather than the Public

Service Commission. The PSC is no longer involved with trucking at all. About 80,000 trucks transport 68 percent of the $835 billion worth of freight that moves through Michigan annually, state data shows. The impact of state and federal trucking deregulation can’t be overstated, Taylor said. “It’s been one of the biggest public policy successes of the past 75 years in terms of impact on the U.S. economy,” he said. “Costs as percentage of the GDP declined after 1980. It was a tremendous success in reducing prices, improving service and speed. It had an impact on reduced inflation in the U.S.” Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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MERIDIAN, from Page 1: Health plan’s hire calling 448 full-time employees — including 417 in Michigan — to accommodate growth in Healthy Michigan Medicaid and its fast-growing national pharmacy benefit management company, Meridian Rx LLC, as corporate revenue grew 17 percent in the first quarter, Jon Cotton said. Another 60 contractors were hired to fill gaps in Meridian’s IT Sean Cotton: department, Employees “our Sean Cotton said. front line.” Those contractors will be replaced by Meridian employees over the next two years, he said.

Meridian on the move On top of its recent hirings and the business expansion, Meridian is preparing to move into its new headquarters at the former Compuware Corp. headquarters at Campus Martius. Last year, Meridian and Bedrock Real Estate Services jointly purchased the 1.1 million-square-foot Compuware building for an estimated $140 million to $150 million. Jon Cotton said Bedrock and Meridian haven’t decided on a name for the building and are using One Campus Martius for now. Bedrock is Dan Gilbert’s full-service real estate firm.

Leadership team High-profile senior leadership hires also are part of the plan. This week, Robert Frank, M.D., former CEO of Wayne State University Physician Group, will begin his job as Meridian’s new chief medical officer. Frank, who lost his job last year at UPG over philosophical differences with Valerie Parisi, M.D., Robert Frank: former Wayne New chief medical State medical officer at Meridian. school dean, replaces Thomas Petroff, D.O., who left in April to become medical director of Southfieldbased AmeriHealth Caritas. Last fall, Meridian hired Teri Takai as chief information officer to lead the company’s IT expansion efforts. Takai was CIO of state information technology departments in Michigan and California and then the U.S. De Teri Takai: State’s partment of De fense. ex-IT leader doing same at Meridian. Competing for talent in a tight health care job market will be Meridian’s first big hurdle as it grows, said Sheryl Simmons, director of human resources with Bingham Farmsbased Group Associates. “With the number of unfilled positions in health care out there, the gap is tightest since 2007,” Simmons said. “Having a skilled strategic project manager and a vision to drive their (recruiting and training) plan will be keys to success.” Meridian’s growth contrasts with the 500 announced layoffs by HealthPlus of Michigan, which recently agreed to sell its Medicaid and MiChild membership to Molina Healthcare of Michigan for an unspecified price. Molina is expected to hire some of the laid-off workers.

Company roots Founded by CEO David Cotton, M.D., in 1997 as Health Plan of Michigan, Meridian has expanded from Michigan into Illinois and Iowa

DAVID HALL/CDB

Meridian Health Plan and Bedrock Real Estate Services have yet to come up with a new name for their new building: the former Compuware Corp.headquarters.

Starting in September, Meridian plans to start moving its employees to the new building one floor at a time from other downtown Detroit offices at 777 Woodward and 1001 Woodward. The move will be assisted by dPop!, an office design space and moving company founded by Gilbert. “This takes an enormous amount of work from us,” Jon Cotton said. “It will be

done (each floor) in two days.” By the end of the year, Meridian plans to house at least 1,788 employees in five floors at One Campus Martius, Jon Cotton said. Total Meridian employment could top 2,050 people, including about 1,800 in Michigan.

and now has more than 722,000 Medicaid managed care members. Meridian also operates Medicare health plans in Michigan and Illinois and Medicare drug prescription plans in Michigan, Indiana, Kentucky and Illinois. Its Meridian Rx now has 31 corporate clients in 15 states with more than 50,000 pharmacy benefit members. While the challenges in adding so many workers simultaneously may be daunting for some companies, Sean Cotton said Meridian, which prides itself on being a family-run business, has beefed up its training and orientation programs to absorb the new workers into its culture. Besides twin brothers Jon and Sean, Cotton family members also include younger brother Michael Cotton, who is corporate COO. Last year, Shery Cotton, the brothers’ mother, retired as corporate COO. “We really invested in new employee orientation, training, recruiting and retention teams and expanded them over the last year,” Sean Cotton said. “This is our front line, and we treat them like family. We want the best of the best employees in Detroit, Michigan and the Midwest.” An entry-level job at the company sometimes turns into a substantial career. Jon Cotton said many entry-level employees hired into the call center area eventually move on to other departments. “The main reason we have attrition is they grow with the company and it is a stepping stone in their career,” he said. “We invest so much in our people. We added a whole new department, the culture department, to get the word out on what it means to work at Meridian.” Simmons said Meridian’s culture

department is a good idea, especially for a family-owned business. “When change is happening rapidly, they can go to that department and check if they are maintaining their culture,” she said. A decade ago, when the company was smaller, Jon Cotton said employees couldn’t help but bump into one or more of the Cotton family members during the day. “Now we are diversified across states and it is hard to” interact with the family each day, Jon Cotton said. “We teach them what it means to work in a company that values family.” Simmons said Meridian needs to remain cognizant of existing employees for retention because integrating so many new employees and embarking on a move to a new building can be stressful. “I was at a company and went to 65 people to 1,000 in a year,” Simmons said. “I knew everybody on a first-name basis. Suddenly I didn’t know (the newer people). I felt I was disrespectful because I couldn’t remember their names.” But there are limits to Meridian’s growth. Jon Cotton said Meridian had to turn away offers from several states the past few months to submit request for proposals to participate in Medicaid managed care plans. “Our recent (National Committee on Quality Assurance ) rankings came out and we had two Medicaid plans in the top 10 — Michigan and Illinois,” Jon Cotton said. “Because of our growth this year, the hiring, the building move, we had to turn away very large contracts. We think we will have some big years ahead.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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PAY, from Page 1: Prevailing wage repeal push persists

UPCOMING

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Those hourly rates are at the center of a statewide and national debate over pay scales on public projects. Legislative Republicans, perhaps emboldened by new leadership and an expanded majority, have made repealing the 50-yearold law a high priority, either legislatively or by ballot initiative. The push to repeal comes despite opposition from Gov. Rick Snyder, who sees it as detrimental to his efforts to attract skilled labor, and without hard data on whether it would save the state money as proponents claim. Those factors — and that repeal in general is supported by nonunion contractors and not supported by unionized ones — leads some to view the campaign as an attack on labor, akin to right to work. “There’s no public outcry,” said Patrick “Shorty” Gleason, legislative director of the Michigan Building and Construction Trades Council, which represents skilled trades unions including ironworkers, plumbers and laborers. “People aren’t just beating down the Capitol doors saying, ‘You got to take this off the books.’ ”

Repeal introduced Prevailing wage has been on the to-do list of some GOP lawmakers, contractors associations and conservative interest groups for years without success. But it caught fire in January when the Senate introduced a repeal in the first bills of this legislative session, Senate Bills 1-3. The bills, co-sponsored by new Senate Majority Leader Arlan Meekhof, passed the Senate and are pending in the House. But his counterpart, House Speaker Kevin Cotter, of Mt. Pleasant, doesn’t plan to fast-track a vote on the bills when the governor has implied he might not sign them. “I would prefer that the governor sign (the legislation), obviously,” said Meekhof, of West Olive, “but if he’s reticent, I’ll find any way to get it Arlan Meekhof: done.” Will get it done, with Perhaps anticor without Snyder ipating a veto, lawmakers are considering a backup plan — nearly identical legislation led by a petition drive that could not be vetoed by the governor. A group billing itself as Protecting Michigan Taxpayers has launched a petition drive to collect nearly 253,000 signatures by late November to force the Legislature either to vote to enact repeal or put it on the ballot in November 2016. Snyder can’t veto petition-drive initiatives. Protecting Michigan Taxpayers is a registered Michigan ballot committee. The petition effort is being funded by the Michigan Freedom Fund and the Associated Builders and Contractors of Michigan, a Lansing-based trade group that includes mostly non-union contractors. Both support repeal.

The Freedom Fund has ties to the DeVos family — its chairman, Greg McNeilly, is an executive at a company owned by Dick DeVos and managed his campaign for governor in 2006. In a touch of irony, the fund’s new president is Terri Reid, who until last month was Snyder’s external affairs director. Snyder declined to comment directly on Reid’s departure. Reid did not respond to a message seeking comment, but Tony Daunt, the organization’s operations director, told Crain’s she has a history of promoting grassroots and conservative causes and “she’s excited to be here.” The repeal effort has lawmakers’ attention. Cotter said at the Detroit Regional Chamber’s Mackinac Policy Conference that he hasn’t counted votes to know if enough support exists in the House to pass the petition legislation, but “there is broad support for repealing prevailing wage.” Chris Fisher, ABC’s president and CEO as well as vice president of Protecting Michigan Taxpayers’ board, said the group would not have launched the ballot drive if it wasn’t confident it had lawmakers’ backing. ABC also sued the city of Lansing in 2012 to throw out its local prevailing wage ordinance. The Michigan Supreme Court has agreed to hear the case on appeal from ABC after the Michigan Court of Appeals sided with the city. A date for oral arguments has not been scheduled.

Inflated rates? Whether repealing prevailing wage saves money depends on whom you ask. Proponents often cite a 2013 report from East Lansing-based An derson Economic Group , commissioned by ABC, that found Michigan taxpayers could have saved $224 million per year — and $2.2 billion in total — on K-12 and higher education building construction from 2002 to 2011 if prevailing wage didn’t exist. That was partly due to an assumption that prevailing wage inflated pay rates by 25 percent, the report says. But that study’s findings were challenged in a 2013 report by Uni versity of Utah economics professor Peter Philips, commissioned by supporters of prevailing wage. Philips wrote that Anderson’s study, authored by Alex Rosaen, based his report on “outdated and miscalculated” assumptions, one of which considered capital outlays on school projects solely as payments to contractors when they also include land purchases and other costs. Rosaen, Anderson’s public policy and economic analysis director, told Crain’s that Philips’ critique of his use of capital outlay spending was fair and he’ll change the approach in future studies. A narrower accounting would have resulted in lower savings estimates, he said, but not enough to alter his findings. He based his assumptions in part

on findings from previous studies on prevailing wage, including one by Philips. “This is an area of study where the data aren’t perfect and there are no perfect experiments to have us really know we have the answer right down to the penny, but the answer is very clear,” Rosaen said. “One person’s unnecessary costs are another person’s wages, so policymakers need to weigh one side against the other and think about what they think is most important for our state to have the best quality of life.” In his study, Philips reviewed data from Kentucky, Ohio and Michigan and found no statistical difference in cost per square foot on school projects. All three states had periods in the 1990s without active prevailing wage laws. Michigan’s law was suspended from 1994-97 when a federal district court ruled the state’s prevailing wage law was invalidated by the federal Employee Retirement Income Security Act; the U.S. 6th Cir cuit Court of Appeals later reversed that decision. The nonpartisan Senate Fiscal Agency, in its analysis of the Senate bills, said it couldn’t determine whether any savings would result from repealing prevailing wage, since the “lack of available data makes it difficult to estimate with any certainty how much would be saved if the bills were enacted.” Any savings would depend on the new wages paid to workers, as well as how much competition exists at the time contractors bid on projects, the agency said. Savings like those presented in Anderson’s report “just do not occur in the reality of construction markets,” said Bart Carrigan, president of Associated General Contractors of Michigan, which represents roughly 200 construction firms across the state and is the counterpoint to ABC. AGC negotiates contracts with trade unions on public projects, including equipment operators, carpenters, masons and ironworkers. Wages are bargained regionally and tend to be highest in Detroit, Carrigan said. Wages generally are set at 75 percent of Detroit-area wages in Lansing, Saginaw and the Upper Peninsula; 68 percent in Grand Rapids; and 65 percent in Traverse City, he said. Two-thirds of its member contractors use union labor on their projects.

Quality concerns? When Michigan’s law was suspended in the 1990s, any cost savings were short-lived because fewer contractors bid on public projects, which ultimately drove up prices, Mike Stobak, vice president of Southfield-based builder Barton Malow Co. ’s public and education group, testified in May before a Senate committee. In addition, Stobak testified, workers often left contractors in See Next page

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search of higher hourly wages at another company, which prompted concerns about project quality. “I applaud the effort of exploring more cost-effective means to deliver publicly funded projects, and we should examine all alternatives currently utilized in other areas of the country,” he testified. “But, please, let’s avoid the temptation to take the easy route and return to what we know is a failed approach.” Mike Houseman, president of Grand Rapids-based Wolverine Building Group’s North America division, said quality and safety on building projects are regulated by the state and have no bearing on prevailing wage. Houseman said contractors aren’t looking to pay workers less than they already pay, but rather let the market settle on a wage that is truly prevailing in their communities. He considers the prevailing wage now paid in West Michigan inflated because the region doesn’t have as many union-affiliated contractors as metro Detroit does. Wolverine is not a union shop. Data from LARA show some trades, including boilermakers and

asbestos abatement laborers, do earn the same wages in Kent County as in Wayne County. But for most workers, that’s not the case. A carpenter in Grand Rapids, for instance, earns $27.26 to $35 per hour, while a similar worker makes $46.04 to $51.19 per hour in Detroit. A roofer is paid $25.70 per hour in Kent County and $48.46 per hour in Wayne County. “We believe that repeal of prevailing wage would be a huge benefit to Michigan and its economy,” Houseman said. “It’ll create jobs. It’ll create more infrastructure projects, as well as ultimately save taxpayers a significant amount of money in the construction of statefunded projects.”

Worker shortage If prevailing wage is repealed, union leaders say they will have to cut training budgets for skilled trades under pressure from contractors to lower bids. That’s the alternative to cutting wages and benefits, including health insurance and retirement plans, said Gleason, of the building trades council. And that’s problematic, union leaders say, considering Michigan

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has a shortage of incoming workers in the skilled trades. The work is physically demanding, with unpredictable schedules and outdoor work in a variety of weather conditions. Patrick Devlin, the trades council’s secretary-treasurer, added that repealing prevailing wage could deter people who might otherwise consider the skilled trades out of concern they would be paid less for challenging work. “The timing couldn’t be worse on this,” Devlin said. Snyder has made boosting enrollment in skilled trades programs a focus of his administration. On Mackinac Island, TV host Mike Rowe, of Discovery Channel’s “Dirty Jobs,” urged business leaders to fight the stigma that vocational education is somehow less desirable

than a four-year college degree. That’s the irony of the prevailing wage debate happening now, said AGC’s Carrigan. Michigan lost skilled workers to other states and industries when construction shed jobs during the recession, he said, and lawmakers want to curb wages just as the state is trying to lure them back. But Fisher, of ABC, said it’s prevailing wage — not the lack thereof — that hinders recruiting. “When you have less construction activity that can be financed, that can be afforded and that can be put into place,” he said, “there is a need for less construction workers, fewer construction companies and overall less construction activity.”䡲 Lindsay VanHulle: (517) 657-2204 Twitter: @LindsayVanHulle

OLGA’S, from Page 3 to protect ourselves while we raise some capital and prepare for a sale.” When the Compuware location opened, it was Olga’s 36th location, but the company has been trying to rein in costs and closed eight stores. In its case filing, Olga’s listed millions in debt to dozens of creditors, including $2.4 million to Citizens Bank and $1.2 million to food distributor Sysco Corp . It also owes $103,843 to Detroit-based law firm Dickinson Wright PLLC and taxes to the state of Michigan and the Inter nal Revenue Service , although the amounts were not listed in the bankruptcy petition. Liabilities are estimated as somewhere between $1 million and $10 million. Eric Djordjevic, president of Detroit-based Epicurean Group Inc., said restaurants like Olga’s, fast-casual concepts, are hot right now and many buyers are eager to get into the space. But, he said, the segment could be approaching oversaturation. “People want something quick and casual, but rooted in something foodie, whether it’s local or healthy,” Djordjevic said. Epicurean owns and operates several restaurants in metro Detroit, including C o a c h I n s i g n i a , Lakes , Novi Chop house and Plaza Deli. Kosloski reiterated that once some debt is cleared, the chain will be much more attractive. Kosloski rejoined Olga’s last year, hired by chief restructuring officer Farmington Hills-based Kenneth J. Dalto & Associates Inc. Kosloski previously served as Olga’s vice president of operations between 2008 and 2012. Kosloski declined to reveal the occupancy costs for the Compuware location or how much debt it incurred for the restaurant. Djordjevic said generating accurate costs ahead of a new restaurant is difficult and, often, troublesome. “Starting with accurate projections is always a wild card, not only in costs of opening, but in revenue from a location,” Djordjevic said. “When you start with a big hole, it’s tough to dig out.” Olga’s also struggled with profitability at its other locations prior to reorganizing, Kosloski said. The company reported 2013 revenue of $44 million.

Five years ago, Olga’s began implementing a strategy to open 105 new locations, mostly fast-casual concepts. In 2010, the company opened its first Olga’s Market Fresh Grill at Great Lakes Crossing in Auburn Hills and the company said at the time that it was outperforming other restaurants in the Olga’s system in both sales and traffic. It was a fast-casual prototype of the original Olga’s Kitchen with menu prices about 10 percent lower than the full-service version. In 2013, Jonathan Fox replaced Matthew Carpenter, who spent more than six years running Olga’s, as the CEO. Fox implemented continuity among Olga’s menus and recipes, including adding several items, Crain’s reported in October 2013. He also planned to continue its expansion effort. But Fox left the company soon after restructuring began in the summer of 2014. Olga’s, founded in Birmingham in 1970 by Olga Loizon, also owns 11 restaurants with a real estate partner; Mark Schostak, executive chairman of Team Schostak Family Restaurants, said an entity affiliated with his company, Olga’s SOK Holdings LLC, owns Olga’s restaurants in a joint-venture with OKI LLC, a coowner of Olga’s. Olga’s SOK is not named in the filing. “We don’t expect any impact on the 11 stores that we own as a result of this bankruptcy filing,” Schostak said Friday afternoon. “Those restaurants are doing very well. The joint venture restaurants are not named in the bankruptcy petition. The company’s headquarters are in 6,700 square feet of office space in the Butterfield Office Center south of West Big Beaver Road and east of Coolidge Highway in Troy. Mason Capitani, office specialist for Troy-based L. Mason Capitani Inc., said he wasn’t given any indication that the Olga’s space would be vacated. Kosloski said the Olga’s brand will remain intact, no matter who buys it.“We’ve been around 45 years and we’re a unique concept,” Kosloski said. 䡲

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

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Campbell Soup to invest $20M into Ferndale operation By Sherri Welch swelch@crain.com

Campbell Soup Co. plans to invest $20 million in the Garden Fresh Gourmet Ferndale facilities as part of its commitment to keep the company’s operations in Michigan, said Garden Fresh Founder and CEO Jack Aronson. Camden, N.J.-based Campbell (NYSE: CPB) plans to add production space through expansions of the current Garden Fresh manufacturing facilities in Ferndale, which include a 25,000-square-foot salsa plant and a 28,000-square-foot site that produces hummus under the Garden Fresh and other brands. Also on tap for the plants: new product lines and other modernization of the facilities, Aronson said. Campbell confirmed it plans to invest in the business but declined to discuss specifics, saying it is still developing plans. Though companies including T. Marzetti Co., PepsiCo Inc. and Nestle USA had approached Garden Fresh

about acquiring the company previously, none of them felt right, Aronson said. “We weren’t for sale.” But the Bolthouse plant in Bakersfield, Calif., was “the first culture we ever found that mirrored ours.” “You know if you go through a plant if people are happy (by) the way they talk to management,” he said. “If we were going to sell, it was going to be to these guys.” What sealed the deal, Aronson said, was the fact that Campbell said it was going to keep the company’s operations in Michigan, retain the current workforce of over 450 people and make investments. “It was a great opportunity for our team, the city of Ferndale and our state,” he said. It also helped lay to rest the couple’s biggest fear: that they would have to lay off employees. Given the debt the company had taken on to accommodate its growth, “if there would have been a catastrophe of any kind, we would have had to lay people off because we didn’t have a

pot of cash,” Aronson said. Aronson will remain an adviser to Bolthouse/Garden Fresh, helping to work on new recipes for existJackAronson: ing product lines Staying on as which include adviser. salsa, chips, hummus and dips and developing them for new products. As for the recipes he developed to this point: Campbell’s President and CEO Denise Morrison, “said they’d never change a (Garden Fresh) recipe without our approval,” Aronson said.

Big business Though Garden Fresh has the leading U.S. market share among fresh salsas, it’s only sold in about 25 percent of the grocery and big box (like Costco) stores across the country, Aronson said. Overall, the industry of making

salsa is considered a mature market worth more than $900 million in the U.S., according to a February report by Australian research firm IBIS World Inc. But revenue growth potential has driven the large players to expansion, including manufacturing efficiencies, increased domestic production and acquisitions. Discretional spending is also increasing abroad, improving export conditions for U.S. salsa makers. As for the Garden Fresh brand under new ownership, it will have access to a much larger distribution network as a part of the Campbell Fresh division, Bolthouse Farms and a team of 26 or more national sales people selling it vs. three, Aronson said. “With the clout that Campbell’s and its international partners bring, Garden Fresh will get the attention of markets and new consumers never imagined in the past, said Ken Nisch, chairman of the Southfieldbased retail consulting firm JGA Inc.,

in an email. With Michigan’s agricultural capacity, hopefully, there will be opportunities to not only keep but also expand food manufacturing and processing in Michigan as Campbell’s increases distribution and develops other products under the Garden Fresh brand, he said. The Garden Fresh brand is about fresh and from the garden, said Darren Tristano, executive vice president of Chicago-based food research and consulting firm Technomic Inc. “It has a health halo around it (and) is a really strong place to start if you’re Campbell,” trying to break further into the fresh market. “If they want to leverage this brand...they really need to build the story behind it, communicate to the customer what it is, what it’s representing,” he said. 䡲 Sherri Welch: (313) 446-1694 Twitter: @SherriWelch Kirk Pinho and Dustin Walsh contributed to this report.

SALSA, from Page 1: High pressure processing entity meant to give startups an assist bacteria and micro-organisms. Aronson expects the new company to begin operating in four to six months after an initial investment of $7 million to $10 million. At the same time, Aronson and Zilko said they plan to continue helping incubate and mentor food startups through the nonprofit Startup Engine Entrepreneur Depot they launched in the spring with Eastern Market Corp. So much of Garden Fresh’s success was due “to a local supermarket owner who was passionate about local food,” Aronson said during a keynote at the JVS “Strictly Business” lunch last Thursday. Jim Hiller of Hiller’s Markets “has inspired us to help others just as he helped us.” The Aronsons and Zilko last week finalized an agreement to sell Garden Fresh to Campbell Soup Co. (NYSE: CPB) for $231 million. The

deal is set to close later this month. The $100 million company and its salsa — the market leader in the U.S. and globally among fresh salsas — got its start 18 years ago in the back of the Aronsons’ bankrupt Ferndale restaurant, Clubhouse BBQ , when Jack Aronson mixed that first, five-gallon bucket batch. “In ’97, I was a struggling restaurateur when (Jim) Hiller walked in,” Aronson told the “Strictly Business” crowd. “I was told a salsa with no preservatives could never make it,” he said. But as the oft-repeated story goes, Hiller — who entered an agreement in May to sell his family’s chain of local grocery stores to The Kroger Co. of Michigan — came in to the couple’s restaurant and asked to try the salsa he’d heard so much about. After trying it, he asked the couple to begin packaging it for sale in his stores.

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: Alderney Advisors LLC ........................................ 7 American Express Open .................................... 2 Automotive Industry Action Group ................ 8 Beaumont Health and Wellness Center .......... 9 Beaumont Health System ................................ 11 Beaumont Hospital, Troy .................................. 9 BorgWarner Inc. .................................................. 8 Campbell Soup Co. ........................................ 1, 22 L. Mason Capitani INc. ......................................221 Chelsea Community Hospital............................ 9 Chelsea Wellness Center .................................. 9 Chelsea-Area Wellness Foundation ................ 9 Citizens Bank ...................................................... 21 Conway Mackenzie Inc. ...................................... 8 Kenneth J. Dalto & Associates INc. ................ 21 Detroit Medical Center ...................................... 11 Detroit Water and Sewerage Department ...... 5 Dexter Wellness Center ...................................... 9 Dickinson Wright PLLC ...................................... 21 DTE Energy Co. .................................................... 2 Eastern Market Corp. ...................................... 22 Epicurian Group Inc. .......................................... 21 Garden Fresh Gourmet ................................ 1, 22 Graze.com ............................................................ 2 Great Lakes Water Authority ............................ 5 Healthier Hospitals Initiative .......................... 11 Henry Ford Health System ................................ 11 Hiller’s M arkets ................................................ 22

IBISWorld Inc. .................................................... 22 JGA Inc. .............................................................. 22 Keiser University .................................................. 2 Kellogg Co. ............................................................ 2 Manchester Wellness Center ............................ 9 McClure’s Pickles LLC ...................................... 22 McLaren Healthcare .......................................... 11 Michigan Public Service Commission ............ 17 Northwood University ........................................ 2 Oakwood Healthcare ........................................ 11 Olga’s SOK Holdings LLC .................................. 21 Plante Moran PLLC .............................................. 5 St. John Providence Health System ................ 11 St. Joseph Mercy Health System ................ 9, 11 St. Joseph Mercy Hospital Chelsea .................. 9 Team Schostak Family Restaurants .............. 21 St. Joseph Mercy-Chelsea Cancer Center .... 10 Startup Engine Entrepreneur Depot .............. 22 Stockbridge Wellness Center ............................ 9 Syndeco Realty Corp. ........................................ 18 Sysco Corp. ........................................................ 21 Technomic .......................................................... 22 University of Michigan ................................ 10, 11 Wayne State University .................................... 17 Womenable Inc. .................................................. 2 Yazaki North America Inc. .................................. 4 Olga’s Kitchen Inc. .............................................. 3 U.S. Bankruptcy Court ........................................ 3

“I could never imagine what Garden Fresh would become,” Aronson said. The “great thing” about the sale of the company, he said, is that it “will give (us) more time and resources to help these food startups.” Garden Fresh couldn’t afford to use high-pressure processing to extend the refrigeration life of some of its preservative-free salsa, hummus and other products for several years, Aronson said. That’s where the idea of paying it forward comes in; the new company will make the technology available to food startups locally, without them having to incur shipping costs, while also helping extend the shelf life of the stuffed chicken burger the pair are already producing under the Jack’s Special Grilled label. For now, the stuffed chicken burger business, which posted $350,000 in May, will remain based in Clinton Township, Aronson said, as it is operating under a lease there. The high-pressure company will occupy about 30,000 square feet of space in an industrial area about two blocks from a current Garden Fresh facility. It will operate near tenants including Valentine Distilling Co., Allied Printing Co. and the owner of its space, Brass Aluminum Forging Enterprises LLC, Aronson said. Aronson said the plan is to equip the space for the new HPP tolling company with cooler panels, the new high-pressure processing machine, new flooring and drains, among other equipment. The HPP machine will enable food startups to double or triple the refrigeration life of certain fresh foods. Joe McClure, owner of Detroitbased McClure’s Pickles LLC , said the HPP process is great for small

fresh food producers. “If you can bring that technology to some of these producers and get them educated, it’s fantastic.” McClure said producers of freshpressed juice, for example, could see a tangible benefit for their product, which typically lasts on the shelf for only a couple days. “Maybe they could get a couple weeks out of it,” McClure said. Garden Fresh products are distributed in countries including France, Spain, Denmark, Sweden, Japan and South Korea, he said. In addition to putting resources behind the new company, Aronson and Zilko said they plan to continue to provide incubator space and assistance to food startups through

SEED, a nonprofit launched in the spring with a $150,000-$250,000 grant from Eastern Market Corp. The grant helped fund equipment and the hire of Michelle Kobernick to run it as program director, Aronson said. By providing manufacturing equipment to allow companies to produce small runs of their product, SEED allows people trying to launch a food business to see if their food can be turned into a viable company, Aronson said. It builds on the mentoring he and Zilko had been doing with food entrepreneurs. Garden Fresh has also provided additional employees to help run and clean the food manufacturing equipment; and product, food safety and creative expertise from among its employees. Currently, SEED operates from one of the Ferndale sites that will transition to Campbell when the deal closes and be converted to a research and development facility, Zilko said. Aronson said SEED could move to the Ferndale site currently occupied by cold-pressed juice startup Drought which is considering a move to the new HPP tolling facility. Among the companies SEED is working with are local food startups like Scotty O’Hotty hot sauce and Jen’s Gourmet Dressings. “It’s my hope SEED can be to upstart food manufacturers what the back of our restaurant was to me and my wife,” Aronson said. “We are deeply committed to our local food producers and will do all we can to help them realize their dreams.” 䡲 Sherri Welch: (313) 446-1694 Twitter: @SherriWelch Kirk Pinho contributed to this report.

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WEEK ON THE WEB/JUNE 8-12

RUMBLINGS

Dearborn hotel for sale — once again

Branson hears pitches, makes his own at CCS event

FULL VERSIONS OF THESE AND OTHER STORIES @ CRAINSDETROIT.COM

he hotel and conference center formerly known as the Dearborn Hyatt Regency is up for sale once again. The move is the latest in 2 1/2 years of turmoil for the property. The broker listing the hotel, New York-based Savills Studley’s U.S. Capital Markets – Hotel Group, said the price is likely to be in the high $30 million to low $40 million range. Located across from Ford Motor Co.’s world headquarters, the 14-story, contemporary design hotel is Michigan’s secondlargest with 772 rooms and 62,000 square feet of meeting space. The forsale sign comes amid a fracas tied to the hotel’s name. The hotel began operating as the Royal Dear Lawande born, Hotel and Convention Center late last week, after Chicagobased Hyatt Corp. took issue with another name the ownership and management had selected: Regency Dearborn Hotel & Convention Center. Rather than go to court over the name, the Israel-based ownership group Royal Realties LLC chose to change the name.

ON THE MOVE 䡲 Sachin Lawande, 48, has been named CEO of Visteon Corp., succeeding Tim Leuliette, who retired. Lawande was most recently president of the infotainment unit of Harman International Industries. 䡲 Mike Brosseau, 47, has been appointed to president of Auburn Hills-based Brose North America Inc., a subsidiary of Brose Fahrzeugteile GmbH & Co. KG. He succeeds Jan Kowal, 66, who is retiring but will serve Brose as a consultant. 䡲 Bill Dircks has been named vice president and CFO at Inteva Products LLC, replacing Kevin

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

$700,000 The minimum bid for the building leased by Bert’s Warehouse in the heart of Eastern Market. The 33,300-square-foot building and 20,000-square-foot surface parking lot will go up for auction July 20-22.

150,000

The square footage of the Cosma Body Assembly Michigan plant, a Magna International Inc. subsidiary, in Lyon Township. The $56 million plant, which will supply underbody components to automakers, is expected to support 250 jobs.

1200

The address on Featherstone Road in Pontiac of the Silverdome — which is back on the market. Toronto-based Triple Properties Inc., which owns the former home of the Detroit Lions, hopes to fetch $25 million for the stadium. Triple bought the Silverdome in 2009 for $583,000.

Grady, who left to become executive vice president and CFO at Dura Automotive Systems LLC. Dircks most recently served as senior adviser for Summit, N.J.based private equity firm Charterhouse Equity Partners LLC. 䡲 The Detroit Red Wings named Jeff Blashill its new coach, replacing Mike Babcock, who is leaving to be head coach of the Toronto Maple Leafs. Blashill, 41, has been coach of the Red Wings’ top minor-league affiliate, the Grand Rapids Griffins, since 2012.

COMPANY NEWS 䡲 The M-1 Rail project signed a $32 million contract with Pennsylvania-based Brookville Equipment Corp. for six streetcars for use on the Woodward Avenue line when it opens in late 2016. 䡲 Johnson Controls Inc. said it is “exploring strategic options” for its Plymouth Township-based automotive business — the first step in the possible sale or spinoff of its seat business. The company said it had no specific timeline for the

M-1 Rail

Brookville Equipment Corp. will build six streetcars for the M-1 Rail line when it opens in 2016. Here’s a rendering of what the car could look like.

completion of its strategic review. 䡲 Tapper’s Diamonds & Fine Jewelry is supporting creative talent in the area by launching the Rock Her World Design Contest, which seeks to find a new design for its diamond collection in time for the holidays. The winning designer will receive $500 and a possible internship or apprenticeship with Tapper’s. 䡲 Towers Watson & Co. plans to move from a 78,000square-foot office in One Northwestern Plaza to Travelers Tower in November. No staff reductions are expected. 䡲 Tropical Smoothie Café will host an event from 7-9 p.m. June 24 at its store at 22905 Michigan Ave. in Dearborn for potential franchisees as it seeks to expand in metro Detroit. 䡲 Cardinal Health Inc.’s $30 million medical products distribution center opened Wednesday. The 275,000square-foot center at 6000 Rosa Parks Blvd. will become the first tenant in Henry Ford Health System’s proposed south campus park.

OTHER NEWS 䡲 The Pontiac Silverdome is for sale for what the listing broker said is about $25 million. CBRE Inc. is marketing the 127.5-acre property as “mixed-use play,” and said they have had interest from industrial users. 䡲 A board representing Detroit, surrounding counties and the state signed on Friday to have the Great Lakes Water Authority take over operations of Detroit’s water and sewer system, a move designed to limit future rate increases and improve the system’s aging infrastructure. 䡲 Wayne County, facing a $52 million structural deficit in its general fund, has issued a request for proposals for a brokerage to market and sell three county-owned properties downtown: the Guardian Building, the First Street Parking Garage and the vacant, Detroit Savings and Loan building. 䡲 The Michigan Department of Transportation will rely on its regular annual federal transportation funding to pay for a $3 billion widening and repair of I-94 through Detroit. That’s why the project, slated to begin in 2019, isn’t expected to be finished until September 2036. 䡲 Construction is expected to begin this summer on the $61.3 million mixed-use development in Brush Park. Nearly 200 apartments and 14,700 square feet of retail space are planned by Birmingham-based Broder & Sachse Real Estate Services Inc. and Southfield-based developer Woodborn Partners LLC.

crowd of hundreds jammed an auditorium at the College for Creative Studies on Friday afternoon to hear what was being billed as Ain’t Too Proud to Pitch, a forum for four Detroit companies seeking financial support. It wasn’t competitive — there was no prize money and no winner — but it was an opportunity for local companies to promote their brands. The event included a panel discussion on entrepreneurship with Bridget Russo, the chief marketing officer of Shinola; Adriel Thornton, the founder of Digital Laundre;Dan Gilbert, founder of Rockbridge Growth Equity, Detroit Venture Partners and Bizdom; and Richard Branson, in town to celebrate the launch of his Virgin Atlantic airline’s new service between Branson Detroit and London. The British billionaire told the crowd that the Branson Group offers unlimited paid vacation to employees on a trust basis. If they can get their work done, they can take as much time off as they want. “And it’s been great for us,” he said. “We have that. It’s called free popcorn and slushes,” countered Gilbert. “Who would you rather work for?” Branson asked the audience to loud laughter.

Cockrel mum on next job What will Ken Cockrel Jr. do next, since he is leaving Detroit Future City on its own to be reorganized as an independent nonprofit? The former Detroit City Council member, president and Detroit mayor who replaced Kwame Kilpatrick in 2008-09 told Crain’s via email that he couldn’t reveal the next steps in his career just yet. Cockrel “It’s been a pleasure working with the executive committee, and the staff at DFC are some of the most talented and dedicated people I’ve ever met,” he wrote. “I wish DFC the best of luck as it pursues a new direction.” In December 2013, Cockrel became executive director of the implementation office of Detroit Future City, currently a sponsored project of the Detroit Economic Growth Association.

The organization will transition into an autonomous nonprofit over four to six months, during which time current innovation director Dan Kinkead will be acting director. The 350-page Detroit Future City framework plan, completed after years of research and community input, focuses on job growth, land use, improving neighborhoods and rebuilding infrastructure.

Eastern Market to get juicier Eastern Market will go beyond its staples of produce, meat, nuts, coffee beans and pizza to juices and smoothies this summer when Beyond Juicery + Eatery opens a third planned location in late summer. The juice bar, founded and owned by Vivio’s Inc. co-owner Mijo Alanis, has a five-year lease on 3,000 square feet in a new retail and manufacturing center at 2501 Russell St., next door to Germack. It expects to open in late August or early September. The original 1,100-square-foot Beyond Juicery opened in Birmingham in 2005. A second, 1,500-square-foot store, at 10 Mile and Evergreen roads in Southfield, is to open at the end of June, Alanis said.

Hall of Fame gala July 23 The Automotive Hall of Fame will honor four inductees July 23 at the Detroit Marriott at the 2015 Induction & Awards Gala Ceremony. The Dearbornbased Hall of Fame announced last month that it was honoring Roger Penske , founder and chairman of Penske Penske Corp .; former Ferrari SpA Chairman Luca di Montezemolo ; and Ratan Tata , chairman emeritus of Tata Sons . Also being honored posthumously is Elwood Haynes , founder of the Haynes Apperson Automobile Co. The organization is also honoring former Delphi Automotive plc President and CEO Rodney O’Neal as its 2015 Industry Leader of the Year. “Each made their unique vision a reality through tenacity and creativity,” Hall of Fame President William Chapin said in a statement about this year’s honorees. Crain Communications Inc. Chairman Keith Crain was an inductee to the Hall of Fame last year. 䡲

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