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

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MICHIGAN BUSINESS

CRAIN’S Readers first for 30 Years

How to add vets to your duty roster (a cool car doesn’t hurt) PAGE 11

DETROIT BUSINESS JULY 13-19, 2015

Furniture giant’s structurefollows-strategy approach targets millennials, leads to big growth

Art Van hopes to appeal to millennials with its new line of furniture.

ART VAN FURNITURE

Art Van: $1B within reach By Sherri Welch swelch@crain.com

rt Van Furniture Inc. is bullish on the market for millennials and their penchant for minimalist bedroom sets; new product lines and geographic expansion are among the reasons the company expects to reach $1 billion in annual sales within three years.

For the Warrenbased company, which has spent the past couple of years expanding both in its hometown state and in other Midwest markets, the $1 billion mark is within reach if current projections hold true. Art Van brought in $620 million during fiscal

Moving Van. Agency to open Chicago office to help client Art Van, Page 28

2014 ended Sept. 30, up from $575 million in 2013 and $385 million in 2009. “Given the (anticipated) success of the next three years, we will be at an estimated billion by 2018,” CEO Kim Yost told Crain’s last week. “We have a three-year plan ... that says that’s doable,” with the company’s expansion in SEE ART VAN, PAGE 28

Tech innovator likes to ‘play where the puck is going to be’ By Gary Anglebrandt Special to Crain’s Detroit Business

Mohammed Islam: Blood analysis without the blood.

Mohammed Islam could be a poster child for a patenting professional. He’s founded six companies based on his patents. He teaches courses on the subject, showing University of Michigan engineering students the right and wrong ways to win patents. And he has collected more than 150 patents of his own, or so he thinks. “The last time I checked, in total, it was

around 150. I lost count,” he said. Islam’s field is optical and laser technology. He is a professor of electrical and computer engineering, and separately of internal medicine, at UM. Omni MedSci is developing a wearable glucose monitor that diabetics could use to track blood sugar levels without the need to draw blood. “We’re going to use lasers to do glucose monitoring,” Islam said. The initial version would be a desktop unit using fiber lasers to do measure-

Omni MedSci had nine issued patents at the start of this year, picked up four more this year and has 15 more pending. It Omni MedSci ‘s wide-ranging research does not license any technology from UM. interests helped make it No. 1 on Crain’s 2015 The company, thus far paid for out of list of the 25 most innovative companies. Full Islam’s pocket, is trying to get funding coverage of the rest begins on Page 17. from financial and strategic backers. His goal is to have a headset ready in three ments, before graduating into a wearable years. Omni MedSci has had meetings that probably would go around the ear with Microsoft, Apple, Dell and Johnson & where plenty of blood flows. Eventually SEE INNOVATOR, PAGE 25 cheaper LEDs would replace lasers.

Eureka Index: Michigan’s innovative companies

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MICHIGAN

BRIEFS A resort town’s savior? Call him a big two-hearted giver If it takes a village to raise a child, this may be a case of it taking a developer to save a village. Ernest Hemingway put Walloon Lake on the map, but a number of forces, not the least of which was the Great Recession, threatened to close the book on the northern Michigan resort community. But Garret Ellison of MLive.com reports that Jonathan Borisch came to town with money and motivation. “If you had seen that village five years ago and said it would look like it does today, people would have laughed at you,” Bob Saddler, a homeowner and director of the Walloon Lake Association, told Ellison. In the past three years, Borisch and his son, Matt, have opened shops, restaurants and a 32-room hotel. The village has about 30 businesses, about half of them seasonal. Before the Borisch family, there was only one. Writes Ellison: “Their success is largely credited to a collaborative approach that has involved significant input from local stakeholders — everyone from township plan-

LENDING

ners and neighbors to the village old-timers who meet mornings at the general store.” Linda Penfold, owner of the Wal loon Village General Store — which Borisch doesn’t own — said of the developer: “He follows through. If he says he’s going to do something, he does it. If he says he’s not going to do something, he doesn’t do it.”

Website: State 6th-best for making living (if it’s nice out) Our fair state more often than not takes it on the chin in these state rankings. So imagine the surprise when the website moneyrates.com, figuring that craft beer polls had just about jumped the Shock Top, decided to measure “the best states to make a living” by ranking them according to average wages, state tax rates, cost of living, unemployment rate and incidents of workplace illness, injuries and fatalities. OK, so Texas was No. 1. Big surprise. But No. 6 was … yes, Michigan. Our strengths: The auto industry has recovered, the jobless rate has fallen to 5.4 percent from 7.4 percent and the cost of living is belowaverage.

T R E A S U RY

M A N AG E M E N T

Finishing last: Hawaii, because of its high cost of living. Also, it probably is hard to think about making a living when you’re living in Hawaii.

Another marketing success: It just drones on and on … Rob Bliss of Rob Bliss Creative, one of the creators of those YouTube “lip dub” videos featuring Grand Rapids and another viral video of a woman being catcalled as she walks along the streets of New York City, has found a new way to make his mark in marketing. It involves dropping stuff from a drone. Bliss told MLive.com that he will release a promotional video Tuesday on YouTube. The video is being produced for ilikegiving.com, which uses short films to encourage generosity. “We dropped doughnuts to cops, a skateboard in a skateboard park, flower petals over a wedding,” Bliss said. So what would you drop on the state capitol? (And now you know why writers have editors.)

MICH-CELLANEOUS 䡲 Bayer CropScience Inc. plans to make $50 million of improvements to its plant in Muskegon Charter Township, MiBiz reported. The company — which makes herbicides, insecticides, fungicides and other agricultural products — employs about 70 workers in Muskegon. 䡲 The number of fliers departing from Bishop International Airport in Flint is down 1.3 percent for the first five months, MLive.com reported.

BANKING

There have been 177,447 departures, down from 179,920 in the first five months of 2014. 䡲 Muskegon-based Port City Group has merged with Fayetteville, Ark.-based Pace Industries , one of the nation’s largest manufacturers of aluminum, zinc and magnesium die casting, MiBiz reported. Port City Group made the deal so it could pay for future growth. 䡲 A $250,000 grant from the Michigan State Housing Development Au thority will help pay for the demoli-

tion of 33 homes that have been abandoned or were forfeited because of unpaid taxes. That eventually may clear the way for a $1 million plan to build middle-class homes, The Muskegon Chronicle reported. 䡲 Perani Arena, home of the Flint Firebirds of the Ontario Hockey League, is now the Dort Federal Credit Union Event Center after the credit union signed a 10-year deal that includes naming rights, MLive.com reported. Arena owner IMS Hockey Corp. bought the former Plymouth Whalers from Peter Karmanos Jr. in January. 䡲 Growth in West Michigan’s industrial sector moderated in June, reported MLive.com, citing work by Brian Long, director of supply management research in the Seidman College of Business at Grand Valley State University. The economy remains on solid footing, but growth has tapered off because the summer is often slower for local industries, Long said. 䡲 Preservationists say they’re near their goal of raising the $4.1 million needed to place 708

BUSINESS

S E RV I C E S

INSIDE THIS ISSUE CALENDAR . . . . . . . . . . . . . . . . . . . . . . 24 CLASSIFIED ADS . . . . . . . . . . . . . . . . 25 DEALS & DETAILS . . . . . . . . . . . . . . . 24 MARY KRAMER . . . . . . . . . . . . . . . . . . . 11 OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . 8 PEOPLE . . . . . . . . . . . . . . . . . . . . . . . . . 24 RUMBLINGS . . . . . . . . . . . . . . . . . . . . 30 WEEK ON THE WEB . . . . . . . . . . . . . . 30

COMPANY INDEX: SEE PAGE 29

acres adjoining Glen Lake and the Sleeping Bear Dunes National Lakeshore

into a land conservancy, The Associated Press reported. Organizers say it’s the largest privately owned unfragmented northern hardwood forest in Leelanau County and is vital to keeping a clean watershed for the northern Lower Peninsula lake. 䡲 The city of Holland announced its proposal for an $11 million redevelopment of the Holland Civic Center and the surrounding property. The multipurpose arena seats 2,700 and opened in 1954. 䡲 The route traveled by the SS Badger car ferry between the Lake Michigan port cities of Ludington and Manitowoc, Wis., has been designated as a continuance route of U.S. 10, the Ludington Daily News reported. What is especially noteworthy is that this is the only stretch of state highway without a single pothole. 䡲

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Nursing degree rules re-examined Senate proposal would allow community colleges to offer 4-year degree By Lindsay VanHulle Crain’s Detroit Business/Bridge Magazine

LANSING — Lawmakers in Michigan have renewed an effort to allow community colleges to award bachelor’s degrees in nursing — a move that could change the way nursing education is delivered in the state as industry preferences evolve to favor nurses with more advanced training. The state’s 28 community colleges support the idea as a natural extension of their mission. But fouryear public universities oppose the measure, arguing the change would

undermine existing agreements between community colleges and traditional four-year programs. Senate Bill 98, introduced by state Sen. Mike Shirkey, is pending in the Senate after a committee approved it in June. Their fight will be uphill. A similar bill was signed into law in December 2012, allowing community colleges to award their first-ever bachelor’s degrees in four technical fields, but nursing was ultimately taken off the table to win votes in the Senate for passage.

A matter of degrees An associate degree in nursing often is the entry-level credential for registered nurses. Their clinical work in two-year programs prepares them to sit for the same licensure exam as nurses with four-year degrees.

Supporters don’t yet know if they have enough votes this time. But they say the issue makes sense given the changing industry landscape, one shaped by an aging population that requires more medical care and health care reforms that have expanded the number of residents who have health insurance. Community colleges and hospitals from Dowagiac in Southwest Michigan to Ironwood in the Upper Peninsula are on board, saying the

The difference is in the coursework. Bachelor’s degree courses include classes on such topics as leadership or management, along with more specialized training in areas like public or behavioral health. Nationally, 60 percent of all registered nurse candidates in 2011 did not have bachelor’s degrees, according to an April 2013 report from the U.S. Department of Health and Human Services’ Health Resources and Services Administration. In Michigan, roughly 42 percent of registered nurses had associate degrees, while 46 percent held bachelor’s credentials, according to a 2014 survey by the Michigan Center for Nursing, a project of the nonprofit Michigan Health Council. The share of registered nurses holding master’s degrees in nursing was about 9 percent in the same study. Fewer than 1 percent held doctorates in nursing.

SEE NURSING, PAGE 27

Hope amid the ruins

Of Greek descent Number of metro Detroiters reporting Greek ancestry, ranked by community: Livonia: 1,472 Ann Arbor: 1,159 Sterling Heights: 1,079 Warren: 848 St. Clair Shores: 756 Troy: 715 Novi: 600 Royal Oak: 595 Rochester Hills: 547 Westland: 534 Allen Park: 493 Dearborn: 489 Source: U.S. Census Bureau 2009-13 American Community Survey, 5-year estimates

BLOOMBERG

By Vickie Elmer Special to Crain’s Detroit Business

ith Greece nearly out of cash and edging closer to economic collapse, Greek immigrants and Greek-American business owners in metro Detroit worry about their relatives there — and their supplies of imported products. Most don’t plan to alter summer travel plans to their home country or expect to experience a specific business decline from the country’s troubles, but they do remain in suspense over Greece’s fate. They are concerned about their homeland and its

Crisis in Greece likely won’t deter travel, could impact supply chain small businesses, too. “I don’t think there’s going to be any direct impact on the Greek-Americans in metro Detroit unless their families in Greece lose jobs or businesses,” said Ernest Zachary, vice president for development at Detroit-based planning consulting firm Zachary & Associates Inc. and owner, with his wife, Diane Van Buren, of SocraTea in midtown Detroit.

The crisis in Greece has been brewing for years, from a mix of high government debts, low exports, high pension payouts and banks that require foreign support to stay solvent. Banks have rationed withdrawals all month, and many remained closed for almost two weeks. Greece’s GDP has declined, and its jobless rate has more than doubled since 2010 to around 25 percent recently. Around

60 businesses a day reportedly have closed this year. Then, earlier this month, Greece became the first country in 71 years to default on an International Monetary Fund loan payment. Its residents rejected terms of a bailout, and its finance minister quit abruptly last week to make room for new negotiation with creditors.

Detroit connections Zachary’s parents moved to the U.S. in

MUST READS OF THE WEEK How a track lost race to survive

Objet de park

Thirty years ago, Crain’s reported on Mt. Clemens Race Track’s efforts to stay open. In this week’s Looking Back, Crain’s looks at what’s left: A lot of fond memories, PAGE 4

Artist Robert Sestok bought a patch of Midtown and turned it into an outdoor gallery for 30 of his metal sculptures. Read more about City Sculpture park and see some of Sestok’s work, crainsdetroit.com/sculpture

SEE GREECE, PAGE 29

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LOOKING BACK On July 15, 1985, Crain’s reported on Mt. Clemens Race Track’s efforts to stay open amid rising costs and unfavorable weather. The site now houses the Gibraltar Trade Center, but some fondly remember the days of short-track stock cars there. More at crainsdetroit.com/30

Track didn’t last in Mt. Clemens, but memories of race nights still linger By Bill Shea bshea@crain.com

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that flanks I-94 in Mt. Clemens, with most likely unaware the site was once home to a thunderous short-track stock car speedway. That was the Mt. Clemens Race Track , which opened in 1951 and entertained fans until mounting financial losses prompted its sale in 1986. The 55-acre plot was eventually sold to the owner of Gibraltar, who opened the flea market in November 1990 in COURTESY LAURA TUCKER what had been the racetrack’s parking area north of Above: Norm Tucker, shown celebrating victory in 1967, was North River Road. A Google Map view of the one of the most popular land today shows only a drivers at the Mt. Clemens ghostly outline of where Race Track during its heyday. part of the asphalt track once sat, the land criss- Right: Driving the No. 3 car in crossed with the tread 1969 was Ray Nece, a multiyear marks of what might be dirt late model superstock champion at Mt. Clemens and an inductee in bikes and four-wheelers. first Thirty years ago, track the Michigan MotorSports Hall The race was Sept. owner Cyndy Winkler ex- ofFame. 3, 1951, and it plained to Crain’s Detroit Business how she tried to make drew 5,000 fans, according to the liends meet at the speedway in the brary profile. The grounds came to include face of rising costs and mercurial weather that often wiped out races half-mile and quarter-mile ovals and a figure-eight track. The track — and revenue. A year later, unable to get bank fi- was paved from dirt to asphalt in nancing and in arrears to the track’s the mid-1970s. In 1954, a lagoon was added, and previous owner, Winkler sold the property to the city of Mt. Clemens, there were briefly boat races and bringing to an end 34 years of racing. water shows. By the 1980s, it was little more than a watery ditch. Horses, pheasants Winkler and her then-husband, and stock cars Dr. Henry Winkler, bought the track The track’s origins date to 1916 in 1977. when the Mt. Clemens Driving Club “We bought it as a speculative vencreated a harness racing horse track ture. Initially, we didn’t plan on geton the site and called it the Clinton ting involved in it,” she said in 1985. Driving Park, according to a short his- “We bought it for the land value. It tory of the speedway from the Mt. looked like something we could work Clemens Public Library. at, build and make look better.” Horse racing stopped around They agreed to a $1 million land 1925, and the land was largely fallow. contract with Stubbs, she said last The land was bought by Dr. Clay- week. ton and Ruth Stubbs immediately “Even today that’s a helluva lot of after World War II for use as pheas- money,” she said. “It was not probaant hunting grounds. bly a good financial sort of thing.” Stubbs was approached in 1950 The couple invested in track imby drivers from Detroit’s Motor City provements, such as expensive new Speedway at Eight Mile and Schoen- light and sound systems, she said. herr roads — a dirt track that For the first couple of years, they opened in 1932 and closed after a relied on others to run the track, but fire in 1959 — about using the land it became evident that it needed for races, according to the library personal attention. profile. That gave birth to the Mt. “In a cash business like that, you Clemens Race Track. can never count on getting a true

COURTESY JOHN NECE

accounting of the money coming in unless you have some checkpoints on it,” she said. The Winklers divorced in 1983. Cyndy Winkler became full owner of the track and ran it while raising five children and working as an X-ray technician in the off-season, she said. The track in 1985 averaged 2,500 fans for its Thursday and Saturday races, the story reported then. It was actually closer to 1,200 people on a good day, Winkler said 30 years later. When notable drivers would come to race from elsewhere, such as Mark Martin, Rusty Wallace and Dick Trickle, the track would see an attendance spike. Drivers at Mt. Clemens in 1985 raced in five divisions: superstocks, street stocks, limited sportsmen, mini-modified and “powder puff” (street stocks raced by women) The superstock cars cost $25,000 to $40,000 to build, Winkler said at the time. Street stocks literally were cars off the streets raced by beginners, and mini-modified cars were specially modified stock cars. “Not a day goes by that I don’t close my eyes and find myself somewhere at Mt. Clemens either diving into the first turn amidst a pack of cars, or sitting in the grandstands watching my heroes,” said SEE NEXT PAGE

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James Koester, who opened Gibraltar Trade Center North at the location in November 1990. Anton’s company worked out a build-to-suit deal that included the building, which was built in nine months, he said, and the deal had an option to buy after five years — which the Koester family did. Anton said he kept a small triangular slice of land, which he eventually sold to The Macomb Daily for its headquarters.

FROM PREVIOUS PAGE

Dave DeHem, president of the Michigan Motor Sports Hall of Fame

and former racer at Mt. Clemens.

Racing for revenue The track generated about $750,000 a year from ticket, concession and alcohol sales, Winkler said in 1985. Of that, 40 percent was paid to drivers for race purses. The money supported five fulltime employees and 75 part-timers during the May-September race season that consisted of 32 race nights. The track also was selling race programs with full-page ads that sold for $650, and 4-by-8 signs around the track itself were selling for $475 for the season in 1985. A 10by-24 billboard at the track leased for $1,500. In the end, it wasn’t enough money. The track’s major expenses were labor costs, taxes and insurance. Winkler said at the time the raceway had to carry $3 million in insurance, which cost $1,000 a race and was atop property and liquor liability insurance. Weather was a constant worry. Even the threat of rain kept fans away, which was nearly as bad for a seasonal business as rain itself because races could not be rescheduled.

The end arrives The decision to sell after the 1985 season came after Winkler was unable to get additional financing to

Tracking nostalgia COURTESY JOHN NECE

In 1966, Bill Schultz raced his distinctive Pontiacs to some of his many victories at Mt. Clemens Race Track. operate and improve the track, she said, and fell in arrears on the land contract. The city of Mt. Clemens bought the track in March 1986 for $725,000 as part of a plan to develop the land into an industrial park. Winkler said she sold the track equipment at auction, including the lights and sound system, for 20 cents on the dollar shortly thereafter. The $725,000 settled what was owed on the land contract, Winkler said, and she kept a small profit from the equipment auction and the sale of a small piece of land she owned outright at the track.

A new era Mt. Clemens held on to the property for a year, annexed portions of

the property that straddled Clinton and Harrison townships, and then sold it in 1987 to Mt. Pleasant businessman Gebran Anton. Anton said he was involved in the deal because he was asked to develop the land by Carlo Catenacci, owner of John Carlo Inc. , the large Clinton Township-based road building firm. The original plan was to create an industrial park, and one small office and factory was built, Anton said. That project was then shelved when Anton heard that the owners of the Gibraltar Trade Center in Taylor were looking for land. Anton’s development company — now Mt. Clemens commercial real estate firm Anton, Sowerby & Associates — leased the property to

After the track closed, the Mt. Clemens drivers went on to race at the many ovals elsewhere in the state, such as Flat Rock Speedway near Monroe, and even the famed Daytona International Speedway. Many regulars from the Mt. Clemens track are enshrined in the Michigan Motor Sports Hall of Fame. Mt. Clemens native Tracy Leslie, who began his racing career at his hometown track before going on to drive in ARCA and NASCAR stock car races, will be inducted in November. The strong nostalgia for the track continues because it drew a closeknit fan base that interacted with the drivers and crews, said Laura Tucker, who maintains a Facebook page devoted to the track’s fans and history, and is administrative manager at Troy-based Motor City Racing Promotions. “I met so many people, from all

walks of life, that put their passion into this sport,” said Tucker, whose father, Norm, raced at the track for 24 years. “Even after the checkered flag dropped, we didn’t go home. The concessions stayed open and we watched the replays of the night’s events on closed-circuit televisions.” A 30th reunion party is scheduled for 5:30 p.m. Nov. 7 at the DeCarlo’s Banquet and Convention Center in Warren. Tickets are $30, and the event is for fans, driver, sponsor or worker from the Mt. Clemens track. Tickets are available from Bill Barnhart at mert@comcast.net or Dave DeHem at ddehem@att.net. As for Winkler, after the track sale she went to work as a producer for Madison Heights-based corporate video maker MVP Communications Inc. (which became MVP Collabora tive in 2004), which had done work for the track. Her second husband is from Toronto, where in the 1990s they started the amateur Bay Area Golfing Series Tour, a venture they were able to sell for a profit in 2002 and retire, she said. Winkler said the lessons she learned from running the Mt. Clemens track helped her run a profitable business at a time golf was exploding in popularity. “For once, I was in the right time and right place,” she said. 䡲 Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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XanEdu books $8 million in funding Publishing company to increase staff, add to corporate learning, development business By Tom Henderson thenderson@crain.com

Ann Arbor-based XanEdu Publishing Inc. , which customizes educational content for the K-12, university and corporate markets, will formally announce Monday that it has closed on a funding round of $8.1 million. CEO John DeBoer told Crain’s the company will use the funding to increase its marketing and sales teams and hire software developers to add features to the corporate learning and development business it launched in January. The funding comes from new and existing investors, including Detroit-based Superior Capital Part ners LLC, a private equity firm, and Ann Arbor-based Plymouth Ven tures, a venture capital firm. In 2013, Superior and Plymouth led an investment round of $4 million in the company. DeBoer said XanEdu will add about 20 employees to its current total of 70. He said the business of delivering online content to corporate clients is projected to increase revenue by 30 percent to 40 percent a year over the next three years.

“The corporate learning and development market is a $26 billion market. ... We’ll use this funding to accelerate that platform.” John DeBoer, XanEdu Publishing Inc.

He said revenue for the fiscal year that began July 1 is expected to be about $20 million. “The corporate learning and development market is a $26 billion market,” he said. “We entered that market in January and are selling product now. We’ll use this funding to accelerate that platform.” He said XanEdu offers customized print and online course material at 1,000 colleges and universities in the U.S. The company’s online content-delivery platform is used at campus bookstores run by Barnes & Noble and Follett , the two companies that dominate the campus book market. Mark Horne, CEO and managing partner at Plymouth Ventures and chairman of the board at XanEdu, said that the Ann Arbor company’s acquisition last year of New Yorkbased SharedBook Inc. allowed

XanEdu to broaden its ability to deliver digital content, opening up the corporate market. “Now that the company is well capitalized, we ought to see some pretty exciting things over the next two or three years,” he said. Superior specializes in investing in distressed companies and engineering turnarounds. In 2009, it bought two business units from Ann Arbor-based National Archive Publishing Inc. , XanEdu and National Archive’s microfilms archiving business. At the time, National Archive was near death. In 2008, PNC Financial Services Group Inc. of Pittsburgh bought National City Bank, a failing bank based in Cleveland. National Archive had a large nonperforming loan with National City that PNC inherited and later planned to wipe off its

books by liquidating the company. In stepped Mark Carroll, the managing partner at Superior. In the whirlwind time of 31 days, he created a holding company, bought XanEdu and the archive business and put in some operating cash to keep them afloat. In 2010, that transaction was honored as the small deal of the year for 2009 at the annual M&A awards event put on by Crain’s and the Detroit chapter of the Association for Corporate Growth.

In 2010, XanEdu got a big growth opportuMark Carroll: Deal nity with the infor XanEdu was troduction of the honored in 2010. iPad. “We introduced a digital platform to cater to the mobile learning needs of students,” said Carroll. “With the investments that have been made, XanEdu is now extremely well-positioned to lead the digitization of learning materials utilized throughout corporate America.” Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

DNR outdoor center set to open July 20 The Michigan Department of Natural Resources Outdoor Adventure Cen ter on the Detroit riverfront is set to open to the public July 20. Redevelopment of the threestory, 41,000-square-foot former Globe Trading Co. building began in spring 2013 by Detroit-based Rox bury Group and Detroit-based contractor Walbridge Aldinger Co. The new $12.8 million center is across from William G. Milliken State Park and Harbor at the intersection of Atwater Street and the Dequindre Cut trail. The center includes a 60-footlong archery range, 15-foot waterfall, simulators for activities like allterrain vehicle riding, retail shop, 3,000-gallon freshwater aquarium, food court, cafeteria and meeting room, banquet space, lab area, deer blind tower, video monitors with a live high-definition video stream to a bald eagle’s nest, and other interactive features. Details at michigan.gov/oac.

Nominations sought for best nonprofits Crain’s Best Managed Nonprofit Contest this year will focus on

actions local nonprofits are taking to execute and/or adapt their missions and operations to the trends they foresee for their own sectors. Examples include, but are not limited to, greater ethnic diversity, new generations of leadership, rapid technology change, and social and new models for organizing around projects and causes. Applications are due Aug. 24. Finalists will be interviewed by judges the morning of Nov. 10. Applicants for the award must be a 501(c)(3) with headquarters in Wayne, Washtenaw, Oakland, Macomb or Livingston counties. Applications must include an entry form, a copy of the organization’s code of ethics, a copy of the most recent audited financial statement and a copy of the most recent IRS 990 form. Previous first-place winners are not eligible; neither are hospitals, HMOs, medical clinics, business and professional organizations, schools, churches or foundations. The winners will be profiled in the Dec. 7 issue, receive a “bestmanaged” logo from Crain’s for use in promotional material and will be recognized at Crain’s Newsmaker of the Year lunch early next year. For an application form, please email YahNica Crawford at ycrawford@crain.com or visit www.crainsdetroit.com/nonprofit contest. For information about the contest itself, email Executive Editor Cindy Goodaker at cgoodaker@crain.com or call (313) 446-0460.

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CRAIN’S DETROIT BUSINESS

OPINION It’s the right time to end film incentives n era of sorts has passed with Gov. Rick Snyder’s signature on legislation that ended the state’s cash-rebate film incentive program. The rebates, a Granholm-era program, were never a favorite of the incentive-averse Snyder and much of the Legislature. Advocates argued that widespread film projects made Michigan a more attractive place to live and also could help build a permanent infrastructure for the industry here. But a 2010 report from the Senate Fiscal Agency calculated that each new job created by the incentives cost taxpayers anywhere from $44,561 to $193,333. The Michigan Film Office will continue for now, but it appears that’s mainly to wrap up existing projects that will take place over the next couple of years. In signing the bill, Snyder noted that the state still has many attractive venues for film projects. That’s true, but it’s also true that incentives appear to drive the vast majority of location decisions. So realistically, that means perhaps only rare sightings of actors such as George Clooney at Cliff Bell’s, Ben Affleck at MSU football practice and Michael Imperioli eating ice cream on Main Street in Royal Oak. We’ll miss the fun of that, but there never has been compelling evidence that the economics work. Maybe there will be a way to change that in the future, but ending the program is the right call for now.

LETTERS

State needs strong earned income tax credit Editor: Crain’s Detroit Business is right to support continuation and, ideally, even expansion of the state earned income tax credit (“Roads plan needs to retain tax credit,” July 6 editorial), and the Michigan Senate should be congratulated for rejecting the House plan to cut this important poverty-fighting and taxfairness tool and using those resources for transportation. The EITC is proven to help fight poverty and promote work, and it is well-respected for its effectiveness. A recent poll conducted by EPICMRA shows that 65 percent of

Send your letters: Crain’s Detroit

Business will consider all signed letters that do not defame individuals or organizations. Letters may be edited for length and clarity. Email: cgoodaker@crain.com

Michigan voters support the EITC and 18 percent back its elimination. The economic impact of the EITC is particularly critical in regions of our state with high poverty levels, rural as well as urban. The EITC also benefits businesses. The dollars that go to low-income working families are spent quickly, right in the communi-

ty, for essentials like food, shelter and clothing, and help provide jobs and economic opportunity. Michigan’s state and local tax system combined imposes a heavier burden on the poor than the wealthy, with low-income families paying a larger share of their income for property and sales taxes. The EITC helps overcome that disparity, helping add fairness to our tax system. Michigan needs a strong earned income tax credit, and lawmakers need to hear from those who believe in it. Gilda Jacobs President and CEO, Michigan League for Public Policy

Fata case should boost vigilance Stan Ovshinsky still changing the game The sentencing of Dr. Farid Fata to 45 years in prison hardly seems adequate to his crimes. The oncologist was convicted of poisoning more than 500 patients with needless cancer treatment and then billing insurance companies millions of dollars for it. But there are questions that continue beyond his conviction, most importantly, what steps can be taken to better safeguard patients? After all, the fact that Fata was caught was almost a fluke: A patient broke her leg while Fata was on vacation and one of his colleagues discovered she did not have cancer. Fata perhaps should have been caught sooner. Some of his treatments may not have conformed to medical protocols, for example. And a complaint was filed with the state by a nurse who alleged improper mixing of chemotherapy drugs and mistreatment of patients. But unnecessary or inappropriate treatment is not limited to health care providers as amoral as Fata. New rules that took effect last summer made it harder for state health licensing boards to prematurely end investigations of health care professionals. That’s good, but not enough. Patients and insurers need to be more rigorous in requiring second opinions. Health systems need to have protocols in place that evaluate doctors who practice at their hospitals. Not all bad acts can be prevented, but healthy vigilance goes a long way.

years after his death, Stan Three Ovshinsky is on the verge of his greatest triumph, if Stephen Breezy is right. The bankruptcy of the company Stan founded in 1960, Energy Conversion Devices Inc., is scheduled to come to an official close on Aug. 26, and after Breezy says Intel Corp. (Nasdaq: INTC) and Micron Technologies Inc. (Nasdaq: MU) will start commercializing a technology called phase change memory. Not “a” technology. “The” technology. “This is the biggest game changer since the invention of the transistor,” Breezy said by phone last week. “Because of this, over the next 10 years, computing will change more than it has since the advent of the computer.” Breezy is a pseudonym for a computer engineer and IT director for a large company in Southeast Michigan. Writing on the website Seeking Alpha in June, Breezy detailed the history of phase change computing. In the 1960s, Ovshinsky first began exploring the properties of something known as chalcogenide glasses,

TOM HENDERSON WEB: thenderson@crain.com TWITTER: @TomHenderson2

the most important of which is that as heat is applied or taken away, the atoms switch back and forth from an amorphous structure to an ordered crystalline structure. The chemistry and physics behind why that is so important is well beyond me, but the result is something called nonvolatile memory that is 500 to 1,000 times faster than current flash and dynamic random access memory (DRAM), while using half the power. In 1999, ECD established Ovonyx Inc., a joint venture with Tyler Lowrey, the CEO at Micron, to commercialize the technology, with Intel becoming the chief investor. In 2008, a year after Ovshinsky was forced out by the board, ECD transferred relevant

patents to Ovonyx, and in 2012, as part of its bankruptcy, ECD’s share of Ovonyx was sold to Micron. Breezy says Micron and Intel will want to make sure there are no lastminute objections by ECD shareholders about those patent transfers before announcing anything to the marketplace. I had many visits with Stan over the years, and he always reserved special enthusiasm for discussions of phase change memory, though like so many of his enthusiasms, finding a market remained elusive. Until now, if Breezy is right. He said today’s smartphone is a toy compared to one that will be powered by phase change memory: “Instead of a toy, you’ll have a full computer in your pocket. You won’t need a computer at home, you’ll just need a screen, and you’ll connect wirelessly to it and a keyboard through your phone.” Or, as he wrote on Seeking Alpha: “Micron currently sells hot dogs from a cart of a street corner in an okay neighborhood. But they’re about to open a five-star restaurant with Intel as their partner.” 䡲

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Redeveloping school buildings good for Pontiac KIRK PINHO WEB: kpinho@crain.com TWITTER: @kirkpinhoCDB

hey may not look like much right now, but there are reuses in the works on many of the Pontiac School District buildings the district has sold in the past five years amid budget woes. The district — which recently whittled a $51.7 budget deficit by $12.6 million (24 percent) to $39.1 million — has sold 15 buildings, mostly former schools, to developers and investors for a total of $2.65 million. The most recent deal was an $800,000 sale of eight buildings this spring to Michael Stephens, the facilities manager and co-owner of the Ottawa Towers office complex on Woodward Avenue at Judson Street. But the buildings are not in the downtown area, where several large-scale projects are planned or have been completed, including the expected $40 million to $50 million investment in the Indian Hill district. This Pontiac district project is planned across multiple buildings for multifamily residential, commercial/retail and office space. Other projects, such as the $20 million completed Lafayette Place and $21 million in-the-works Strand Theatre redevelopment by Pontiac-based West Construction Services, have also drawn considerable attention. These are the kinds of catalytic, critical investments needed to create a vibrant downtown. These are what developers like Bob Waun and others want to see. Waun, vice president of business development for Birminghambased Core Partners LLC and one of the investors in the Indian Hill project, said putting the former school buildings to good use — whether for a recycling center or storage space or something else entirely — increases the viability of the downtown. Think Birmingham, Royal Oak and Ferndale. Or in Wayne County, Plymouth and Northville and others. All have strong neighborhoods enveloping their thriving and popular central business districts. And that won’t materialize if, as Waun says, the school interiors are akin to “when the Germans stole the art in the Louvre after trashing Paris.” And Stephens is not fazed. While development plans for those haven’t been finalized, a number of possible reuses are being considered, including residential housing, a farmers market, a senior center or perhaps even space for nonprofit organizations, he said. “We are not developers, we are investors,” said Stephens, who paid $1.54 per square foot for the eight buildings that total 520,700 square feet. “We are trying to match the best developer with the best intentions with the right project.”

He also said he is meeting with members of the communities surrounding the buildings to hear feedback. Stephens is among the four groups that have bought district buildings. Pontiac-based Lee Industrial Contracting LLC purchased the 478,000 former Pontiac Central High School on West Huron Street for $1.05 million this year, according to the district. Stephen Cartier, project manager for Lee Industrial, said the company is weighing three possible reuses for the building but declined to discuss

them in more detail. “Our first concern is making sure the building is secure and not sustaining more damage,” Stephens said. Pontiac Surplus LLC, which is registered to Marc Ferguson of Lake Orion, bought the Owen School on East Columbia Street and the Lebaron School on Barkell Street for $50,000. An entity registered to Ismael Mosa-Basha of Bloomfield Hills purchased three buildings in a $750,000 deal. Yet Lee Todd, the owner and broker of Pontiac-based property management and real estate firm Todd

Enterprises LLC, said he is considering making purchase offers on one or two of the recently sold school buildings, although he declined to say which ones or what they would be converted into. He views them as a broader compliment to his planned loft redevelopment of the 135,000-square-foot Oakland Towne Center building, which would be a project with nearly 100 loft apartments. That building was long known as the Pontiac State Bank Building. “They (the school buildings) can all be reused, and they will,” he said. “It’s a matter of how.”䡲

COSTAR GROUP

Webster Elementary School on W. Huron Street was among the eight former Pontiac School District buildings that changed ownership earlier this year.

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Drug mergers hard to swallow Allegan is nervous. With good reason. It’s quiet now, at least publicly, but the hostile takeover bid of Allegan County’s largest employer — global generic-drugmaker Perrigo Co. — would have drastic impacts on the region, from Kalamazoo to Grand Rapids. You could include the shoreline community of Holland, too. At stake are as many as 4,000 jobs in Michigan, about 600 in the headquarters as well as manufacturing plants. Technically, Perrigo is an Irish company now. Like many U.S. companies, it went through an inversion. By acquiring an Irish company, Elan, it is now Irish for tax reasons. MARY Yet it has added KRAMER jobs in West Publisher’s Michigan since Notebook the inversion. mkrmaer@crain.com In April, Perrigo’s board rejected a bid made by another generic drugmaker, Mylan NV — born in West Virginia, with a new headquarters outside Pittsburgh but, through inversion, has become a Dutch company. Since then, just to spice it all up, an Israeli drug company, Teva, has made its own hostile bid for Mylan. And the bid would require Mylan to drop its bid for Perrigo — and the accompanying debt that would result from such an acquisition. There are a lot of reasons to root for Teva’s bid in order to save Perrigo. Loss of jobs is one. Not liking the management at Mylan is another. The Wall Street Journal reported on July 6 that when Mylan bought land for the new headquarters a couple of years ago, the company failed to disclose that the main developer of the office park in which it stands was the company’s own lead director and vice chairman, Rodney Piatt. Piatt also chairs the board’s compensation committee. Eyebrows officially raised! As The Journal notes, securities regulators like that kind of relationship to be public. But Mylan says everything was OK because Piatt had sold his interest in the parcel it bought to a third party — albeit the day before the headquarters plan was announced. But what of the enhanced value of the rest of the Piatt still owns? After Mylan’s announcement, other development in the park followed. Another potential ethical red flag was the dustup over an MBA awarded to nowMylan CEO Heather Bresch by West Vir ginia University. News reports in 2007 indicated she didn’t take the courses to earn the degree; she maintained she got worklife credit. In the end, the degree was rescinded and at least three administrators — including the president — resigned. Bresch is the daughter of that state’s former governor (now U.S. senator) Joe Manchin. What’s ironic is that to protect itself from Teva’s bid, Mylan wants U.S. Securi ties and Exchange Commission rules to apply — in order to allow it to enact a poison pill strategy. But it would still prefer the Dutch tax code. I am rooting for Teva. Let’s hope the Israelis win. 䡲

SPECIAL REPORT: MICHIGAN

BUSINESS

JACOB LEWKOW

Roush Industries Inc.hired David Dunckel to recruit and hire veterans. He brings with him a mastery of military lingo — right down to spelling his name “Delta, Uniform, November, Charlie, Kilo, Echo, Lima” — and the cachet of a souped-up company car.

Companies share strategies for putting vets on their duty rosters By Rod Kackley Special to Crain’s Michigan Business

ichelle Salvatore, vice president of recruiting at Quicken Loans Inc., knew something had to change when she was baffled by a veteran’s resume. “I couldn’t figure out from his resume where in this company he could belong,” she said, “because I just didn’t understand the lingo.” That same day, Salvatore happened to see the unemployment rate for returning military veterans, “and I was floored by it.” That’s when she decided on a new course to improve Quicken’s process of hiring former servicemen and women. Salvatore created Quicken’s Tour of Duty program to find, recruit and bring veterans into the Michelle Detroit-based company. Salvatore: “I just At Livonia-based Roush didn’t understand Industries Inc., David Dunckel was hired last the lingo.” year to recruit and hire military veterans. For him, the lingo was no problem. Dunckel speaks military so well that he routinely spells his name with the NATO phonetic alphabet to make sure his name is written correctly — “It’s Dunckel. That’s Delta, Uniform, November, Charlie, Kilo, Echo, Lima.”

While Dunckel didn’t have trouble with military terminology, he had nowhere near Salvatore’s years of experience in hiring. He had no idea how to put together a formal recruitment effort for vets. But he did know where to find the people who could help him. He simply went to Google and found other businesses that already had successful hiring programs. Roush started its Veterans Initiatives program in May 2014 with a goal of hiring 30 veterans by May of this year. So far, the company has hired more than 100.

The long, talented line Roush Industries and Quicken Loans are just two of the Michigan companies reaching into what Dunckel described as a “leadership-forging cauldron” to grab the best talent the military has to offer. There is plenty of talent to choose from now and in the foreseeable future. Lauren DeVol, a public information officer with the Michigan Veterans Affairs Agency, said that 30,000 to 50,000 retiring military personnel are expected to return to Michigan over the next five years. But as Salvatore, Dunckel and others tasked with this mission have discovered, finding, recruiting, hiring and then retaining military talent is no easy task. Businesses need to be prepared to meet the challenge presented by translating military skills, training and certification into civilian job opportunities.

Intentional effort Companies that have been successful at hiring vets have discovered they need to have a plan and then work it. Salvatore designed Tour of Duty to bring veterans into Quicken Loans for six months to try their hands at jobs. They can either be matched with an assignment that fits their military skills or try a couple of different jobs to find a match. Chris Smith, public relations manager for Quicken, said 80 people have gone through the program, which began in 2013. About two-thirds wound up being hired full time. For the others who leave after six months, Salvatore hopes Quicken at least helped them improve their civilian resumes. Col. Ken Huxley, retired from the U.S. Air Force, manages talent acquisition for Detroitbased Strategic Staffing Solutions and has been running the company’s veteran hiring initiative for the past three years. Businesses looking to start such a program, Huxley said, should not be afraid to start small. But they must have a plan. First, set up an internal department, team or have someone devoted at least part time to recruiting and hiring veterans, he said. General Motors Co. also has made an intentional effort to bring vets into its U.S. workforce. Although it has been a challenge, the automaker does have an advantage over SEE VETERANS, PAGE 12

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SPECIAL REPORT: MICHIGAN BUSINESS

VETERANS FROM PAGE 11

other businesses in that GM has been involved with the military for nearly a century. During a time spanning two world wars, more than 100,000 vets have worked for GM, said Ken Barrett, the company’s chief diversity officer. “So it is not like this is a big stretch for us.” Of the 90,000 Ken Barrett: GM people collecting has 5,000 vets on GM paychecks in payroll. the U.S., about 5,000 are vets, Barrett said. That is close to the company’s goal of having 8 percent of its workforce made up of veterans. Sharon Wenzl, vice president of corporate communications and community relations at Novibased CooperStandard Holdings Inc. , was instru-

mental in helping develop and now runs the auto supplier’s Sharon Wenzl: Careers for VetUse resources erans Program. already out there. She also sits on the board of the Cooper Standard Foundation , which supports the initiative. Wenzl said the Careers for Veterans Program, which started in 2014, has helped boost the veteran workforce by 14 percent to 297 employees out of a total workforce of 4,290. Of these, 99 vets are in Michigan. Her best advice: Tap into resources that are already available. “Community colleges may have veterans-hiring programs. Benchmark with companies like ours, reach out to organizations like Info rum that helped us develop our Next4Vets program,” Wenzl said of an additional program. Inforum, Michigan’s professional women’s alliance, developed Next4Vets, which was underwritten by the Cooper Standard Foundation, to help woman vets move from the military back into the civilian workforce. It began as a pilot program in fourth quarter 2014 and became part of the Inforum Center for Leadership programs this spring. According to the U.S. Department of Veterans Affairs , women are the fastest-growing group within the veteran population.

Networking As Dunckel discovered at Roush Industries, finding and working with other businesses that also want to start hiring veterans or improve on that hiring can be as simple as typing google.com and hitting the Enter key. He was amazed at how open other companies were to sharing best practices — even those that compete with Roush. “We trade best practices because we all have the same goal that veter-

ans find employment,” he said. “There is this nonspoken agreement that I think you will only find in this veteran community. It is an unusual arena.” Barrett at GM also advised finding companies that hire a lot of veterans and do it well. “It is not really a competition,” he said. “At the end of the day, we want to make sure we are giving back to the veterans who have sacrificed and put it all on the line for us.”

Finding veterans At Quicken Loans, Salvatore found that the first challenge — even before translating military lingo and skills into something understandable — was finding vets who were ready to leave the military or who recently had mustered out of the service. With 16,000 leaving every month, it might seem as if HR people would be tripping over them. But the problem is, veterans tend to flock with veterans. So the first thing Salvatore did was to hire a vet. “There is an unspoken kinship between vets,” she said. “When they get on the phone, they relate to them much more so than they open up to a civilian.” Dan Irvin, CEO and founder of Southfieldbased telecommunications provider 123Net , said that five years ago he quickly, albeit unintentionally, discovered the Dan Irvin: Hire a wisdom of hiring vet to hire more a vet to find vets. other vets. “Everybody knows a vet,” he said. “Just find a friend who served.” A simple plan, but it has worked. 123Net now has 60 employees, nearly one in four of whom is a vet. The best advice from GM’s Barrett to the business that is either starting or concentrating on improving a veteran hiring program is to try to understand what you have in your own organization already. Vets could be working in your company and you don’t even know it. Once a company knows how many vets are on its payroll, it should set up a veterans resource group of those people. “Then you will have a knowledge base that you can start to leverage,” Barrett said. Cooper Standard didn’t realize how many vets it had on the payroll until the company started its veterans hiring initiative, Wenzl said. “Once you have hired a group of veterans, you begin to learn from them,” she said. “And one thing leads to another, once you have that very strong nucleus of veterans.” Huxley at Strategic Staffing Solutions said the best plan is a focused, measured approach that depends on former military people, like himself, to find other former military people. “Just take the viewpoint of ‘one veteran at a time,’ ” he said. “As you start bringing these folks in, they have their

own networks. So it becomes kind of a geometric progression.” Dunckel goes to where he knows military people are — military bases. Because of his service in the Army National Guard, he has a retired military identification card giving him full access to the bases. A recruiter without an ID card can be on the base only when a job fair is in session and can sit at a card table for an hour. But Dunckel can hang out with the soldiers where they like to hang out and spend as much time talking to them as he likes. His second advantage: a company car. “I drive my Roush Mustang around on the posts, find the soldiers who are ready to transition, talk with them and raise some awareness,” Dunckel said.

Interviewing/hiring The interviewing process is different for vets, too, Huxley said. There are two groups of veterans, he said. Those who have been out of the military for five years or more are pretty much assimilated into civilian culture. They know what to expect and what is expected of them in a job interview and a corporate environment. But the vet who has just left the military and perhaps joined the service right out of high school never has been subjected to a civilian job interview. It can be an awkward experience. “I think you do have to have more of an open mind with them because their resumes are not going to necessarily track with the skill sets that you are looking for,” Huxley said. “So you have to have your mind open to go beyond what they did in the military and understand the unique skills and experiences they can bring to the job.”

Retention Finding, recruiting and hiring are not the only challenges faced by businesses looking to add veterans to their payrolls. The final piece is retention. Statistics from the U.S. De partment of Defense show that most vets will work two or three jobs within five years of leaving the service. Barrett, who retired as a captain after more than a quarter of a century in the U.S. Navy , understands how tough it can be for a military person to fit into the civilian culture. While in the Navy, he would walk into a room of 1,000 people and someone said, “Attention on deck.” Everyone would stand at attention until he gave the order to carry on. “Now I walk into a room for a meeting, and if someone happens to look up, I consider that a win.” Any business worried about retention should consider forming a veterans resource group to help the vet transition into a civilian culture, Barrett said. “For some people, it’s seamless. They hit the ground running,” he said. “Some people have a little more of a challenge transitioning. That is why it is important to have a very robust group so the military vets have someone they can talk to.” 䡲

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SPECIAL REPORT: MICHIGAN BUSINESS

Survey highlights challenges state’s female vets face

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In Michigan’s quest to provide better services to veterans, state officials are gathering some new findings that could illuminate the needs of woman vets. Early results from a Michigan Women’s Commission survey point to challenges including a high degree of sexual harassment in the military, significant post-military housing difficulties and homelessness, and unemployment that tops that of not only Michigan but also its veteran population as a whole. By studying those and other results being analyzed but not yet released, the commission hopes to build a profile of Michigan’s population of woman veterans and respond to needs, ultimately helping them make successful transitions to civilian life and jobs. About 50,000 woman veterans live in Michigan. The commission wanted to see “what do these women look like and how can we help them?” said Susy Avery, executive director of the commission, which is working on the survey with the Michigan SusyAvery: Veterans Affairs “There are women Agency. veterans who are The predomihomeless.” nantly online survey was conducted from July 2014 through January and attracted 425 respondents. Survey areas included health status, military background, benefits use and the way that woman vets gather information. One finding: Nearly 64 percent of respondents experienced sexual harassment in the military, and 36 percent experienced sexual assault or trauma. The majority of those women — 60 percent — said they did not think they received the services needed to address their experiences. Nearly 30 percent said they had encountered challenges finding housing since separating from the military. Of those, 38 percent said they had been homeless for a period of time and 8 percent were currently homeless. It’s a group often thought of as male, Avery said. “People don’t realize there are women veterans who are homeless.” Lisa Todd, residential services coordinator at Piquette Square in Detroit, an apartment project for homeless veterans, said the women’s homeless population is

Survey findings of women experienced sexual harassment in the military

64%

experienced sexual assault or trauma

36% 60%

said they did not think they received the needed services had encountered challenges finding housing since leaving the military

30%

of those respondents had been homeless for a period of time; 8 percent were currently homeless.

38%

masked by several factors, including the lack of transitional housing for woman vets, a reluctance to seek help and assistance found with family and friends. “In all reality, though, not having your own address is anybody’s definition of homeless,” Todd said. “Not having an address, you have no foundation, you have no start.” Piquette Square offers permanent, subsidized apartments and services to help veterans become self-sufficient and reintegrate into the community, including mental health counseling, job training and connections to resources such as a veterans education program at Wayne State University and employment through the Michigan Works workforce development agency, Todd said. “One of our main goals is to keep you housed and get you some kind of income,” she said. Woman vets occupy 10 of the 150 apartments at Piquette Square. Avery said the Michigan Women’s Commission wants to delve deeper into factors contributing to some of the survey results and build awareness, including through presentations to lawmakers. Jeff Barnes, director of the state Veterans Affairs Agency, said that “too often, people only think of male soldiers or male veterans when, in fact, women are the fastest-growing group within the veteran population.” JeffBarnes: The agency’s Women are fastestwork with the growing group of Women’s Comvets. mission, Barnes said, will help it learn more about woman vets and align future programs with identified needs. 䡲

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WORLDWATCH WHERE MICHIGAN DOES BUSINESS BULGARIA

GEORGIA IA EN M AR

Istanbul Bursa Ankara Izmir

TI Automotive Ltd. SYRIA

IRAQ

CYPRUS LEBANON

TURKEY

DOMINO’S PIZZA INC.

Domino’s Pizza operates a headquarters in Istanbul.

Autoliv Inc. Based: Auburn Hills Operations: One manufacturing fa-

cility in Gebze Employees: 2,200 Products/services: Airbags, seatbelts, steering wheels and metal stampings Top executive: Mustafa Alaca, senior vice president for the textile product line and country manager Clients: Tofas, Fiat, Ford, Honda, Hyundai, Karsan, Mercedes-Benz, Peugeot, Renault, Nissan, Toyota

Domino’s Pizza Inc. Based: Ann Arbor Operations: One headquarters, sup-

ply chain center and administrative office in Istanbul and 435 pizza delivery stores across the country Employees: 8,800 Products/services: Pizza, dessert and other food items including pizza

with toppings tailored to a regional taste such as jambon, corn and tuna Top executive: Aslan Saranga, CEO of Domino’s Turkey Clients: Retail pizza consumers More information: Domino’s opened its 10,000th store worldwide in 2012 and designated a store in Istanbul for the celebration.

Dow Chemical Co.

With a 2014 GDP of $813.3 billion, Turkey is the 18th-largest economy in the world, according to the CIA World Factbook. Agriculture makes up about 25 percent of employment in Turkey, though industry and service sectors still play a major role. While Turkey was not devastated by the global fiscal crisis of 2008, it has had trouble in recent years with its GDP growth. In 2013, GDP growth was 4.4 percent; in 2014, it dropped to 2.9 percent. Turkey’s major imports include machinery, fuels, transport equipment and chemicals. Its major import partners are Russia (10 percent), China (9.8 percent), Germany (9.6 percent) and Italy (5.1 percent). Turkey’s major exports include apparel, textiles, transport equipment, metal manufactures and foodstuffs. Its major export partners are Germany (9 percent), Iraq (7.6 percent), the United Kingdom (5.7 percent) and Russia (4.6 percent). Crain’s World Watch report showcases companies that are leaders in global markets and those that are expanding. Each World Watch features a different country. If you know of a Michigan company that exports, manufactures abroad or has facilities abroad, email Jennette Smith, managing editor, at jhsmith@crain.com.

Based: Midland Operations: Four manufacturing fa-

cilities in Kocaeli, one office in Istanbul and one office in Gaziantep Employees: 230 Products/services: Plastic foam, paint, polyurethane and plastic additives that are used in sectors such as automotive, construction, textile, furniture, bedding and appliance Top executive: Ihsan Necipoglu, general manager of Dow Turkey and Central Asian Republics

and spare parts Top executive: Ozcan Keklik, managing director More information: General Motors began operations in Turkey 25 years ago.

Coming up August: Philippines 䢇 September: Brazil

Dow Corning Corp. Based: Midland Operations: One regional office and

application laboratory in Istanbul Employees: 20 Products/services: Silicone-based materials for the beauty care, transportation, packaging, textiles and high-performance building industries in the region Top executive: Leonidas Kolaitis, country and sales leader for Turkey More information: Dow Corning has operated in Turkey for more than 20 years.

global chairman and CEO Clients: Ford Otosan, Ford Europe Service, Ford Russia, Ford, Renault, Toyota

General Motors Co. Based: Detroit Operations: Headquarters located in

Izmir Employees: 65 Products/services: Passenger cars, manufactured by Adam Opel AG,

and 56 authorized dealers around the country offering sales, services

Based: Auburn Hills Operations: Fluid carrying systems

and powertrain plant in Bursa and a fuel tank systems plant in Gebze Employees: 450 Products/services: Fuel lines and bundles, brake booster lines, brake lines and bundles, tank top lines, brake and fuel bundles, clutch lines, breather tubes, fuel tanks (mono and co-ex) and filler pipes Top executives: Haluk Payaslioglu, general manager; Ferruh Yucel, plant manager Clients: Fiat, Tofas, Oyak-Renault, Karsan, Grammer, Magneti Marelli, Valeo, Robert Bosch, Fompak, Delphi Packard, Farba, Toyota Turkey, Renault Turkey, Fiat Turkey

Ziebart International Based: Troy Operations: A master franchisee

store in Istanbul and 24 sub-franchisee stores throughout Adana, Ankara, Antalya, Bursa, Diyarbakir, Eskiisehir, Isparta, Izmir, Kahramanmaras, Kocaeli, Mersin, Sakarya and Trabzon Employees: 114 Products/services: Appearance and protection services, including professional detailing, paint protection coatings, underbody sound barrier, sprayed-on bed liners, automotive glass repair, architectural film, window tint, paint protection film, truck accessories, electronics, and scratch repair services. Top executive: Thomas Wolfe, president and CEO of Ziebart International More information: For the past 15 years, Entrepreneur magazine has named Ziebart one of its top 500 franchisors. Natalie Broda

Faurecia North America Inc. Based: Auburn Hills Operations: One emissions control

DOW CHEMICAL CO.

Dow Chemical has a plastic additives plant in Gebze.

technologies plant in Kocaeli, one plant in Bursa Orhangazi, one R&D center in Gebze, and a JIT plant at the Ford Otosan headquarters, which is a joint venture of Continental AG and Faurecia Employees: 650 employees Products/services: Robot welding, cold ends, hot ends, diesel particulate filters and injection molds for instrument panels and door panels Top executive: Yann Delabrière,

ZIEBART INTERNATIONAL

This outlet in Bursa is among stores for Ziebart International.

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MOST

SPECIAL REPORT:

INNOVATIVE COMPANIES EUREKA INDEX

Transforming the future Auto, life science companies top patent rankings By Gary Anglebrandt Special to Crain’s Detroit Business

utomotive suppliers and life sciences companies led the pack in this year’s Eureka Index, Crain’s annual focus on innovative companies. Many are well known, but some are more under the radar. Take, for example, Integrated Sensing Systems Inc., which is working on microelectronic implants for monitoring heart functions. What also can be seen is the important task of protecting ongoing work at established businesses. Such is the case of Specialty Vehicle Acquisition Corp., which has carried on the tradition of the former ASC Inc. For the index, Ocean Tomo LLC, a Chicagobased patent research company, analyzes patents awarded in 2014 to organizations in Southeast Michigan. For the purposes of this index, Southeast Michigan covers Wayne, Oakland, Macomb, Washtenaw, Livingston, St. Clair and Genesee counties. In all, 103 local organizations in Southeast Michigan were granted at least three patents, the minimum needed for consideration. Collectively, they were granted 3,957 patents, up from 3,872 in 2013. Total patent awards in the U.S. last year topped 326,033, according to the U.S. Patent and Trademark Office, up from 302,948 in 2013. Ocean Tomo ranks the organizations for the quality of their patents, based on a proprietary methodology and scoring system that considers about 50 factors, including references to past patents, the number of citations and references made in subsequent patents, pres-

In this report 䡲 Rankings on patent quality, see box at right 䡲 More about the top 25 innovative companies, Pages 18-21 Profiles of 5 innovation standouts:

䡲 Omni MedSci Inc.: A University of Michigan professor has founded six companies based on his patents. This one makes a wearable glucose monitor that tracks blood sugar ... without drawing blood, Page 1.

䡲 Specialty Vehicle Acquisition Corp.: Remember sunroof pioneer ASC Inc.? This company is what remains, only its specialty is protecting pickup beds, Page 18

䡲 Mi4Spine LLC: This home-office business uses stem cells to reconstruct the human spine, Page 19

䡲 Integrated Sensing Systems Inc.: Patents are a big deal even when they protect products — microelectromechanical systems — that are small ... very small, Page 19 䡲 Zephyros Inc.: An auto supplier uses patents to keep rivals’ sticky fingers off its adhesives and other products, Page 20 䡲 Crain’s List: Michigan’s largest patent recipients, 2012-2014, Page 23

ence or absence of limiting claim language and the likelihood a company will seek to defend that patent. It then assigns patents a value relative to a

MOST INNOVATIVE COMPANIES RANKED BY PATENT QUALITY

median score of 100, based on this analysis. It’s quality over quantity, Ocean Tomo says. So while some companies had more patents than others, that did not necessarily mean they ranked highly. General Motors Co. picked up 1,625 patents in 2014 but ranked 59th at an average score of 96.86, while the No. 1 business on the list, Omni MedSci Inc., needed only three to rise to the top because it had an average score of 149.50. Omni MedSci is a medical device business based on the work of Mohammed Islam, a professor at the University of Michigan. (See story, Page 1.) “Anyone can write a patent,” but making one that will endure challenges both legal and technical is “an art,” Islam said. Businesses like his — based in life sciences — have performed well in the three years Crain’s has run the Eureka Index. This is to be expected from a state where the venture capital industry leans heavily on life sciences. Also to be expected in a state rooted in automotive, the index is top-heavy with automotive suppliers, along with a smattering of electronics, consumer and software businesses. Tom Lewry, a patent litigation attorney at Southfield-based Brooks Kushman PC, said Southeast Michigan is a hotbed of patent activity, as evidenced by the decision of the U.S. PTO to place its first office outside the Washington, D.C., area in Detroit. “It’s a place where a lot of innovation is going on, in part because of Ann Arbor and the University of Michigan, but also because of the automotive companies and all the technology going into cars these days,” he said. 䡲

1. Omni MedSci Inc.

149.50

2. Global IP Holdings LLC

147.20

3. NeuroNexus Technologies Inc. 145.80 4. Specialty Vehicle 144.07 Acquisition Corp. (ASC) 5. Magna Electronics Inc.

143.32

6. Rubicon Genomics Inc.

139.80

7. Ovonyx Inc.

135.50

8. Imra America Inc.

134.58

9. MI4Spine LLC 10. Innovative Surgical Solutions LLC (Sentio LLC)

131.57 130.70

11.Integrated Sensing Systems Inc. 124.75 12. Gentherm Inc.

123.06

13. A123 Systems LLC

122.85

14. Duo Security Inc.

122.78 122.77

15. ZF TRW (TRW Vehicle Safety Systems Inc.) 16. Zephyros Inc.

122.40

17. Eastman Outdoors Inc.

119.90

18. Choon’s Design LLC

119.00

19. American Axle & Manufacturing Holdings Inc.

116.55

20. Henry Ford Health System

115.97

21. Trijicon Inc.

115.66 115.33

22. Bosch Automotive Service Solutions Inc. 23. Magna Powertrain USA Inc.

113.40

24. Altair Engineering Inc.

113.10

25. Ilumisys Inc.

112.72

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1. Omni MedSci Inc. See story, Page 1

2. Global IP Holdings LLC Sterling Heights Top executive: Nick DeMiro, president Patents in 2014: 19 Industry: Auto supplier Score: 147.20

Global IP Holdings is a patent-holding company belonging to Mayco International LLC, a manufacturer of body and interior automotive parts. Last year’s patents were for panels, structural materials and cargo features for vehicles. Global IP has 50 total patents in force. Global IP and one of Mayco’s companies, NJT Enterprises LLC, already has sued to protect one of its patents issued last year, charging that Century Plastics Inc. of Shelby Township infringed on a patent for carpeted floors for the rear storage areas of Jeep Cherokees. The patent is licensed exclusively to Mayco. The case was settled, according to research by Ocean Tomo.

3. NeuroNexus Technologies Inc. Ann Arbor Top executive: Daryl Kipke, executive

director Patents in 2014: 5 Industry: Medical devices Score: 145.80

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A subsidiary of Frisco, Texas-based Greatbatch Inc., NeuroNexus is a University of Michigan spinoff that makes neural interface technology such as probes, electrode instruments and related accessories. Greatbatch bought it for $12 million in 2012. Last year’s patents were awarded for methods of making microelectrode

arrays, a guide tube for an implantable device system and methods for manufacturing implantable electrodes. NeuroNexus has 18 patents in force, all of which have been issued since 2011. Seven more have been issued in 2015. SEE NEXT PAGE

Growing from its sunroof roots to protector of pickup beds 4. Specialty Vehicle Acquisition Corp. dba ASC Warren Top executive: Joe Bione, president and CEO Patents in 2014: 6 Industry: Auto supplier Score: 144.07

casual researcher would never guess it, but behind Specialty Vehicle Acquisition Corp.’s filings with the U.S. Patent and Trademark Office is a company with a long and storied history in Southeast Michigan. SVAC is the company that eventually wound up with the remnants of ASC Inc., the business founded by the late Heinz Prechter in 1964 to manufacture sunroofs for cars and was for most of its history based in Southgate. ASC was a pioneer in the auto industry; Prechter was influential in Republican politics as well as the local economy, particularly Downriver. He expanded into real estate and the newspaper business, owning the Heritage newspaper chain. ASC went into bankruptcy in 2007, six years after Prechter’s death. Los Angeles private equity firm Hancock Park Associates bought the assets and formed SVAC to make use of them. Two years ago, the firm brought in Joseph Bione, president of Troybased turnaround outfit Whitehall Group LLC, to run SVAC, which still uses ASC as a brand name. Under its new owners, ASC has morphed from a sunroof company into a maker of “tonneau covers” that go over the beds of pickup Bione trucks, protecting cargo from weather. ASC only makes them for automakers, with no aftermarket products, Bione said. Customers include Chrysler, Toyota and Honda. Stricter fuel economy standards for trucks provide an extra lift: Those coverings have the added benefit of increasing aerodynamic efficiency. They also are the source of the company’s patent activity. The

patents secure ASC’s hold on its technologies for the sealing, latching and aerodynamic features of its coverings. SVAC has 27 patents in force, according to Ocean Tomo research. SVAC’s six patents issued in 2014 were for pickup truck bed cover systems, while earlier patents were mostly directed to vehicle convertible roof systems. Patents in force and issued before 2014 rated low in Ocean Tomo’s scoring methodology; all were below a score of 100, while those issued last year were all well above 100. The company had no patent issues between 2011 and 2014, according to Ocean Tomo. Bione said ASC probably has twice as many patents pending or in process as it currently has in force, reflecting a renewed appreciation for intellectual property that’s in keeping with ASC’s heritage. The company had struggled for direction following the auto industry’s near collapse. “A lot of people didn’t know if we were still around,” Bione said. Annual revenue was at $10 million when Bione came aboard but now is on track to hit $50 million next year. “We’re getting back to our DNA. Even though the ownership has changed, the DNA is the same,” he said. More patents will come as the company decreases the weight of its coverings, Bione said. Though tonneaus are the company’s main focus, it also makes interior trim, seating and headliner parts. And it still has a design studio for building vehicles on behalf of customers, another specialty of its predecessor. As for the big question, does ASC still make sunroofs? “Very little,” Bione said. Tip: Smaller auto suppliers too often don’t realize the value they provide. “They get pushed around by the big guys enough, and they don’t think they’re worth anything,” Bione said. “You’d be surprised what you can bring to General Motors.” After identifying patentable technology, these companies should protect it and get credit for it, he said. “Or, you just become a commodity.” 䡲 Gary Anglebrandt

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SPECIAL REPORT: MOST INNOVATIVE COMPANIES FROM PREVIOUS PAGE

Licensees of its technology include Intel, Samsung, Hynix and BAE Systems.

2013 before adding 28 last year for oscillators, amplifiers, fiber systems and pulsed light systems.

8. Imra America Inc. Magna Electronics: Driver assistance

5. Magna Electronics Inc. Auburn Hills Top executive: Jake Hirsch, president Patents in 2014: 24 Industry: Automotive supplier Score: 143.32 Magna Electronics makes electronic systems for automobiles. This includes basics like controllers for interior heaters and oil pumps. It also includes newer technologies in demand among automakers that are increasingly expected to offer things like cameras for parking assist systems and lane departure warning systems in vehicles. The subsidiary of Ontario-based Magna International Inc. earned 24 patents last year as well, and six the year before. Last yearâ&#x20AC;&#x2122;s haul pertained to driver assistance systems, rear vision systems, vehicle motion correction, mounted cameras and accessory mounts.

6. Rubicon Genomics Inc. Ann Arbor Top executive: James Koziarz,

president and CEO Patents in 2014: 3 Industry: Biotechnology Score: 139.80 Rubicon develops and manufactures biological tools for genetic testing used in drug development and diagnosis. The company has a portfolio of 12 inforce patents with issue dates ranging from 2004 to 2014, all directed toward nucleotide amplification technology. Ocean Tomo gives high marks to the entire portfolio. Those covered last year include one for â&#x20AC;&#x153;DNA amplification and sequencing using DNA molecules generated by random fragmentationâ&#x20AC;? and another for â&#x20AC;&#x153;attaching a stem-loop oligonucleotide to a double stranded DNA molecule.â&#x20AC;?

7. Ovonyx Inc. Sterling Heights Top executive: Tyler Lowrey, CEO Patents in 2014: 13 Industry: Semiconductors Score: 135.50

Ovonyx comes from the patentinducing mind of the late Stanford Ovshinsky, better known for his Auburn Hills-based company Energy Conversion Devices Inc.

Ovonyx was a joint venture between ECD and Intel Corp., based on phasechange semiconductor memory (a type of random-access memory used in computers) invented by Ovshinsky. It was sold to Micron Technology Inc. in 2012 for $1.3 billion. Last year brought another round of patents to the intellectual propertyintensive business â&#x20AC;&#x201D; it has 286 â&#x20AC;&#x201D; as the company continues development of its mainstay memory technologies.

Ann Arbor Top executive: Takashi Omitsu, president Patents in 2014: 28 Industry: Auto supplier Score: 134.58 Imra America is the laser research and development arm of Japanese automotive supplier Aisin Seiki Co. Ltd. Its work on femtosecond fiber lasers, which are used to cut delicate things like semiconductors and corneas, is behind the companyâ&#x20AC;&#x2122;s buildup of intellectual property. The company was issued 23 patents in

10. Innovative Surgical Solutions LLC (Sentio LLC) Wixom Top executive: Chris Wybo, president Patents in 2014: 3 Industry: Medical devices Score: 130.70

Sentio makes a medical device that allows surgeons to avoid the tangle of nerves near the spine. President Chris Wybo likens the device to a â&#x20AC;&#x153;stud finder for nerves.â&#x20AC;? Patents for a neural monitoring system, SEE INNOVATIVE, PAGE 20

Making impact at the micro level 11. Integrated Sensing Systems Inc. Ypsilanti Top executive: Nader Najafi, president Patents in 2014: 4 Industry: Electronic equipment and instruments Score: 124.75

he need for intellectual property protection at Integrated Sensing Systems is pretty easy to see, even if the companyâ&#x20AC;&#x2122;s products arenâ&#x20AC;&#x2122;t. ISS makes microelectromechanical systems, or MEMS. MEMS is a sister technology to nanotechnology, the two of them often paired. MEMS are akin to semiconductor chips but incorporate micro-level mechanical devices like actuators, sensors and fluid channels. When coming up with new technologies that require this level of painstaking detail, itâ&#x20AC;&#x2122;s wise to secure the work with strong patents. ISS formed in 1995, making it a veteran in the Ann Arbor areaâ&#x20AC;&#x2122;s high-tech startup world that has ballooned during the past two decades. (The company says itâ&#x20AC;&#x2122;s the oldest independent MEMS company in the U.S.) It has product lines based on two lines of technology. The older of the two are sensors for analyzing the properties of fluids, sniffing out values for density, viscosity and the like. These are used in fuel cell applications; one major use is for determining concentrations of methanol. They also are used in energy production for making and moving fuel. Sales in that line of work began in 2003. For the newer work, which has spurred the patenting activity of late, ISS is taking aim at the growing market for medical devices. The company is making â&#x20AC;&#x153;miniature, intelligent, wireless, battery-less sensing implantsâ&#x20AC;? that go into the heart to monitor functionality, said Nader Najafi, company president. The sensors

are designed for long-term management of cardiac disease such as arrhythmia and chronic heart failure. ISS has Najafi opened a new, Series D round of preferred stock financing to pay for this foray into the medical world. It aims to raise $20 million to pay for clinical studies and regulatory affairs. Sales are planned to begin in 2016 in Europe first, then the U.S. in the same year. The company is not backed by venture capital and has instead relied on capital from previous rounds of preferred stock sales. It has 53 patents, most of them issued in the U.S. but some internationally as well. â&#x20AC;&#x153;We look at our patents in a broad way,â&#x20AC;? Najafi said, getting patents that cover the devices themselves, in addition to assembly, packaging and final applications. Besides patents, ISS holds secrets of its trade very closely. This creates a higher barrier to entry for would-be competitors. â&#x20AC;&#x153;This is a high-tech, complex company. Trade secrets are of paramount importance,â&#x20AC;? he said. Tip: Hire full-time people early. They can carry some of the operational load while the founders work on their patents. That â&#x20AC;&#x153;reduces stress and increases the probability of success,â&#x20AC;? Najafi said. He also recommended hiring strong legal help at this early stage, too, even if it means higher upfront costs. This makes for better-written patents that will reduce the need for defense later. Strong patents also increase a companyâ&#x20AC;&#x2122;s valuation. Owners who balk at the price should ask themselves if they really need the patent, he said. â&#x20AC;&#x153;There is no such thing as a low-cost patent.â&#x20AC;? äĄ˛ Gary Anglebrandt

Spine is backbone of biz 9. MI4Spine LLC Bloomfield Hills Top executive: Mick Perez-Cruet, CEO Patents in 2014: 3 Industry: Medical devices Score: 131.57

ick Perez-Cruet already has a full schedule. He is a neurosurgeon at his private practice, the Michigan Head & Spine Institute in Southfield, chief of minimally invasive spine surgery at Beaumont Health System, and professor and vice chairman of the neurosurgery department at Oakland Universityâ&#x20AC;&#x2122;s William Beaumont School of Medicine. So his company, MI4Spine, is more of a skunkworks than a dayto-day business. He started the company, based at his home office in Bloomfield Hills, in 2006 to turn his ideas into inventions. It has 18 patents in Perez-Cruet force with issue dates ranging from 2008 through 2014. The current project at center stage thatâ&#x20AC;&#x2122;s been absorbing patents, including those issued to MI4Spine last year, is a technology to reconstruct the spine using stem cells. The stem cells, taken from umbilical cords that otherwise get thrown away, are used to create a solution that is injected into spinal discs. This is to encourage what is called â&#x20AC;&#x153;chondroprogenitor intervertebral disc regeneration,â&#x20AC;? and its purpose is to restore cushioning and mobility between discs that is lost as the spine ages. Research is taking place atOU and Beaumont. The next step is multi-centered clinical trials. MI4Spine turned five earlier

ideas into fully developed products. The â&#x20AC;&#x153;home run,â&#x20AC;? Perez-Cruet said, is the BoneBac Press. This device takes excess bone powder left over from drilling during spine surgery and presses it into what he described as a â&#x20AC;&#x153;nice wet caulkâ&#x20AC;? that can be reused to shore up bone in the spine, or elsewhere. Perez-Cruet assigned this patent and those of its four other fully developed products to Traverse City-based Thompson MIS LLC, which now manufactures the products. Perez-Cruet has a minority stake in Thompson. Medtronic Inc. in April began buying and distributing the BoneBac Press, Perez-Cruet said. The plan for MI4Spine is to continue developing technologies for minimally-invasive spine surgery and then licensing them, rather than transferring rights to them to other companies, as the company did with the patents it assigned to Thompson MIS. Manufacturing its technologies on its own is not currently in the plans for MI4Spine, but PerezCruet would not rule that out. â&#x20AC;&#x153;I canâ&#x20AC;&#x2122;t answer for the future,â&#x20AC;? he said. Tip: Perez-Cruet said he has learned to appreciate the value of trusted associates. That includes his two business partners who own MI4Spine with him: John Pepper, who designs the products, and John Miller, an attorney who handles the legal work. The company also recently hired a business development person. â&#x20AC;&#x153;We work well together. Thereâ&#x20AC;&#x2122;s no backstabbing; weâ&#x20AC;&#x2122;re very open and honest with each other,â&#x20AC;? he said. Finding people who can be trusted frees Perez-Cruet to focus on the inventive side. The next step is to find businesses, such as licensees and manufacturers, who also are open and honest, he said. äĄ˛ Gary Anglebrandt

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INNOVATIVE

FROM PAGE 19

robotic surgical system and a weightlifting bar were awarded to the company last year.

Auto supplier goes on defensive with patents 16. Zephyros Inc. Romeo Top executive: Tom Kleino, president Patents in 2014: 17 Industry: Auto supplier Score: 122.40

Dan Coker and Gentherm No. 2 last year

12. Gentherm Inc. Northville Top executive: Dan Coker, president

and CEO Patents in 2014: 14 Industry: Auto supplier Score: 123.06

The publicly traded supplier of heated seats and automotive climate control parts ranked No. 2 last year in Crain’s list of fastest-growing companies, growing with the rebounding industry and adding a global footprint with the 2011 acquisition of Germany-based W.E.T. Automotive Systems AG. Last year’s patents were for climate control systems, heat pumps, an energy management system for hybridelectric vehicles and other heating and cooling technologies. They followed nine patents the company earned in 2013 for convective heater technology, a fluid distribution system and other climate-control devices.

ephyros Inc. is a patentholding entity for Romeobased L&L Products Inc., an automotive supplier. L&L makes structural adhesives, structural reinforcement parts and materials such as acoustic baffles that reduce noise in the interior of vehicles. L&L was founded in 1958 by Bob Ligon and Gene Lane, who are both 86 years old and no longer active with the company, said President Tom Kleino. The respective families of Ligon and Lane maintain 50-50 ownership of the company, Kleino now in its third generation of family ownership, he said. L&L’s business is 99 percent automotive, but it plans to enter new industries, Kleino said, declining to name which ones. Zephyros, incorporated in 2006, has 149 patents in force for technologies that include its core technologies such as bonding, sealing, sound absorption and reinforcement, but also including

13. A123 Systems LLC Livonia

A123 is a developer of battery technology, mainly for use in automobiles. This is an intellectual property-intensive field to be in. Last year’s patents awarded to A123 were for original thinking in areas such as laser welding of congnections in an electrochemical cell, a method for determining a state of charge in an energy delivery device, and new battery structures. These awards followed 18 patents collected in 2013. Wanxiang Group Corp., based in China, acquired A123 out of bankruptcy in 2013.

Gary Anglebrandt

authenticating users of networked systems, including one for authenticating users of mobile devices. Duo Security has only five patents in force, four of which were issued in 2014. Applications for eight more patents were filed last year, all of them directed at data security and authentication.

Jason Forcier: A123 a hard charger

Top executive: Jason Forcier, CEO Patents in 2014: 10 Industry: Battery maker Score: 122.85

such technologies as fuel cell formation and magnetic composition. Last year’s patents were for sealing, fastening and structural reinforcement technologies, with an emphasis on vehicle bodies and tops. The patenting strategy is purely defensive, Kleino said. L&L didn’t start patenting its technologies until the 1990s, when the company saw others trying to steal its action. “We saw companies trying to enter the acoustic baffle business. They were very predatory,” Kleino said. “More suppliers were coming into the space, and we decided we needed to protect what we’d created.” Tip: With patent laws having changed to favor first-to-file applicants, there’s more incentive to try to get patents, Kleino said. “If you think you have something and think there’s value, go ahead and apply.” He recommended hiring good attorneys and then sticking with them. L&L has used the services of The Dobrusin Law Firm PC in Pontiac for 15 years, impressed at the firm’s use of on-staff engineers who understand L&L’s business. It’s worth the time to research and hire a good firm, Kleino said. “So often you see that today, people trying to do something cheap on Legal Zoom or something like that. Take the time to find the right attorney,” he said. 䡲

Dug Song: Leads dynamic Duo Security

14. Duo Security Inc. Ann Arbor Top executive: Dug Song, CEO Patents in 2014: 4 Industry: Internet software and services Score: 122.78 The provider of network authentication software has raised $49 million in venture capital funding. Most recently, it announced in April that it had raised $30 million in a Series C funding round. The funds will be used to invest in engineering and international expansion. Its four new patents were for

Customers include Facebook, Paramount Pictures, Random House and Twitter.

15. ZF TRW (TRW Vehicle Safety Systems Inc.) Livonia Top executive: John Plant, CEO Patents in 2014: 10 Industry: Auto supplier Score: 122.77

ZF TRW is the new name of the former TRW Automotive Holdings Corp. , which was bought by Friedrichshafen AG for $12.4 billion in a deal that closed in May. ZF CEO Stefan Sommer told Automotive News in January that his SEE NEXT PAGE

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SPECIAL REPORT: MOST INNOVATIVE COMPANIES FROM PREVIOUS PAGE

Score: 116.55

company wanted TRW’s technologies for brake controls and other areas of autonomous driving, describing the brake control technology as forming the “brain of the chassis.”

Although American Axle’s Detroit operations represent a sparse remnant of what they once were, the automotive supplier continues to invest in R&D locally. It announced last year it would build a $20 million Advanced Technology Development Center on its Detroit campus.

Of last year’s 10 patents gained by former TRW subsidiary TRW Vehicle Safety Systems Inc., nine were for airbag systems and one was for a seatbelt mechanism.

17. Eastman Outdoors Inc.

The center is expected to open later this year and bring 100 engineering and technical jobs. Its patents last year fell into categories related to driveshafts and suspensions for cars.

Flushing Top executive: Rob Eastman, CEO and

president Patents in 2014: 3 Industry: Leisure products Score: 119.90

For those who have a burning need to stir-fry deer meat in a wok made for the outdoors, Eastman Outdoors has just the thing. Based near Flint, Eastman Outdoors makes products for outdoor barbecuing and wild game cooking, including a wok that stands on a tripod and has a port for hooking up a can of propane. The company won patents in the category of mechanical guns and projectors for the design of a hunting crossbow that allows for more accessories to be added to the weapon than others on the market. Eastman has a portfolio of 17 in-force patents with issue dates ranging from 2001 to 2014. All patents issued prior to 2014 are directed mostly to arrowrelated technology or cooking technology.

20. Henry Ford Health System Detroit Top executive: Nancy Schlichting, CEO Patents in 2014: 3 Industry: Health care Score: 115.97

The 100-year-old Southeast Michigan hospital system talks up innovation in its public marketing and operates a Henry Ford Innovation Institute in the same spirit. Its 2014 patents include an injector that goes into the myocardium of the heart, and a personalized health risk assessment for critical care.

21. Trijicon Inc. Wixom Top executive: Stephen Bindon

Patents in 2014: 5 Industry: Aerospace and defense Score: 115.66

A maker of gun sights, Trijicon attempts to gain an edge on competitors through R&D and a corresponding accrual of intellectual property. The company added five more gun sight patents to its collection last year, including one for a shotgun.

23. Magna Powertrain USA Inc. Troy Top executive: Jake Hirsch, president Patents in 2014: 4 Industry: Automotive supplier Score: 113.40

Warren

The powertrain subsidiary of Ontariobased Magna International Inc. added to its intellectual property holdings with patents pertaining to continuously variable transmissions, electric drive modules and hydraulic couplings.

Top executive: Richard Wolf, president Patents in 2014: 48 Industry: Auto supplier Score: 115.33

24. Altair Engineering Inc.

22. Bosch Automotive Service Solutions Inc.

Warren-based automotive service business SPX Corp. became Bosch Automotive Service Solutions in 2012 when Germany-based Robert Bosch GmbH bought the supplier of repair shop technology, diagnostic software and training services. Patents gained last year were for tools and technology for servicing automobiles, such as diagnostics information readers, an alternator and starter tester, and a system for exchanging information with electric power supply stations using a smartphone. In 2013, the company gained nine patents including ones for an angled wire stripper, a data meter and a vacuum pump.

Troy Top executive: James Scapa, chairman

and CEO Patents in 2014: 3 Industry: Engineering, software and

staffing services Score: 113.10 Altair’s simulation software aids engineers and designers who craft products as well as the manufacturing processes that produce them. The company also has product engineering, industrial design and staffing arms. Patents were awarded to Altair for designs of a “hand-held rescue tool” that has an actuating handle and jaws for cutting the object to be grabbed, and for

two designs of natural gas storage tanks.

25. Ilumisys Inc. Troy Top executive: David Simon, president Patents in 2014: 14 Primary Industry Classification: LED

lighting Score: 112.72 A subsidiary of Altair Engineering Inc., Ilumisys makes LED tubes that can replace fluorescent lights. The company’s first products were based on Altair’s intellectual property, and Ilumisys has been pursuing patents since its spinoff from Altair in 2007. Among the 14 patents Ilumisys won last year were those covering LED tubes and modules for replacing fluorescent light tubes, shock prevention mechanisms, and a system to integrate LED lights into an emergency notification system so the lights can do things like “produce a pattern of light indicating a direction toward or away from an emergency location.”

An Ilumisys LED tube

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Choon’s Design is the company behind the popular Rainbow Loom braceletweaving kits for children. The business might sound soft and fun, but there’s bare-knuckle business happening behind the scenes. Choon’s has been embroiled in patent litigation against competitors it claims are selling knockoffs of its design, including one that ropes in retail chain Toys R Us Inc. It has filed 14 federal lawsuits since August 2013.

Contact us today to learn more. ROD BYRNE, CPA, CVA, CGMA Principal rod.byrne@rehmann.com JIM CARPP, CISA, CIRM Director of Consulting jim.carpp@rehmann.com BILL KOWALSKI, JD Principal, RCIS Director of Operations bill.kowalski@rehmann.com

It picked up three more patents last year for “link-making” kits.

19.American Axle & Manufacturing Holdings Inc. Detroit Top executive: David Dauch, CEO Patents in 2014: 10 Industry: Auto supplier

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CRAIN'S LIST: MICHIGAN'S LARGEST PATENT RECIPIENTS 2012-2014 Ranked by number of utility patents awarded Rank

Company Address Phone, website

Top executive(s)

3,438

1,176

1,208

1,054

Automobile manufacturer

1,899

691

634

574

Automobile manufacturer

Osamu Nagata president and CEO

378

130

133

115

Automobile manufacturer

Whirlpool Corp. 2000 North M-63, Benton Harbor 49022 (269) 923-5000; whirlpool.com

Jeff Fettig chairman and CEO

313

111

112

Household appliances

University of Michigan Ann Arbor 48109 (734) 764-1817; www.umich.edu

Mark Schlissel president

294

113

Public university and health care system

Magna International of America Inc. 750 Tower Drive, Troy 48098 (248) 631-1100; www.magna.com

Jim Tobin chief marketing officer and president, Magna Asia

274

89 B

83 B

Dow Global Technologies Inc. 2030 Dow Center, Midland 48674 (989) 636-1000

Mark Whiteman president

237

Chemicals, plastics and agricultural products

Nissan North America Inc. 39001 Sunrise Drive, Farmington Hills 48331-3404 (248) 488-4123; www.nissanusa.com

Carla Bailo, senior VP, R&D Nissan Americas; Kunio Nakaguro, senior VP, R&D Nissan North America

163

Automobile manufacturer

FCA US LLC 1000 Chrysler Drive, Auburn Hills 48326-2766 (248) 576-5741; www.fcanorthamerica.com

Sergio Marchionne chairman and CEO

162

Automobile manufacturer

Guardian Industries Corp. 2300 Harmon Road, Auburn Hills 48326-1714 (248) 340-1800; www.guardian.com

Ron Vaupel president and CEO

156

Manufacturer of glass, automotive and building products

Dow Corning Corp. 2200 W. Salzburg Road, Midland 48686 (989) 496-4000; www.dowcorning.com

Robert Hansen chairman, CEO and president

131

53 C

32 C

46 C

Lear Corp. 21557 Telegraph Road, Southfield 48033 (248) 447-1500; www.lear.com

Matthew Simoncini president and CEO

129

Automotive supplier

Eaton Corp. 13100 E. Michigan Ave., Galesburg 49053 (616) 342-3000; www.eaton.com

Ken Davis president, vehicle group

120

Engine air management, actuators, sensors, mirror controls, differentials, superchargers, valve trains, hose, truck transmissions

TK Holdings Inc. 2500 Takata Drive, Auburn Hills 48326 (248) 373-8040; www.takata.com

Robert Fisher executive vice president

111

Automotive safety restraint supplier

Johnson Controls - Automotive Experience 49200 Halyard Drive, Plymouth 48170 (734) 254-5000; www.johnsoncontrols.com

Beda Bolzenius vice chairman, Johnson Controls; president, Automotive Experience

102

Automotive supplier

Robert Bosch LLC 38000 Hills Tech Drive, Farmington Hills 48331 (248) 876-1000; www.boschusa.com

Mike Mansuetti president

Automotive, industrial, consumer goods, energy and building technology and services supplier

Michigan State University East Lansing 48824 (517) 355-1855; www.msu.edu

Lou Anna Simon president

Public university

Federal-Mogul Holdings Corp. 27300 W. 11 Mile Road, Tower 300, Southfield 48034 (248) 354-7700; www.federalmogul.com

Rainer Jueckstock, co-CEO, co-chairman and CEO, Powertrain; Daniel Ninivaggi, co-CEO, cochairman and CEO, Motorparts

34 D

32 D

Designs, engineers, manufactures and distributes technologies to improve fuel economy, reduce emissions and enhance vehicle safety

Gentex Corp. 600 N. Centennial St., Zeeland 49464 (616) 772-1800; www.gentex.com

Fred Bauer chairman and CEO

Auto-dimming mirrors and aircraft windows, fire protection products

James Verrier president and CEO

BorgWarner Inc. 3850 Hamlin Road, Auburn Hills 48326 (248) 754-9200; www.borgwarner.com

Stryker Corp. 2825 Airview Blvd., Kalamazoo 49002 (269) 385-2600; www.stryker.com

Kevin Lobo chairman and CEO

Engineered components and systems for powertrain applications; develops products to improve fuel economy, reduce emissions and enhance performance Medical technology company

Access Business Group LLC 7575 Fulton St. E., Ada 49355 (616) 787-6767; www.accessbusinessgroup.com

George Calvert Amway VP supply chain, R&D

Contract manufacturing services

Denso International America Inc. 24777 Denso Drive, Southfield 48033 (248) 350-7500; www.densocorp-na.com

Sadahiro "Sam" Usui CEO

24 E

18 E

21 E

Automotive supplier

Delphi Technologies Inc. 5725 Delphi Drive, Troy 48098-2815 www.delphi.com/manufacturers/dti

Kevin Clark president and CEO

Automotive supplier

Bissell Homecare Inc. 2345 Walker Ave., Grand Rapids 49544 (800) 237-7691; www.bissell.com

Mark Bissell president and CEO

Home care products

GM Global Technologies Operations LLC 300 Renaissance Center, Detroit 48265

Ford Motor Co. 1 American Road, Dearborn 48126 (313) 322-3000; www.ford.com

Toyota Motor Engineering and Manufacturing North America Inc. 1555 Woodridge Ave., Ann Arbor 48105 www.toyota.com

Mark Reuss executive vice president, global product development, purchasing and supply chain Mark Fields president and CEO

Total patents Patents Patents Patents awarded awarded awarded awarded 2012-2014 2014 2013 2012 Type of business

102 B Automotive parts supplier

Silicon-based materials and technology

SOURCE: U.S. PATENT AND TRADEMARK OFFICE A utility patent protects the invention of a new machine, process or composition. The invention must be useful, such as software or stamping machine, to qualify for a utility patent. Patent origin is determined by the resident state of the first-named inventor.

B Includes patents registered to Magna International Inc. and its subsidiaries. C Includes patents registered to Dow Corning Toray Co. Ltd. D Includes patents registered to its subsidiaries. E Includes patents registered to Denso Corp.

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PEOPLE

RANDY RUPP, CEO, Rehmann

ON THE MOVE FINANCE Kurt Barr to director, Cascade Partners LLC,

Barr

Southfield, from director of corporate and business development, Blue Cross Blue Shield of Michigan, Detroit. Jessica Workman to branch manager, Advantage One Federal Credit Union,

Brownstown Township, from financial soluWorkman tions partner, Advantage One Federal Credit Union, Riverview.

FOOD Don VanTiem to president, Atlas Wholesale Food Co., Detroit, from

director of operations.

MARKETING Jeremy Bowler to senior vice presi-

dent of research and consulting, financial services division, Market

Bowler

CALENDAR

SPOTLIGHT

DiMeglio

Strategies International, Livonia, from global insurance practice lead, J.D. Power and Associates, Troy. Joe DiMeglio to executive vice president and worldwide account director, General Motors account, McCann Worldgroup, Birmingham and Detroit, from executive vice present, chief client officer, Organic Inc., Detroit.

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

Randy Rupp has been named CEO of Troy-based Rehmann, a financial services firm. He succeeds Steven D. Kelly, who will continue to serve as the firm’s Rupp chairman. Rupp, 55, started his career with Rehmann as an intern in 1982. In 1993, he was named a tax principal in the firm’s Saginaw office. He joined the board in 2003 and has served as vice chairman for nearly a decade. Rupp graduated from Michigan State University with a bachelor’s degree in accounting. He is a member of the American Institute of Certified Public Accountants and the Michigan Association of Certified Public Accountants.

WEDNESDAY JULY 15

A New Automotive Era. 11:30 a.m.-

1:30 p.m. Inforum. In her book Road to Power: How GM’s Mary Barra Shattered the Glass Ceiling, author Laura Colby describes the character, choices and leadership style that steered Barra’s career trajectory to become CEO of General Motors Co. Westin Book Cadillac, Detroit. $40 Inforum members, $55 nonmembers, $25 students, $500 table sponsors. Website: inforummichigan.org. Rescuing the Reluctant Networker. 810 a.m. Better Business Bureau. Greg Peters, founder of The Reluctant Networker LLC, on the fundamentals of good networking practices and the techniques to use them. Better Business Bureau, Southfield. Free. Contact: Demitria D. Robinson, (248) 799-0305; email: drobinson @easternmichiganbbb.org

Crain’s hosts 2015 CFO of the Year Awards Honor the CFOs of the year and get a peek inside the business mind of sports CFOs when Crain’s Detroit Business hosts a panel discussion with the top financial executives from Detroit’s four major professional teams. The event is 7:30-10 a.m. July 23 at The Henry hotel, Dearborn. Individual tickets are $75; a reserved table of 10 is $800. Preregistration closes at 9 a.m. July 21. If available, walk-in registration will be $90 per person. For information, contact Kacey Anderson, (313) 446-0300; email: cdbevents@crain.com; website crainsdetroit.com/events.

UPCOMING EVENTS 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.

NONPROFITS Melissa Gush to director of children’s education, St. Vincent and Sarah Fisher Center, Detroit,

More Calendar items can be found at crainsdetroit.com/events.

from children’s program coordinator.

New Enterprise Forum. 5-7:30 p.m. July 23. Ann Arbor Spark. Training entrepreneurs how to present to investors. Three entrepreneurs give a 4-minute pitch of their business idea to a panel of investor judges in a kinder version of TV’s “Shark Tank.” Spark Central, Ann Arbor. Free. Contact: (734) 214-0110; email: PR@NewEnterpriseForum.org.

DEALS & DETAILS

Detroit, we’re In Your Corner.

ACQUISITIONS & MERGERS Stephen Ternullo & Associates Inc., Clinton Township, a provider of structural engineering, forensic investigation and fire investigation services, was acquired by Unified Investigations & Sciences Inc., a subsidiary of Sedwick Claims Management Services Inc., Memphis, Tenn., and a national provider of multidisciplinary engineering and forensic investigation services. Websites: uis-usa.com, staengineering.us.

NEW SERVICES 123Net Inc., Southfield, a telecom-

munications and Internet service provider, has launched its Hosted IP PBX for businesses seeking cloudbased enterprise telecom services. Website: 123.net. Altair Engineering Inc., Troy, announced the general availability of PBS Professional 13.0, the latest version of software for high-performance computing workload management and job scheduling on clusters and supercomputers. Website: altair.com.

Summer 2015 ■

Detroit

■

Novi

■

Grand Rapids

■

Kalamazoo

■

Grand Haven

■

Lansing

Deals & Details guidelines. Email cdbdepartments@crain.com. Use any Deals & Details item as a model for your release, and look for the appropriate category. Without complete information, your item will not run. Photos are welcome, but we cannot guarantee they will be used.

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INNOVATOR

In the lab at Omni MedSci (from left): Larry Peterson, director of engineering; Mike Freeman, director of research; and Mohammed Islam, the company’s founder.

FROM PAGE 1

Johnson about the product, Islam

said. The devices would be able to send medical data to the cloud, process it and send it back to the user and the user’s doctor. Corporate customers that bought or licensed these devices would be able to sell them for a monthly fee, covering features like sending alarms to a user’s health care provider when readings look dangerous. “The revenue is going to come from the cloud services you provide,” Islam said. Telecommunications is another field in which Islam has deep experience. His second company, Xtera Communications Inc. , is based on telecommunications backbone technologies using fiber optics. (Islam later sold it but it still carries on, now based in Texas.) Another company, Cheetah Omni LLC, is a holding company for patents on delivering telecommunications to homes through fiber optic lines. Another field to add to Islam’s resume is defense. His company Omni Sciences Inc. , also in Dexter Township, has been developing lasers for the U.S. Department of Defense and members of the intelligence community for the past decade. Recent work has been for the Air Force Research Laboratory , using lasers to identify targets of interest — camouflaged objects, bombs — at a distance. In tests conducted at Wright-Patterson Air Force Base in Ohio, a laser placed in a 12-story tower hits a target a mile away. The light signature that returns helps de-

CARTER SHERLINE

1. Omni MedSci Inc. Dexter Township Top executive: Mohammed Islam, founder and CTO Patents in 2014: 3 Industry: Medical devices Score: 149.50

termine the chemical composition of the target, thus verifying what it is. Islam said Omni also has been doing work at a U.S. Army testing location in Virginia and has a $17 million proposal pending at Intelligence Advanced Research Projects Activity

to detect explosives at distances. Omni Sciences licensed some technology from UM; Omni MedSci has not. Some employees are former students. Islam takes his guiding principle from a quote attributed to Wayne Gretzky: “A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.” He aims his patents at where he predicts technology will be in 10 years, and tells his students to do the same. This is in part because of the years it takes to get a patent through the U.S. Patent and Trademark Office. And most patents are enforceable for only 20 years from the filing

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date. It’s better to receive a patent at a technological peak than after the wave has crested. “If you’re going to make a valuable patent, you have to see where it’s going to be 20 years out,” Islam said. Tip: Besides designing a patent to withstand time (or at least two decades), patent-seekers also should design them to withstand aggressors. On this, Islam also has experience. Cheetah Omni has sued Fujit su Network Communications Inc. , Ci enna Corp. , Alcatel-Lucent USA Inc. , Huawei Technologies USA Inc. and Nokia Siemens Networks US LLC, all of which settled. In 2011, Cheetah Omni sued three subsidiaries of Verizon Communications Inc. for patent infringement, and a jury awarded it $5.4 million in damages. “There’s getting a patent, and there’s getting a patent that will withstand litigation,” Islam said. “It’s an art form.” He teaches students how to write patents to avoid what are called “design-arounds,” where other parties emulate the invention in a way just different enough to avoid infringing. After describing the patent, “sit back and try to think of every which way people will try to design around you,” Islam said. 䡲

How to write a solid patent Mohammed Islam and Tom Lewry present a formidable duo. Islam is a professor of internal medicine and electrical and computer engineering at the University of Michigan. Lewry is a patent litigation attorney at Southfield-based Brooks Kushman PC. Together they teach patent courses for engineers at UM. Lewry also teaches at Wayne State University. Lewry represents Islam when they go on the offensive against companies many times larger than Islam’s Cheetah Omni LLC. A jury awarded the telecommunications company $5.4 million in damages in 2011 after it sued three subsidiaries of Verizon Communications Inc. for patent infringement. Lewry and Islam have forced much larger companies like Fujitsu Network Communications Inc., Alcatel-Lucent USA Inc. and Nokia Siemens Networks US LLC into settlements. When smaller companies have to go toe-to-toe with much larger foes, it’s comforting to know the patent in question is solid. Lewry said a patent for a simple invention costs about $7,000, and one for a complicated high-end technology can cost $20,000 or more. He and Islam offered a few tips to make sure the money is well spent. 1. Think, and write, broadly. In describing the invention, try to imagine all the “design-arounds” others might come up with down the road and head them off. Consider that smartphones weren’t around just 10 years ago.

Islam sometimes spends months on this part of the process alone. 2. Do a “prior art” search. “Art” in the patenting world refers to level of technology already attained at large — as in the phrase, “state of the art.”

A prior art search then means a thorough look at articles and filings of existing patents. And it still refers to art in the more commonly used sense, too: Look at the drawings that usually accompany patent filings. Google has special search functions for patents and scholarly works. The U.S. Patent and Trademark Office’s downtown Detroit office lets visitors use the same search system its reviewers use. These resources make it far easier to investigate prior art than in the past, but some people are much better at it than others, Lewry said. Patent litigation law firms and patent services companies can sharpen the focus, and they know what they’re looking at when they come across arcane information. 3. “It’s all about the claims.” The claims are points made at the end of a filing that stake out a patent’s territory, Lewry and Islam said.

“They’re like the deed for a piece of land,” Lewry said. Claims describe the actual invention — what it is and what it isn’t. They describe its boundaries and should take everything they can up to, but not including, the previous art. Gary Anglebrandt

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Debate over energy mandate Business interests split on Michigan’s efficiency rules By Jay Greene jgreene@crain.com

ver the past five years, Michigan utility customers have saved more than $3 billion through state-mandated energy efficiency programs. But the 2008 law that created them expires later this year, and some Republican legislators and Michigan’s two major utility companies, DTE Energy Co. and Consumers Energy Co. , want to drop the mandate in favor of voluntary programs and integrated resource planning, commonly known as IRP. Such a law — which aims to predict future supply and demand of natural gas and electricity usage — would require the utilities to offer service to customers at the lowest system cost that would provide adequate and reliable service. The issue has split business interests. For example, the Association of Business Advocating Tariff Equity , which advocates for large industrial companies on energy issues, is lobbying differently than Ford Motor Co., an ABATE member until about four months ago. The Michigan Manufacturers Asso ciation , Michigan Chamber of Com merce , ABATE, the utilities and Republican legislators want to replace the energy efficiency mandates with IRP. The utilities say they’ll voluntarily continue offering energy efficiency programs. Ford, Whirlpool Corp. , environmental groups and key Democratic legislators are skeptical of that promise because utility profits and shareholder returns are contingent on energy sales. Still, there is a general consensus that the energy optimization standard featured in Public Act 295 of 2008 has been a success. But over the past several months — in hearings and discussions over how to proceed when the current energy law expires in December — there has been strong disagreement among key stakeholders over one word: mandate. The law requires the state’s 65 utilities to offer energy efficiency programs to lower monthly bills for customers. The utilities are expected to create savings that amount to 1 percent of retail sales for electricity and 0.75 percent for gas. Customers pay a surcharge to fund the programs. Large users can exempt themselves from most surcharges by creating their own energy optimization plan, but continue to pay a surcharge that subsidizes low-income residential customers. The Republican- and utility-led mandate opponents want the next energy law to be tied to an IRP, a process that evaluates energy alternatives, including new generation plants, power purchases and effi-

Savings stats Highlights of the Public Act 295 energy optimization program for 2013

Michigan’s energy optimization standard was created under Public Act 295 of 2008. It requires all 65 natural gas and electric utility providers in the state to offer programs to reduce overall energy use and help customers cut monthly bills. For 2013, utilities hit a combined average of 132 percent of their electricity savings targets and 121 percent of their natural gas savings targets. The 2013 targets were to reduce energy use by 1 percent of retail sales for electricity providers and 0.75 percent for gas providers.

Customers spent $253 million and saved $948 million on reduced energy use. For every dollar spent, customers enjoyed a return on investment of $3.75.

ciency programs. They say this will give Michigan a flexible approach, especially when facing new federal carbon emission reduction rules. On the other side, leading Democrats, environmental groups, energy efficiency advocates and some large corporations, including Ford and Whirlpool, want to extend the mandate. They point to 1995, when the Michigan Public Service Commission

eliminated mandated programs and utilities mostly abandoned efficiency efforts until the 2008 law brought them back. They also don’t have confidence in integrated resource planning as a method to encourage energy efficiency because states that use it generate lower savings than the mandate states, according to a new report from the American Council for an Energy-Effi cient Economy.

Bill vs. bill The two camps are represented by dueling bills. Earlier this year, Rep. Aric Nesbitt, R-Lawton, chairman of the House Energy Committee, introduced House Bill 4297, which does away with the energy optimization standards. Sen. Mike Nofs, R-Battle Creek, has introduced a counterpart bill, Senate Bill 437, that repeals energy efficiency and renewable energy standards and replaces them with the IRP process. Rep. Sam Singh, D-East Lansing, has introduced H.B. 4055 to slowly increase the current energy optimization mandate to 2 percent of

Overall, energy efficiency programs saved 1.3 megawatt-hours of electricity and 4.41 million thousand cubic feet of natural gas. This savings amounted to the annual electricity use of 121,000 households and the annual natural gas use of 58,000 households. Residential programs included lighting; heating, ventilation and air conditioning; weatherization; and energy education. Commercial and business programs included rebates for specific equipment replacement, such as lighting, boilers, pumps and compressors. Tons of reduced environmental pollutants included lower amounts of sulfur dioxide, nitrous oxides, mercury and other air toxins and particulate matter. Source: Michigan Public Service Commission, 2014 report

annual retail sales for electric utilities over four years from the current 1 percent. In April, Valerie Brader, Snyder’s senior policy adviser and now executive director of the Michigan Agency for Energy, presented the governor’s proposed IRP process, which is supported by the utilities, among others. Michigan’s IRP proposal would include the consideration of renewable energy generation and energy efficiency savings as part of energy supply and demand planning, said Mike Byrne, the PSC’s legislative liaison. Not all IRPs include those elements. “You would forecast energy needs five, 10 or 20 years out, look at the resources (generating capacity) available to you and what kind of additions you need to meet that load,” Byrne said. Byrne said each utility would have its IRP approved by the Public Service Commission. But Marty Kushler, senior policy fellow with the American Council for an Energy-Efficient Economy, said allowing utilities to voluntarily implement energy optimization programs and for the state to rely on IRPs is a recipe for failure. “I have not seen a single economic argument against energy optimization policy,” Kushler said. “All I have seen is the philosophical argument that ‘we don’t like mandates.’ ” Kushler said 18 states have an IRP process, but those states do not have an energy optimization standard and have much lower energy efficiency results than states that mandate utility programs like Michigan does. “Eliminating Michigan’s energy

optimization standard would be a huge step backward,” he said. Jeff Noel, corporate vice president for communications and public affairs for Whirlpool, said the company supports continuing the energy optimization mandate “because it works.” “It has been shown that by having a North Star, an established framework, that energy efficiency programs are successful,” Noel said. “The beneficiaries are the residents of Michigan.” Noel said having a mandate reduces electricity costs, increases jobs and makes home ownership more affordable through lower energy bills. “We build products that consumers need and want,” he said. “Consumers are looking at ways to reduce energy bills. … The standards bring more attention to that. It is a win-win.”

New climate Where Snyder stands on maintaining a mandatory standard is unclear. Last year, he expressed support for continuing state-led energy optimization programs. But sources tell Crain’s that Snyder is privately telling legislators he would not object to doing away with energy efficiency mandates. Irene Dimitry, DTE’s vice president of business planning and development, said the regulatory and economic climate is vastly different today than in the 1990s. “We have looming carbon reduction requirements, and as a company we support that and the IRP process,”

Dimitry said. “We will not start and stop because it wouldn’t make sense,” she said. “We think energy efficiency has value and has been a good thing for our customers because in general they use less energy.” In June 2014, the U.S. Environmental Protection Agency proposed the Clean Power Plan, which asks states, including Michigan, to develop plans by August 2016 to reduce greenhouse gas emissions from fossil fuel-fired electric generating units by 2030. Interim emission targets are expected by 2020. In 2016, the EPA will issue final regulations for power plants to reduce excess carbon dioxide — gases that trap heat in the atmosphere and are blamed for global climate change — by at least 17 percent. The EPA is reviewing Michigan’s proposal. DTE and Consumers officials say continuing energy efficiency programs are an effective way to help them meet the EPA carbon emission regulations. Last month, Detroit-based DTE released a statement showing that its energy efficiency programs in 2014 saved more than 850,000 electric and gas customers more than $585 million. Lifetime savings could total $4.5 billion, DTE said. To illustrate the energy savings, DTE electric customers have saved enough energy since 2009 to power all the homes in Ann Arbor for nearly four years. More than 300 DTE jobs also have been created to support the program, the company said.

‘What is the harm?’ But James Clift, policy director with the Michigan Environmental Council, said he is somewhat skeptical DTE is committed to energy optimization. “What is the harm in continuing the standards?” Clift said. “If you are fully committed, then fine, give us the comfort level that it won’t change.” Clift said he’s not sold on the idea that carbon reduction rules will be an incentive for utilities because legal challenges could delay implementation of interim rules past 2020, especially if the issue goes to the U.S. Supreme Court. “We also worry the national perception of Michigan will change if we take the standards out of the law,” said Clift. “Companies thinking about locating here might change their mind, and we could potentially lose economic development potential.” Dimitry said DTE has filed an energy optimization plan with the Public Service Commission for 2016 and 2017 that keeps in place its current program. She believes Michigan’s proposed IRP process will continue energy efficiency programs past that period because they will be made part of rate cases. SEE NEXT PAGE

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A 2014 survey by the Michigan Conservative Energy Forum showed that 84 percent of Michiganians support mandated energy efficiency programs offered by utilities. Some 75 percent support expanding renewable energy like wind and solar. “Energy efficiency has been a home run for Michigan, saving money, reducing pollution, creating jobs,” said Becky Stanfield, deputy director for policy for the Midwest region for the Natural Resources Defense Council . “Both major utilities have consistently exceeded the goals under budget and the results have been thoroughly evaluated and celebrated.” Robert Strong, ABATE’s legal counsel, said the provision for large companies to create their own energy optimization programs isn’t practical because of the amount of documentation required. He said there’s not a reason to include large industrial companies in the mandates because they have financial incentives for efficiency improvements. However, he said residential and smaller commercial customers could benefit from the mandated programs. Dave Mengebier, Consumers Energy’s senior vice president of governmental and public affairs, said the energy optimization mandate has saved its customers $855 million with lifetime savings of about $2 billion. “It is not just reducing use, it is the avoided generation costs,” Mengebier said. “We don’t have to purchase as much electricity (on the regional market), and over time we avoid building power plants.” But Mengebier said Consumers also supports the voluntary approach with a strong IRP process tied to rate regulation. The Jackson-based energy provider also plans to file an energy optimization plan for 2016 and 2017 that extends its current programs. “The IRP will have two major requirements: one, energy providers must demonstrate they are meeting customer energy needs (and offering) affordability and reliability. Two, (utilities) must meet all federal and state (environmental) rules. We need to reduce carbon emissions.” Rep. Bill LaVoy, D-Monroe, said Democrats are pushing Republicans and Snyder to have a mandate kick in if efficiency targets are not reached using the IRP process. “I don’t know how you get to goals without the mandate,” said LaVoy, who is minority vice chair of the House Energy Committee. “The current rules have been a positive, both from the environmental and cost-savings standpoint. It doesn’t make sense to change.” 䡲 Jay Greene: (313) 446-0325 Twitter: @jaybgreene

NURSING FROM PAGE 3

issue mainly is about improving access to higher education. Not all students can afford university tuition or relocate to attend a fouryear school, said Mike Hansen, president of the Michigan Community College Association . The problem is especially pronounced in rural areas, where commute times to universities are longer. For example, Gogebic Community College in Ironwood, in the western U.P., is more than two hours away from both Michigan Technological University in Houghton and Northern Michigan University in Marquette, where many students choose to transfer. If community colleges could offer their own bachelor’s degrees, Hansen said, students would be able to work full time as registered nurses while continuing their education at home — saving both time and money. “The mission of a community college has always been to serve the community,” he said. “The mission has been expanding and growing.” In metro Detroit, Henry Ford Col lege in Dearborn and Schoolcraft College in Livonia are among two of as many as 12 with serious interest in offering bachelor’s degrees in nursing, Hansen said. Henry Ford College graduates about 240 nursing students each year, President Stanley Jensen said. The college would introduce the bachelor’s degree component as soon as it could if the bill is adopted, and could make up the extra faculty costs by charging slightly higher tuition rates for the upper-level courses. “It is really kind of a jobs bill for us,” Jensen said Wayne County Community College District also submitted testimony in

support of the bill.

Opposition Michigan’s public four-year universities — the main opponents to Shirkey’s bill — fear approval would undermine existing partnerships with community colleges that let students transfer credits to complete their degrees, and force them to compete with one another for students. “In the long run, there may be a concern about market erosion,” said Daniel Hurley, CEO of the Presidents Council, State Universities of Michigan, which lobbies on behalf of

the state’s 15 public universities. But, he said, nursing programs inherently are expensive, requiring faculty with master’s degrees or doctorates, labs and clinical space, new curriculum development — and staff time. A shift to community colleges could cost students more in the long term, which would counter statewide policy efforts to maximize efficiency of taxpayer dollars. “There’s no magic bullet in terms of education delivery. Higher-cost programs cost more,” Hurley said. “From an efficiency standpoint, it’s bad public policy.” Michigan’s 15 public four-year schools renewed a pledge in June that they would “collaborate with our

community college colleagues and will provide locally any new baccalaureate or degree completion program for which there is a need within that community college district.” The idea, they say, is to eliminate duplication of programs already offered in Michigan. Many already have transfer agreements in place with community colleges that help students transfer credits to finish bachelor’s degrees in a number of fields. Shirkey, R-Clarklake, could not be reached for comment last week. But the nonpartisan Senate Fiscal Agency, in an analysis, said colleges’ total funding from state aid or local property taxes would not be affected. It would be up to colleges to decide whether to cover any new costs by charging higher tuition rates to bachelor’s degree students or to all students, or to redirect money from other programs without raising tuition. The bulk of nursing program expenses is in clinical practice. But colleges already offer clinical training as part of their associate degree programs and won’t need to build more labs, Hansen said. Much of the additional coursework is lecture-based and so extra costs likely will come from hiring new faculty.

Bill details Nursing programs aren’t the only educational focus area included in Shirkey’s bill. The legislation would also allow community colleges to offer bachelor’s degrees in allied health professions such as technicians, information technology and manufacturing technology and also add a bachelor’s degree in ski area management. Those fields would be in addition to cement technology, energy production technology, maritime technology and culinary arts, which were part of the law Gov. Rick Snyder signed two years ago. Shirkey’s bill would require any community college wanting to offer a bachelor’s degree program in nursing to meet state requirements for evaluation and inspection of the program, as well as seek accreditation from the Commission on Collegiate Nursing Education or the Accreditation Commis sion for Education in Nursing.

A possible benefit of expanding the number of schools that offer bachelor’s degrees would be sending more students into the pipeline for advanced degrees given by universities, Hansen said. Community colleges can fill their own faculty needs with adjunct instructors, including working nurses, a process he said would be easier if more master’s- and doctorate-qualified faculty existed. Tim Nelson, president of North western Michigan College in Traverse City, said the college paid “a significant portion” of the tuition for two of its faculty members to enroll in university doctoral programs in order to fill NMC’s teaching gaps. The goal is to reduce turnover by training nurses in the same region where they will work. Industry leaders say that pipeline — of bachelor’s-trained nurses to

hospitals, and later to universities for advanced degrees — has been necessary as health care grows more complex. The Institute of Medicine recommends that 80 percent of the country’s registered nurses hold bachelor’s degrees by 2020.

27 Said Chris Mitchell, vice president of government and public affairs for the Michigan Health and Hospital Association : “Having a bigger pot of nurses that are looking for jobs, I think, would benefit everybody, but more in particular folks in rural communities.” 䡲

CHOICE. ACHIEVEMENT. RESURGENCE. Grand Valley State University is developing the talent and resources to help re-energize Detroit. As the authorizer of 38 charter schools in southeast Michigan, we provide high quality K-12 options for more than 32,000 students. When we say we’re committed to academic achievement in our charter schools, we can prove it: Grand Valley is the ﬁrst charter school authorizer in

the nation to be recommended for AdvancEd accreditation of our authorizing practice.

Grand Valley’s Detroit Center at 163 Madison Avenue supports our charter school staff and our small business support services, which helps new and existing small businesses to succeed, creating jobs and economic stability here in Detroit. We also offer seven master’s degree programs to our charter school teachers in Detroit as well as over 100 specialized training sessions for teachers, charter school staff, and school board members. Visit us online at gvsu.edu/cso or call (616) 331-2240 to learn more about how Grand Valley State University is helping to shape a resurgent Detroit. Grand Valley’s Charter Schools Office located at 163 Madison in downtown Detroit.

gvsu.edu/cso

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VC execs happy with new role for MEDC official By Tom Henderson thenderson@crain.com

Michigan venture capital executives said they were relieved at last week’s announcement that Fredrick Molnar, director of the Michigan Economic Development Corp . incubator center in Plymouth Township, will take a new role as MEDC vice president of entrepreneurship and innovation. Since last September, Molnar had been the director of the Michigan Life Science and Innovation Center, an incubator managed by the MEDC. Molnar replaces Paula Sorrell, who resigned from the MEDC in May to

ARTVAN FROM PAGE 1

Michigan, Illinois, Ohio and Indiana through corporate and franchised locations, he said. Also part of the plan: the launch, now underway, of two new furniture lines aimed at millennials, the expansion of the luxury Scott Shuptrine galleries and Pure Sleep stores and investments in the company’s e-commerce business.

Reinvestment Art Van Eslander, the company’s chairman and namesake founder, has invested the majority of earnings back into operations for the past five years, to the tune of about $100 million, Yost told Crain’s last week. Plans call for another $100 million investment between now and 2018, Yost said. “We think we’re halfway through this (current) business cycle,” he said. Extenuating economic factors such as issues in China and Greece are clearly out of a company’s control, Yost said. “(But) what we can control is how we operate our business every day. We don’t participate in recessions ... we just continue to grow,” through continued investment and store openings, he said. Kim Yost: “We In the face of don’t participate in the most recent recessions.” economic recession, “our owner continued to invest in the business, knowing full well we’d come out of it quicker and faster than competitors,” Yost said. And the strategy has paid off, he said, noting Art Van “has had a history of gaining market share in every one of the downturns.”

Midwest growth This month, Art Van expects to open its eighth store in the Chicago market since 2013. The new flagship store in Downers Grove, Ill., will be the nicest in the chain, Yost said, with its “miles of windows” and two

resume her private-sector consulting career. She had recruited Molnar to run the Plymouth center. Some in the venture capital Fredrick Molnar: community Takes on new role were worried with MEDC. that the MEDC would not replace Sorrell. The organization has been under scrutiny by some Republicans in the state House and Senate, who wanted to divert some of its budget to road re-

pairs and limit the state’s support of venture-capital programs. Steve Arwood, the MEDC’s president and CEO, said that he wanted to reduce the MEDC’s focus on venture capital through such statefunded programs as the Venture Michigan funds and the 21st Century Investment Fund and focus more on job training. Jim Adox is managing director of the Ann Arbor office of Madison, Wis.-based Venture Investors LLC . One of his portfolio companies, Tissue Regeneration Systems Inc. , is housed in the life science incubator in Plymouth Township.

“Fred has done a good job of improving operations there,” said Adox. “And I’m glad to see the important position Paula had has been filled.” Two current MEDC projects are an entrepreneur-in-residence program for state VC firms and a program to help early-stage companies recruit C-level executives. In 2012, Sorrell helped launch the M-TRAC program, which stands for Michigan Translational Research and Commercialization and is funded by the state’s 21st Century Jobs Fund to accelerate tech transfer. Molnar helped get that program off the ground and served on an

evaluation committee to determine funding for state universities. “The Michigan Venture Capital As sociation looks forward to working with Fred,” said Maureen Miller Brosnan, executive director of the Ann Arbor-based organization. Previously, Molnar was COO at iCyt Mission Technology, a spinoff from the University of Illinois at Ur bana-Champaign. Prior to that, Molnar was director of North American sales and marketing for Beckman Coulter Inc., a global medical device company based in Brea, Calif. 䡲 Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

Sussman Agency to open Chicago office,aid Art Van

mall next door and construction of a new, 20,000-square-foot building.

sion spots annually for Art Van, and a new campaign will soon launch for the Art Van Pure Sleep mattress chain. The agency won the Art Van work in 2009. It previSouthfield-based retail advertising firm The Suss man Agency plans to stake out space in Chicago to ously had been with Bloomfield Hills-based Berline grow its client base and to aid its largest client, Art Van, Group , and it was briefly with Southfield-based W.B. Doner & Co. in 2012 before returning to Sussman. as the furniture chain adds stores there. The agency initially likely will establish its Chicago The Chicago office isn’t just to service Art Van, Susspresence by sharing to-be-determined office space man said, but is to find new retail clients for the with production outfit Carlin Films, said Alan Sussman, agency. who launched the ad firm in 1987. “It’s to make sure we’re on the ground The goal is to have a Chicago location there,” he said. “We’re looking for business picked by October. larger than we can find in Detroit. We have “There are so many options, we just pretty much what we can find here.” haven’t pulled the trigger,” Sussman said. One reason a Chicago location wasn’t Three to four new employees will be hired picked sooner, Sussman said, is that the to run the office. Another five hires are exagency began working with Vancouver-based pected this year at the Southfield office, he oxygenated water retailer Formula Four Bever ages Inc. six months ago on a time-consumsaid, and the agency is looking at leasing ading rebranding campaign. Alan Sussman: ditional space in its current building. Other current clients include Southfield A previous iteration of Sussman’s advertis- His agency won Art attorney Geoffrey Fieger, Troy-based Hanson’s ing firm had a Chicago location for years until Van work in 2009. Window and Construction Inc. , Farmington 1986, he said. The current company took shape in 1987 as Sussman Sikes & Associates , but Hills-based Weight Watchers and Clarkston-based Sellchanged to its current name in 2013 after longtime ers Auto Group. The agency has about $100 million in annual partner Diana Sikes left to become senior vice president of marketing at Warren-based Art Van Furniture billings, Sussman said. He got into the ad business as an executive in 1973 Inc. in 2010. Art Van is increasing its Chicago footprint. The as a partner with Sussman Stern & Robinson Advertising chain is soon opening its eighth metro Chicago loca- Inc. in Detroit. 䡲 Bill Shea: (313) 446-1626 tion, and more are expected in coming years. Twitter: @Bill_Shea19 Sussman said his agency handles about 1,000 televi-

By 2018, the largest consumer in the market numerically and monetarily will be the Gen Y or millennial generation, between the ages of 25 and 35, Yost said. “We need to transition our stores to be targeting that next generation of consumer.” This spring, the company introduced its Art Van Urban brand, an eclectic line of products with an industrial feel featuring stone and metals. Art Van Urban will roll out officially in the company’s fall catalogs, offering customers options for contemporary, small-scale furniture with clean lines and a minimalistic approach that’s designed for small spaces. Art Van has a number of galleries featuring the lines already up and running, Yost said.

By Bill Shea bshea@crain.com

floors that will feature Art Van, Scott Shuptrine luxury furniture and the two new furniture brands the company is introducing to attract millennial shoppers: Art Van Urban and Art Van Modern. Another eight stores are planned for the Chicago market over the next two years, along with another $50 million investment there, Yost said. “By the time we finish 2016, our goal will be to have 16 stores up and running” in the Chicago market, he said. “We’re getting real estate opportunities that come up regularly and frequently.” Chicago is the third-largest market for furniture and mattresses in North America, behind New York City and Los Angeles, Yost said, with about $2.5 billion in furniture and market sales annually. The Windy City still has a lot of great markets further south, he said. “We’re going to approach those from a franchise standpoint,” and other

locations such as Rockford, Ill., to the west, which will see a new franchise open within the next few months. After opening a corporate store in Toledo and two franchises in Ohio, Art Van is eyeing the “three Cs” in Ohio — the Cincinnati, Columbus and Cleveland markets, Yost said. “Those are three material and significant markets. For us to dominate Ohio, we have to not only be in Toledo.” The company has also set its sights on the Indianapolis market, Yost said, following the opening of a corporate store in Fort Wayne, Ind., and a franchise in South Bend, Ind., last fall.

Michigan growth At the same time, the company is expanding its Scott Shuptrine showrooms. Since it launched its first showroom for the high-end line in Royal Oak in 2013, it’s opened loca-

tions in Grosse Pointe, Novi, Petoskey, Grand Rapids and Chicago. Later this year, it plans to add locations for the luxury furniture line in Shelby Township, Taylor, Toledo and Downers Grove. And in the spring/summer of 2016, the company plans to “spend a lot of time and effort” on the Art Van stores in Novi, Grand Rapids and Shelby Township, adding or expanding the Scott Shuptrine stores in each, Yost said. To support that growth, Art Van is expanding its metro Detroit distribution center in Warren to be able to supply its growing Midwest market share. The company is investing $18 million over the next two years to expand its distribution and office space in Warren. The plan, which should be completed by 2017, will add 141,000 square feet in warehouse space and additional offices through the renovation of the 43,000-square-foot strip

The millennials

At helm of ‘Pure Sleep’ While his brother Gary Van Eslander serves as president of the company, running the distribution network and stores, David Van Eslander earlier this year took the helm of the Pure Sleep business as president. “We are gaining market share and have had such phenomenal success over the past 12 months,” Yost said. After buying Mattress World , Art Van converted the 25 or so stores to Pure Sleep banners. It’s since opened another 65 locations as either free-standing locations or within Art Van stores, he said. Furniture Today reported in January that Art Van has set a goal to establish 500 Pure Sleep stores across the U.S. within five years, each taking about 4,000 square feet of space. Art Van has been able to position itself for all of this big growth by following one business tenet, Yost said: Structure follows strategy; strategy doesn’t follow structure. Companies limit themselves by trying to pursue a new strategy, like ambitious growth into new geographic markets, with their current structure, he said. “But if you reverse it ... structure following strategy ... it’s limitless what you can achieve,” Yost said. 䡲 Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

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CRAIN’S

The Greek echo

DETROIT BUSINESS

Possible economic ripples include borrowing rates, auto sales

www.crainsdetroit.com

The threat of a Greek default is one thing, but an actual default and subsequent exit of Greece from the eurozone will reverberate across the Atlantic into the U.S., said Paolo Pasquariello, associate professor of finance at the University of Michigan. “Financial turbulence both in Europe and the U.S. is likely, and with it significant slowing of both economies,” Pasquariello said in an email from Europe. “These are potentially much bigger sources of concern than currency fluctuations for CEOs and CFOs in Michigan as in the rest of the country.”

Economics experts believe the Greek turmoil will cause the U.S. Federal Reserve to delay any plans to raise interest rates before the end of the year. A move local commercial real estate players hope holds true. “I would hope the Fed takes a cautious view (of the situation in Greece) and keeps rates low,” said Richard Hosey, a former senior vice president for Bank of America and now the owner of Detroit-based real estate developer Hosey Development LLC. “This is particularly important for Michigan commercial real estate properties. ... Increased interest rates would reduce the debt capacity further and make commercial and residential real estate transactions more difficult.”

Auto sales will undoubtedly be affected by further decline of the European market, due in large part to

GREECE FROM PAGE 3

1912, and he remains connected to cousins and other relatives in Greece. Zachary and his family travel to Greece often, but he said the challenges the country is facing will not alter his plans. His last visit last year, to Athens and Southern Greece, was partly a business trip for the Hellenic Museum, but more often he heads to the North where relatives live, Zachary said. Michigan is home to 46,393 residents of Greek descent, roughly 40 percent of whom live in Oakland, Wayne or Macomb counties, according to data provided by Detroitbased nonprofit research organization Data Driven Detroit. “We’re a very visible group,” Zachary said. “Children of Greeks

BLOOMBERG

A police officer watches as Greeks line up to receive their pensions outside a National Bank of Greece branch. the struggles of Greece. But Europe-based Fiat Chrysler Automobiles NV, the parent of Auburn Hillsbased FCA US LLC (Chrysler), has the most at stake, said John Taylor, chairman of supply chain management at Wayne State University. “Greek issues are not good for Fiat, and therefore Chrysler, in terms of the ability to raise large sums of capital they need for investment in multiple nameplates over the next few years,” said Taylor, who is also traveling in Europe.

speak Greek” and go back to Greece regularly. July and August remain the traditional months of travel in Greece, and many metro Detroiters with ties to the country return during that time. Detroit Metropolitan Airport has at least six airlines that offer flights to Athens, including Air Canada , Air France, KLM, Delta, Lufthansa and Alitalia . Round-trip tickets currently cost $1,650 to $1,800, according to various travel websites. Susan Hiltz, public affairs director of AAA Michigan, said despite the Greek financial crisis, travel to the nation remains on par this year with previous years. However, AAA is urging its members to carry multiple forms of payment and to recognize that there could be disruptions of banking services in Greece. Tourism and travel represent 17.3

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: 123Net ................................................................ 12 A123 Systems .................................................. 20 Altair Engineering ............................................ 21 American Axle & Manufacturing Holdings .. 21 Art Van .......................................................... 1, 28 Atlas Wholesale Food .................................... 29 Autoliv .............................................................. 16 Bosch Automotive Service Solutions .......... 21 Choon’s Design ................................................ 21 Consumers Energy .......................................... 26 Cooper-Standard Holdings .......................... 12 Domino’s Pizza ................................................ 16 Dow Chemical .................................................. 16 Dow Corning .................................................... 16 DTE Energy ...................................................... 26 Duo Security .................................................... 20 Eastman Outdoors .......................................... 21 Faurecia North America ................................ 16 Ford Motor ...................................................... 26 General Motors ...................................... 11, 16, 17 Gentherm ........................................................ 20 Global IP Holdings .......................................... 18 Henry Ford Health System ............................ 21 Ilumisys ............................................................ 21 Imra America .................................................... 19 Innovative Surgical Solutions ........................ 19 Integrated Sensing Systems .................... 17, 19 Magna Electronics .......................................... 19 Magna Powertrain USA .................................. 21 MI4 Spine .......................................................... 19

Michigan Agency for Energy .......................... 26 Michigan Community College Association ...... 3 Michigan Department of Natural Resources .. 6 Michigan Economic Development .............. 28 Michigan Environmental Council ................ 26 Michigan Motor Sports Hall of Fame ............ 5 Michigan Veterans Affairs Agency ............ 11, 14 Michigan Women’s Commission.................... 14 NeuroNexus Technologies .............................. 18 Northwestern Michigan College .................. 27 Omni MedSci ................................................ 1, 17 Ovonyx .............................................................. 19 Piquette Square .............................................. 14 Plymouth Ventures .......................................... 6 Presidents Council, State Univ. of Michigan .. 27 Quicken Loans .................................................. 11 Roush Industries .............................................. 11 Rubicon Genomics .......................................... 19 Specialty Vehicle Acquisition .................. 17, 18 Stoukas Imports ............................................ 29 Strategic Staffing Solutions .......................... 11 Superior Capital Partners ................................ 6 Sussman Agency ............................................ 28 TI Automotive .................................................. 16 Trijicon .............................................................. 21 Whirlpool .......................................................... 26 XanEdu Publishing ............................................ 6 Zephyros .......................................................... 20 ZF TRW .............................................................. 20 Ziebart International ...................................... 16

The effect of the Greek crisis on Michigan exports to the nation remains unknown. While exports from Michigan remain meager, shipments rose sharply in 2014, totaling $13.1 million from $8.2 million in 2013, according to the U.S. Chamber of Commerce . The bulk of exports were machinery and vehicles, which made up $9.9 million of the 2013 total. However, exports to Greece remain way down from a decade ago, which totaled $34.7 million, $25.5 million of which was attributed to vehicles alone.

percent of Greece’s gross domestic product, a much higher share than in Italy or all of Europe, according to the World Travel & Tourism Council. In Greece, visitor spending is growing by about 3 percent a year, and contributes $39.1 billion to the economy. But tourism spending alone cannot buoy the Greek economy, and local Greeks fear potential imports shortages as a result of the crisis. Yanni Dionisopoulos, co-owner of the Greektown restaurant Golden Fleece, who will also travel to Greece this summer, is concerned about the availability of beer and wine imports from Greece that are customer favorites at the restaurant. St. Clair Shores-based Stoukas Imports , a dba of Stoukas Enterprises Inc. , imports 95 percent of its food products from Greece, said Dino Stoukas, owner of the company. Primary imports include coffee, cheeses and olives, Stoukas said, and he fears labor strikes could lead to disruptions of shipments critical to his local operations. “Dock workers, maybe they’ll go on strike,” Stoukas said. “The whole country could go on strike. You don’t know what’s going to happen… .” Others say they are pained by the Greek crisis — but also see opportunity in it. John Kohl, CEO of Detroit-based Atlas Wholesale Food Co. , said imported olives and olive oil from Greece should become much cheaper if Greece leaves the eurozone and converts back to its own currency, the drachma. Roughly half of the restaurants to which Atlas distributes food products are owned by people of Greek descent, Kohl said. Imports from Greece to Michigan totaled $8.4 million in 2014, up from $5.1 million in 2013. Transportation equipment led the im-

ports totaling $3.8 million, with food products totaling $965,000.

Real estate opportunity? And, as to vacation or retirement homes in Greece: “It’s going to be a great buying opportunity,”Kohl said. Dennis Kefallinos, a native of Greece who is owner of the Russell Industrial Center, Nikki’s Pizza and other properties in Detroit, said he’s on the hunt to buy property in his home country. Kefallinos said so far he’s held off, waiting for the right time to buy, but plans to do so soon to take advantage of the weakened euro. Locally, Kefallinos bought the Michigan Building and Michigan The ater , which he intends to renovate into an event space. He’s sometimes been the target of criticism for delayed renovations or improvements to buildings like the Roosevelt Hotel, which he bought in 2010, and Shapero Hall , a former Wayne State University pharmacy school building he purchased in 2007. But when it comes to Greece, Kefallinos said there are many attributes to celebrate. “They have the best sunsets in the world,” he said. “It’s opportunity city.” Kefallinos moved to Detroit in 1969 at age 15 and started washing dishes and saving money. His brother, a certified public accountant, lives on Zakynthos, the Greek island where they were born. “Hardly anybody pays him. He’s struggling,” said Kefallinos. “The only people who suffer in Greece are the workers.” Kefallinos still finds joy amid the grapes and lemon and olive trees on his family’s farm and his waterfront home. “We hang out, and nobody talks about business,” he said. Crain’s reporter Dustin Walsh contributed to this report.

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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WEEK

ON THE WEB JULY 4-10

Oakland County cancer doctor sentenced to 45 years in prison Farid Fata, M.D., an Oakland Township cancer specialist, was sentenced Friday in federal court in Detroit to 45 years in prison for fraud and other crimes, AP reported. Fata pocketed millions of dollars from insurers while giving more than 500 unwitting patients excessive and debilitating treatments.

COMPANY NEWS Pittsburgh-based Dick’s Sporting Goods, which owns Field & Stream, is seeking a site for a second Michigan store for Field & Stream, a Dick’s official said. Michigan’s first Field & Stream opened at Oakland Mall in Troy in March. The University of Michigan said it has chosen Oregon-based Nike Inc. as its new athletics apparel, footwear and equipment provider, ending a long pairing with Germany’s Adidas AG. The deal begins in August 2016 and runs through 2027 with an option through 2031. Financial terms were not announced. The University of Michigan’s Ross School of Business said its Zell Lurie Commercialization Fund has invested in a UM spinoff, Reveal Design Automation Inc., which says it has developed software tools to streamline the process for verifying whether new chip designs work as intended. Quality Metalcraft Inc., a Livonia-based automotive metal components and assemblies supplier, was acquired by The Watermill Group LLC, a Lexington, Mass.based private equity firm. Terms were not disclosed. Ann Arbor senior living community Glacier Hills Inc. is exploring the possibility of becoming a subsidiary of Livonia-based Trinity Senior Living Communities. The organizations signed a nonbinding letter of intent to consider that possibility in a process expected to be completed by next March. Detroit-based architectural firm Rossetti Associates Inc. was hired to design the Los Angeles Lakers’ $80 million corporate headquarters and practice facility slated to open in 2017. Ford Motor Co.’s Michigan Assembly Plant in Wayne will stop building the Focus and C-Max in 2018, a sign that the Dearborn automaker sees slow demand for small cars to continue, Automotive News reported.

Auburn Hills-based polymeric components supplier Unique Fabricating Inc. is looking to enter new markets and negotiating to buy an unnamed business, Plastics News reported.

OTHER NEWS The Max M. Fisher Music Center, home to the Detroit Symphony Orchestra, was renamed the Max M. and Marjorie S. Fisher Music Center in recognition of support from local philanthropist Marjorie Fisher. After her husband’s death

in 2005, she became founding chair of the Max M. & Marjorie S. Fisher Foundation. Michigan Humane Society supporters attending a July 23 fundraising event will enjoy a “Pawte Cuisine” dinner with dishes cooked by chefs Marc Djozlija of Wright & Co. and Andy Hollyday of Selden Standard. Participants are pledging to donate $1,000 for each of the next five years. Also part of the event is a preview of the new MHS Animal Care Campus in Detroit, the venue for the dinner. Brighton-based custom car shop Mobsteel will be the titular focus of an eight-episode reality series to premiere Aug. 16 on NBC Sports Network. The show is about the shop transforming “vintage American cars into modern-day street machines,” the network said in a statement. Terry Crews, the Flint-born actor and former National Football League player, has been snooping around in Midtown or the New Center area for real estate, sources said. Crews co-stars on the Fox TV series “Brooklyn Nine-Nine.” Detroit’s Madison Building and the Coleman A. Young Municipal Center won international Outstanding Building of the Year awards during the Building Owners

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

RUMBLINGS Michael Bolton plays provider for Shinola bicycle promotion

$388M

The value of a settlement the Internal Revenue Service won against the estate of former Detroit Pistons owner and Guardian Industries Corp. founder Bill Davidson.

4.8%

Michael Bolton shows off his new Shinola bicycle. In November, he tweeted a photo of himself on a new Shinola bike.That one was yellow.

The revenue spike during the first half of the year for Detroit’s three casinos. MotorCity Casino Hotel reported the largest increase during the second quarter with revenue rising 5.4 percent to $117.4 million.

34 The years Ruth Spencer spent in broadcast news. The Emmy awardwinning anchor announced last week she will retire from NBC affiliate WDIV-Channel 4 in December.

plans to open Geiger Eat Shop, a restaurant in Detroit’s West Village neighborhood, next year. Credit card information for concessions and retail purchases made at the Detroit Zoo between March 23 and June 25 has been stolen. The zoo’s concessions and retail operator, Denver-based Service Systems Associates, said it believes the data breach happened through its point-of-sale systems in gift shops at nine zoos nationwide. High competition between health insurers does not necessarily lead to lower premium costs for individuals and businesses, according to a national study by the Novi-based Economic Alliance for Michigan. Timothy Whiteus, M.D., of Oak Park was found guilty in Ingham County Circuit Court of health care fraud for using an unlicensed podiatrist and billing for his services. and Managers Association Interna Trustees at Oakland University tional’s conference in Los Angeles. voted to increase tuition 8.5 perThe TOBY awards are given for cent for the coming academic community impact, accessibility year, ignoring the state’s 3.2 perand other factors. cent tuition cap, AP reported. Greg Reyner, chef and co Entrepreneurs who call Deowner of Royal Oak’s Café Muse, troit both home and office are eligible to sign up for LaunchDetroit’s third year of programming. The nonprofit program offers free business training and consulting, mentoring, networking opportunities and the potential for a $1,000 to $2,500 microloan. Application deadline is Aug. 21; de Fiat Chrysler Automobiles tails are at launchdetroit.org. is investing $166 million to Comerica Bank’s MichiCOURTESY OF GREG REYNER gan Economic Activity install three new press lines at its Sterling Stamping Plant The building at 8044 Kercheval Ave. in West Village has Index in April rose 1.9 perbeen vacant for 25 years. Now the first floor and basestamping plant in Sterling centage points to 121.6. The Heights by year’s end, Auto- ment are being renovated so Greg Reyner (in photo) index averaged 117.4 points can open GeigerEat Shop restaurant and bar there. motive News reported. last year.

COURTESY MICHAEL BOLTON

Shinola got another celebrity publicity boost last week when Michael Bolton tweeted a photo of himself on his new Shinola-brand bicycle. “American Made. Made in Detroit,” Bolton wrote. The singer of hits such as “How Am I Supposed to Live Without You” and “Soul Provider” has been in Detroit working on a documentary about the city’s comeback. Bolton tweeted a photograph of a Shinola bike in November, and Bill Clinton showed off his two Shinola watches last year.

Raucous festival returns with ‘Crash Night,’ more The rotating cast of musicians known as the Detroit Party Marching Band will again host its two-day street band festival, Crash Detroit, this weekend. The festival will include “Crash Night” on Friday. Street bands from across the U.S. will perform at businesses and unused spaces in Detroit. The “spontaneous” performances will be announced on Crash Detroit’s Twitter and Facebook pages. The same bands will give free performances on Saturday at Roosevelt Park in Corktown. Food and drink will be available. Other bands to perform include Gabriel Brass Band, Environmental Encroachment, Satori Circus, Rhyta Musik, The James Cornish Ensemble and Extraordinary Rendition Band. Sponsors include the Corktown Business Association, Campbell Ewald, Mercury Burger Bar, Slows Bar BQ, Ottava Via, Green Safe and PJ’s Lager House.

Automation Alley event to explore Cuban links Amid the “Cuban Thaw” — the normalization of relations between the U.S. and Cuba that began last December — Automation Alley will host an event to explore opportunities for Michigan businesses in the island nation. The Troy-based technology business association is hosting “Cuba: The Next Frontier” Aug. 6 at its head-

quarters at 2675 Bellingham Road. The event, from 8 a.m. to 11:30 a.m., will focus on insights about Cuba’s economic, political and social outlook by business experts. Speakers include Noel Nevshehir, director of international business at Automation Alley; Alex Lee, deputy assistant secretary for South America and Cuba at the U.S. Department of State; Dana McAllister, executive director of the Cuban-American Chamber of Commerce; and Ronald Stanley, senior vice president of Lansing-based construction management firm The Christman Co. The cost for members is $20; it’s $40 for nonmembers. To register, visit automationalley.com. Automation Alley also plans to embark on a trade mission to Cuba with several Michigan businesses in the fall of 2016 to spot opportunities and gauge local interest.

Detroit-bred designer to appear on ‘Project Runway’ Laurie Underwood, a 2003 Cass Technical High School

graduate, will compete against 15 other designers in the upcoming 14th season of the re- Laurie Underwood: Will compete in 14th ality TV show season of ‘Project “Project RunRunway’ way.” Underwood, who lives in Chicago, launched her ready-to-wear clothing line, Wanda Grace, there in 2008. She is the second Detroit native to make the cut in the past two seasons of “Project Runway,” following fourth-place finisher Char Glover in season 13. Underwood will be judged by the same fashion heavyweights as Glover, including Heidi Klum, Marie Claire creative director Nina Garcia, designer Zac Posen and fashion consultant Tim Gunn. Prizes this season include $100,000 to launch a business. The Lifetime network show is set to premiere Aug. 6.

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What began as a plan to build a new home for the Detroit Red Wings has taken flight as an ambitious plan by the Ilitch family to create or revive five neighborhoods and unify downtown and Midtown. See Pages 20-26

Crain’s Detroit Business proudly salutes its newsroom team for taking home seven gold awards at the annual Alliance of Area Business Publishers conference and Editorial Excellence Awards.

AWARDS INCLUDED:

BEST COVERAGE OF LOCAL BREAKING NEWS: Detroit Rink City. By Bill Shea and the Crain’s Detroit Business editing team.

BEST ANCILLARY PUBLICATION: Detroit 2.0. “The Big Bet on Detroit.

BEST HEADLINES: Senior Editors Bob Allen (left) and Gary Piatek

BEST STAFF GENERATED BLOG

BEST USE OF MULTIMEDIA: Detroit Rink City

BEST BYLINED COMMENTARY: Reporter Kirk Pinho’s opinion piece on Pontiac blight

BEST WEBSITE: www.crainsdetroit.com

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