Crain's Detroit Business, August 3, 2015 issue by Crain's Detroit Business

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CRAIN’S Readers first for 30 Years

DETROIT BUSINESS

Photographer brings hospital spaces healing imagery,

Something substantial: Tubby’s buys Just Baked cupcakes,

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AUGUST 3-9, 2015

DMC goes it alone in nurses’ pay suit September date set for class action on hospital wage collusion By Chad Halcom chalcom@crain.com

A federal lawsuit that goes to trial next month could have eight-figure stakes for Detroit Medical Center — if the hospital system continues to contest allegations that it colluded with other hospitals to suppress wages among more than 20,000 local nurses. The hospital is the sole remaining defendant in a 2006 class-action lawsuit before Chief U.S. District Judge Gerald Rosen, since co-defendants Beaumont Health of Troy, Henry Ford Health System of Detroit, Livonia-based Trinity Health and four others have settled for more than a combined $48 million. And while the allegations against the local health care providers may be unique, attorneys said wage collusion is gaining some traction as a basis for civil court claims — and that employers should take the opportunity to review their own wage-setting, hiring and market

research practices. A class of more than 20,000 registered nurses alleges eight hospital systems in Southeast Michigan colluded to keep pay scales for acute care hospital nurses artificially lower than market forces would dictate, between December 2002 and late 2006. Some 11,581 submitted claims to divide the previous settlement funds — about $31.5 million after deducting various attorney fees, incentive awards, costs to send formal notices and other expenses. The DMC tried and failed to get the class action decertified earlier this year at the 6th U.S. Circuit Court of Appeals , and lost a motion in April to exclude expert testimony of Orley Ashenfelter, a Princeton Uni versity economics professor who has pegged total damages to the nurse class at more than $595 million. That sum may be a long shot in court, since it

Greektown by day – but on weekends, a pedestrian plaza. LARRY PEPLIN

Goal for Greektown: No cars, more traffic Summer series of outdoor dining, entertainment could expand By Kirk Pinho

SEE NURSES, PAGE 19

kpinho@crain.com

ay no mind to that man swallowing fire on Monroe Street. He, outdoor dining and other live entertainment options might become a regular fixture on the main city blocks through Greektown. Now that a long-discussed plan to create a temporary pedestrian plaza on the weekends through Labor Day has officially kicked off, urban planning and other experts say that Greektown at Sundown organizers have identified one of the practices that make for good urban environments. Good dining options. Entertainment. Pedestrian-friendly streets. These are some of the things that happen when you regularly shut down vehicle traffic and add programming to a main thoroughfare of a commercial district. “A brilliant move that will significantly increase the number of visitors and diners,” said Robert

More than 20,000 nurses claim that eight hospital systems in Southeast Michigan colluded to keep pay scales artificially lower

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Gibbs, managing principal of Birmingham-based Gibbs Planning Group Inc.

To create the Greektown at Sundown program, the Greektown Preservation Society — which spearheaded the summer event series — had to get city permits to close off Monroe from Beaubien Street to St. Antoine Street from car traffic during the evening hours (5 p.m. to 2 a.m. Fridays, Saturdays and Sundays) and cobble together funding. The funding will total between $100,000 and $120,000 and come from a variety of sources, said Tasso Teftsis, president of the preservation society. If the program is successful in the coming month, Greektown visitors can expect Teftsis and the roughly 25 business owners in the society to start working on an encore for Greektown at Sundown, perhaps making it an annual event series and expanding it west to Brush Street. Greektown is generally bounded by SEE GREEKTOWN, PAGE 20

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MICHIGAN

BRIEFS Meijer family blackmail try ends badly for shifty taker By now, James Casbolt of St Ives in Cornwall, England, probably realizes that, to the rest of us, his name in the Social Register is the less formal “Haley Meijer’s ex-husband.” And, yes, that Meijer. Namely, the daughter of Hank Meijer, CEO of the eponymous Walkerbased retailer. Haley and James married in 2011 and split up in 2013. The following tale, as reported by MLive.com, sort of gives off a couple of clues why. After the breakup, Casbolt went online and posted pornographic photos he took of Meijer while they were married. Later, he said he would remove them — provided he got $3.1 million. Either that would constitute blackmail or one of the most expensive cases of Web hosting on record. Among his subsequent threats, according to the Daily Mail newspaper: “If my terms are not met, I can tickle the public interest for years until the Meijers are so infamous in the world they will not be able to walk down the streets safely.” A Meijer Inc. spokesman declined

to comment, calling this a private family matter. Which doesn’t mean the Meijers didn’t have a response. And the response, from the family who gave us the phrase “Why pay more?” Why pay at all? And so James Casbolt recently was sentenced to 12 years in jail. Another case of the retailer wagging the dog.

Survey: Biz owners balance optimism, hiring concerns Michigan business owners are upbeat about their near-term prospects although increasingly worried about finding qualified workers, MiBiz reported, citing a semiannual survey of nearly 900 owners of small and midsized businesses. The respondents continue to have strong expectations for sales and earnings growth in the next six months, and some survey results were the best ever recorded. But the Michigan Future Business Index, conducted by Accident Fund Insurance Co. and the Michigan Business Network, also found concerns that growth soon may slow. Executives also cited a shortage of qualified workers that “may be creating a drag on hiring and

on the economy,” according to a summary on the survey results. “The reason for this apprehensiveness appears to be linked to the significant challenges experienced with attracting new employees,” according to the report. The report further noted that, for the first time, a plurality of respondents said access to qualified workers is either “poor” or “only fair,” the worst finding ever recorded. Sixty-six percent said they expect higher sales in the next six months, up from 61 percent in November 2014, and is the highest percentage ever in the survey.

MICH-CELLANEOUS 䡲 Treetops Resort east of Gaylord said it has emerged from Chapter 11 bankruptcy protection after a voluntarily reorganization, The Associated Press reported. The golf and ski resort said the process gave its owners time to shed legacy debt and position itself financially for future improvements. The resort remained open during the reorganization. 䡲 The Flint-based Charles Stewart Mott Foundation gave $4 million to the Genesee Area Focus Fund to help children succeed in and beyond the classroom, The Associated Press reported. The grants included $3.1 million for YouthQuest , an afterschool program, and $825,000 for the Summer Youth Initiative , which places young people in jobs, and TeenQuest , a youth leadership and pre-employment training program.

䡲 Michigan State University researcher Robin Buell received $5.1 million from the National Science Foundation to study the genetic structure of the mint family, The Associated Press reported. And it’s quite a family. Mints include basil, oregano, rosemary, sage, savory, thyme, spearmint, peppermint and such herbal tea or medicine ingredients as bee balm, bergamot, hyssop, lavender and skullcap. Perhaps the research will lead to a new name for skullcap. 䡲 Grand Rapids-based restaurant management company Mer itage Hospitality Group Inc. acquired 15 Wendy’s fast food restaurants in the Toledo area, MiBiz reported. The acquisitions will mean about $19 million in additional annual revenue to Meritage. 䡲 North Carolina-based Tanger Factory Outlet Centers Inc. officially opened the approximately $79 million Tanger Outlets Grand Rapids in suburban Byron Center, the Grand Rapids Business Journal reported. 䡲 The manager of the Shoreline Federal Credit Union in Norton Shores, next to Muskegon, has admitted embezzling $1.9 million between 2001 and this year, The Muskegon Chronicle reported. Kathryn Sue Simmerman, who was fired in February, was accused of taking cash from the vault of the credit union and hiding it in her purse. 䡲 The Saginaw Downtown Development Authority will receive a $1 million state grant to help develop a group of downtown properties into

INSIDE THIS ISSUE BANKRUPTCIES . . . . . . . . . . . . . . . . . . 9 CALENDAR . . . . . . . . . . . . . . . . . . . . . . . 16 CLASSIFIED ADS . . . . . . . . . . . . . . . . 17 DEALS & DETAILS . . . . . . . . . . . . . . . 16 OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . 8 OTHER VOICES . . . . . . . . . . . . . . . . . . . 8 PEOPLE . . . . . . . . . . . . . . . . . . . . . . . . . 16 RUMBLINGS . . . . . . . . . . . . . . . . . . . . 22 WEEK ON THE WEB . . . . . . . . . . . . . . 22

COMPANY INDEX: SEE PAGE 21 an indoor-outdoor farmers market, state officials announced this week, MLive.com reported. The money will come from the Michigan Department of Environmental Quality’s Brownfield Grant program. The downtown farmers market, currently located about four blocks to the south, will move to its new permanent outdoor home in time to kick off the 2016 season. 䡲 Ludington city officials revoked a license under which Claire Whitcomb was allowed to sell books door to door, the Ludington Daily News reported. Residents accused Whitcomb of knocking on people’s windows, coming into their garages, name-dropping teachers and neighbors, and seeking additional information about people in the community. One woman contacted the city after she said Whitcomb grabbed her arm when she tried to walk away. 䡲

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BY THE NUMBERS: THE MICHIGAN ECONOMY

How state forest industry grew anew By Dustin Walsh dwalsh@crain.com

t one time, Michigan’s forests were as synonymous with industry as the Great Lakes and the automobile. Between the 1860s and 1900, the state was the largest producer of lumber in the country. But by the late 1800s, the forests were nearly decimated by overharvesting from nearly 2,000 sawmills. The barren lands, now unproductive to foresters, became state-owned through tax reversion, said David Price, acting supervisor of forest planning and operations at the Michigan Department of Natural Resources. Under the nurturing of the U.S. Forest Service in the early 1900s, the forests were restored, Price said. Large sawmills, such as those owned by Louisiana-Pacific Corp., returned to Michigan. Price said the sustainable management now benefits the state through not only the timber industry but also the booming forest recreation industry (camping, hiking, hunting). Michigan’s forests and their trees now support more than 77,000 jobs in the state and contribute $16.3 billion to the economy, while roughly only 30 percent is harvested annually. 䡲

COURTESY MONTE NAGLER FINE ART LLC

Beaumont Hospital-Wayne purchased some of Monte Nagler’s photos and put them on the ceiling so patients lying down for an MRI would have something to look at.

Monte Nagler’s camera captures serene scenes of outdoors that make patients feel better inside

Picture this: The art of healing By Jay Greene jgreene@crain.com

Engineer and businessmanturned-fine-art photographer Monte Nagler spent 20 years in the automotive industry and later in the muffler business before finding his niche taking photographs of outdoor nature scenes that promote healing. In 1983, Nagler and his wife, Mickey, opened Monte Nagler Fine Art LLC in Farmington Hills. As Mickey Nagler says, “Our art gallery is our home.” Heavily influenced by the late Ansel Adams, whom he met and studied with Monte Nagler: in Yosemite Na Sees photography tional Park, Monte Nagler started as therapy. out taking pictures of Michigan environs in black and white. But it wasn’t until he got an offer in the late 1990s to shoot pictures for a Troy medical center owned by Royal Oak-based Beaumont Hospital that Nagler got into health care, where he said he fully developed his style of creating calming images intended to heal. The architectural firm employed by Beaumont “thought the imagery I

was shooting would be suitable for hospitals,” he said. “It really started to excite me. I thought if seeing a nice, calming photograph in the health care environment could help relax people, get them through a procedure, MRI, CAT scan, radiation a little easier, that is a terrific feeling.” Over the past 20 years, health care organizations have begun to invest more into art, music, color and lighting within their four walls to create “healing environments” for patients. Studies have found that patients relax and recover more quickly during inpatient stays or during such diagnostic procedures as MRIs or breast biopsies.

From mufflers to photography Nagler graduated from the Uni versity of Michigan with an engineering degree in 1962 and an MBA in 1963, then went to work for Ford Motor Co. By age 29, he had decided to go into business for himself and opened two Midas muffler businesses. “The muffler business was exhausting. Not motivating. I never liked it,” he said. But Nagler already had become interested in photography. In 1979, he won a major photo contest that

NICOLE SHACKELFORD

MUST READS OF THE WEEK How suppliers shifted from billboards Thirty years ago, Crain’s reported that billboards were the backbone of automotive supplier advertising campaigns. Today, thanks to forces such as social media and recession, that’s no longer the case, Page 4

Maybe it should be Food Field It’s on the minds of Detroit Lions’ fans at the start of every season: What new foods will they be serving at home games? Well, for $17, you and a friend (OK, maybe just you) can ingest a beef pasty (left). Or how about the international fusion that is the Reuben egg roll (right)? Page 7

SEE NAGLER, PAGE 21

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LOOKING BACK: A Crain’s Detroit Business story from Aug. 5, 1985, discussed the role of billboards used by auto suppliers to reach industry procurement executives. Billboards have remained, but their importance has been lessened as other marketing methods have evolved. More at crainsdetroit.com/30

Signs of the times: Suppliers rely less on roadside marketing By Bill Shea

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merican roadside billboards trace their roots to the 19th century, and they began to proliferate along streets and highways after Henry Ford’s assembly lines began churning out cars in the early 20th century. Most signs touted Model Ts, Mustangs and Monte Carlos to consumers, but by the 1960s, the automotive industry began to employ billboards to reach Detroit’s manufacturing buyers, engineers and executives who made decisions on which parts and raw materials to use. The billboards complemented other marketing efforts, such as direct mail, trade show booths, trade and news magazine ads, and radio spots. The one-two punch of the recent recession and the rise of other forms of marketing — social media, email and online videos — put a dent in the number of auto supply billboards along metro Detroit’s major arteries. But that doesn’t mean such billboard advertising isn’t out there. It’s just not what it once was. In its Aug. 5, 1985, issue, Crain’s Detroit Business profiled the trend of billboards as the backbone of many supplier campaigns. The story quoted Richard Sharga, an account executive with Philadelphia ad agency Lewis Gilman & Kynett Inc. who was handling advertising in Detroit for Bethlehem, Pa.-based Bethlehem Steel Corp. “Our market is design engineers, purchasing agents, product engineers and management. We have focused primarily on Detroit because research shows threequarters of all buying influence we want to reach is there,” Sharga said in the story. While those in the billboard industry say that remains true, they acknowledge that auto supplier signs have become a smaller part of their business. “A lot has changed in that time, as far as the automotive category,” said Rich Rickert, vice president and general manager of Baton Rouge, La.based Lamar Advertising Co.’s Detroit unit. In the early 2000s, automotive Rich Rickert: was a third of Lamar’s metro Detroit Supplier billboards business and 6 percent nationally, have “dropped Rickert said. Last year, it was 13 perdramatically.” cent nationally, he said. “The majority of that business is local dealers and suppliers, and it always has been,” he said. “The supplier side of it has dropped dramatically.” Automotive companies that advertise locally on Lamar billboards include Tokyo-based Aisin Seiki Co. Ltd. and Korea’s Nexen Tire.

Lamar has been in Detroit only since 1987, when New York City-based rival Outfront Media Inc. acquired billboard giant 3M National and had to sell some of its metro Detroit holdings to satisfy antimonopoly concerns from the U.S. Department of Justice. In the past, suppliers would lock in billboards annually, but now the time spans are much shorter, Rickert said, some made more possible by the rise of digital billboards that rotate messaging for many companies. The peak billboard period is during the North American International Auto Show, and auto industry messaging pops up along I-94 between Detroit Metropolitan Airport and downtown. It also can be commonly seen along I-75 between Detroit and Auburn Hills.

The downturn Rickert blamed the decline in supplier billboards on the economy and the auto industry’s well-documented financial troubles. “I think a lot of it had to do with the turmoil in the last decade, but there were declines even before the 2008 market crash,” he said. “It’s picking up a little bit again. There’s been a lot of M&A activity with suppliers.” Lamar is one of the nation’s largest billboard firms, with 144,000 advertising displays in 44 states, Canada and Puerto Rico and $1.3 billion in revenue last year. Detroit accounts for less than 1 percent of Lamar’s displays, according to the company’s annual report. Lamar has about 2,000 leased sign sites and another 189 owned sites in Michigan, mostly in metro Detroit. Billboards targeted at automotive supplier buyers began to appear in the 1960s, said Tom Carroll, Outfront Media’s Midwest and New England region vice president. “Unless you were in the automotive business, you didn’t know who the company was or where they were from. They were trying to reach a very specialized audience,” he said. That hasn’t changed. “We still have several manufacturers who are trying to reach the car community and are doing so by using billboards,” Carroll said. “They’re trying to get their message in front of the people they’re trying to sell their products to. “They know the people who are making these buying decisions have to get to their headquarters.” Some of those advertisers include BorgWarner Inc. , Dana Corp., Siemens AG, the Steel Market Development In stitute, Mitsubishi Heavy Industries Ltd. and the Falken Tire Corp. owned by Japan’s Sumitomo Rubber Industries Ltd. Outfront Media was CBS Outdoor until it went public SEE NEXT PAGE

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Billboards promote long history of ads

in 2014, and over the years it acquired some or all of the assets of major billboard competitors such Love or loathe billboards, the Germans are to credit more than 50 square feet — originated in New York City as 3M National, Viacom Outdoor, In finity Outdoor and Gannett Outdoor. or blame. with circus posters in 1835, according to the association. Nationally, about 5 percent of its The history of billboards stems from German Fifteen years later, exterior advertising was first $1.3 billion in 2014 was automotiveblacksmith and printer Johannes Gutenberg’s invent- used on street railways, and the earliest recorded billrelated nationally. It did not have a ing movable type printing in 1450, and then German board leasing was in 1867, according to the OAAA. metro Detroit breakdown. actor and playwright Alois Senefelder perfecting liAmerican billboards in general exploded in popuDetroit accounted for 3 percent thography in 1796 to aid his theater business. larity after a standardized billboard structure was esof the company’s 378,000 displays Initially, billboards were local in nature. tablished in 1900. last year, according to the compa“Merchants painted signs or glued posters on walls “Confident that the same ad would fit billboards ny’s annual report. and fences to notify the passers-by that their estab- from coast to coast, big advertisers like Palmolive, Kel Like Lamar, Outfront offers tradilishments up the road sold horse blankets, rheuma- logg and Coca-Cola began mass-producing billboards tional static billboards but also an tism pills and other useful items,” the Washington, as part of a national marketing effort,” the OAAA wrote. It also noted that Michigan formed the first state bill increasing number of digital billD.C.-based Outdoor Advertising Association of America Inc. wrote in a short industry history at oaaa.org. posters association in 1871. boards. Bill Shea The large-format American poster — measuring Locally, the company has 30 digital bulletin boards, which show messages for eight seconds. It was 1,108 total bulletin boards in the can range from $700 to $5,000-plus Auburn Hills-based TI Automotive remains a key marketing tool for TI, Detroit market, and 1,152 posters, a month, according to industry esti- Ltd. , a manufacturer of fuel tanks Buscemi said. which are smaller signs. Specifically, the company will air mates. A billboard in rural Kansas is and fluid lines that traces its corpoCompanies buy space going to cost far less than rate origins to Model T supplier spots during the “Paul W. Smith on the boards for contracts Show” on Detroit’s WJR 760 AM one in downtown Los An- Harry Bundy and Co. in Detroit. The company’s marketing strate- when he broadcasts for auto events, that range from 12 to 52 geles. gy to reach buyers today uses he said. weeks, Carroll said. The More tools “The people in the industry are YouTube videos, print ads, motortypical size is 14 feet by 48 While always governed sports sponsorships and an active generally listening to his show,” feet. by budgets, suppliers have social media presence using Twitter Buscemi said. He declined to discuss more ways to reach buyers and Facebook, he said. Tim Smith, president and CEO of pricing specifics, but did and customers compared “It has become the easier, most Detroit-based ad firm Skidmore Stusay cost depends on the loto 30 years ago. cost-effective way to reach a lot of dios, is a billboard advocate and has cation, number of bill- Frank Buscemi: “There are so many people at once,” Buscemi said of so- used them in client campaigns. He boards and length of con- “More tools now available” than in also says that smart marketers find more tools now available cial media marketing. tract. than you had in 1985,” said TI doesn’t use billboards locally, the ways to reach audiences in mulA digital billboard typi- 1985. tiple places with similar messages, Frank Buscemi, global but does in China. cally costs about $1,000 a Traditional radio advertising also using social media, email, direct week, and traditionally billboards communications director for

“In 1985, I could count on one hand the media options I could choose from. Today, with digital, social, mobile and electronic media, ... it is impossible to rely on a single media source.” Tim Smith, Skidmore Studios

mail, video streams, websites and outdoor advertising. “The challenge for marketers today is that the number of advertising options available has grown exponentially in the past 30 years,” he said. “In 1985, I could count on one hand the media options I could choose from. Today, with digital, social, mobile and electronic media that all happen instantaneously, it is impossible to rely on a single media source.” 䡲 Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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For dessert, Tubbyâ&#x20AC;&#x2122;s buys Just Baked cupcakes Tubbyâ&#x20AC;&#x2122;s move into cupcakes is part of a growth strategy that may bring other Michigan brands into its 60 franchised restaurants and its corporate stores, incorporated as

By Vickie Elmer Special to Crainâ&#x20AC;&#x2122;s Detroit Business

Sandwich chain Tubbyâ&#x20AC;&#x2122;s hopes to tempt customers into ordering dessert â&#x20AC;&#x201D; and to do that, it has acquired most assets of the Just Baked gourmet cupcake business. Roseville-based Tubbyâ&#x20AC;&#x2122;s today will announce it is acquiring certain assets of Livonia-based Just Baked.

Tubbyâ&#x20AC;&#x2122;s Sub Shops Inc.

â&#x20AC;&#x153;We are in growth mode. Weâ&#x20AC;&#x2122;re expanding pretty aggressively,â&#x20AC;? said CEO Robert Paganes. He and his partner Bill Kiryakoza said they also

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are talking to a coffee company about a purchase or partnership. They hope to expand the dessert line to more offerings, and may offer bagels or breakfast sandwiches. Paganes called the addition of cupcakes â&#x20AC;&#x153;icing on our cakeâ&#x20AC;? and â&#x20AC;&#x153;easy sells â&#x20AC;&#x201D; the fun part of the business.â&#x20AC;? The minicakes could increase the average customer ticket from $12 now to $14 or $15, about a 20 percent boost, said Kiryakoza, who is executive vice president and a partner in the company. Besides indiRobert Paganes: vidual sales, â&#x20AC;&#x153;We are in growth Tubbyâ&#x20AC;&#x2122;s hopes to mode.â&#x20AC;? use the new product offerings to boost group food sales. For example, it could sell Monster party subs plus two dozen cupcakes to families celebrating birthdays or graduations. The Just Baked deal covers the trademarks, recipes and rights to franchise future locations â&#x20AC;&#x201D; as well as installing them â&#x20AC;&#x201D; in existing Tubbyâ&#x20AC;&#x2122;s locations. Just Baked founders Todd and Pam Turkin will continue to consult with Tubbyâ&#x20AC;&#x2122;s; details were unspecified last week.

COURTESY OF TUBBYâ&#x20AC;&#x2122;S

After a customer finishes eating one of its sandwiches, Tubbyâ&#x20AC;&#x2122;s hopes he or she will leave room for a cupcake, too, now that it has purchased Just Baked cupcakes. â&#x20AC;&#x153;I am hopeful that the brand I created and nurtured will flourish under Tubbyâ&#x20AC;&#x2122;s guidance. As you know, this is all new, and we have not yet even talked about where or what my role may be going forward, but I am committed to helping in any way needed to continue to grow the brand,â&#x20AC;? Pam Turkin wrote in an email to Crainâ&#x20AC;&#x2122;s. Financial terms of the deal were not disclosed. Kiryakoza and the Turkins met about three years ago at a networking gathering arranged by a lawyer. Starting in January, as Just Baked closed most of its stores, the two companies discussed a sale. Negoti-

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ations took about six months. Food mergers and buyouts have continued to be big news nationally and in metro Detroit. H.J. Heinz Co. is buying Kraft Foods in a stock and dividend deal, and Campbellâ&#x20AC;&#x2122;s Soup Co. acquired Ferndale-based Garden Fresh in June, in two recent large examples. Many food industry mergers are made to improve distribution channels, improve economies of scale â&#x20AC;&#x201D; or, in the case of a large company acquiring a smaller one, to acquire a â&#x20AC;&#x153;credible brand,â&#x20AC;? said Erik Gordon, a professor at the University of Michiganâ&#x20AC;&#x2122;s Ross School of Business. Often the acquiring company, like Tubbyâ&#x20AC;&#x2122;s, wants to get into a new market segment, Gordon said. He suggested that local combinations â&#x20AC;&#x201D; like Tubbyâ&#x20AC;&#x2122;s and Just Baked â&#x20AC;&#x201D; are less desirable, especially if the companies stress their Michigan connections. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a very limiting position,â&#x20AC;? said Gordon. Paganes said Tubbyâ&#x20AC;&#x2122;s wants to form partnerships with or purchase other Michigan-based companies. â&#x20AC;&#x153;It would be nice to have a bunch of Michigan companies under one roof. Joining forces,â&#x20AC;? he said. Within several months, Tubbyâ&#x20AC;&#x2122;s franchisees may bake cupcakes before or after they bake breads used in the companyâ&#x20AC;&#x2122;s grilled submarine sandwiches. Specific details on how the cupcakes will be produced and displayed will be determined in the next few months, in partnership with Tubbyâ&#x20AC;&#x2122;s franchisees. Tubbyâ&#x20AC;&#x2122;s sales last year hit $22 million, up from $19 million in 2013. Its growth is coming from new franchisees opening up to a dozen locations next year, Kiryakoza said. Among the locations are Riverview, Ypsilanti, Brighton, Port Huron and Flint. While Tubbyâ&#x20AC;&#x2122;s is expanding, Just Baked scaled back in January, closing many of its stores after consumer tastes shifted. The company was established in 2008 and grew quickly to 17 locations in Southeast Michigan, offering more than 40 varieties of cupcakes. The most popular ones will be sold at Tubbyâ&#x20AC;&#x2122;s locations, and some flavors may rotate, Tubbyâ&#x20AC;&#x2122;s officials said. äĄ˛

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Supersized pasty is Lions’ latest ‘wow’ menu item By Bill Shea bshea@crain.com

In the culinary arms race to lure sports fans into stadium concession lines for unique food — and away from their couches and high-def TVs — the Detroit Lions have hauled out the heavy artillery: meat pies. Chicago-based stadium concessionaire Levy Restaurants, which has handled Ford Field’s food for the team since the stadium opened in 2002, has created an enormous, madefrom-scratch beef pasty. It will be sold during Lions games this season beginning with the Aug. 13 preseason opener against the New York Jets. For $17, fans get a baked flaky pastry shell filled with ground beef, potatoes, carrots, onions, celery and rutabaga. It’s served with a cup of gravy, and comes in a pizza-style box with a knife and fork — and can feed two or more, easily. It will be sold in the Bud Light Party Zone near Section 238/239. For more than a decade, stadiums have bolstered staple hot dogs and pizza offerings with increasingly upscale or unique concessions — Remember the poutine hot dogs at Comerica Park two years ago? — as an initiative to keep fans coming to games while creating incremental revenue. This season, new general concession options at Lions games will include a ramen noodle bar, fresh tortilla chips with red or green salsa, buffalo chicken or chili verde waffle fries, a Southwest chicken wrap and Korean BBQ. The club and suite level will see new foodie perks, too, including specialty bloody marys, craft cocktails, Bell’s Two Hearted beer cheese and Zingerman’s pimento cheese spread with pretzels, and new desserts. The beef pasty, however, will be this year’s “wow” item, the stadium staff said. Levy’s executive chef at Ford Field, Joe Nader, expects to begin the season with 100 pasties prepared before the game, and could increase that number if fan demand is there. “Other people might see it and say, ‘Whoa, where can I get that?’ ” he said. Levy also expects demand to increase when the temperatures fall. “For preseason games, it’s still August and people are eating differently than they will in November,” Nader said. Ideally, they’ll sell up to 300 pasties per game eventually, he said. Levy stressed that thought and care went into the pasty’s creation. “The filling has to be good, but the crust also has to be good,” Nader said “It’s not a Michigan pasty if it doesn’t have rutabaga.” The pasty is a traditional northern Michigan food that traces its roots to English miners who immigrated to the state’s copper digs in the 19th century. Levy said the Ford Field kitchen, which has 30 full-timers year-round and expands to 100 on game days, tries to source local ingredients when possible, which taps into mil-

LARRY PEPLIN

Clockwise from top: New to the Ford Field menu on Detroit Lions game days: A massive beef pasty, buffalo chicken waffle fries and Reuben eggrolls. lennial preferences. Nader said he takes notes on his smartphone whenever he sees culinary inspiration and ideas that can be repurposed for the stadium — or for nonsporting events and meetings that Levy also handles at Ford Field, and for the team’s food at its Allen Park training facility. “Every season, we’re looking at what food trends are happening around the city and the country. ” Trying to appeal to fans born between 1980 and 2000, known as millennials or Gen Y, led to the portable

ramen bar, Nader said. “It’s a nice, fresh food with good, strong flavors, and it’s easy and fast for us to make in a concession setting,” he said. For $9, fans get a bowl with choice of three ramen broths dispensed from devices similar to coffee urns, Nader said. The noodles will have vegetable and meat options. He also expects the new Reuben egg rolls to be popular. Fans get two — they’re egg roll crusts stuffed with corned beef, cheese and sauerkraut, with a side of Russian dressing —

sandwiches, and National Coney Is land, replacing American Coney Island. In another change this season, Ontario-based Tim Hortons has replaced Dunkin’ Donuts as the stadium’s coffee provider on game days, and that means the end of the venerable doughnut race during games. In its place will be a contest in which two fans race in a humansized hamster ball. Last year, Bigalora Wood Fired Cucina replaced the Big Boy stand in the second-level Huntington Club, featuring wood-fired Neapolitan-style pizzas. Also added in 2014 was the Breadstick Bar and Bistro on the second level. The Lions and Levy have added local food brands to the stadium in recent years, including Slow’s Bar BQ, Zingerman’s gelato and deli food, Russell Street Deli, Corridor Sausage Co., Treat Dreams ice cream and Sugar House craft cocktails. Nader, 44, has been Ford Field’s top chef for a decade. He begins his football Sundays at 3:30 a.m. and puts in 14 hours to oversee the food service for the 64,500-seat stadium. He catches glimpses of the game while moving from one food station to the next. “Combined, I’ve probably seen one football game in 10 years,” he said, chuckling. 䡲

for $6.50. Good-for-you foods also are being touted: Last month, the Lions launched a “Healthy Choice” program in cooperation with St. Joseph Mercy Health System. The program highlights on menus more than 65 healthy food options such as salmon sliders, and a highprotein vegetarian salad with mixed greens, kale, tofu and chickpeas. The revenue boost from such foods is very small, and some ingredients are so costly that the offering is more akin to a loss leader, Nader said. Levy and the Lions don’t disclose financials, and they split revenue from concession sales in an undisclosed ratio. Detroit in 2013 was estimated to have generated $254 million in total revenue, much of which came from shared national revenue, ticket sales, etc. But the thinking is that “wow” foods help create new fans. “It’s one more arrow in owners’ quivers to get fans off their recliners and into the ballpark/stadium/arena to fill that empty seat,” said Allen Sanderson, a senior lecturer at the University of Chicago’s department of economics who often writes and speaks about sports economics. New name-brand food inside Ford Field this season includes La Shish, offering shawarmas and falafel

Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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CRAIN’S DETROIT BUSINESS

OPINION

We need more tools to help biz report from Oakland University last week put a damper on the widely held belief — locally, anyway — about Southeast Michigan’s burgeoning entrepreneurial climate. As it turns out, the area ranks dead last among the country’s largest metro areas with 220 new entrepreneurs per 100,000 people, compared to No. 1 Miami with 520. The numbers were pulled from We should not data collected by the entrepreneuronly focus on ship-focused Kauffman Foundation. Of some comfort is that the new business Ann Arbor area, where many entrepreneurial efforts are focused, is formation, not included. but also on And metro Detroit’s numbers are not very different from Chicago, how to help Washington, D.C., and Philadelthose phia, all of which show only 230 enbusinesses trepreneurs per 100,000. Still, it’s discouraging, but it doessucceed. n’t mean nothing can be done. For one thing, business formation is only one part of the equation. In a January report, the Knight Foundation found that despite the high rate of startups in Miami, the number of large businesses had declined 20 percent since 2000. And although the area had assets of weather, customer access and infrastructure, it still faces challenges common elsewhere: lack of financing, few mentors, a small VC community and a small talent pool. Metro Detroit has some of the tools for fostering business success and growth. Others can be developed. Yes, we should determine what can be done to encourage more new business formation. But we also should be focusing on how we can help those businesses succeed once launched.

Kudos to county on foreclosures As Wayne County improves its efforts to foreclose and auction off properties with long unpaid property taxes, a Detroit News story documents some of the consequences of not foreclosing in a timely manner. Delinquent commercial properties in Melvindale and Romulus, for example, haven’t been finished or redeveloped, been an annoyance to neighbors and deprived those communities of needed revenue. Other business properties in the county have deteriorated as they’ve sat untended and been rifled by scrappers. There are clearly consequences and opportunity costs tied to not acting. We’re glad the county is moving forward.

Education: Key to closing opportunity gap many civic leaders, W hile businesses and entrepreneurs have positioned Detroit for the comeback we are now witnessing, the next great frontier is education. Investment of time, talent and resources will likely be required if we are going to improve graduation rates. The next generation of Detroiters will need the skills and knowledge that can only be afforded through quality education. The real measure of our success is the ability to leverage the city’s tremendous opportunity for economic growth into personal growth for our residents. The president of the Detroit Public Schools Foundation, Glenda Price, recently said that her “challenge for all of us is to ensure that we make the necessary investments in today’s Detroiters so that they become a part of the growth and are not left behind.” Based on a report by the Coalition for the Future of Detroit Schoolchildren, it is evident that the educational status quo in Detroit is not acceptable. Less than 10 percent of K-8 students in Detroit are at grade level in reading and math. College isn’t even a possibility for many students, and skilled-trades education is also a challenge without the fundamentals in place. Aside from creating personal hardship, these poor educational outcomes may fail to create the talent pool needed to restore Detroit in the years to come. It’s estimated that 70 percent of new jobs in Michigan will likely require postsecondary education or skilled-trades training by 2020.

OTHER VOICES: Mark Davidoff and Clark Durant Mark Davidoff (left) is the Michigan managing partner for Deloitte LLP, which recently launched a five-year pilot project in collaboration with Cornerstone Schools to better provide professional skill-building and career awareness to students in grades five through 12. Clark Durant is the founder of Cornerstone Schools, an independent charter school system in Detroit.

Jobs of the future in key industry segments will help drive Detroit forward — such as in technology, financial services, health care and manufacturing. This opportunity can only be realized if we work to create an environment of educational equality, providing all students the opportunity to achieve academic success and develop into strong professional candidates for our growing job market. School programs that expose our students to the world of opportunities in professional careers and enable the building of the required professional skills such as analytical problem-solving, approaches to critical thinking, written/oral communications and team building are critical for future success in the workforce.

It is our duty as responsible corporate citizens to invest in our future talent pool through financial support of our city’s schools, allowing students to experience our work space and engaging our current talent to serve as role models and mentors for the city’s children. Investment in such areas as scholarship programs and the development of innovative approaches to curriculum will provide greater access and drive innovation into the learning environment, preparing students much earlier for professional aspirations. Existing public-private collaborations have already demonstrated change for students who otherwise would have had little hope of gaining the skills needed for fulfilling college experiences and successful professional careers. These collaborations have a common thread of success: a leadership-driven effort started by a small number of catalysts that opens a gateway for a broad set of commitments and opportunities across the business community. It is an imperative. The corporate community must help position our youth for future professional success and fulfilling personal growth. Career-oriented programs can realize success through increased student achievement, internship experiences, opportunities for experiential learning and engagement of professionals with students in new approaches. It’s time to get involved. Greater corporate investment in our students gives them the tools they need to help contribute meaningfully to their communities, in Detroit and beyond. 䡲

TALK ON THE WEB Re: Detroit to launch high-tech, solar-powered parking system I’m glad to see the city of Detroit taking advantage of the latest technologies for the parking program; however, I wish they had elected to use Michigan firms to provide the solution. MTAMLinda

Sounds more complicated than the present system. If Detroit is serious about attracting people downtown, it should reduce parking rates or eliminate meters altogether. Richard Perry

OK, but the breaking-in period could be hell. Imagine a ballgame with everyone trying to park, and long lines at these kiosks as people try to push the right buttons and remember their license plate number. Citymec

Re: Lions single-game tickets go on sale via paperless Flash Seats I like having a regular ticket option. It provides a souvenir of the event. Grandslam

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

Re: Allyson Martinek gone from WDVD 96.3 FM morning show Wow. At a minimum, they should have sent something out. I hate the sneaky way they do things. I’m done. Sorry 96.3. I was getting tired of hearing the same song every hour of the day. This is the last straw . If you treat your employMartinek ees this badly, I’m not going to be a listener.

car cracking up. They were great to gether . Allyson will be greatly missed. Whether I will continue to listen is up in the air for now. Lori N

Re: Experts see many causes for Michigan disability claims surge It appears that a lack of job skills is considered a disability for Social Security purposes. Walk into any Social Security office, and it is likely you will see younger people outnumbering retirement-age people. This is a real threat to the Social Security benefits of hard-working taxpayers who have put a substantial amount of money into the system over four or five decades. Social Security should not be a welfare program. Carolyn Mazurkiewicz

Maskay

Blaine is very talented. He carried the show. I am sure ratings were waning, otherwise they would not have changed. New personality will be good for the show. Rick E

I have been listening to “Blaine and Allyson in the Morning” for quite a few years. I would be in my

Re: Jefferson Avenue to get brighter with new streetlights New LED lighting is good, but what about the restoration of historic streetlights in historic parts of the

city? It looks tacky in cities that have a nice strip of old buildings or houses and then have modern streetlights. Justin Thompson

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Vitamin firm battles Bausch & Lomb over eye formula By Chad Halcom chalcom@crain.com

Farmington Hills-based Vitamin Health Inc. is escalating its two-year court battle with the New Jerseybased eye care giant Bausch & Lomb Inc. with a new federal lawsuit in Detroit over a vitamin formula developed to slow the progress of macular degeneration. Vitamin Health, founded in 2001 by Aaron Shepherd and maker of various VitEyes eye vitamin products, brought a lawsuit before Judge John Corbett O’Meara of U.S. District Court, alleging false advertising and violations of the Michigan Consumer Protection Act in Bausch’s marketing of two PreserVision products. The Detroit case follows a 2013 lawsuit by Bausch and Wyeth LLC against Vitamin Health claiming false advertising and two counts of patent infringement by VitEyes, at a federal court in Rochester, N.Y. Vitamin Health is also suing Hartford Casualty Insurance Co. for breach of contract in a related case, claiming the insurer is supposed to cover it for part of the Bausch lawsuit in New York. At issue are alleged similarities between VitEyes and PreserVision as treatments for age-related macular degeneration, based on a pair of studies from the National Eye Institute, one of the federal National Institutes of Health. “But they (Bausch) have a patent on a very specific formula with very specific ingredients, including 80 milligrams of zinc product,” said Steven Susser, an attorney at Carlson Gaskey & Steven Susser: Olds PC in BirmVitamin Health formula “an order of ingham, representing Vitamin magnitude Health in both different.” the Bausch lawsuits. “We believed then and we believe now that having 25 milligrams of zinc in our products is not just a

BANKRUPTCIES The following businesses filed for protection in U.S. Bankruptcy Court in Detroit July 24-30. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation. 䡲 DBS Lodging Technologies LLC , 1402 Roslyn Road, Grosse Pointe Shores, voluntary Chapter 7. Assets: $40,000; liabilities: $693,122. 䡲 Cowley Investments LLC, 33338 Grand River Ave., Farmington, voluntary Chapter 11. Assets and liabilities not available. 䡲 Cowley Equipment LLC, 33338 Grand River, Farmington, voluntary Chapter 11. Assets and liabilities not available. 䡲 Old Village Inn Inc., 33338 Grand River, Farmington, voluntary Chapter 11. Assets and liabilities not available. Natalie Broda

little different. It’s an order of magnitude different.” Laurie Little, senior vice president of investor relations at Quebec-based Valeant Pharmaceuticals Inc. , which acquired Bausch & Lomb shortly before the New York lawsuit was filed in 2013, said the company would not comment on pending litigation. In a presentation this year, Valeant estimated that PreserVision was its second-highest-grossing product line, with $250 million in global sales in 2014.

Bausch alleges that VitEyes products infringe on two patents issued in 2003 and 2013 to Bausch and Wyeth, along with the NEI, for nutritional formulas developed in the age-related macular degeneration study, or AREDS, of 2001 and follow-up AREDS 2 study released in 2013. The original formula called for a mix of vitamins C and E, beta carotene, zinc and copper. The second formula replaced beta carotene with lutein and zeaxanthin after beta carotene apparently had an adverse effect on some former smokers.

Vitamin Health has several VitEyes products that it packages and promotes as “AREDS 2 Formula” but lowered its zinc dosage from 80 mg to 25 mg after the original Bausch lawsuit. The company contends that AREDS 2 found the lower zinc dosage does not reduce the benefits of the formula and does not infringe on the joint patent, but Bausch contends that means the AREDS 2 product labeling is false advertising. In the new suit, Vitamin Health contends that PreserVision’s “AREDS

Lutein” variant product is mislabeled because it does not contain beta carotene as in the original AREDS formula. It also contends Bausch’s marketing and promotional materials claim “only PreserVision AREDS 2 contains the exact levels of all six clinically proven nutrients now recommended by the National Eye Institute” to slow the progress of age-related macular degeneration, because it implies that the NEI has found only 80 mg of zinc to be effective. 䡲 Chad Halcom: (313) 446-6796 Twitter: @chadhalcom

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SPECIAL REPORT: SHERRI WELCH Reporter’s Notebook swelch@crain.com TWITTER: @SherriWelch

Retailers have state on expansion menu Lots of restaurants and an interesting mix of retailers are looking to set up a shingle in metro Detroit. According to a roundup presented at the International Council of Shopping Centers Michigan Idea Exchange in late July, newcomers looking at the region and state include the bar and grill Bubba’s 33, Brickhouse Tavern + Tap, Cooper’s Hawk Winery & Restaurants, Dinosaur Bar-B-Que, the Pittsburgh-based pizza and sandwich shop Primanti Bros. and the women’s boutique Versona. Besides those chains, several retailers and restaurant operators already with a presence here look to add more locations in metro Detroit or Michigan. Among them: 䡲 Golden Corral Corp. This buffet operator expects to open its seventh location in the state by the end of August in Taylor as part of 20 stores opening in Michigan this year. Cities where Golden Corral has locations: Southfield, Farmington, Kalamazoo, Holland, Portage and Saginaw. 䡲 Nashville, Tenn.-based Kirkland’s Inc., a home decor, accessories and gifts chain, planned to open its third Michigan store in Shelby Township on Saturday and six more between now and the end of 2016. 䡲 Little Caesars Pizza is “filling some holes” with an undisclosed number of new stores and the relocating of other stores in the Detroit area, said Michael Atwell, the company’s vice president of real estate. 䡲 Panda Express said it has five stores under construction and five set for 2016, adding to sites in Detroit, Troy, Rochester Hills and Allen Park. “Based on the success we’re having right now, I will declare this will be the best market for Panda Express,” said Jim Tarpey, the company’s regional real estate manager. 䡲 Hilliard, Ohio-based PetPeople plans to add six stores in the region this year, joining its first stores in Grosse Pointe, Birmingham and Bloomfield Hills. 䡲 Planet Fitness plans to add five locations this year in Wayne, Oakland and Macomb counties. 䡲 Illinois-based Save-A-Lot Food Stores, one of the largest grocery chains in the country, expects to open 10 stores in Michigan this year. Grocery is a hot segment, with Kroger Co. of Michigan’s conversion last month of five former Hiller’s Markets and the opening of three Fresh Thyme stores in Troy, Rochester and Northville. The Fresh Thyme chain is new to the market. 䡲

REAL ESTATE

Slice of life: Watch how custom pizza-making works: crainsdetroit.com/pizza

Pizza race is rising Factions of build-your-own-pizza chains rush to see which can bake lease deals first By Sherri Welch

Eyes on the pies BLAZE PIZZA

swelch@crain.com

outheast Michigan’s consumer appetite for dough, sauce and mozzarella is enticing national, quick-service pizza chains to the local market. At least six “custom-built” pizza chains are on the hunt for new sites to lease in the region. It’s a pizza war, of sorts, since they’re generally all seeking the same sort of locations: strip mall and out-lots that are toward the front of properties, with a preference for end-cap units in high-density, high-traffic areas. Known for their thin crusts, pick-your-own-toppings approach and twoto-three-minute baking times, the chains include Blaze Pizza, Mod Pizza, Pie Five Pizza Co., Pieology Pizzeria, 1000 Degrees Pizzeria and Project Pie. Their move into the market is likely to feed continued development of outlot strip centers along main roads in the region, said Jim Bieri, president of Detroit-based Stokas-Bieri Real Estate. The custom pizza places are “the shiny new penny,” he said. They can afford the higher rents for out-lots and are moving into locations where other retail has slowed. “In the mix of things, they are a strong ingredient for the next year or two in terms of keeping the development of out-lots on a strong pace,” Bieri said. Though fast-casual, custom pizza has been popular in other parts of the country since at least 2009, the segment is growing as existing players expand nationally and others enter the fray.

National rollout It’s hard to pinpoint “ground zero for the custom pizza explosion,” according to Franchisechatter.com. But there’s broad agreement it was inspired by the popular Mexican wrap chain Chipotle and is believed to have begun in Southern California. There are at least 16 different companies offering the concept, according to the “Fast-Casual Custom-built Pizza Cluster Report” released by Chicagobased food research firm Technomic Inc. last November. With custom-built pizzas, customers choose their ingredients, including the dough, sauce and toppings in assembly-line fashion. Pizzas are cooked in high-heat speed ovens. The concepts cater to those seeking fresh or healthier choices, according to Technomic. The trend “marks a move away from delivery and discounting, two pillars that limited-service pizza (relies) upon,” the company said in the report. The Italian foods segment, specifically pizza, has been an underserved and underpenetrated sector within the fast-casual restaurant market, Technomic Executive Vice President Darren Tristano said in an email. SEE PIZZA, PAGE 12

• Locations in Royal Oak, Novi and Kalamazoo. Looking in Ann Arbor and Allen Park. • Target: Open nine more stores in metro Detroit by 2017. • Franchisee: Houghton Lake-based Northland Investments, dba Blaze Midwest Inc.

MOD PIZZA LLC • Location in Livonia. Northville location set to open this month and Rochester location in fall. Plans to open a total of 25 locations in state by 2019. • Franchisee: Team Schostak Family Restaurants

PIE FIVE PIZZA CO. • Location in Southfield, at 12 Mile and Telegraph roads. Second Southfield location set to open on Evergreen Road in next couple of months. Others planned in West Bloomfield Township, Sterling Heights and Ferndale. • Franchisees: John Draper II and his father,J.D. Draper of Viridian Group.

1000 DEGREES PIZZERIA • New Jersey-based chain set to open within 90 days at Macomb Mall in Roseville. Allen Park location set to open soon after. Others planned in Brighton, Detroit and Ann Arbor. The five sites in the works for Michigan are part of a plan to open 25 in the state over the next five years. • Franchisees: Martin Yono, Randy Kassab and Rudi Sawa

PIEOLOGY PIZZERIA • Location in Ann Arbor

PROJECT PIE LLC • Royal Oak location set to open by Labor Day. Location planned in West Bloomfield Township, and 18 additional planned in metro Detroit within the next two to three years.

Detroit restaurants outside central biz district toast zoning change, PAGE 13

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SPECIAL REPORT: REAL ESTATE

PIZZA FROM PAGE 11

Technomic expects the custom pizza segment to grow at a compound annual growth rate of 30 percent over the next five years. “Consumers will very likely use these concepts for lunch and dinner with a heavy amount of on-site dining, with less sales related to the traditional delivery and takeout methods of Domino’s Pizza, Pizza Hut and Little Caesars.” Last year, the fast-casual pizza market was worth an estimated $1 billion of the $36 billion pizza industry, Tristano said. Demand for custom pizza exceeds the current supply of fast-casual restaurants nationally, he said. “We expect very high unit growth for years to come.”

Born from pretzels California-based Blaze, which was formed by the founders of Wetzel’s Pretzels , is “opening like crazy because they have existing franchisees,” Bieri said. Its Royal Oak restaurant launched in 2013, making it the first fast-casual pizza chain to open in Michigan, said Darla Bowen, marketing director for Houghton Lakebased Northland Investments, which owns Blaze locations in Novi and Kalamazoo and is represented in the metro Detroit market by Matthew Swantko at Landmark Commercial Real Estate Services in Farmington Hills. “It’s a very competitive market for the right space,” Bowen said. “We do look for end-caps if they are available. Strip centers are great for us, but we also have some locations on college campuses.” Among the eight Blaze locations Northland operates across Michigan, Ohio and Indiana are restaurants near Western Michigan University in Kalamazoo; University of Notre Dame in South Bend, Ind.; Ohio State University in Columbus; and Indiana University-Purdue University Indi anapolis.

The group has plans to open a location near the University of Michigan in Ann Arbor and also is looking in Allen Park. The goal is to have an additional nine stores in metro Detroit by the end of 2017, for a total of 11, she said.

Mod Pizza The first Michigan location for Washington-based Mod Pizza LLC opened in June in Livonia on Middlebelt Road in a 2,600-square-foot space. Livonia-based franchisee Team Schostak Family Restaurants

plans to open two dozen additional locations in the state over the next five years. A second location is planned for Northville Park Place, a mixed-use development set to open in midAugust at the corner of Seven Mile and Haggerty roads in Northville. And a third site, with a fall opening date, is taking shape in Rochester at the Rochester & Auburn Shoppe’s on

COURTESY OF BLAZE PIZZA

Blaze Pizza , which opened its Royal Oak location in 2013, plans to open another near the University ofMichigan in Ann Arbor and is considering a restaurant in Allen Park. The goal: 11 stores in metro Detroit by the end of 2017. the former site of Meadowbrook Dodge. The center commands one of the highest rental rates in the city, at $38 to $44 per square foot, as Crain’s reported in June. “We’re actively pursuing other locations that should be open before the year is over,” said Brand Leader Jacob Schostak, noting the company is looking for communities with young families and looking at endcap units in strip centers as well as out-lots. Michigan is an influential pizza state, given the popularity of the food among residents and the national chains based here, including Domino’s Pizza, Little Caesars, Jet’s Pizza and Papa John’s, he said. “There is clearly a large pizza following here,” Schostak said. “While some people might think of the competition as a reason to stay away, it actually attracts us to the opportunity.”

Pie Five Pie Five Pizza, a subsidiary of Dallas-based Rave Restaurant Group Inc. , opened its first metro Detroit location in Southfield in a strip center at 12 Mile and Telegraph roads. A second location, in the Southfield City Centre district on Evergreen Road near 10 Mile Road, is under construction and set to open in the next few months, said the local franchisee owners’ broker, Bunia Parker, a principal with Sum mit Commercial LLC in Detroit. The franchisee owners, John Draper II and his father, J.D. Draper of Viridian Group, are also opening Pie Five locations in Wisconsin and Ohio. “We are actively negotiating over 10 sites in Michigan,” including sites in West Bloomfield Township, Sterling Heights and Ferndale set to open in the near term, Parker said. The owners also are looking at a downtown Detroit location in one of Dan Gilbert’s buildings. In all, they plan to open more than 30 locations across Michigan over the next couple of years, Parker said. A lot of brands have sprouted in the fast, custom-pizza segment, but

not all are going to survive, Parker said. “I try to tell landlords you shouldn’t just choose the one that will pay you the most money. ... It doesn’t matter if they pay the most money if they’re going to be out of business in two years.”

Freshly rising chains Some chains are just entering the market. California-based Pieology Pizzeria opened its first Michigan restaurant, a corporate-owned location in the former Borders store in Ann Arbor, in late June. New Jersey-based 1000 Degrees Pizzeria has five sites in the works for Michigan in the near term as part of a plan to open 25 in the state over the next five years. The local 1000 Degrees franchisees, who are also developing sites in Arizona, are entrepreneurs Martin Yono, Randy Kassab and Rudi Sawa, said their real estate broker, Matthew Berke of Keystone Commercial in Farmington Hills. Their first pizza place is set to open at Macomb Mall in Roseville within 90 days, he said. Another 1000 Degrees, at Independence Marketplace on West Outer Drive in Allen Park, will open soon after, followed by locations in Brighton, Detroit and Ann Arbor. An unnamed franchisee for California-based Project Pie has signed a lease for a location at Fourth and Main streets in downtown Royal Oak and plans to open it by Labor Day, said broker Eric Unatin, senior associate at Armada Real Estate. It’s also close to signing a lease with the developer of the West Bloomfield Township Hampton Inn complex and plans 18 more local locations within the next two to three years. “I refer to it as the pizza war — you’ve got six competing users all vying for the same sites and markets,” Unatin said, “and I’m sure there will be more in due time.” “You can bet if we’re negotiating on one site, we probably have two or three competitors, at a minimum, in line with us.” 䡲

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SPECIAL REPORT: REAL ESTATE

Zoning change slakes restaurants’ thirst for alcohol By Kirk Pinho kpinho@crain.com

teurs need to go through a hearing process through the Building, Safety

For years, if a restaurateur want- Engineering & Environmental Depart ed to open an alcohol-serving es- ment and the Board of Zoning Appeals tablishment in Detroit outside of that could affect not only wallets — the central business district, he or but also calendars — if they wanted she was hamstrung. to locate within 1,000 feet of two That’s because of an alarming other alcohol-serving restaurants. amount of red tape and delays to The process for one license could earning that privilege. take up to $2,200 in city fees But things are changing. — not to mention costs for A zoning change that adan attorney — and up to six vocates describe as a win for to eight more months to rerestaurant owners outside ceive BSEED and BZA apof downtown’s 1.6 square proval for an alcohol-servmiles — particularly with ing restaurant, said Tonja the proliferation of new dinStapleton, zoning adminising spots there and in the trator for BSEED. greater downtown’s 7.2 Tonja Stapleton: “Basically, we were square miles — took effect “We were shooting shooting ourselves in the last month after nearly three ourselves in the foot.” foot when trying to create years of work. entertainment districts As of July 11, restaurants and different nodes,” Stapleton throughout the city’s 143 square said. “It really impacted the Livermiles that serve alcohol are consid- nois business district and Corktown ered a “by right” use. Translation: and Eastern Market, and to some No longer do prospective restaura- extent, New Center and Midtown.”

A series of steps are required to just go get your liquor license and open a restaurant in Detroit, includ- go through that process. It’s a real ing site selection, site plan approval time saver.” and obtaining a liquor liIt also will help grease the cense, city business license skids for restaurateurs from and certificate of occupanout of state eying Detroit for cy, among others. a location, Howe said. Patrick Howe, a partner “We are seeing restaufocusing on hospitality and rants from New York, land use for Royal OakChicago, Las Vegas. When based law firm Howard & they call me and I have to Howard PLLC, said Corktown explain the process that hot spots like Slows Bar BQ, Patrick Howe: takes 60-90 days to comGold Cash Gold, Mercury Burger New process “a real plete,” it’s a deterrent, he Bar and Sugar House all had time saver.” said. “Then I tell them the to go through the probuilding they are looking at longed process. can be used as a restaurant by right, The system required two sepa- it’s a huge change in their minds.” rate hearings. First, a board of buildStapleton said that in the first ing department staff member weeks of working on the ordinance would have to approve the restau- revision, the state Liquor Control rant use. Then if approved, the ap- Commission had authorized the city plicants would have to receive a to have 476 Class C liquor licenses, waiver of concentration from the which allow for the sale of liquor, beer and wine for consumption on zoning team, Howe said. “You don’t have to deal with the premises. Those cost $600 per year, hearings now,” he said. “You can plus $350 per year for each addi-

Guidance

tional bar. The LCC had issued 596, putting the city 120 over quota. The city currently has 558 licenses issued, or 81 over quota. Detroit can have more issued licenses than the quota because the quota is based on population figures from U.S. Census data and the number of issued licenses sometimes lags behind that figure. Ryan Cooley, owner of O’Connor Realty Detroit LLC in Corktown and a partner of Slows Bar BQ and Gold Cash Gold (all three of which had to receive BSEED and BZA approvals), said the change will expedite the process for new restaurateurs. When asked, he typically tells aspiring restaurant owners it takes about 18 months to open up a restaurant in Detroit between securing the financing, build-out and obtaining the proper approvals. That timeframe is now shortened. “Anything to speed up the process is good,” Cooley said. 䡲 Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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Study: ‘Centers of excellence’ hospitals best for certain surgeries By Jay Greene

ease guidelines published by the

jgreene@crain.com

American Health Association/American College of Cardiology. The AHA/ACC

Sometimes the best place for surgery is your friendly neighborhood community hospital. Other times, it could be miles away at a hospital with higher costs for the procedure, but with demonstrably better outcomes and lower long-term costs. Researchers Wally Hopp and Jun Li at the University of Michigan’s Ross School of Business in Ann Arbor crunched data from 35 New York hospitals on mitral valve repair and discovered major differences between community hospitals and teaching hospitals considered “centers of excellence” for heart surgery. Mitral valve disease is the most common form of heart valve disease in the U.S., affecting 5 percent of the population and resulting in 500,000 annual hospital admissions. Hopp and Li found health insurers saved $471 to $7,978, the savings dependent on the age and health of the patient, by having patients treated at a hospital considered a center of excellence. The report, “Cost-Effectiveness of Referring Patients to Centers of Excellence for Mitral Valve Surgery,” was published May 27 in Social Science Research Network. The paper can be found at myumi.ch/6xm7m. The researchers defined a center of excellence as a hospital that performs more than 100 mitral value procedures per year and is listed in the top 50 cardiac programs in the 2014 U.S. News and World Report ranking. Hopp and Li sought out New York for statistics because inpatient and outpatient data was unavailable in Michigan on mitral value repair, an open heart procedure to treat narrowing or leaking of the left heart atrium where blood flows from the lungs. The only two hospitals in Michigan that met Hopp and Li’s definition were the University of Michigan Hospital in Ann Arbor and William Beaumont Hospital in Royal Oak, they said. However, Frank Fazzalari, M.D., a cardiothoracic surgeon at UM, said other hospitals in Michigan have the technology and skill to generate similar medical outcomes, depending on the valve repair required. “If you have mitral valve disease, a degenerative disease, it is preferable to have mitral valve repair,” he said. “There is a wide spectrum of what you can do. Some (surgeries) can be done at community hospitals; others can best be done at centers of excellence.” Fazzalari, who was a member of the UM research team and suggested the study, said generally there is an economic benefit for patients to have this type of surgery performed at a hospital with experienced surgeons and staff. Because the costs and outcomes can vary for many surgical procedures, Fazzalari suggested researchers study the new heart dis-

guidelines recommend that mitral valve diseases be repaired at a centers of excellence-type hospital. He said researchers are in the process of identifying the type of mitral valve repairs that should be performed at centers of excellence and others that can safely be performed at community hospitals. Hopp said patients, employers and health insurers can save money and patients can live longer by choosing the right hospital to repair a leaky or narrowing heart valve. Li said research found that going to a center of excellence can be a better option for both patients and insurers, even if it’s further away from the patient and costs more upfront. “One of the big questions for patients and insurers right now is which procedures should be done in specialized places and which procedures should be done in community hospitals,” said Hopp, a professor of technology and operations at UM.“The decision tree is often a mess, and the resulting decisions often don’t make sense from a health standpoint or cost standpoint.” Besides Hopp, Li and Fazzalari, Steven Bolling, M.D., a professor of cardiac surgery, and Guihua Wang, a doctoral candidate in the Ross school, were on the research team.

Report findings Full implementation of the AHA/ACC guidelines would lead to a 9 percent increase in mitral valve repairs instead of valve replacement surgery. Researchers also predicted a 2.2 percent to 4.8 percent reduction in mortality, 3 percent to 3.9 percent in reoperation, 3.9 percent to 6.8 percent reduction in stroke, and an average gain of one to four months’ life expectancy, depending on a patient’s age and other medical problems, the report found. Fazzalari said patients facing mitral valve problems have three cardiac surgical options: Get the valve repaired, get it replaced with a tissue valve from a cow or pig, or replace it with a mechanical valve. He said research data suggests that, in most cases, mitral valve repair is superior to mitral value replacement in patients with degenerative mitral valve disease because it offers better survival chances, fewer complications and lower costs. Mechanical mitral valve replacement also can require ongoing medications, including anticoagulation. But not all mitral valves can be repaired due to the nature of heart disease. Patients should talk with their doctor about their best options, Fazzalari added. 䡲 Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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Troy-based med group saves Medicare millions in pilot By Jay Greene jgreene@crain.com

the participating Medicare patients, or 2,200. Based on the incentive formula, USMM kept $7.9 million of the $11.7 million in bonus incentive payments paid to the nine practices, Sowislo said. Other participating practices included Boston Medical Center, Cleveland Clinic, North Shore-Long Island Jewish Health Care, Christiana Care Health System, Doctors on Call, Doctors Making Housecalls and Housecall Providers.

example, PACE’s seniors have a 16 percent hospital readmission rate, far less than the similar group of Medicare-Medicaid patients who have a 22 percent readmission rate. “Our goal is to keep people home who are nursing home eligible,” Naber said. “They are the sickest of the sick.”

A three-year pilot program to cut costs and improve the quality of care for hundreds of chronically ill Medicare patients treated by Troybased U.S. Medical Management showed such good results — cost savings of $25 million — that Congress has extended the program anPilot results other two years. The purpose of the pilot was to First-year results of Medicare’s Intest whether home-based care can dependence At Home program with reduce the need for hospital and 8,400 Medicare patients show 17 Aging in place emergency room care, improve pamedical sites — including two U.S. Mary Naber, CEO of Detroit- tient and caregiver satisfaction, and Medical Management practices in Southeast Michigan — reduced based PACE of Southeast Michigan , lead to better health outcomes for costs by significantly cutting unnec- said programs like Independence At beneficiaries along with lower costs Home can re- to Medicare. essary hospitalizaduce costs and Besides the estimated average tions and ER visits. “Our goal is to improve quality cost savings of $3,070 per Medicare The program also keep of life for beneficiary, or $800 per member per improved the Medicare pa- month, said the Centers for Medicare overall quality of people tients. PACE, and Medicaid Services, Medicare pacare for the home a Medicare- tients improved in other ways. chronically ill Among them: Medicare patients seniors who were who are Medicaid funded program, also received follow-up contact from treated at home, nursing helps seniors their provider within 48 hours of a the study found. stay in their hospital admission; had their medAuthorized home by using ications identified by their provider under the Patient eligible. They are homes an outpatient within 48 hours of discharge from Protection and Afthe hospital; and used hospital and fordable Care Act, the sickest of the clinic-driven model that pro- emergency department services the Medicare pro- sick.” vides transporta- less for such conditions as diabetes, gram featured U.S. high blood pressure, asthma, pneution services. Medical Manage- Mary Naber, “There are monia or urinary tract infection, ment practices, a PACE ofSoutheast Michigan many demo proj- CMS said. medical service or“These results support what ganization with 39 offices in 11 states, ects out there as it relates to coordiincluding Michigan, Indiana, Ohio, nation of care,” said Naber, whose most Americans already want — that chronically ill patients two PACE outpatient cenWisconsin, Texas and Kentucky. can be better taken care of Last year, St. Louis-based Centene ters in Detroit are one of Corp. acquired a majority interest in eight in Michigan and 110 in their own homes,” said USMM for about $200 million. Andy Slavitt, CMS acting nationally. Five of USMM’s practices, inadministrator, in a state“(Medicare) is trying to cluding two practices managed by figure out ways to manage ment. affiliate Visiting Physicians Associa - chronic diseases, improve Steven Mehran, USMM’s tion in Okemos and Flint, partici- quality and reduce costs,” chief medical officer, said pated in the new three-year pay- Naber said. the pilot program proved ment program that ended in May, USMM’s model is one that While PACE doesn’t send Andy Slavitt: said Bob Sowislo, USMM’s govern- doctors to the home like ”These results should be closely studied ment affairs officer. The other par- the Independence At support what most when the program is exticipating VPA practices are in Dal- Home program, Naber said Americans ... want.” panded nationally. las, Milwaukee and Jacksonville, Fla. PACE has nurse case man“We did nothing differOf the 17 medical practices that agers who visit patients at home. ent than we had been doing” in case participated in the Medicare pilot, They provide transportation to sen- management, medication manageonly nine saved enough money and iors to bring them into PACE-run ment and direct patient care, said improved quality indicators to earn medical clinics where they receive Mehran, adding: “One powerful bonus payments. USSM’s five prac- medical, dental, audiology, behav- measure of our success is the contitices accounted for 84 percent, or ioral health, nutritional, pharma- nuity factor. We know if we provide $20 million, of the $25 million saved ceutical and rehabilitative services. 70 percent of care to the patient, we in the pilot, Sowislo said. Naber said she hopes Medicare can significantly impact care while The five USMM practices also expands the PACE program be- maintaining quality.” managed the lives of 27 percent of cause it has proven successful. For Mehran said VPA physicians and

Nominations sought for Best Managed Nonprofit Contest 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 “best-managed” 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/nonprofitcontest. For information about the contest itself, email Executive Editor Cindy Goodaker at cgoodaker@crain.com or call (313) 446-0460.

nurses visit patients in their homes, meet with family members and ensure their environments positively influence their health. Although the three-year pilot ended May 31, Congress approved July 20 the Independence at Home Act (Senate Bill 971), which will extend the program another two years.

Earlier this year, Medicare announced a plan to tie 30 percent of Medicare payments to quality and value through alternative payment models — like the Independence At Home program — by 2016. By 2018, the percentage would grow to 50 percent of payments. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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PEOPLE

ON THE MOVE ARCHITECTURE Susan Haifleigh

Haifleigh

to senior interior designer and studio director, JPRA Architects, Farmington Hills, from director, Diamonte Design LLC, Northville.

CONSULTING

Mary Zatina

Norman Fenton to executive chef, Tom’s Oyster Bar and Ale Mary’s Beer Hall, Royal Oak, from executive sous

chef, Bistro 82, Royal Oak. Zatina Jerome Fosset to assistant food

and beverage director and manager, The Corner, the Townsend Hotel, Birmingham, from beverage and food manager, W Hollywood, part of Starwood Hotels and Resorts Worldwide Inc., Hollywood, Calif.

Joel Radner to sales manager,

round tools division, North America, Seco Tools LLC, Troy, from market segment specialist for aerospace and power generation, Colchester, Conn.

Stapleton

Amy Schneider and Mark Stapleton to equity partners, G2 Consulting Group LLC, Troy. Both are project managers.

MARY ZATINA, senior vice president, government relations and community affairs, Beaumont Health

dent, Coca-Cola Refreshments, Atlanta.

MANUFACTURING

Schneider

SPOTLIGHT

Radner

ENGINEERING MARKETING

has been appointed senior vice president of government relations and community affairs at Southfieldbased Beau-

mont Health.

In this role, her responsibilities will include managing government relations for Beaumont Health and managing community affairs. Previously, she served as senior vice president, government relations and corporate communications at Oakwood Healthcare Inc., leading marketing, communications, public relations, community health and government relations. Zatina, 55, earned a bachelor’s degree in mass communications and English from Wayne State University. Her responsibilities for Oakwood Healthcare’s marketing and communications will transition to Margaret Cooney Casey.

Melinda Conway Callahan to chief

Burton

MacDonald Solack

James Burton and Michael MacDonald to vice presidents/partners, Hubbell, Roth & Clark Inc., Bloomfield

Hills, from associates.

FINANCE Feras Shamma -

Uyeda Callahan

Jason Solack to vice president, O2 Integrated division, Gongos Inc., Auburn Hills, from senior director. Also, Crystle Uyeda to director, business development, from research strategist.

mi to vice presi-

dent, treasury management deposit officer, Level One Bank, Farmington Hills, from business banking reShammami lationship manager, J.P. Morgan Chase & Co., Detroit. Rhett Rowe to

president, Capital for Merchants, North

Rowe

NONPROFITS Dan Ginis to senior vice president and chief development officer, Michigan Humane Society, Bingham Farms, from director of development, Ginis Gerald R. Ford School of Public Policy, University of Michigan, Ann Arbor.

American Bancard LLC, Troy, from

Kristine Chandler to director of

senior regional director, Great Lakes Business Credit LLC, Troy.

development, North Star Reach,

FOOD Troy Ellis to ex-

Ellis

ecutive vice president, supply chain, Domino’s Pizza Inc., Ann Arbor, from senior vice presi-

Chandler

Ann Arbor, from consultant, ArtCenter Traverse City, Traverse City.

Diane Dupuis to development director, Legacy Land Conservancy, Ann Arbor, from legacy and major gifts officer, Grand Traverse Regional Land Conservancy, Traverse City.

development officer, Focus: Hope, Detroit, from chief development officer, Forgotten Harvest, Oak Park.

REAL ESTATE John Kuriakuz to partner, Alidade Capital LLC,

Bloomfield Hills, continuing as director of acquisitions. Also, Robert Jones to vice president, asset management, from diJones rector of real estate, Art Van Furniture Inc., Warren.

TECHNOLOGY Matthew Dills to vice president, human resources and chief human resources officer, ITC Holdings Corp., Novi, from executive vice president, human resources and talent management, Hylant Inc., Toledo, Ohio.

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.

DEALS & DETAILS CONTRACTS Pelham Services LLC, Dearborn,

has signed an agreement with U-Haul International Inc., Phoenix, as a U-Haul neighborhood dealer. Website: uhaul.com/locations.

battery energy for plug-in hybrids through a combination of global positioning systems and topographical road data. Website: mahle.com. Gardner-White Furniture Co. Inc., Auburn Hills, announced that bedding by Sealy Corp., Trinity, N.C., is now available at all Gardner-White retail locations. Website: gardner-white.com.

NEW SERVICES The Whitney restaurant, Detroit,

Arotech Corp., Ann Arbor, a provider of defense and security products for the military, law enforcement and homeland security markets, has received $8.7 million in new awards and contract modifications since the beginning of the second quarter. Website: arotech.com.

NAME CHANGE Professional Engineering Associates Inc., Troy, a civil engineering,

land surveying and landscape architecture consulting firm with a branch office in Howell, has changed its name to PEA Inc. The company logo will not change. Website: peainc.com.

has launched a new website, designed by Big Bang Detroit, Detroit. Website: thewhitney.com. Altair Engineering Inc., Troy, announced that Elysium Co. Ltd., Hamamatsu, Japan, has joined the Altair Partner Alliance, adding its 3-D geometry healing and translation software CADdoctor. Websites: altairalliance.com, elysium-global.com. Domino’s Pizza Inc., Ann Arbor, has launched its new app for Apple Watch, which includes Domino’s Tracker. Customers can now track their order. The app can be downloaded at the App Store for Apple Watch. Website: dominos.com.

NEW PRODUCTS BrassCraft Manufacturing Co., Novi, a Masco Corp. company and

manufacturer of plumbing and flow control products, has launched an updated excess flow valve that conforms to the new industry standard. It helps protect against gas-related fires and explosions. The valve installs horizontally or vertically and has no parts that can wear, break or misalign over time. Website: brasscraft.com. Mahle Powertrain LLC, Farmington Hills, part of Mahle Group, has developed control software that can manage the consumption of

STARTUPS Pizza @ Annabel Cohen Cooks Detroit, a carry-out pizza restaurant,

has opened at the Crosswinds Plaza, 4301 Orchard Lake Road, No. 155, West Bloomfield Township. Telephone: (248) 562-7409. Website: annabelcohencooksdetroit.com. Deals & Details guidelines. Email cdbdepartments@crain.com. Use any Deals & Details item as a model for your release, and look for the appropriate category. Without complete information, your item will not run. Photos are welcome, but we cannot guarantee they will be used.

CALENDAR WEDNESDAY AUG.5

Selling Smart Workshop : Strategies for Selling Professional Services.

11 a.m.-1 p.m. Ann Arbor Spark. Learn how to close more service contracts by following a systematic approach. Ann Arbor Spark. Free. Registration ends 24 hours before the event. Contact email: alissa@annarborusa.org.

THURSDAY AUG.6

Cuba: The Next Frontier. 8-11:30 a.m. Automation Alley. What does the normalization and restoration of U.S.-Cuban diplomatic relations mean for U.S. business and industry? Speakers: Noel Nevshehir, director, international business, Automation Alley; Jeffrey DeLaurentis, chief of mission, U.S. interests section — Cuba; Dana McAllister, executive director, Cuban-American Chamber of Commerce. Automation Alley head-

quarters, Troy. $20 members, $40 nonmembers, $30 walk-in members, $50 walk-in nonmembers. Preregistration ends Aug. 4. Contact: (800) 427-5100; email: info@automationalley.com.

UPCOMING EVENTS Best Strategies in Supplier Diversity Luncheon. Noon-2 p.m. Aug. 19. Diversi-

ty Information Resources. Speaker: Eric Holder Jr., former U.S. attorney general. $124. Detroit Marriott Renaissance Center. Contact: Betsy Gabler, (612) 781-6819; email: info@ diversityinforesources.com. Calendar guidelines. Visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

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Q&A: Julie Fream, Original Equipment Suppliers Association

Suppliers association zeros in on Mexico, new-tech firms The number of assembly plants under construction in Mexico is starting to cause headaches for auto suppliers. Tier-one companies are struggling to build networks of tier-two and tier-three suppliers in Mexico because smaller vendors are reluctant to shoulder the financial risk, said Julie Fream, CEO of the Original Equipment Suppliers Association.

“The big suppliers are setting up plants, but it’s very difficult to get the smaller suppliers to do so,” said Fream, 51. “Generally, sales to (only) one customer will not support setting up a plant. That’s the biggest challenge we’re hearing about.” With 450 member companies that generated combined sales of $300 billion last year, OESA acts as an advocate for suppliers in North America. Before Fream joined the industry group in 2013, she spent 30 years in a variety of engineering, sales and planning jobs at General Motors, Ford Motor Co., TRW and Visteon Corp. She spelled out her priorities in a July interview with Automotive News, a sibling publication to Crain’s Detroit Business. Among the highlights from that Q&A: In recent years, a lot of automakers have built plants in Mexico. How has OESA responded?

We do have members that are headquartered in Mexico. So that is part of our reach. We also work with

INA (Mexico’s supplier association). The big challenge for suppliers in Mexico is developing a network of tier-two and tier-three vendors. So there’s a shortage?

Correct. The big suppliers are setting up plants, but it’s very difficult to get the smaller suppliers to do so. Generally, sales to one customer will not support setting up a plant. That’s the biggest challenge we’re hearing about. Does OESA play matchmaker be tween big and small suppliers?

We have been asked to provide lists, and we do so. Members will say, “We need a supplier who can make a certain type of plastic molding. Do you know anyone who can do this in Mexico?” And we’ll find a supplier that fits their needs. How many OESA members have plants in Mexico?

A very significant percentage has some kind of facility in Mexico. It’s got to be 60 percent or more. What are OESA’s top priorities this year?

We are focusing on the new-technology suppliers. We’re making sure that we’re bringing in those new suppliers (as members) and offering them the services they need. The other priority is to make sure we have a global presence. That doesn’t mean we’ll open offices all

“Generally, sales to one customer will not support setting up a plant. That’s the biggest challenge we’re hearing about.” over the globe, but we want to make sure we can assist our suppliers in Europe, Japan or elsewhere.

ture parts. But our supplier membership has gone up, which is a good thing. That’s our core group. Some time ago, your predecessor in troduced a model terms-and-condi tions contract. Have you updated it?

Our latest effort is a model contract for three-party agreements. Let’s say an automaker directs a tier-one supplier to use a particular tier-two vendor. Our (model contract) creates the right environment for those three-way discussions. We reviewed it with several automakers, and it’s been adopted by at least one. So that’s a win, right?

When you talk about new-technolo gy suppliers, are you talking about software developers, chipmak ers, infotain ment?

Those are the biggest groups. It’s what you hear about in the press all the time. But there are others, (such as suppliers of) lightweight materials like carbon fiber. This is a complex market. We want to make sure they can network. Have the new-tech suppliers in creased OESA’s membership?

We have more than 450 members, and that’s really consistent. We have seen a demographic shift. Our affiliated membership has gone down a little bit. That includes people who are connected with the auto industry but don’t manufac-

Royal Oak development gets $4.5M loan

It’s a big win, and we had another win that I can tell you about. I’ve

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A $48 million mixed-use development planned for downtown Royal Oak received $4.5 million in Michigan Community Revitalization Program funding from the Michigan Economic Development Corp. The project at 400 N. Main St., proposed by Southfield-based Ver sa Development LLC and Royal Oakbased CG Emerson Real Estate Group through an entity called Trailhead RO LLC in Southfield, is planned to consist of a 120-room Hyatt Place hotel, a mixed-use building with 56 apartments, and retail and office space. Planned for 3.56 acres north of 11 Mile Road and west of North Troy Street, the project would also include a 325-space parking deck. According to an MEDC memo, the site houses a former car dealership that has been closed since 2008. The site has three buildings totaling more than 40,500 square feet that will be demolished. They housed showroom, administrative, maintenance and body shop operations. The developers plan to start demolition this fall, and construction is likely to take 18-24 months to complete, said Tim Thwing, the

Does your council presence allow you to speak frankly about issues that suppliers might not be willing to com municate directly to the company?

Yes. We’ve been told by many automakers that they appreciate that. Our relationships with the automakers are better than ever. Are OESA’s members upbeat?

The mood is good. We’re seeing some uneasiness about Greece and China, but the mood is good, and the production numbers are very strong. But we all realize that the shoe will eventually drop and eventually there will be a downturn. The question is when. 䡲

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An artist’s rendering of the Trailhead RO LLC development in downtown Royal Oak. city’s director of planning. Other financing for the project is expected to include a $34.75 million loan from Fifth Third Bank; $6.5 million in equity from Develop Michigan; $480,000 from Hyatt Corp., the hotel’s franchiser; and $4.1 million from the ownership team, according to the memo. Tax increment financing from the city amounts to up to $3 million in reimbursements. Previous proposals for the site included an $18 million Kroger Co. store development that was widely

opposed by some residents and local competitors. The site was purchased from Ally Bank out of foreclosure in 2012 and the city has approved rezoning and final site plans for the site, the memo says. The MEDC board approved the MCRP performance-based loan last week. The developers still need to apply for building permits. 䡲 Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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NHTSA uses Fiat order to clean up industry on safety By Ryan Beene Crain News Service

WASHINGTON — The National Highway Traffic Safety Administra tion ’s recent consent decree with Fiat Chrysler Automobiles seeks to punish and remedy the automaker’s safety shortcomings while also addressing recall issues vexing the entire auto industry. The agreement and its recordsetting $105 million penalty stemmed from a NHTSA probe into violations that occurred in 23 Fiat Chrysler safety recalls since 2009. But the terms of the pact, especially its list of nearly 30 “performance obligations,” also are designed to spread and cement the lessons of recent safety crises involving General Motors, Takata and Honda. “It doesn’t have any teeth with other OEMs, but what it’s trying to do is set up a model or a standard of behavior within the industry,” said Clarence Ditlow, executive director of the Center for Auto Safety here and a vocal critic of Fiat Chrysler recently. Central to the pact is a top-tobottom revamp of FCA’s current recall and defect practices, a process that will be overseen by an independent monitor who will report to NHTSA and will have broad authority to hire staff and investigate safety

New recall policy could mean dealer penalties WASHINGTON — Fiat Chrysler dealers stand to lose incentive dollars from the automaker if they sell used cars with open, unrepaired recalls under a new policy ordered by U.S. regulators. The policy is outlined in the 36-page consent agreement between Fiat Chrysler and the National Highway Traffic Safety Administration, imposed July 24 for violations of U.S. auto safety laws tied to 23 FCA recalls. According to the agreement, FCA US must “develop and implement a process to deter dealer sales of unremedied vehicles subject to a recall.” That will include training to reinforce FCA’s existing policy against selling cars with open recalls. It also calls for “imposing a financial penalty … and/or prohibiting any dealer from receiving any incentive from FCA US, if the dealer sells an unremedied recalled vehicle regardless of issues. That represents a deeper level of scrutiny than similar consent orders imposed on GM and American Honda Motor Co. in the last 18 months. “What you’ve seen is an evolution of the consent orders to try and get more and more future safety,” NHTSA Administrator Mark Rosekind told reporters last week. “What started in GM with some independent oversight has clearly evolved now to having a monitor, which was used by DOJ previously

whether new or used.” It’s illegal to sell new cars with open recalls, but no such law exists for used cars. Dealer groups have opposed recent legislation introduced to ban the sale of used cars with unrepaired recalls. The National Automobile Dealers Association said one such bill recently proposed by U.S. Sen. Richard Blumenthal, D-Conn., would diminish the value of millions of used cars and ground vehicles recalled for minor compliance issues such as a typo in an owner’s manual. Details of how the policy will work are still unclear. A Fiat Chrysler spokesman said the automaker was still developing the policy in the days after the consent order with NHTSA was announced last week and said dealers would be briefed when it was finalized.

with Toyota. We have tried to take the best of what we learned from every one of these and continue to improve each one of these actions.” That approach may help NHTSA satisfy some of the public demand for tougher safety standards and enforcement, even as legislative efforts to strengthen auto-safety laws and boost regulators’ resources languish in Congress. “This may be a way for NHTSA to leverage its limited manpower in

Ryan Beene

the enforcement area by requiring this independent monitor to do a lot of the legwork that NHTSA can’t do itself because it doesn’t have the person-power to do it,” said Allan Kam, a former NHTSA enforcement attorney and safety consultant. For example, the deal calls on FCA to impose penalties, such as withholding incentives, on dealers that sell unrepaired recalled vehicles, new or used. (See inset box) That’s aimed squarely at tightening the so-called used-car loophole that

has allowed unrepaired used cars to be sold to unwitting buyers, as was the case with Carols Solis IV, who died in Texas in January from injuries caused by a defective Takata airbag in a Honda Accord he had bought secondhand. Federal and state lawmakers have proposed several bills to close that loophole in the past year, but they have faced resistance from dealers and industry lobbyists who consider it too burdensome. NHTSA will make FCA ease that burden, ordering it to lead an effort to compile recall data — based on vehicle identification numbers — from other automakers to be made available for bulk recall searches, a key need for dealers seeking to check their used-car inventories for recalled cars. Another provision bars FCA from postponing a decision about whether to issue a recall until it finds a root cause or a proposed fix. That was a factor in both the GM switch and Takata airbag cases. Under the deal, Fiat Chrysler must help improve recall participation industrywide. It will be required, for example, to develop and “scientifically” test options for making recall notifications more effective. From Automotive News

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Suppliers speed their quest for software talent ticular component, Juliussen said. As suppliers beef up their software development, the hunt for software talent has taken on Kyle Entsminger: the urgency of a Background in video gold rush. games, special To cope with effects. the software engineer shortage, suppliers such as Van Buren Township-based Visteon Corp. are turning to unconventional sources — such as the movie and video game industries — to recruit people such as Innovation Manager Kyle Entsminger. Before he joined Visteon’s advanced product design team in 2011,

Entsminger, 34, earned his software chops as a video game developer and special effects editor for the movie industry. Now, he’s working on a new graphic display for a concept cockpit that may, among other things, feature 3-D images, perhaps even holograms. Before he joined Visteon, Entsminger ran his own Dallas-based video game company, Perpetual FX Creative. Entsminger developed expertise in gesture control when he designed the “Alien Monster Bowling League” game for Nintendo. But his company ran out of money in 2010 when it produced an ill-fated rodeo game for some Texas oilmen. Sony eventually shut down that project, and Entsminger moved back to Detroit, where he had grown up, with his fiancée. After an encounter

with a Visteon executive at a party, Entsminger joined the company. While infotainment accounts for the lion’s share of a vehicle’s software, collision avoidance generates the second biggest chunk of code. Because it’s a safety technology, some automakers prefer to develop portions of the software in-house. But even companies such as BMW and Volvo don’t write all their software. Which is why more than 70 percent of chipmaker Nvidia’s 9,500 employees are engineers — most of them software developers. One of them is Mike Houston, a 36-year-old senior software engineer who helped “train” Nvidia’s Tegra X1 graphics chip, which will power future collision avoidance systems. Houston is an expert in networks that help computers identify previ-

ously unseen objects. For autonomous vehicles, the biggest problem on city streets is a vehicle or object that the computer can’t identify and thus cannot anticipate. The solution: Let each vehicle consult a central supercomputer, which identifies the obstacle by analyzing millions of images transmitted from other cars. While infotainment and collision avoidance require the auto industry’s most cutting-edge software, the entire vehicle is getting smarter. By 2020, sales of semiconductors for “body and convenience” (i.e. adjustable seats, self-dimming LED headlamps, etc.) will rise 43 percent from 2014, according to an IHS forecast. And sales of semiconductors for powertrains are expected to jump 40 percent. That means the industry will continue poaching software talent. 䡲

the information is going after that.” Mark Griffin, partner at Keller FROM PAGE 1 Rohrback LLP in Seattle and attorney would overtake even the $415 mil- for the nurses, said DMC could get a lion deal that Apple Inc., Google Inc., credit against its judgment for the Intel Corp . and Adobe Systems Inc . settlement sums its competitors reached earlier this year to settle have already paid. But whatever a claims they suppressed wages and judge or jury finds the lost wages mobility through agreements not to were, the damages could be tripled poach or solicit each other’s em- and some additional costs could be ployees. borne by the defendants for any anThat agreement, which went for titrust law violations. a final approval hearing in July be“The allegations are such that, fore U.S. District Judge Lucy Koh in under antitrust law, DMC can be California, covers more than 64,000 held jointly and severally liable for software engineers and other tech all of the uncompensated damages sector employees over a five-year of the entire conspiracy” if the hosperiod. It is second in size only to an pital goes to trial and loses, he said. employment lawsuit against the Veronica Lewis, a litigation partfederal government that settled in ner at Gibson, Dunn & Crutcher LLP 2000 for $508 million, after 23 years and co-trial counsel for DMC in the lawsuit, said late last week the comin court, according to Bloomberg. But if the nurses fetch even a frac- pany would not comment on the tion of that at trial, attorneys said, the case. DMC officials have consistently DMC could still end up paying as much or more than all the settling denied colluding with other hospitals on nurse wages in court, but hospitals combined in the case. Patricia Nemeth, owner of De- have acknowledged the hospital troit-based employment law firm system used wage and benefit data Nemeth Law PC, said wage collusion in third-party surveys or communiclaims are fairly rare against em- cation with other hospitals to help ployers, and she was surprised peg its wages to a “median of the when the nurses’ lawsuit market,” while staying first made headlines severwithin its own budget conal years ago. But the case straints, according to court could be instructive for documents. employers who sometimes Attorneys for DMC have seek wage and benefits said in the past that the data from their competicompany is “right on the tors to get a sense of the law” and was not considerlabor market. This might ing its own settlement. happen when bargaining Patricia Nemeth: Be that as it may, Rosen with employee unions or Wage collusion in late July ordered both claims fairly rare. making specific hires. sides to appear for a settleIn most cases, she said, ment conference Sept. 14 not every employer will volunteer before Layn Phillips, CEO of Califorthat information and it’s best if it nia-based Phillips Alternative Dispute gets exchanged as a ministerial Resolution and former federal judge. function — not among administra- Attorneys told Crain’s that meeting tors or decision-makers within is likely to be a routine one, before trial proceedings start the next day. companies. Nemeth and other attorneys said “If it’s done at a lower level of the organization, like an HR generalist going it alone in court when your talking to their counterparts, that’s co-defendants have settled isn’t alnot anyone making administrative ways foolhardy. Some defendants decisions and that wouldn’t invite may have less evidence against as much suspicion,” she said. “But them than others did, or have a betyou’d also need to monitor where ter appetite for risk — or see an im-

portant principle or business practice at stake. “There certainly have been cases where one party holds out and goes to trial, and (some can) get off,” said Larry Saylor, senior principal at Miller Canfield Paddock and Stone PLC who specializes in class-action and antitrust litigation defense. “It may just be that they’re less risk-averse than the other companies and it doesn’t reflect on the strength of the case.” Saylor is not involved in the DMC nurse dispute, but pointed to a 1990s class action on behalf of more than 40,000 pharmacies. This claim originally alleged about a dozen

drug manufacturers and wholesalers had colluded to charge retailers higher prices on brand-name drugs. Eight of those companies had settled for more than $700 million combined before trial, but a handful of holdouts won a defense verdict that was upheld by the 7th U.S. Circuit Court of Appeals in 1999. In the DMC case, the hospital system also asked Rosen in July to consider delaying the trial until the U.S. Supreme Court can rule on an appeal from Arkansas-based Tyson Foods Inc. The high court agreed in June to hear the Tyson case on whether a

class action can be certified under the federal Fair Labor Standards Act, when liability and damages are computed for the class based on the “average” observed within a statistical sample of plaintiffs. The hospital contends that a Supreme Court ruling in favor of Tyson could require a decertification of the class action in the nurses’ case, and the trial should go on hold until a ruling comes down sometime next year. Rosen has yet to rule on that request, but so far a Sept. 15 trial date is unchanged. 䡲

By David Sedgwick Crain News Service

Software is king. Now that smart cars can evade road obstacles, display 3-D maps and respond to voice commands, the software and electronics hardware for these features can cost more than a vehicle’s raw metal. According to an estimate by Southfield-based IHS Automotive, the price tag for a vehicle’s software can range from $350 to $1,050. The electronics hardware — that is, the computer chips, displays and user controls that put this software to use — can add another $2,000 to $6,000 to a vehicle’s cost, says Egil Juliussen, an IHS researcher. “Software is the major factor, and in some cases the deciding factor” in an automaker’s decision to buy a par-

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GREEKTOWN FROM PAGE 1

Gratiot Avenue to the north, Randolph Street to the west, East Lafayette Street to the south and the Chrysler Freeway to the east.

Test run Business owners said they consider blocking off Monroe Street to cars as a test mission. “We want to first test this to see how it works — see how owners and our Tasso Teftsis: guests like it — Astoria co-owner and then we will wants to test this go from there,” first. said Teftsis, who is co-owner of Astoria Pastry Shop , Red Smoke Bar beque and the Krema pastry and coffee shop, all in Greektown. All of those establishments feature outdoor dining. In addition to those three restaurants, others including outdoor dining for the next month are Santorini Estiatorio , P a p p y ’ s B a r & G r i l l , Golden Fleece Restaurant , Plaka Café and Pizza Papalis. Expanding Greektown at Sundown west to Brush would encompass Fishbone’s and Firebird Tavern. “Hard to believe Greektown hasn’t (already) had more outdoor dining,” Gibbs said. The overall event series fits in snuggly with a variety of other existing and planned pedestrian-friendly urban experiences in Detroit. There’s the 2.5-acre Campus Martius in the downtown core, complete with live music and pickup basketball games during the warmer months and food trucks to satisfy the appetite. There’s the planned cousin park to Campus Martius, a $5 million to $10 million effort by DTE Energy Co. to create a public 1.5-acre park across from its headquarters off of Third Street in western downtown. The park is Robert Gibbs: expected to feaLack of outdoor ture a restaurant; dining in Greektown an outdoor café; “hard to believe.” half-field games of soccer, Frisbee and other sports; and entertainment spaces for live music, movies and theater. And then there’s Eastern Market , the local foodie’s paradise of fresh produce and specialty food goods. The change at Greektown builds “around the strengths of that particular neighborhood, which are restaurants,” said Dan Carmody, president of Eastern Market Corp. “A more creative use of streets is something we need more of in the metropolitan area, especially in Detroit.” There are also planned pedestrian-friendly and walkable areas folded into the Ilitch family’s The District , the family’s name for the sprawling planned development of a new hockey arena for the Detroit

COURTESY OF ROCK VENTURES LLC

A fire artist performs on Monroe Street in Greektown, a preview of Greektown at Sundown summer events on weekends through Labor Day. ness? Is it increasing some and not all? We have to weigh all those variables,” he said. “We want to first test this to see how it works, see how owners and our guests like it and then we will go from there.” The Greektown Preservation Society has been in talks about the event series — LARRY PEPLIN which was anEric Larson, CEO of the Downtown Detroit Partnership, says the Greektown project is being done with nounced last week comparatively little money. — since January, according to AthiRed Wings and other ancillary devel- Larson said. na Papas, co-owner of Santorini. That, he said, makes Greektown at opment over 45 city blocks totaling Although the preservation socieSundown a model that could easily be ty spearheaded the effort, a portion $650 million. Also in the works: Making the replicated on certain portions of Mid- of the funding as well as organizaCapitol Park area more pedestrian town and Capitol Park, for example. tional chores were done by Dan “It’s flexible,” he said. friendly by closing Shelby Street on Gilbert’s Rock Ventures LLC, Opportunity Detroit and the Greektown Casi the west side of the park to vehicle National trend no-Hotel, which Gilbert owns. traffic and narrowing Griswold Street Closing the one-block stretch of During Greektown at Sundown, on the east side to two lanes and widening sidewalks, said Robert Gre- Monroe will — however temporary, from 6-9 p.m. there will be live, gory, senior vice president of the DDP. however small — give it the feel of mostly acoustic music for diners to Combine those efforts and oth- other urban pedestrian malls enjoy while eating. In addition, ers into Detroit, and a truly walka- throughout the country, such as the there will be features such as Kalamazoo Mall, the nation’s first; the strolling cirque performers, interacble downtown seems possible. “It really is about continuing to 11-block Nicollet Mall in Minneapo- tive art installations (like paint-byfind appropriate ways, as Detroit lis; State Street in Madison, Wis.; numbers), character sketch artists transitions, to demonstrate that we and the 1.25-mile 16th Street Mall in and chalk artists. Art is being curated by 1xRUN, a Detroit-based online need to have walkable, accessible Denver. Some of the things Teftsis and art retailer run by Inner State Gallery urban environments,” said Eric Larson, CEO of the Downtown Detroit other members of the preservation in Eastern Market. Partnership and founder, president society will evaluate when deterSupporters and CEO of Bloomfield Hills-based mining whether to bring Greektown Larson Realty Group. Restaurant patio furniture was at Sundown back in the future are What is unique about the Greek- public safety, as well as the event se- donated by IKEA, and Shinola/Detroit LLC donated three bike racks. IKEA, town project is that it is being done ries’ impact on their bottom lines. with comparatively little money, “Is it increasing everyone’s busi- commercial interior design firm

dPOP! and Detroit’s Hellenic Museum of Michigan donated window dis-

plays. Eric Perry, an award-winning photographer, will host his “Forward” exhibit on the “Slow Roll” bike ride in a pop-up gallery at 567 Monroe. The combination of live entertainment, outdoor dining and other activities is a plus for Greektown and shows that organizers are helping the area move in the right direction, Gibbs said. “I say good for them,” he said. “Smart move.” Mark Nickita, co-founder and president of Detroit-based architecture and planning firm Archive DS , called the summer event series “a terrific way to engage people into this historically prominent district.” He pointed to the outdoor seatMark Nickita: “A ing as a key eleterrific way to ment of the plan, engage people” in giving restauGreektown. rants with that feature an advantage. “It becomes critical for a restaurant or café to identify ways to incorporate some type of outdoor seating in order to maximize their potential,” he said. Nickita also said portions of the Harmonie Park area, Capitol Park and Grand Circus Park downtown, as well as Canfield Street in Midtown and Bagley Street in Mexicantown, could be well served by becoming more consistently pedestrian-friendly. 䡲 Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB Natalie Broda contributed to this report

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CRAIN’S

NAGLER

DETROIT BUSINESS

FROM PAGE 3

www.crainsdetroit.com

included a three-week trip to Spain. So at age 43, in 1983, Nagler sold his muffler business and opened his photography shop. Over the next 32 years, Nagler, now 75, wrote a column on photography for the weekly Observer & Eccentric newspaper chain and had six books on photography published. He still teaches classes at Schoolcraft College in Livonia and gives seminars in the Upper Peninsula and at Interlochen Center for the Arts in northern Michigan. During the 2008 recession, annual revenue at Nagler Fine Art dropped. It had been growing at 20 percent a year and peaked at $360,000, said Mickey Nagler, adding that revenue could come back to that amount this year. Besides his wife, Nagler employs a graphic designer and an office manager. The Naglers also count Simon, a border collie, as the official company greeter. An average piece of health care art, matted and framed, could run $400 to $600. Larger ones for hospitals, framed in glass, could run about $1,200. Photographs also can be mounted on aluminum or acrylic backing, he said. Nagler also sells photographs to Art Van Furniture , Barnes & Noble , other companies and dozens of hospitals in Michigan and around the world.

Editor-in-Chief Keith E. Crain Group Publisher and Editor Mary Kramer, (313) 446-0399 or mkramer@crain.com Associate Publisher Marla Wise, (313) 446-6032 or mwise@crain.com Executive Editor Cindy Goodaker, (313) 446-0460 or cgoodaker@crain.com Managing Editor Jennette Smith, (313) 446-1622 or jhsmith@crain.com Director, Digital Strategy Nancy Hanus, (313) 4461621 or nhanus@crain.com Managing Editor/Custom and Special Projects Daniel Duggan, (313) 446-0414 or dduggan@crain.com Assistant Managing Editor Kristin Bull, (313) 446-1608 or kbull@crain.com Senior Editor/Design Bob Allen, (313) 446-0344 or ballen@crain.com Senior Editor Gary Piatek, (313) 446-0357 or gpiatek@crain.com Research and Data Editor Sonya Hill,(313) 446-0402 orshill@crain.com Web Producer Norman Witte III, (313) 446-6059 or nwitte@crain.com Editorial Support (313) 446-0419; YahNica Crawford, (313) 446-0329 Newsroom (313) 446-0329, FAX (313) 446-1687 , TIP LINE (313) 446-6766

REPORTERS

COURTESY OF BEAUMONT HOSPITAL-WAYNE

Beaumont Hospital-Wayne has purchased more than 200 photographs over the past six years, CEO Eric Widner said.Among them is this Monte Nagler panoramic view of Detroit. His works “resonate with patients and staff,” Widner said.

Technology changes For years, Nagler used a Linhof Technika IV camera that uses 4-by5-inch sheet film. He would set up the heavy camera on a tripod, get under a black cloth, put the 4-by-5 plate on and start shooting away. He still has hundreds of high-quality pictures from that camera. “When we began our health care program, I had lots of color photographs,” he said. “The 4-by-5 camera has such good quality, we can use it for very large pictures in hospitals.” Now, Nagler is all-digital and uses two cameras — a Canon 5D Mark 3 with 51-megapixel quality and a Canon 5D original version that has been converted into an infrared camera for special photos. “We get calls to blow up pictures to 15 and 26 feet. The digital cameras give us high quality,” he said.

Monte Nagler’s 18-foot canvas hangs at Beaumont Hospital-Troy.

COURTESY OF MONTE NAGLER FINE ART LLC

Nagler has an 89-foot wall mural in the entrance of Henry Ford Hospi tal in Detroit, an 18-foot-tall canvas at Beaumont Hospital-Troy and recently installed 72 photographs in the surgery areas at Beaumont Hospital-Wayne, the former Oakwood Annapolis Hospital.

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: 1000 Degrees Pizzeria ......................................111 Archive DS ........................................................ 20 Armada Real Estate ........................................ 12 Beaumont Hospital-Royal Oak ......................114 3 Beaumont Hospital-Wayne ..............................3 Blaze Pizza ..........................................................111 Carlson, Gaskey & Olds .................................... 9 Detroit Lions ...................................................... 7 Detroit Medical Center ......................................11 20 Downtown Detroit Partnership ....................2 Eastern Market ................................................ 20 Fiat Chrysler Automobiles ..............................118 Gibson, Dunn & Crutcher ................................119 Gibbs Planning Group ........................................ 1 Greektown Preservation Society ......................11 Howard & Howard ............................................113 6 Just Baked ..........................................................6 Keller Rohrback ................................................ 19 Lamar Advertising ............................................ 4 Little Caesars Pizza............................................111 Michigan Department of Natural Resources.... 3 Miller Canfield Paddock and Stone ................119

Mod Pizza ............................................................111 Monte Nagler Fine Art ...................................... 3 Nemeth Law ...................................................... 19 Northland Investments....................................112 O’Connor Realty Detroit .................................. 13 Original Equipment Suppliers Association ....117 Outfront Media .................................................. 4 PACE of Southeast Michigan ..........................115 Pie Five Pizza ...................................................... 11 Pieology Pizzeria ................................................111 Project Pie .......................................................... 11 21 St. Joseph Mercy Oakland Hospital................2 Skidmore Studios .............................................. 5 Stokas-Bieri Real Estate ..................................111 Summit Commercial........................................ 12 Team Schostak Family Restaurants ..............112 TI Automotive .................................................... 5 Tubby’s ................................................................ 6 U.S. Medical Management ..............................115 University of Michigan ................................ 6, 14 University of Michigan Hospital......................114 Vitamin Health .................................................. 9

“When I am out photographing, I am always thinking health care,” he said. “Would it relax a patient? A photographer needs to picture what motivates him or her.” Recently, Nagler sold about 35 pictures to St. Joseph Mercy Oakland Hospital in Pontiac for a new eightstory patient tower.

decorating the walls. It was better than a sterile wall, but people react to … familiar things,” Weiner said. “When they see a lighthouse in western Michigan, they say, ‘I was there on vacation!’ and that brings back positive memories.”

St. Joseph healing arts

At Beaumont-Wayne, CEO Eric Widner said he became familiar with Nagler 10 years ago. Widner originally purchased ceiling photographs for the hospital that patients could look up at while lying down for an MRI. “As we have upgraded and renovated, we use Monte’s photographs in our departments,” he said. “His work is exceptional, capturing serene concepts that resonate with patients and staff.” Over the past six years, Widner said, the hospital has purchased more than 200 photographs for the emergency department and cardiac catheter lab, and a 6-by-16-foot photograph covers the entire wall of the west entrance of the outpatient lobby. “We have a panoramic view of the Detroit River, from Windsor facing Detroit,” Widner said. “He shot it in color, but we had it converted to black and white. It is very striking.” Nagler said some of his favorite themes cover waterfalls, forests, mountains and gardens. Mickey Nagler said many studies and articles have been published about how the imagery in photographs or paintings can physiologically affect people. “It becomes a positive distraction,” she said. “You start focusing in on the art and are less focused on (the procedure). Your heart rate goes down, and less medications are necessary. Brain tests have shown you have less anxiety.” Weiner said that to relax, he often goes out into the St. Joseph Mercy lobby — where there is a waterfall, calming music and artwork. Nagler said hospital administrators tell him patients leave sooner in a healthier state of mind and body. “Proper art, music, lighting,” he said, “saves them money.” 䡲

St. Joseph CEO Jack Weiner said the hospital’s healing arts program is integrated into its overall effort to improve the quality and outcome of patient care. Early last year, St. Joseph Mercy Oakland opened a $135 million south patient tower with 136 staffed private rooms — and more than 200 pieces of art, all from Michiganbased artists including Nagler. Weiner said the 301,000-squarefoot wing was designed as a safe and calm “healing environment” for patients and families and to feature some of the most cutting-edge medical technologies possible. “There is a tremendous amount of literature about impact of environment on the healing process,” Weiner said. “The shapes, configuration of design, color, lighting, art, sound, all the visual acuities go together to create an environment where people feel they can heal, both overtly and subconsciously.” For example, St. Joseph’s seventh floor houses its joint and orthopedic services, featuring art that illustrates rejuvenation, movement, sports and the outdoors. On the other hand, the oncology floor portrays more reflective-type art, he said. “The combination of arts, sounds and technology helps us drive performance,” Weiner said, noting that patient falls at the hospital have been cut 60 percent and that patients recover from illness quicker. “We get lots of comments: It doesn’t feel like a hospital,” he said. “They say it feels like a hotel. They tell us they feel good when they are here.” The veteran hospital administrator said hospitals need to focus on improving their look. “Twenty years ago, we would buy a bunch of posters and say we were

‘Serene concepts’

Jay Greene: (313) 446-0325 Twitter: @jaybgreene

Jay Greene, senior reporter Covers health care, insurance, energy, utilities and the environment. (313) 446-0325 or jgreene@crain.com Chad Halcom Covers litigation and the defense industry. (313) 446-6796 or chalcom@crain.com Tom Henderson Covers banking, finance, technology and biotechnology. (313) 446-0337 or thenderson@crain.com Kirk Pinho Covers real estate, higher education, Oakland and Macomb counties. (313) 446-0412 or kpinho@crain.com Bill Shea, enterprise editor Covers media, advertising and marketing, the business of sports, and transportation. (313) 446-1626 or bshea@crain.com Lindsay VanHulle, Lansing reporter. (517) 6572204 or lvanhulle@crain.com Dustin Walsh Covers the business of law, auto suppliers, manufacturing and steel. (313) 446-6042 or dwalsh@crain.com Sherri Welch, senior reporter Covers nonprofits, services, retail and hospitality. (313) 446-1694 or swelch@crain.com

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ON THE WEB JULY 27-31

Detroit Digits Riverfront A numbers-focused look at the Towers week’s headlines: apartment 454 buildings for sale Number of streetlights workers

he recently renovated Riverfront Towers apartment buildings, with 557 units in two high-rises overlooking the Detroit River off Jefferson Avenue, are up for sale. An asking price is not listed for the buildings, which are owned by Riverfront Tower Holding LLC, controlled by a group of private New York City investors. The Troy office of Berkadia is the broker handling the new listing.

ON THE MOVE 䡲 After weeks of speculation about the direction of the team’s future, the Detroit Tigers traded ace starting pitcher David Price to the Toronto Blue Jays for young pitchers Daniel Norris, Matt Boyd and Jairo Labourt. Price, 29, is eligible for free agency after this season. The Tigers also traded relief pitcher Joakim Soria to the Pittsburgh Pirates for infield prospect JaCoby Jones. 䡲 Maria Thompson was named chairwoman of Detroit-based nonprofit NextEnergy, which promotes advanced energy technologies and businesses. She replaces Robert Buckler, now chairman emeritus. Thompson is entrepreneur-in-residence in the Ann Arbor office of Winter Park, Fla.based venture capital firm Arsenal Venture Partners. Named to the NextEnergy board were Lizabeth Ardisana, principal owner and CEO of ASG Renaissance; Patti Glaza, vice president of Invest Detroit; and Eri Shreffler, managing director for the automotive office at the Michigan Economic Development Corp. 䡲 Alison Davis-Blake is stepping down as dean of the Ross School of Business at the University of Michigan. Davis-Blake, 56, recently told

colleagues at UM that she would be leaving effective June 30, 2016. 䡲 Allyson Martinek, co-host of the “Blaine & Allyson in the Morning” show on Detroit’s WDVD 96.3 FM, is no longer with the station, owned by Atlanta-based Cumulus Media Inc. The circumstances of her departure were unclear.

COMPANY NEWS 䡲 Post-bankruptcy Chassix Holdings Inc. has $300 million of exit financing from PNC Bank and some previous secured bondholders, and a board of directors that includes veterans of the local auto supply chain, the Southfield-based supplier said. Chassix filed for Chapter 11 reorganization in March. 䡲 Flint-based HealthPlus Insurance Co., selling part of its business

are installing along Jefferson Avenue between Grosse Pointe Park and I-375 as part of the Detroit Public Lighting Authority’s residential street lighting program.

$1.985 million The high bid in the recent online auction for Bert’s Warehouse in Eastern Market. The winning bidder was not identified, though real estate adviser Ryan Snoek said he or she is “not local.”

75,000 Square footage of new Masco Corp. headquarters in Livonia, which will open next year. The company is moving from a 400,000-squarefoot space in Taylor.

to Molina Healthcare of Michigan to meet state solvency rules, is offering hundreds of employees voluntary separation from the company as part of its reorganization. 䡲 The Detroit Lions put singlegame tickets for the preseason and regular season on sale entirely through the team’s Flash Seats paperless digital ticketing system. Meanwhile, the Lions and the Detroit Sports Commission made their pitch to have the 2019 college football national championship game at Ford Field as game executives visited the stadium and nearby area. 䡲 Officials announced the relocation of Detroit-based Real Times Media and the Michigan Chronicle newspaper to a new corporate headquarters in the Paradise Valley section of downtown Detroit at 1452 Randolph St. 䡲 Chinese supplier YFS Automotive Systems Inc. plans to build a 150,000-square-foot manufacturing facility on 30 acres of vacant industrial property in Detroit to design, test and manufacture automotive fuel system components. 䡲 Columbus, Ohio-based Huntington Bank will add $5 million in new funding to a microloan program collaboration with the Michigan Economic Development Corp.

and expand the pilot program in Detroit to include all of Wayne County; Macomb, Oakland, Livingston and St. Clair counties; the Lansing area; and the state’s west side. 䡲 Capitalizing on the movement to convenient outpatient care, Detroit-based Henry Ford Health System plans to open its first QuickCare medical clinic this week in the Grinnell Building at 1515

Woodward Ave.

䡲 Doctors Hospital of Michigan in

Pontiac filed for Chapter 11 bankruptcy protection. Hospital officials said they plan to keep the 47bed facility open. 䡲 A new study by Consumer Reports indicates that most hospitals in Southeast Michigan scored poorly on their ability to control patient infections. 䡲 Lazlo LLC, a Corktown-based startup founded by Detroit siblings Christian and Kathryn Birky, is getting ready to launch a sustainable men’s clothing line manufactured and sold by former prison inmates. 䡲 Crossroads Town Center, a 102,275-square-foot shopping center in Howell, was sold for $8 million by Cincinnati-based Viking Partners LLC to Cincinnati-based Phillips Edison Grocery Center REIT II Inc. 䡲 Troy-based Delphi Automotive plc agreed to buy United Kingdom cabling-gear maker HellermannTyton Group plc for $1.7 billion,

Bloomberg reported.

OTHER NEWS 䡲 Wayne County moved closer to state oversight after Gov. Rick Snyder affirmed the county’s financial emergency status, Bloomberg reported. The confirmation came after Snyder said he agreed with a state review team. 䡲 Oak View Hall, the $30 million Oakland University student housing complex that opened last year, received the second-highest award for green building certification from the U.S. Green Building Council. 䡲 Karpinski’s, once a thriving family-owned restaurant and bar along the I-75 service drive in Detroit with roots tracing to 1925, was demolished. The building had been for sale since the restaurant closed in 1999. 䡲 Comerica Bank’s Michigan Economic Activity Index in May had its strongest monthly gain since 2005, growing 3.3 percentage points to 124.8. 䡲 The government says $13 million to $14 million has been recovered so far from Farid Fata, the former Oakland Township cancer doctor sentenced to 45 years in prison after giving unnecessary treatments to patients, AP reported. 䡲 State employees can’t be forced to pay labor unions for negotiating contracts and providing other services, the Michigan Supreme Court said via AP.

OBITUARIES 䡲 Harry Gast, a Republican from Berrien County who served in the Michigan Legislature from 1971 until 2002, died July 30. He was 94. 䡲 John Lobbia, former president, CEO and chairman of Detroit-based DTE Energy and Detroit Edison, died July 24. He was 74.

RUMBLINGS Village’s police reservist program draws biz leaders MLive.com reported. edia reports surrounding David Harvey, director of the Michia police reservist program gan Commission on Law Enforcement in the small Saginaw Standards that oversees police departCounty village of Oakley continue ments across the state, told MLive in to entangle several local business leaders in a controversy — and larg- July that his agency will be involved in any new law that more clearly deer discussion — over guidelines for fines reserve office standards. such programs. The names of 150 people, many of them recognizable from Detroit’s Transformed UM library business community, were released reopens after two years after a court battle over the village’s The $55 million University of resistance to make public the list of Michigan’s Taubman Health Sciences applicants who have donated Library will reopen Monday after money to Oakley in return for retwo years of renovations. serve officer status. Located on UM’s medical school Among those on the list: Matt Cullen, president of Rock campus, the 143,400-square-foot Ventures LLC; Van Conway, president, Taubman library has been transCEO and senior managing director formed into an all-digital learning of Birmingham-based Conway space for future physicians, scienMackenzie Inc.; singer Robert “Kid tists and other health professionals. Rock” Ritchie; Luciano Del The library features Signore, owner of Bacco Risdozens of classrooms, torante in Southfield; and meeting rooms and highBirmingham casino develtech simulated clinic. oper Michael Malik. It is the main hub for Conway told Crain’s that UM’s 780 medical students he gives the village $1,000 and more than 1,100 graduannually and was interate students and postdocviewed by the Internal Revtoral fellows in the schools enue Service criminal inves- Van Conway: It’s of public health, dentistry, tigation unit over the about charity – pharmacy, social work, reservist issue. nothing more. nursing and kinesiology. He said no laws have A gift from the late been broken, and he was unaware shopping mall developer A. Alfred Taubman in 1977 helped fund the of the number of other reservists. original construction of the library. “I’m extremely charitable; a lot of Before his death earlier this year, he those efforts support law enforceprovided input to the renovation ment. That’s all there is to it,” Conplanning. way said. “The money goes to the Construction teams used 1,700 village of Oakley. … A few friends tons of concrete, recycled 1,780 and I went through the training. It tons of material and installed more was part charity, part camaraderie. than 67 miles of data cable. The implication is that we’ve done The project was designed by TMP something wrong. We haven’t.” Architecture and Ballinger ArchitecConway said he hasn’t resigned ture and Engineering and constructed his reservist position because there by the Christman Co. was nothing illegal about it. The Detroit Free Press in March reported that Oakley reservists each pay Detroit Future City launches $1,300 for a uniform, gun and arsearch for future leader mored vest. Detroit Future City has launched “There’s not one example of any a search for a new executive direcof us using the badge in the wrong way,” Conway said. “So, here we are, tor, a search which will be led by Los Angeles-based The Hawkins Co. a year after this mess started and In June, the organization anwhat do we have? We’ve got a village nounced its intentions to become with a bunch of respectful, highan independent nonprofit and that profile reservists. Isn’t there more Ken Cockrel Jr. was stepping down as important things to worry about?” Cullen said be believed his dona- executive director of its implementation office. tion of about $1,000 was a charitaThe organization had been ble donation, and he never received sponsored by the Detroit Economic a uniform or weapons training, he Growth Association. In 2013, the told the newspaper. Cullen, one of Dan Gilbert’s key lieutenants, told DFC released its strategic frameThe Saginaw News last month that work, a long-term blueprint for city he returned his badge. and neighborhood revitalization. The village, which has fewer than Detroit Future City plans to com290 residents, attempted to keep the plete its transition to nonprofit stanames secret after a bar owner tus by December. The Kresge Founsought the reserve officers’ identities. dation, the largest funder of the DFC, recently approved another No one on the list lives in Oakley. $1.2 million to continue its operaThe police department lost its Michigan Municipal League insurance tion. For details, see detroitfuturecity.com/news. over the situation in 2014,

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