Crain's Detroit Business, Sept. 14, 2015 issue by Crain's Detroit Business

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CRAIN’S Talent trouble Readers first for 30 Years

DETROIT BUSINESS

Michigan Business: The growing appetite for locally grown,

Second Stage: What local companies did when Plan B became Plan A,

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SEPTEMBER 14-20, 2015

Blue Cross settles suit over charges, another on way By Chad Halcom chalcom@crain.com

Blue Cross Blue Shield of Michigan

looming attrition wave of baby boomers and stands a real chance of losing the talent wars if it can’t figure out how to attract new younger workers to live there full time. Low-paying jobs and a lack of affordable housing are two of the culprits. Too few rental units in the city center have created a serious housing crunch — especially among millennials, the generation loosely defined as born between the early 1980s and early 2000s. That is driving up rent prices, lengthening waitlists and contributing to a labor shortage that worries employers.

has quietly settled one lawsuit from rival health insurer Aetna Inc. over its past charging agreements with various Michigan hospitals, but it must resolve one more from Health Alliance Plan of Michigan on the same issue. The litigation is over the so- Curing the called “most fa- code. Bill aims vored nation” to ‘level field’ of contracts Blue health insurance, Cross began Page 31 adopting with hospitals more than eight years ago. Those contracts called for hospitals to bill the insurer at a rate at least equal to any other insurer. Another form of contract, called “most favored nation plus,” also allegedly caused more than 20 of the state’s 131 hospitals to charge competing insurers at a premium. The practice was controversial and ultimately brought changes to

SEE TRAVERSE, PAGE 32

SEE BLUE CROSS, PAGE 31

Traverse City fears labor shortage as wage, housing issues keep millennials away COURTESY OF TRAVERSE CITY TOURISM

Traverse City is a magnet for tourists, but low-paying jobs and a lack of affordable housing make it hard to attract the younger workers who will replace baby boomers.

By Lindsay VanHulle Crain’s Detroit Business/Bridge Magazine

TRAVERSE CITY — During the summer, Traverse City can feel like a crowded metropolis, with traffic jams and lines for restaurant seats and parking spaces downtown — just the sort of place said to attract the younger workers critical to future growth. The crowds, though, are largely tourists. The city itself has just 15,000 permanent residents. Grand Traverse County, as a whole, has not quite 90,000, roughly the same number who live in Canton Township. And although the local economy is thriving in many ways, the county faces a

JOHN RUSSELL

Allison Beers of Traverse CityYoung Professionals knows of people who move 15 minutes from downtown Traverse City because that’s the closest they can afford to live. Advertisement

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Investment firm’s newly raised fund is the largest in state’s VC history By Tom Henderson thenderson@crain.com

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Ann Arbor-based Arboretum Ventures LLC has finished raising the largest venture capital fund in state history, closing Arboretum Ventures IV LP at $220 million. On June 18, Arboretum filed a form with the U.S. Securities and Exchange Commission saying it intended to raise $215 million for its fourth Ultrasound investment. fund. In less than three months, the firm surpassed Delphinus Medical that total. Technologies raises $39.5 Its previous fund, raised million in VC, Page 34 in 2011, also was oversubscribed. It had been targeted at $125 million and closed at $138 million. The previous largest fund in state history was the $180 million Michigan Growth Capital Partners II, raised in 2013 by Farmington Hills-based Beringea LLC. Managing Director Tim Petersen said Arboretum will continue to concentrate on medical devices, diagnostics health care IT and health care service companies. “We’ll continue to invest in companies that address the SEE ARBORETUM, PAGE 34

CARTER SHERLINE

Arboretum Ventures Managing Directors Paul McCreadie (from left), Jan Garfinkle and Tim Petersen can celebrate the record raising of the Ann Arbor venture capital firm’s fourth fund.

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MICHIGAN

BRIEFS Perrigo’s response to Mylan bid: As hostile as takeover Perrigo Co. plc Chairman and CEO Joseph Papa has let the folks at Mylan N.V. know what he thinks of Mylan’s $27.1 billion hostile takeover effort of the over-the-counter drug maker. In a letter to Mylan Executive Chairman Robert Coury, Papa said the offer “substantially undervalues Perrigo and its bright growth prospects” and is “grossly inadequate,” MiBiz reported. Papa also attacked Mylan’s decision to lower from 80 percent to 50 percent the amount of Perrigo shares Mylan needs to move forward with taking control of the company, whose headquarters is in Allegan but is domiciled in Dublin, Ireland. “You pretend you could generate the same synergies whether you own 100 percent of Perrigo or whether you own only a control stake, with minority shareholders outstanding,” he wrote. “This defies economic theory and practice and is commonly viewed as such by leading analysts and commentators.” Mylan, run from Pittsburgh but domiciled in the Netherlands, plans

to issue a tender offer to Perrigo shareholders beginning Monday. Perrigo shareholders will have until Nov. 13 to decide whether to sell their stock to Mylan.

HopCat owner sues after deal hits an iceberg Mark Sellers, whose BarFly Ven tures is the corporate parent of the expanding HopCat chain of beer bars, filed a $12.5 million lawsuit against Florida businessman George Wight Jr. and his Armada Enterprises and Armada Group , claiming Wight backed out of a deal to buy controlling interest in the company that owns the rights to salvage the Titanic shipwreck and recovered artifacts. We’ll pause while you absorb that odd juxtaposition, reported by MLive.com and, earlier, by Crain’s in August 2013. Sellers had planned to sell Wight his majority stake in publicly traded Premier Exhibitions for $16.2 million. Wight allegedly reneged after trying to add conditions last November. Premier brought Titanic artifacts to Grand Rapids for five months in 2013. MLive notes that Wight’s part-

ners in Armada include Billy Zane, who played the rich fiancé to Kate Winslet’s character in the “Titanic” movie.

Google service takes orders if ‘I’m feeling hungry’ Residents throughout the lower part of the Lower Peninsula now can order nonperishable groceries, clothes and hardware for same day or overnight delivery from Google Express. The service launched last week in Lansing, Battle Creek, Kalamazoo and Grand Rapids in an area bounded by Fowlerville and part of Howell to the east, Ludington to the north and the state line to the south, the Lansing State Journal reported. Jackson, Ann Arbor and Adrian are not included in the service area. Customers can order certain items from stores including Costco, Kohl’s , PetSmart , Barnes & Noble , Toys R’ Us and Ace Hardware . The service can be accessed through google.com/express.

MICH-CELLANEOUS 䡲 Researchers at Michigan State University will help study the economic and social effects of efforts to fight blight in cities across the state, The Associated Press reported. The MSU Land Policy Institute will work on the study with the Michigan Homeowner Assistance Nonprofit Housing Corp. Researchers will look

at housing vacancies, foreclosures, foreclosure assistance and crime in cities and neighborhoods. They’ll also examine the effects of blight and cleanup efforts on property values.

䡲

Advanced Furniture Testing

opened its North American Furniture Center for Excellence in Holland to provide services more quickly to the region’s office and commercial furniture industry, the Grand Rapids Business Journal reported. Advanced Furniture Testing is a unit of Underwriters Laboratories , whose certification mark appears on 22 billion products. 䡲 Grand Rapids-based Leon Interiors plans to close its plant in suburban Wyoming during the first quarter of next year, the Grand Rapids Business Journal reported. The supplier of interior trim said the closure will affect 125 active positions and those of about 75 employees who had been laid off for more than a year. 䡲 Coldwater-based Coldwater Veneer Inc. was acquired by Evanston,

INSIDE THIS ISSUE CALENDAR . . . . . . . . . . . . . . . . . . . . . . 27 CLASSIFIED ADS . . . . . . . . . . . . . . . . 29 DEALS & DETAILS . . . . . . . . . . . . . . . 28 MARY KRAMER . . . . . . . . . . . . . . . . . . . 11 OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . 8 OTHER VOICES . . . . . . . . . . . . . . . . . . . 9 PEOPLE . . . . . . . . . . . . . . . . . . . . . . . . . 30 RUMBLINGS . . . . . . . . . . . . . . . . . . . . 34 STAGE TWO STRATEGIES . . . . . . . . 22 WEEK ON THE WEB . . . . . . . . . . . . . . 34

COMPANY INDEX: SEE PAGE 33

Ill.-based private equity firm Indus trial Opportunity Partners as part of a management buyout, according to a statement, MiBiz reported. Terms were not disclosed. The company, which employs 235, has plants in Coldwater and West Point, Va., and a distribution operation in Jeffersonville, Ind.

CORRECTIONS 䡲 A Michigan Brief on Page 2 of the Sept. 7 issue gave an incorrect figure for Mylan N.V. ’s hostile takeover attempt of Perrigo Co. plc . Mylan’s takeover was valued at $32.7 billion before the recent decline in the stock market, MiBiz reported. 䡲 A profile of Jan Garfinkle on Page 13 of the Sept. 7 edition should have said that EDF Ventures co-invested in HandyLab Inc. with Arboretum Ventures LLC. The story included other companies — HealthMedia Inc. and Accuri Cytometers — in which EDF was not a co-investor.

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Tapping into beer money By Dustin Walsh dwalsh@crain.com

Investors have popped the top on beer money. Locally, Grand Rapids-based BarFly Ventures Inc., owners of the HopCat brewpub in Midtown, closed last month on a $25 million mezzanine capital financing deal to support its expansion efforts. And in the global beer realm, Amsterdam, Netherlandsbased beer giant Heineken International last week announced a 50 percent stake in California’s second-largest craft brewer, Lagunitas Brewing Co., a deal analysts speculate is the largest ever for the craft beer industry. With millions of dollars flooding the market, craft brewers across the U.S. and here in Michigan are weighing whether financial plays will find them big profits or find them punch-drunk by the big-money milieu. Birmingham-based Cascade Partners LLC was the investment bank on the BarFly deal, which is funded by Texas lenders Congruent Investment Partners and Main Street Capital Corp. The financing is expected to help BarFly open as many as six locations annually, in exchange for a small, undisclosed equity stake and traditional lending terms. BarFly plans to open its seventh location this fall, in Lexington, Ky.

Michigan, U.S. craft brewers navigate flooded market

Overflowing interest Gary Lewis, Cascade’s managing director, said the market to invest in beer is hot right now. “There was a frenzy over this deal,” Lewis said of the BarFly deal. “We’re seeing an evolution of the industry; it’s still in the early stage of the growth curve, and there’s a lot of upside.” Lewis declined to discuss BarFly’s returns but said they were substantial. More than 51 percent of brewpubs and 76 percent of craft breweries that have opened since 1980 are still in operation, according to the Boulder, Colo.-

based Brewers Association. This far outpaces the success of traditional restaurants, according to the association, which states that fewer than 40 percent of restaurants survive over a threeyear period. Joseph Infante, an attorney for Miller, Canfield, Paddock and Stone PLC in Grand Rapids who leads the firm’s alcoholic beverage regulation team, said the success rate of breweries and brewpubs is attracting more and more attention. “You’d be shocked by the number of calls I get from banks that want to talk Michigan craft beer,” Infante said. “It’s not just a few banks around the U.S.; it’s nearly all of them.” Detroit-based Atwater Brewing Co. is in the middle of a $25 million expansion, funded Joseph Infante: through traditional debt fi- Gets calls from nancing, to expand capacity to banks wanting 300,000 barrels of craft beer by to talk beer. 2020 from 40,000 barrels in 2014. The funds were also used to establish Atwater Spirits, a distilling operation that will launch soon, said Mark Rieth, president and CEO of Atwater. Rieth said he has initiated conversations with traditional and nontraditional financiers and worked with advisers to weigh Mark Rieth: Atwater’s future growth op- Talking with advisers about tions. He said that could in- Atwater’s options. volve taking on more debt or finding investors to take an equity stake in the business or, even, merging with three or four other regional craft brewers to work toward an initial public offering. “It’s quite an industry right now,” SEE BEER, PAGE 33

Colleges, state in step with preparing vets for life after military By Amy Lane Special to Crain’s Michigan Business

Phil Larson remembers taking off a uniform he no longer would wear as a staff sergeant in the U.S. Air Force and asking himself questions as he moved into civilian life: “Who am I? What’s my meaning?” “For the last years … it’s been answered for you,” said Larson, now director of the veteran and military services program at the University of Michigan in Ann Arbor. “You knew

that you served the country; there was a purpose, a mission larger than self. “When you get out, you have lost a sense of purpose in your job, friendship networks, pay, accommodations … a lot of security goes with that. College gives people time and room to adjust to being a civilian.” Schools and the state of Michigan hope to play key roles as veterans move from the military culture

Phil Larson directs the veteran and military services program at the University of Michigan. Before that, he was a U.S. AirForce staff sergeant, a job in which finding a sense of purpose was not a problem.

to civilian life and jobs — a transition Larson and others say can be overwhelming. From boosting veteran-specific personnel and creating comfortable student lounges to faculty training and mentoring and student tracking, schools and the state look to address needs that may only grow — with 30,000 to 50,000 veterans estimated to be leaving the military in SEE VETS, PAGE 29

MUST READS OF THE WEEK Only the idea saw the light of day

World Watch: Brazil

Thirty years ago, Crain’s wrote about Diolight Technologies and its so-called forever lightbulb. Diolight itself didn’t last forever, but its technology, far from flickering out, shines on today, Page 6

Read about the metro Detroit companies that helped Brazil reach a GDP of $2.3 trillion in 2014, Page 18

LON HORWEDAL

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Crain’s names Smith as editor, Lee as managing editor amid newsroom moves Crain’s Detroit Business last week announced several changes to its newsroom management, including the promotion of longtime staffer Jennette Smith to editor. Mary Kramer, Crain’s group Jennette Smith publisher, said the announcement formally recognizes Smith’s role in managing the newsroom since May. Smith, 40, has worked at Crain’s for 17 years, starting as real estate reporter before promotions to a series of editing roles beginning in 2007. She was most recently managing editor. Other key announcements: 䡲 Michael Lee rejoins Crain’s as managing editor, replacing Smith. Lee, 43, left Crain’s in 2007 to join The Associated Press, where he led national teams covering retail, Michael Lee health care and breaking news. He was based in New York City originally and later returned to Detroit, leading a national team of reporters and editors from the AP office here. While at Crain’s, Lee was deputy managing editor and general manager of crainsdetroit.com. He starts his new post Sept. 22. 䡲 Beth Reeber Valone, who has worked for C r a i n’ s p a r t time as a Web editor and copy editor, will begin Oct. 5 as news editor, focused primarily on Crain’s daily Beth ReeberValone digital content. Valone, 52, had worked for The Detroit News in two stints totaling 17

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TedX announces speakers for event The seventh annual TEDx Detroit event, featuring a member of NASA, a design strategist and a bat expert, among others, will take place Oct. 8 at the Fox Theatre. Among the scheduled speakers are Cathy Oklin, from NASA’s New Horizons mission team; Jeevak Badve, vice president of strategic growth at Sundberg-Ferar Design; and Rob Miles, executive director of Or ganization for Bat Conservation. TED stands for technology, entertainment and design. TED talks allow ideas to be bounced around by seasoned business people and the startup entrepreneurs. Advance tickets are available via tedxdetroit.com for $85. Marti Benedetti

years; her roles there included p.m. news editor and assistant business editor. She also worked as a regional editor for Patch.com before joining Crain’s in October 2012. 䡲 Cindy Goodaker remains executive editor, focused on strategic priorities and projects such as the upcoming Most Connected report, which will debut Sept. 28, and Crain’s annual Big Deals report on large M&A deals. She also manages the opinion page content, among other duties. 䡲 Senior Editor Bob Allen, 55, will move to a corporate position in project management to help Crain Communications Inc. publications

Bob Allen

adopt a new content management system. This is effective Oct. 1. “What we should be proud of — what I am

proud of — is to see that our company affords opportunities for individuals to advance from within,” Kramer said in an announcement to the staff. “And that we have opportunities to advance by adapting to the entire company’s needs — as Bob Allen is doing. “I am confident that our entire senior leadership team, focused on daily and weekly news operations, will continue to find ways to support our remarkable reporting team in doing its very best work to serve our readers — in print and online.” Smith said she is very pleased to bring Lee back into the fold at Crain’s, where he began in 1999 as a copy editor, to manage the reporting team, and to elevate Valone’s role in day-to-day decision-making for digital content. “We are already doing great work every day,” she said. “But with this team in place, we can take it to the next level.”

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DioLight went dark, but concept shines on in today’s market LOOKING BACK: On Sept. 16, 1985, Crain’s reported on plans by DioLight Technologies Inc. to shine in the lightbulb market. Quality control issues eventually led to bankruptcy for the company. DioLight didn’t survive, but its ideas live on today. More at crainsdetroit.com/30

By Tom Henderson thenderson@crain.com

The forever light wasn’t. DioLight Technologies Inc. was the subject of an article in the Sept. 16, 1985, issue of Crain’s, about to become, then, the first tenant of the city of Pontiac’s 92-acre High wood Industrial Park. DioLight made a lightbulb that used a diode to convert the alternating current used in conventional lightbulbs into direct current, sharply reducing heat at the same time it greatly extended the life of the bulb. They cost a lot more — about $5 for a 60-watt bulb, compared with a buck for a traditional bulb — but they lasted a lot longer, too. Company President Kevin Keating marketed them as a forever bulb. DioLight had been founded in 1982 and got a U.S. patent issued for its diode-based bulb in 1984, the same year it began selling. The bulb used an internal reflector to increase the available light. At the time of the Crain’s article, DioLight, which was having its bulbs made by a subcontractor in Taiwan, was about to take over half of a 50,000-square-foot building on a 3-acre parcel in the in-

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The lightbulb has evolved over the years leading up to today’s LED technology. DioLight Technologies Inc., which was featured in a Crain’s issue 30 years ago this week, had some bright ideas for the time but met with problems that resulted in bankruptcy.

dustrial park to expand production into the U.S. Keating said 1984 sales would be less than $100,000 but would jump to about $1 million in 1985. His target market, he said, would be commercial users — such as apartment complexes, large retailers and hotels — that used high volumes of bulbs that had to be replaced frequently. “The market is unlimited,” Keating told Crain’s. “Our intention is to have 1 percent of the

global market.” The following March, The New York Times profiled DioLight, under a headline that read “An eternal light in every socket.” The article began: “Practicality being one of his traits, Kevin Keating likes things to last — really last. So when it comes to choosing lightbulbs for his home, he screws in the kind that burn for half a century. SEE NEXT PAGE

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“Half a century? So Mr. Keating says. … With normal daily usage of two or three hours, Mr. Keating says the bulb will glow for a robust 50 years, if the cat doesn’t knock the lamp over. DioLight takes its chances and guarantees the bulb for eternity.” An article in Inc. that year was less, um, glowing. It pointed out that a 60-watt DioLight bulb produced only 56 percent as much light as a conventional bulb. In fact, they had the same kind of weak, cold light that consumers complained about years later when compact fluorescents first hit the market. It was a silvery light, not the yellow glow consumers accustomed to. Forever, alas, came quickly for DioLight. Done in by quality control problems, the company filed for Chapter 11 bankruptcy in 1989, listing assets of $337,000 and liabilities of $1.6 million. Earlier, a U . S . D i s t r i c t C o u r t judge in Chicago ruled that DioLight owed one of its distributors $245,000 for supplying it with defective bulbs. Creditors included suppliers, the city of Pontiac — which had been deferring DioLight’s monthly rent of $10,000 since the factory opened — the Internal R e v e n u e S e r v i c e and the state of Michigan.

Forever came quickly for DioLight. Done in by quality control problems, the company filed for Chapter 11 bankruptcy in 1989, listing assets of $337,000 and liabilities of $1.6 million. Keating told Crain’s then that he planned to pay off creditors and resume production. He acknowledged quality control problems with manufacturing. “It’s very high-tech, computerized equipment,” he said. “We think we have overcome the problems, but it’s too late” to avoid Chapter 11. DioLight never resumed production, and the company was dissolved on May 15, 1991. Time, though, has proved the business model of DioLight’s concept, especially with federal power conservation standards having driven incandescent lightbulbs from the market. Diodes — as in light-emitting

diodes — are now commonplace in high-end TVs and in lightbulbs, growing market share as manufacturing costs continue to decline. They glow with the kind of light consumers liked with incandescents, and they are energy-efficient and long-lasting. Troy-based A l t a i r E n g i n e e r i n g I n c . spun off its research into LED lighting as a separate business unit named I l l u m y s i s in 2007. It later was renamed Tog g l e d and has its own 100,000square-foot manufacturing plant in Troy. “We bought this facility planning on growth,” said Toggled President Dave Simon, whose company has had a good year and is poised for strong growth. In 2013, the company sued the Dutch electronics giant P h i l i p s , alleging patent infringement over its replacement tubes for traditional fluorescent tubes. In January, the suit was settled in Toggled’s favor — terms weren’t disclosed — and Philips became one of Toggled’s licensees. Subsequently, eight other LED manufacturers around the world have licensed Toggled’s technology. And in August, H o m e D e p o t ended what had been a trial in a few stores of Toggled’s fluorescent replacements by putting

them into its 2,000 stores nationwide. Simon declined to provide specifics about how that will affect production, revenue and hiring. In August, Ikea announced that beginning this month, it would stock LED bulbs only, replacing not only traditional incandescent bulbs but halogen and compact fluorescents, too. “We expect other retailers to fol-

low suit,” Simon said. “The Department of Energy has said that LEDs will have 40 percent of the market by 2020. That figure is going to be exceeded.” DioLight may be gone, but it is not forgotten. You can bid on a box of 25 unused DioLight bulbs on eBay, with a buy-it-now price of $49.99. 䡲 Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

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CRAIN’S DETROIT BUSINESS

OPINION Big retailers shouldn’t exploit faulty ‘theory’ S

o when is an empty store an asset? When you can use it to get a property tax break on existing stores. As Nick Manes of MiBiz reports on Page 14, that’s exactly what retailers such as Meijer, Target, Wal-Mart and others have been doing. The argument, called the “dark-store theory,” is that operating stores should be assessed at the value of closed ones instead of another measure, such as construction costs. The reasoning is that their stores are customized to their specific purpose to such an extent that they are worth very little when empty. That argument has been successful with the Michigan Tax Tribunal — and, indeed, tax tribunals in other states — which has meant municipalities across the state have refunded millions of dollars. Adding insult to injury is that many big-box retailers have deed restrictions on their properties that prevent competitors from buying them. This seems unfair to us. At a minimum, retailers should not be allowed to use deed-restricted empty stores for comparison, a legislative step Indiana took this year.

A talent gap in Traverse City? It’s easy to forget sometimes how small Traverse City is when you go there as a tourist. At about 15,000 residents, it has a few thousand fewer residents than Ferndale without the benefit of being part of a much larger metropolitan area. But, as Lindsay VanHulle reports on Page 1, the foodie restaurants, beaches and scenery aren’t enough to overcome a looming talent problem as boomers continue to retire. The combination of low pay in many jobs and disproportionately high rent has put the area out of reach for many millennials. City and county officials think more affordable housing is the answer to the problem, but the economic incentives for developers are to build more high-end condominiums or apartments downtown. Studies show that millennials as a group favor larger metropolitan areas, but Traverse City has assets not easily replicable elsewhere that should be attractive to enough younger professionals to secure its future if the correct combination of private money and public incentives can be brought to bear to bring housing costs more in alignment with incomes. It would seem the state has a role to play in that. Traverse City isn’t the only smaller town in Michigan with this issue.

Time to back compact for balanced budget his year, the Congressional

TBudget Office estimates the

U.S. government will spend $425 billion more than it takes in. On the books, that deficit is projected to grow, and in 10 years the total debt is estimated to exceed $22 trillion. In addition, off the books are Social Security, Medicare, the Veterans Administration and other programs that Congress has promised but failed to set money aside for. All combined, the National Debt Clock organization estimates the current total debt, including these unfunded liabilities, at $141 trillion, or about $383,000 per citizen. Clearly, this debt level is unsustainable. It should be just as clear that we cannot trust Congress to address the problem since it created this debt by spending more than it has taken in 45 of the last 50 years. Fortunately, we live in a country where the people and their states have the constitutional right and power to reform the U.S. government. And right now, there is an effort in Lansing to pass an amendment to the U.S. Constitution that would require Congress to pass balanced budgets. Senate Bill 306 supports an Article 5 compact among the states that would require Congress to vote on an amendment to the U.S. Consti-

OTHER VOICES: Andrew Rodney Andrew Rodney is a resident of West Bloomfield Township. tution limiting how much the federal government can borrow and otherwise restricting federal spending to cash revenue. The initiative is supported by an interstate commission with representatives from the four states that have passed it so far. The compact has a long way to go, as it must be passed by 34 more states before it can result in an amendment. But 44 states, including Michigan, already have constitutions that limit their borrowing capacity or require their legislatures to pass balanced budgets. There are receptive legislatures across the country and across political divides. For the compact to pass, enough citizens have to realize that no one benefits from a situation where the government is allowed to borrow

without limit. They must ask their state legislatures to vote for a change. Regardless of whether you feel government should be larger or smaller, a balanced budget amendment by itself won’t push the U.S. government in either direction, just as balancing our own family budget does not dictate the size of house that we live in. What passage of the compact will do is stop the U.S. government from kicking the can down the road. The wasteful spending that congresses have engaged in for the past 50 years has weakened our country in more ways than can be expressed in one column. Our toleration of bad public policy would be much less if we actually had to pay for it out of taxes or a limited amount of credit. Unlimited debt has enabled and will continue to enable bad government. We really have no choice but to compact for a balanced budget if we want to minimize future fiascos. Let your senators know you want SB 306 to come to the Senate floor for a full vote and their support for the bill. Together, we can hold the U.S. government to a higher standard. Support the compact for a balanced budget. 䡲

TALK ON THE WEB Re: Gamrat, Courser scandal

Re: Bank of America building in Troy sells for $35 million

Re: After 35 years, The Lark restaurant is closing

Joan Smykowski

Bank of America needs to be downtown Detroit . Hopefully this is

These two should have resigned days ago. This mess gives ammunition to all those people arguing for a part-time legislature.

their long-term plan, because talent is not flocking to Troy. Millennials want to be in walk-able, vibrant settings, not some office park.

Bon appetit to those lucky last diners, and heartfelt gratitude to Jim and Mary Lark for providing worldclass dining in an approachable, elegant restaurant.

Rock & Roll 35

238562

Now can we get back to roads?

Dona Stewart

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Child Nutrition Act determines kids’ food and futures Measures for a child’s learning potential are often based on parents’ educational achievement, quality of the school district, etc., but it might better be measured in meals. All other factors aside, children who go hungry will struggle to learn and fail to reach their potential in school. As Congress looks to reauthorize the Child Nutrition Act this fall, it will again have an opportunity to help determine the future health, well-being and education potential for a significant portion of Michigan’s children. By reducing the food insecurity that our poorest children face every day, we can raise expectations for their future independence and productivity. Businesses need educated employees. The economy needs educated entrepreneurs who create new businesses and jobs. Unfortunately, Michigan is lacking on both counts and paying a high price as a result. Inadequate childhood nutrition increases illness and health care costs, harms a child’s development and diminishes the capacity or interest in learning. Undernourished children get sick more often; have higher levels of behavioral, emotional and academic problems; and are less likely to graduate from high school and go on to college. The CNA, set to expire Sept. 30, is broad legislation that governs policy involving school meals and nutrition programs for kids. The renewal process, known as the Child Nutrition Act Reauthorization, eventually ends with senators and representatives voting on a new bill that for the next five years sets the direction for programs such as the National School Lunch Program, the School Breakfast Program, WIC (Special Supplemental Nutrition Program for Women, Infants and Children) and the Farm to School Grant Program. While those and similar programs go a long way toward holding the line against the most devastating impacts of hunger by ensuring at-risk children receive at least a base level of nutrition, food insecurity remains a serious — and costly — problem in Michigan. The Children’s Defense Fund has found, for example, that only about 12 percent of Michigan children receiving a free or reducedprice lunch during the school year participate in the federal Summer Food Service Program, which is meant to ensure that low-income children continue to receive nutritious meals when school is not in session. Why wouldn’t families take advantage of the program? With no bus to get them to a school or other site that may be miles away, lack of transportation means they go hungry. A sensible change to the Summer Food Service Program could be made to increase the amount of Supplemental Nutrition Assistance Program benefits that eligible fami-

OTHER VOICES Kate Birnbryer White is executive director of Michigan Community Action, a statewide association addressing poverty in Michigan.

lies receive in the summer for their school-age children. Such a change would be relatively low in cost to

administer and increase access to food during the summer to maintain the health of vulnerable children. The additional SNAP benefits available locally would benefit families, grocers and farmers in Michigan. According to the Center for American Progress, the annual monetary impact of poor educational outcomes and lower lifetime earnings associated with childhood hunger totals $19.2 billion. The annual cost of hunger or food insecurity nationwide is nearly $170 billion. That includes

$130.5 billion spent on illness costs associated with hunger and food insecurity. Communities across the state need to assess how programs are working for their low-income populations and fix the barriers that cause food insecurity for children. Lend your voice in urging Michigan’s congressional delegation to fully fund the Child Nutrition Act and restructure the Summer Food Service Program to close gaps in food policy that leave too many of the state’s children malnourished. 䡲

“Undernourished children get sick more often; have higher levels of behavioral, emotional and academic problems; and are less likely to graduate from high school.”

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

UAW talks reflect labor’s delicate balance This is a big year for organized labor in metro Detroit. Auto talks are on, and UAW President Dennis Williams has proposed a really big idea for reducing health care costs: a health plan like the VEBA for retired autoworkers. Reducing automakers’ health care costs could free dollars for wages and bonuses. Meanwhile, as membership shrinks nationally, unions were jubilant when federal regulators decided that McDonald’s could be a “joint employer” with franchisees in some labor disputes. This could open the door to organizing the fast-food industry across a chain versus individually owned franchises, store by store. This may be a case of “be careful what you wish for” — if fast-food companies invest in even more automation to replace people and there are even fewer lower-skilled entrylevel jobs in this country. Which brings me to a recent visit to my hometown of Grand Rapids, when I saw for the first time “The Spirit of Solidarity,” a sculpture set within a fountain, honoring the mostly immigrant workers in the city’s booming furniture industry who went on strike in 1911. At the time, Grand Rapids had dozens of fine-furniture companies, hence the “Furniture City” label. Timber harvested to the north floated down the Grand River, to be made into tables, chairs and other pieces by companies like Baker, Widdicomb and others. But furniture workers labored for 10 hours a day for a wage of $2 — a day. (In 1914, Henry Ford made history by offering $5 a day, which brought a flood of new residents to Detroit to work in Ford’s factory.) The furniture strike divided the city, and when it finally ended, something unexpected happened. Furniture companies started moving to North Carolina, near the textile industry. The fine-furniture industry largely disappeared. Though headquartered in West Michigan, today’s office furniture manufacturing — Steelcase, Haworth, Herman Miller — is largely elsewhere, in plants that offer the most competitive — read: inexpensive — labor rates. That’s the delicate balance in the workplace, and if the UAW and Detroit automakers reach a deal that reduces health care costs and can still boost wages, that’s a pretty good deal for Michigan. For now. 䡲

BUSINESS Hungry for home JOHN RUSSELL

Nic and Sara Thiesen, co-owners of Loma Farm near Traverse City, are reaping the benefits of a growing demand for locally grown farm produce.

‘Food hubs’ help meet growing demand for locally grown farm fare By Amy Lane Special to Crain’s Detroit Business

wice weekly, a truck arrives at northern Michigan’s Loma Farm to pick up lemon cucumbers, French breakfast radishes, baby bok choy or other seasonal produce that will find some markets far from the farm’s base 15 miles northwest of Traverse City. They’re crops — planted once and sometimes more to meet demand — grown for Traverse City-based Cherry Capital Goodwill’s job-training Foods LLC, which program helps farmers and the unemployed, distributes Page 13 Michiganfarmed and -produced food to retail, restaurant and institutional buyers throughout the state. It’s a connection that broadens 5-year-old Loma Farm’s sales beyond local restaurants and farmers markets. And 37-year-old Nic Theisen, who co-owns the farm business with his wife, Sara, sees benefits and promise. “One thing it certainly does for us is it gets our product much further afield than it would be if we were distributing on our own. Our name gets

Farm to Freezer

out further,” Theisen said. “And then also … every year we’ve been growing more for Cherry Capital. We see it just as a huge growth potential. “I can see in the future it’s going to be an important part of our budget, in terms of financial planning for the future of the farm.” Amid seemingly unabated demand for local foods, farmers like Theisen are finding avenues through “food hubs” like Cherry Capital — operations that aggregate, distribute and market source-identified food. They’re a growing part of a supply chain and among heightened efforts in Michigan to connect farms to tables — be it at schools, hospitals, restaurants or homes. “The demand is growing as people continually want to have a connection to their food, and know where it’s grown from,” said Christine Quane, regional food hub director at Eastern Market Corp. in Detroit. As demand rises, so too do purchases. Grand Rapids-based Meijer Inc., for example, has been increasing both its number of growers and local-

produce spending, which now reaches $100 million throughout its six-state region. Of the 125 local farmers who supply Meijer, 92 are in Michigan. Meijer defines “locally grown” as produce grown within its six-state footprint. In its stores Meijer designates locally grown produce with displays that highlight a farmer and his or her story. Jerry Suter, vice president of fresh merchandising, said that when he’s in Meijer stores, the shoppers he speaks with “appreciate supporting the local economy. And they also like just the freshness aspect of it; they kind of deem freshness as how close to the source” they are. Emphasizing local and fresh doesn’t only resonate with stores. At Beaumont Hospital in Royal Oak, Maureen Husek, director of nutrition and retail services, champions local produce throughout its operations, whether its Michigan cream of asparagus soup on patient menus or SEE FARM FARE, PAGE 12

INSIDE

Dark store theory Retailers statewide are using this theory to win tax assessment appeals. The estimated hit to local communities is $74.3 million from 2013 through June, Page 14

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FARM FARE FROM PAGE 11

blueberries in the cafeteria salad bar. Beaumont’s local food purchases, mostly fresh fruits and vegetables, have grown 4 percent in each of the past two years and were $750,000 in 2014, Husek said. It’s driven partly by Beaumont’s commitment to a national hospital initiative that calls for 15 percent of total food purchases to be sustainable or local, defined as within 250 miles of a hospital. That initiative — and a set of Michigan food system goals that include institutions obtaining 20 percent of their food from Michigan sources by 2020 — bolstered Beaumont buying-local activity that began on a small scale about eight years ago with the launch of a weekly on-site farmers market. The market started as a way for staff to be able to access local foods, but it is also open to hospital visitors and the community; the hospital also buys items to feature the next day in the cafeteria, Husek said. Beaumont works with its primary contract food service vendor to identify fresh and processed products that are local and also takes supply from others like Cherry Capital Foods. “I look for every avenue to increase my local purchasing,” Husek said. She also capitalizes on a statewide local-purchasing campaign that highlights four seasonal products annually. The Cultivate Michigan campaign includes printed materials like posters and brochures, recipes and connections to distributors that carry the featured Michigan product. It’s aimed at increasing demand and institutions’ access to food and is an initiative of the Michigan Farm to Institution Network, of which Husek is on the advisory committee. The network, launched in spring 2014, is an effort to build connections between institutions like hospitals and schools, and farmers and food suppliers. It is led by the Michigan State University Center for Region al Food Systems and the Ann Arborbased Ecology Center . Activities

include outreach, e-newsletters, events and tours of farms and food suppliers, and collecting data like local food purchases by institutional buyers. Colleen Matts, farm-to-institution specialist with the MSU center, said there’s encouraging data on both the supply and demand side. A 2012 survey by the MSU center of Michigan vegetable farmers found 50 percent interested in selling to K12 schools, hospitals and colleges or universities. And a 2013 survey of K12 food service directors found 68 percent purchasing local foods, up from 54 percent in 2012, and 82 percent interested in doing so. Matts said institutional sales can be a stable, steady market in which farmers can find value and diversify. But there are also challenges, in-

cluding prices less than a farmer would fetch in consumer sales, and third-party food-safety certification that large buyers can require but small-scale farmers may lack. A 2013 Michigan Food Policy Council report showed only a small fraction of the estimated 6,500 Michigan fruit and vegetable producers that market directly to consumers had participated in a recent formal U.S. Department of Agriculture Good Agricultural Practices, or GAP, audit. The audit certifies that specific growing and processing methods have been met. It is “expensive for small growers to have this audit,” but that’s one important way some food hubs are helping, said Jamie Clover Adams, director of the Michigan Department of Agriculture and Rural Development.

Under a 2014 pilot project in the Upper Peninsula led by the U.P. Food Exchange, 10 farms took a group approach to certification, using USDA

“The demand continues to grow, so we’ve had to grow with it.” Kelly Lively,institutional partnership manager,Cherry Capital Foods

food-safety standards and operating under a set of policies and procedures developed for the group. Under the “GroupGAP” approach, a USDA auditor inspects some but not all farms and certifies the group and its policies and procedures. The total cost of the GroupGAP audit in the U.P. was $4,922 or $492 per farm — an estimated savings of some $700 for each farm compared with potential costs of an individual audit, according to a report on the pilot. GAP audits are done annually and costs can vary based on the complexity of the farm, the auditor’s time spent on travel and visiting the farm, and other factors. Individual audits of farms in the Lansing or Grand Rapids area might cost $600 to $700 per audit, but run at least $1,200 to $1,600 in the Upper Peninsula, reflecting travel time, said Michelle Walk, extension educator with MSU Extension in Sault Ste. Marie. She said audits are performed by Michigan Department of Agriculture and Rural Development staff, under contract with the USDA, at a

charge of $92 an hour. Cherry Capital Foods has been working with six farms on similar GroupGAP certification and is also looking at the possibility of serving as a coordinator for a statewide approach. “The real purpose is to expand the number of farms that do have those certifications,” said CEO Evan Smith. It’s one of the latest roles for a food business that began in 2007 with a one-person van delivering produce and has grown to about 50 employees and sales that were $3.7 million in 2014 and projected to reach $5 million this year. Cherry Capital has moved twice to larger warehouses in Traverse City and in 2013 opened a warehouse in Okemos to serve mid-and Southeast Michigan customers. “The demand continues to grow, so we’ve had to grow with it,” said Kelly Lively, institutional partnership manager. “Starting from scratch, we had to develop all of this. There was no model; there was no piece of software that worked right for what we have to do.” Cherry Capital distributes produce and shelf-stable products — like jams, salsas and snack foods — from sources locally and throughout Michigan. But food hubs’ approaches vary. One hub being considered for Muskegon could coordinate supply from farmers largely in Muskegon, Oceana, Newaygo and Ottawa counties and distribute to local schools and other institutions and restaurants, according to a recent feasibility study. Marty Gerencer, principal in Morse Marketing Connections LLC , a Norton Shores-based food systems consulting business, said a next step will be to develop a business plan for the food hub. Structuring it as a nonprofit is a possibility, she said. Gerencer and Cherry Capital’s Smith conducted the study, guided by a community advisory council and others. The study was administered by the Community Foundation for Muskegon County. Another approach is in Grand Rapids, where FarmLink LLC , which does business as West Michigan FarmLink , employs a web-based model to connect farmers and purchasers. It works like this: Each week, growers and food producers on post listings on Thursday. On Friday, the website opens to buyers, predominantly West Michigan restaurants but also some hotels, other lodging establishments and nursing homes. Late Monday, orders go out to be filled. And on Wednesday, the items ranging from fresh produce to artisanal cheeses, meats and processed goods are delivered to FarmLink’s warehouse. From there, purchasers can pick up products or take delivery. “We function as a funnel,” said Paul Quinn, partner in the nearly 4year-old venture. “It utilizes the Internet the way the Internet should be utilized, connecting to fragmented businesses.” 䡲

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SPECIAL REPORT: MICHIGAN BUSINESS

Farm to Freezer reaps income, plants skills Go into some 20 food stores and farm markets in the Traverse City region and beyond and you’ll find a line of frozen fruits and vegetables unlike others. It’s produce grown locally on farms of 3 to 1,200 acres, processed and flash-frozen not by a conventional business but through a jobtraining initiative of Goodwill Indus tries of Northern Michigan — a venture that has put money in farmers’ pockets, helped unemployed individuals gain core skills in food safety, handling and processing, and fed local-food appetites. “It’s a win-win throughout the whole community,” said Brad Oleson, a director with Oleson’s Food Stores Inc. , a Traverse City-based chain that gave the Farm to Freezer program its first retail purchase order in late 2013. The program launched after Manistee Community Kitchen founder Brandon Seng joined Goodwill in late 2012 and brought with him local vegetable sourcing and processing savvy he’d employed to supply the school lunch program at Manistee Catholic Central Schools. Cecil McNally, Goodwill executive director, said it was important to Goodwill that the program tie into job training. “With a servicesector economy, there’s a lot of opportunity for people that we work with in that industry,” he said. Grants from two local foundations and the Michigan Department of Agriculture and Rural Development

supported purchases of freezers and other equipment, and a $250,000 low-interest line of credit from Rotary Charities of Traverse City supplied startup money to buy from farmers. Assisted by Mark Coe, a Manistee County farm manager with whom he’d worked, Seng purchased asparagus and cauliflower for processing and pursued sales with area schools. Retail sales followed using packaging created by Seng and Coe, who left Kaleva’s Lutz Farms in December 2013 to manage the Farm to Freezer program. What began with three farmers has grown to 24 supplying a rainbow of produce that includes strawberries, peaches, cherries, blueberries, apples, asparagus, broccoli, carrots and romanesco. Bernie Ware, who with his wife, Sandee, owns Ware Farm in Bear Lake, said Farm to Freezer has given him an added outlet for his farm’s strawberries, and he’s also discussing supplying shiitake mushrooms.

“I think all of us, however you’re farming, there is potential there for sales,” Ware said. Coe said total farm purchases have risen from about 30,000 pounds initially to nearly 150,000 pounds this year, and product distribution has widened from local schools to retail locations stretching from Ludington to Petoskey and to Cadillac, Harrison and Mio. Sales that started at $2,000 to $3,000 a month have grown steadily and are projected next year to reach $20,000 a month, or $240,000 for the year. Proceeds help support training program costs like staff and produce purchases, and money also goes into a Goodwill program that collects and distributes fresh food to food pantries, shelters and community meals programs in the fivecounty region.

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Processing begins in May with asparagus and ends in October with kohlrabi or carrots. Through that period, two 90-day sessions, each with eight slots, train individuals referred through Goodwill and other agencies. The transitional work experience, as it’s called, pays $8.50 an hour and provides other assistance, like resume-building and job-searching as well as basic necessities like cars, bicycles and clothing. “It’s meeting people where they are — and everybody’s needs are different — and providing them with that support. So it’s employment-plus,” said Seng, director of food programs at Goodwill Industries. Individuals gain skills that have helped them find jobs in area businesses, but “what people really learn is what it’s like to be a member of a team,” Seng said. “What it’s like to create a beautiful product. What it’s like to show up to work eight hours, and succeed.” In the off-season, two program graduates who are now Farm to Freezer employees package frozen produce that’s been stored in bulk and pack and ship orders. Oleson said the products have been well received in stores, and he’d like to see Farm to Freezer add more varieties. “The sky’s the limit at this point I think,” Oleson said. “It’s just what Farm to Freezer is capable of.” The program isn’t standing still. It has added equipment and made alterations that have increased production capacity, is experimenting with new items, and in August became certified as an organic processor, which Coe said will open up additional grower and sales avenues. 䡲

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SPECIAL REPORT: MICHIGAN BUSINESS

Retailers use ‘dark store’ theory to lighten tax load By Nick Manes nmanes@mibiz.com

When it comes to paying property taxes in Mason County, retailer Meijer Inc. appears to be following the advice of its old advertising slogan: “Why Pay More.” In the past five years, the Walkerbased grocery chain has lowered its property tax bills in Mason County’s Amber Township, east of Ludington, by appealing its assessment using what’s known as the “dark store” theory. Meijer isn’t alone: Mega hardware retailers Home Depot Inc. and Lowe’s Cos. Inc. have also used the theory to appeal their property tax obligations in Amber Township. Target Inc. and Wal-Mart Inc. also have done so in various parts of the state. Statewide, “dark store” appeals have diverted upwards of $50 million from local government, according to estimates. Rather than peg their properties’ assessed values to the cost of construction to calculate property tax bills, the retailers argue their assessments should be based on those of

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comparable stores, often vacated, empty properties. The reasoning: Retailers build stores with unique design features, rendering them functionally obsolete when they open, thus the comparison to dark stores. So far, the five-member, governor-appointed Michigan Tax Tribunal has largely agreed and ruled in favor of the chains, leaving the local governments on the hook to refund tax payments. “We don’t believe that the dark store philosophy is a fair way of valuing stores, but the Tax Tribunal makes the decision,” said Mason County Administrator Fabian Knizacky. Retailers’ use of dark store appeals has cost communities in Michigan about $74.3 million from 2013 through June of this year, according to data from the Michigan Association of County Treasurers. Groups representing local communities are looking for legislative alternatives, and one bill has been introduced but little action has occurred so far.

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In a May op-ed in the Detroit Free Press, Michigan Association of Coun ties President and Allegan County commissioner Jon Campbell cited reports that property tax appeals in Ottawa County alone have accounted for a loss in revenue of $14.8 million since 2010. That has lawmakers looking for ways to close what many see as a tax loophole that rewards “companies for gaming the state’s tax system,” as Rep. Steve Dianda, D-Calumet, described it.

‘Dark’ for a reason The sticking point for many local officials stems from the retailers’ comparison of their stores to vacant properties. That’s because many vacant properties are “dark” for a reason: Retail owners often insert deed restrictions that block competitors from moving into their old facilities. The deed restrictions then artificially lower the transaction prices for the sales comparisons the big-box retailers want to use in appealing their assessments. “Sometimes these big box stores have fairly unique designs and footprints for a building,” said Chris Hackbarth, director of state affairs at Lansing and Ann Arbor-based Michigan Municipal League. “It’s not like a local gas station or regular commercial establishment where anything can go in there.” But Hackbarth argues it doesn’t make sense to use only sales comparisons to vacant stores in setting the valuation for a property that’s currently in use. “How can you get comparable sales data when you’ve limited the use and basically superseded local zoning and master planning?” he said.

Managing costs The cost to communities has been enough for groups like the Michigan Association of Counties to pay attention in recent years. In 2014, the group stated that closing the loophole was one of its top legislative priorities. Since 2007, big-box stores in Michigan have filed around 180 property tax assessment appeals with the Michigan Tax Tribunal, according to the Michigan Department of Licensing and Regulatory Affairs , which oversees the administrative court. The Tax Tribunal issued a decision in about 20 of those cases. Although many communities appealed the rulings, the Michigan Court of Appeals has consistently affirmed the Tax Tribunal’s decisions, Moon added. For municipalities, it’s easy to understand their frustration: The apSEE NEXT PAGE

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SPECIAL REPORT: MICHIGAN BUSINESS

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Left: Vacant Target store on Sherman Boulevard in Muskegon. Right: Current Target store on Harvey Street near The Lakes Mall in Muskegon. FROM PREVIOUS PAGE

peals take away funds from schools, libraries and other basic services, dollars they are unlikely to make up in an era of diminished state revenue sharing. “What local units (of government) have seen is that these are permanent reductions in revenue bases that won’t come back,” said Jack Van Coevering, a tax policy attorney at Grand Rapids-based Bloom Sluggett Morgan PC. Van Coevering previously served as the chief judge and chairman of the Michigan Tax Tribunal and now often represents municipalities in property tax cases. In Mason County, successful appeals from Meijer, Home Depot and Lowe’s resulted in a loss of 0.3 percent of overall revenue for the county, according to Knizacky. The county has maintained an annual general fund budget of just under $12 million in recent years, according to public records. “Anytime you lose revenue, it pinches the budget and makes things more difficult to do,” Knizacky said. According to the Michigan Association of County Treasurers, the Tax Tribunal rulings resulted in refunds of more than $14.3 million in Kent County, $2.9 million in Calhoun County, nearly $1.6 million in Ottawa County and $265,000 in Kalamazoo County. Mason County also issued refunds totaling more than $430,000. In Southeast Michigan, the refunds totaled more than $2 million in Oakland County, $1.4 million in Livingston County and $886,000 in Washtenaw County. Officials at Meijer declined requests for an interview and instead provided MiBiz with an emailed statement. “Meijer reviews each store’s assessment and appeals the tax valuations of our stores when we believe the values are overstated,” wrote Frank Guglielmi, senior director of communications at Meijer. “Our customers expect us to keep prices as low as possible, and one way we do this is by managing our costs in the most effective way, which includes paying a fair and equitable level of property tax for our stores and facilities.”

Indiana takes action Meijer’s appeals are not restricted to Michigan. Last year, the Indiana Board of Tax Review ruled that a Meijer store in Indianapolis should have been assessed in 2012 at the equivalent of $30 per square foot instead of the $83 set by the county, according to a January report by the Indianapolis Business Journal. Following the Meijer case and an analysis from the Indiana Associa tion of Cities and Towns, Indiana legislators took action, passing a law in July that curbs the use of dark store theory. Now retailers must prove that their construction designs are unique, and the law prohibits properties with deed restrictions and vacant stores from being used for comparisons in assessments. The new Indiana law is also retroactive to 2014, meaning Marion County might not have to issue a refund to Meijer, sources said. The association had estimated that retailers’ use of the dark store argument in Indiana resulted in an assessed value reduction of nearly $3.5 billion, affected more than 17,000 parcels of land, and resulted in estimated property tax savings of $120 million in one year. Stakeholders here are hoping that Indiana’s example will serve as a benchmark for a similar bill. Representatives from the Upper Peninsula are particularly in favor of getting legislation passed because the small communities there are less able to absorb losses when the Tax Tribunal rules in favor of a retailer. An appeal involving a Lowe’s store in Marquette left the community liable to repay more than $755,000 in property taxes. In June, Dianda introduced House Bill 4681 that would create a user fee for underfunded public services for retailers who successfully use dark store arguments to reduce property taxes. It has been referred to the tax policy committee. “Corporations need to pay their fair share for police, fire, and the other local services they demand,” Dianda said in a statement. “If these businesses want services and residents to shop at their stores, then they need to contribute their fair share back to the community.” From MiBiz

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CRAIN'S LIST: LARGEST MICHIGAN LAW FIRMS Ranked by number of attorneys in Michigan Rank

Company Address Phone; website

Top Michigan executive

Michigan attorneys June 2015/2014

Total attorneys all locations June 2015/2014

Representative clients

Honigman Miller Schwartz and Cohn LLP 2290 First National Building, 660 Woodward Ave., Detroit 48226-3506 (313) 465-7000; www.honigman.com

David Foltyn chairman and CEO

254 241

267 241

BlackEagle Partners, DIA, GM, Huron Capital Partners, Kellogg, RamcoGershenson, Rock Financial/Quicken/Rockbridge, Taubman, Trinity Health, and Village Green

Dickinson Wright PLLC 500 Woodward Ave., Suite 4000, Detroit 48226 (313) 223-3500; www.dickinsonwright.com

William Burgess CEO

211 200

409 364

Aetna, AT&T, Beaumont Health' Carhartt, FCA US LLC, Ford, Johnson Controls, J.P. Morgan Chase Bank N.A., Kettering University, Quantum Health, Wal-Mart

Dykema Gossett PLLC 400 Renaissance Center, Detroit 48243 (313) 568-6800; www.dykema.com

Peter Kellett chairman and CEO

187 181

437 346

Ford Motor Co., General Motors Co., FCA (Chrysler), International Transmission Co., JP Morgan Chase, Bank of America N.A., Oakwood Healthcare Inc., Fifth Third Bank

Miller, Canfield, Paddock and Stone PLC 150 W. Jefferson, Suite 2500, Detroit 48226 (313) 963-6420; www.millercanfield.com

Michael McGee CEO

184 181

226 220

Chrysler, Comerica, Ford, Detroit Edison, Meritor, Siemens, BorgWarner, City of Detroit, Michigan Finance Authority

Warner Norcross & Judd LLP 900 Fifth Third Center, 111 Lyon St. SW, Grand Rapids 49503 (616) 752-2000; www.wnj.com

Douglas Wagner managing partner

184 193

Amway, Borg Warner, Consumers Energy, Dow Chemical, Fifth Third Bank, Mahle Industries, Spectrum Health, Stryker, Robert Bosch, Whirlpool

Clark Hill PLC 500 Woodward Ave., Suite 3500, Detroit 48226 (313) 965-8300; www.clarkhill.com

John Hern CEO

150 148

306 290

Bodman PLC Sixth Floor at Ford Field, 1901 St. Antoine St., Detroit 48226 (313) 259-7777; www.bodmanlaw.com

Ralph McDowell chairman

140 135

Comerica Bank, Bank of America, Archdiocese of Detroit, Blue Cross Blue Shield of Michigan, Lear Corp., Ford family, Grede Holdings, Key Plastics, Meridian Health Plan, Sparton Corp.

Plunkett Cooney PC 38505 Woodward Ave., Suite 2000, Bloomfield Hills 48304 (248) 901-4000; www.plunkettcooney.com

Henry Cooney president and CEO

128 138

153 158

Varnum LLP 333 Bridge St. NW, Grand Rapids 49501-0352 (616) 336-6000; www.varnumlaw.com

Richard Hooker and Scott Huizenga partners

127 132

Bank of America, Huntington National Bank, First American Title Insurance, Beaumont Health, Liberty Mutual Insurance Co., Michigan Municipal League, PNC Financial Services Group, The Travelers Cos., Frankenmuth Mutual Insurance Co., The Doctors Co. Alliance Franchise Brands, Borroughs, Bradford White, Kellogg, Flagstar Bank, Georgia-Pacific, Kawasaki Motors, Metro Health Hospital, Michigan Sugar, Sappi/S.D. Warren, Sauder Woodworking

Butzel Long PC 150 W. Jefferson, Suite 100, Detroit 48226 (313) 225-7000; www.butzel.com

116 118

135 138

Beaumont Health, MGM Grand, Dura Automotive, KSPG Automotive, Indian Head, UM, Oakland Community College, Exxon Mobil

Jaffe Raitt Heuer & Weiss PC 27777 Franklin Road, Suite 2500, Southfield 48034-8214 (248) 351-3000; www.jaffelaw.com

Justin Klimko president and managing shareholder William Sider managing partner

103 104

Sun Communities, Strength Capital Partners, Redico

Miller Johnson 250 Monroe Ave. NW, Suite 800, Grand Rapids 49503-2250 (616) 831-1700; www.millerjohnson.com

Craig Mutch managing member

97 92

Amway Corp., Benteler Automotive Corp., Bronson Healthcare, Gordon Food Service, Huntington Bank, Kellogg Company, Stryker Corp., Spectrum Health System, Trinity Health, Viking Corp.

Kitch Drutchas Wagner Valitutti & Sherbrook PC 1 Woodward Ave., Suite 2400, Detroit 48226 (313) 965-7900; www.kitch.com

Mark Wisniewski chairman/CEO

92 91

98 98

State Farm Mutual Insurance, Henry Ford Health, AIG Property Casualty, MHA Insurance Co., Tenet Health, Ascension Health, Ciena Healthcare, HCR Manorcare, Allegiance Health, Utica Mutual Insurance

Foster Swift Collins & Smith PC 313 S. Washington Square, Lansing 48933 (517) 371-8100; www.fosterswift.com

Michael Sanders president

89 89

Garan Lucow Miller PC 1155 Brewery Park Boulevard, Suite 200, Detroit 48207 (313) 446-1530; www.garanlucow.com

John Gillooly chairperson, executive committee

80 80

82 83

Brooks Kushman PC 1000 Town Center, 22nd floor, Southfield 48075 (248) 358-4400; www.BrooksKushman.com

77 75

80 79

Ford Motor Co., Lear Corp., Oracle Corp., Masco Corp., HoMedics Inc., Office Depot, Domino’s, Meritor, Zinc Air Inc., Henkel, and Terex

Giarmarco, Mullins & Horton PC 101 W. Big Beaver, 10th floor Columbia Center, Troy 48084-5280 (248) 457-7000; www.gmhlaw.com

Mark Cantor, president and James Kushman chairman and CEO Executive committee

70 70

Smith Haughey Rice & Roegge PC 100 Monroe Center, Grand Rapids 49503 (616) 774-8000; www.shrr.com

William Hondorp CEO

69 77

University of Michigan Health System, Trinity Health, Michigan Professional Insurance Exchange

Howard & Howard Attorneys PLLC 450 W. Fourth St., Royal Oak 48067 (248) 645-1483; www.howardandhoward.com

Mark Davis president and CEO

66 67

123 123

BASF Corp., BMO Harris Bank N.A., Chrysler, Dow Corning, Konami Gaming Inc., Magna Mirrors of America, Sears Holdings Corp., ThyssenKrupp

Secrest, Wardle, Lynch, Hampton, Truex and Morley PC 2600 Troy Center Drive, P.O. Box 5025, Troy 48007-5025 (248) 851-9500; www.secrestwardle.com

Mark Morley and Bruce Truex, cochairmen, executive committee

63 66

Harness, Dickey & Pierce PLC 5445 Corporate Drive, Suite 200, Troy 48098 (248) 641-1600; www.hdp.com

Executive committee

58 62

110 109

Kerr, Russell and Weber PLC 500 Woodward Ave., Suite 2500, Detroit 48226 (313) 961-0200; www.kerr-russell.com

Executive committee

55 55

AVL Test Systems, Michigan State Medical Society, Quantum Fuel Systems Technologies, Shanghai Zhongli Automobile Parts, Volkswagen Group, WadeTrim Associates

Executive committee Trott Law PC B 31440 Northwestern Highway, Suite 200, Farmington Hills 48334 (248) 642-2515; www.trottlaw.com Anthony Asher Sullivan, Ward, Asher & Patton PC president and CEO 25800 Northwestern Highway, 1000 Maccabees Center, Southfield 48075 (248) 746-0700; www.swappc.com Neil MacCallum Collins, Einhorn, Farrell & Ulanoff PC chairman 4000 Town Center, Suite 909, Southfield 48075 (248) 355-4141; www.ceflawyers.com

49 63

Bank of America, J.P. Morgan, Wells Fargo, Comerica, Ocwen, PNC, HSBC, PHH, GreenTree, SunTrust

48 50

Consumers Energy Co., Health Pro/CNA, Iron Workers' Local No. 25, Level One Bank, Medical Protective Co., MEEMIC, Pipefitters Local 636, ProAssurance Insurance Co., Smithgroup LLC, Tenet Health Systems

46 39

47 39

23 24 25

This list is an approximate compilation of the largest law firms in Michigan. Total number of attorneys does not include "of counsel." It is not a complete listing but the most comprehensive available. Information was provided by the law firms or gathered from their websites. Firms with headquarters elsewhere are listed with the address and top executive of their main Michigan office. NA = not available.

B Formerly Trott & Trott PC LIST RESEARCHED BY SONYA D. HILL

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WORLD WATCH WHERE MICHIGAN DOES BUSINESS

Cooper-Standard Automotive Inc. Based: Novi Operations: Manufacturing facili-

ties in Atibaia, Camaçari and Varginha and a one sales office in São Bernardo do Campo Employees: 1,777 Products/Services: Sealing and trim systems, fluid transfer systems, fuel and brake delivery systems Top executive: Jürgen Kneissler, managing director for Brazil Clients: Ford, FCA, General Motors, Toyota, Renault Nissan, Honda, Volkswagen, Kautex, Hyundai, PSA

Domino’s Pizza Inc. Based: Ann Arbor Operations: 127 stores across the

BRAZIL

ith a 2014 GDP of $2.3 Manaus trillion, Brazil was the eighth-largest economy in the world. The country boasts developed Rio de Janeiro mining, agriculture, manufacturing and service sectors, according to the CIA World Factbook. Unemployment hit a historic low of 4.5 percent early last São Paulo year but has since been rising. Brazil’s major exports are iron ore, soybeans, footwear, coffee, automobiles and transport Gravataí equipment. Its largest export partners are China (19 percent), the U.S. (10.3 percent), Argentina (8.1 percent) and the Netherlands (7.2 percent). Brazil’s major imports are chemical products, oil, electronics, automotive parts and machinery. Its largest import partners are China (15.6 percent), the U.S. (15.1 percent), Argentina (6.9 percent) and Germany (6.3 percent).

country Employees: 3,000 Products/Services: Pizza, pasta,

chicken, bread sides, beverages Top executive: Edwin Junior, market director for Grupo Trigo

Dow Chemical Co. Based: Midland Operations: Latin America head-

quarters, one business process service center and one R&D lab in São Paulo; manufacturing facilities in Guarujá, Jacareí, Pindamonhangaba and Aratu; commercial offices in Rio de Janeiro and Ribeirão Preto; corn seed manufacturing facilities in Luis Eduardo Magalhães, Guaíra, Capinópolis, Paracatú and Rio Verde; parent seeds manufacturing facility in Janaúba; one R&D lab, one corn seeds and hybrid development facility in Jardinópolis; an R&D and manufacturing facility in Jundiaí; an R&D lab, corn and sorghum seeds hybrid development facility in Cravinhos; and Dow AgroScience manufacturing facilities in Franco da Rocha Employees: 3,000 Products/Services: Chlor alkali, seeds, agrochemicals, etc. Top executive: Pedro Suarez, president of Dow Latin America Clients: Whirlpool, Unilever, Anjo Química, Videplast

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

Coming up October: The Netherlands 䡲 November: China

Dow Corning Corp. Based: Midland Operations: A commercial office

in São Paulo, a silicone finishing plant in Hortolândia, a silicon metal plant and a natural resources operations office in Santos Dumont and Breu Branco Employees: 1,000 Products/Services: Silicone-based materials and raw materials used to manufacture silicone-based materials such as silicon metal Top executive: Angelo Bianchini, regional executive Clients: External customers include the construction industry, personal care, cosmetics, automotive/transportation manufacturing and textiles manufacturing

Faurecia North America Inc. Based: Auburn Hills Operations: 27 production facili-

Based: Dearborn Operations: A design office in São

Paulo Services: Architecture, engineering, consulting and construction management Employees: 10 Top executive: Jim Jobes, operations manager for Brazil Clients: John Deere, Hitachi, Azul Airlines, TAM Airlines

Inteva Products LLC Based: Troy Operations: One manufacturing

plant and one technical center in São Paulo Employees: 75 Products: Window regulators and latches Top executive: Marcus Peixoto, production plant manager Clients: Renault SA, Volkswagen AG, Ford, Honda

Products/Services: Direct hire, PT for engineering, IT and finance verticals, outsourcing and consulting, managed service provider, trade marketing, temporary and outsourcing Top executive: Daniel Pagano, country managing director for Kelly

FCA US

Services Brazil Clients: Customers within the

Based: Auburn Hills Operations: An assembly plant in

Goiana, a parts distribution center in Louveira and a central office in São Paulo Employees: 2,750 Products/Services: Vehicle production of the Jeep Renegade and importation of Chrysler 300C and Town & Country; Dodge Durango and Journey; Jeep Compass, Cherokee, Grand Cherokee and Wrangler Top executive: Sérgio Ferreira, managing director

Based: Southfield Powertrain operations: Five manu-

DOW CHEMICAL

Ghafari Associates LLC

ties and three R&D centers to support the company’s interior systems, emissions control technologies, automotive exteriors and seating business groups located in Camaçari, São Bernardo do Campo, Dias d’Ávila, Porto Real, Piracicaba, Limeira, São José dos Pinhais, Quatro Barras and Gravatai Employees: 8,700 Products/Services: Interior systems, emissions control technologies, automotive exteriors and seating Top executive: Yann Delabriere, chairman and CEO of Faurecia

Federal-Mogul Corp.

Dow Chemical’s facility in Aratu.

velopment location in Diadema Motorparts operations: One manufacturing location in Sorocaba Employees: 1,500 Top executive: Marcos Bastos, director and general manager

facturing operations — lighting in Manaus, pistons in Araras, valvetrain in Três Corações and Santo André, and systems protection in Hortolândia — as well as an office in São Paulo and a research and de-

Kelly Services Based: Troy Operations: Offices in São Paulo

and Rio de Janeiro Employees: 150

natural resources, life sciences, high tech, financial services, consumer goods and retail industries More information: Kelly Brazil was awarded the 2015 Reliable Suppliers Prize as “One of Best Evaluated Companies for Recruitment and Selection Services” and for the third consecutive year was named as one of the 300 Best HR Suppliers in Brazil.

Metaldyne LLC Based: Plymouth Operations: One manufacturing

operation in Indaiatuba Employees: 75 Products/Services: Powder metal products for automotive engine applications, including cam rings, rotors and sprockets Top executive: Gilvan Nunes-Bezerra, plant manager, Metaldyne Brazil Clients: Ford, Fiat Chrysler, BorgWarner, ZF Friedrichshafen AG

MSX International Inc. Based: Detroit Operations: Headquarters in São

Paulo and seven branch offices throughout the country Employees: 2,000 Products/Services: Providing technical staffing solutions to OEMs and tier-one and two suppliers, and providing business and process improvement services as well as technical, warranty and training solutions to vehicle manufacturers and dealer networks Top executives: Ilkka Palin, HCS managing director for MSXI Brazil; Felix Serrano, RNS managing director for MSXI UK, Iberia and South America Clients: Fiat Chrysler, Ford, General Motors, Hyundai, Jaguar Land Rover, LG, Mercedes Benz, Nissan, Peugeot Citroën, Volkswagen AG and several

tier-one and tier-two suppliers

TI Automotive Ltd. Based: Auburn Hills Operations: Manufacturing facili-

ties and fluid-carrying systems plants in Gravataí, Juatuba, São José dos Campos and São José dos Pinhais; a manufacturing facility for pump and module systems in Eugênio de Melo; a laboratory and test center in Caçapava Employees: 1,195 Products/Services: Pump and modules, level sensors, brake and fuel lines, power steering products, HVAC, HVAC parts and coated tubes Top executives: Luiz Lourenco, plant manager; Andre Bonatto Nunes, plant manager; Nelson Ferreira, plant manager; Luiz Lourenco, general manager Clients: Fiat Chrysler, Ford, Mercedes-Benz, Renault SA, PSA Peugeot Citroën, Nissan, General Motors, An droid, Iveco Latin America, Dytech Dynamic Fluid Technologies, Hyundai, Volkswagen AG, JTEKT North America Inc.

Ziebart Based: Troy Operations: Three stores in São

Paulo and three stores in Espírito Santo Employees: 114 Products/Services: Appearance and protection services, including professional detailing, paint protection coatings, underbody sound barrier, sprayed-on bed liners, automotive glass repair, architectural film, window tint, paint protection film, truck accessories, electronics and scratch repair services Top executive: Thomas E. Wolfe, president and CEO, Ziebart International Natalie Broda

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SPECIAL REPORT:

SECOND STAGE

JOHN SOBCZAK

“I needed to be checking in more with staff. I look back and scratch my head — I wonder what happened.” Jessica Woll, Woll & Woll PC

Stories inside Down a rabbit hole: TPS Logistics discovered that turning to an acquisition to get out of a hole can actually put you into one. Page 20. Law of rivalries: Jessica Woll, managing partner of law firm Woll & Woll, learned that delegating doesn’t mean checking out, Page 21.

When to scrap Plan A for Plan B Learn how companies rebounded after hitting the mat nyone who craves predictability probably shouldn’t become an entrepreneur. Besides the inherent risk of failure that any business carries, running a company offers many opportunities to be blindsided by even the seemingly most astute decisions. These are decisions that seemed perfectly reasonable at the time, and perhaps more than reasonable. They were the mature, responsible thing to do, appropriate for the company’s growth. For instance, how many times has it been said, including in the pages of Crain’s, that entrepreneurs need to learn to let go? Professional advisers urge business owners to stop being control freaks and trust others to take on some important responsibilities. Jes-

sica Woll did just that at Woll & Woll PC, and it blew up in her face. The decision eventually led to the departure of a good chunk of her staff. And while the decision for TPS Logistics Inc. to buy a company rather than build its own team might have been aggressive, it was hardly novel. It’s practically standard operating procedure these days for technology companies to buy other companies for their talent. Nor did the decision appear reckless. TPS knew the target company and had used its services. To CEO Brandon Stallard, it seemed like the smart thing to do. “I jumped in and bought a company that looked perfect,” he said. And then, “I wake up one morning and realize I don’t have control of this part of my company.” This month’s Second Stage looks not only at how these business owners erred, but how they walked it back.

Stories by GARY ANGLEBRANDT | Crain’s Detroit Business

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SPECIAL REPORT: SECOND STAGE

DISABILITY, TERM LIFE INSURANCE GROUP DISABILITY,

Acquisition to save money became costly rabbit hole By Gary Anglebrandt Special to Crain’s Detroit Business

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The software TPS Logistics Inc. in Troy uses doesn’t just support operations, it is the operations. TPS makes software that helps logistics companies match shipments with shipping space. This wrings costs out of supply chains by finding holes in shipping capacity that might otherwise go unused. The company’s customers are in the automotive, energy, and health and beauty industries. Its system can plug into customer systems, letting TPS tap into complex shipping activities. Then TPS can negotiate cargo rates on customers’ behalf, track shipments, and so on. The time came when the system needed an overhaul. TPS also wanted to make a system customers increasingly had been demanding, one customized to match their needs and more deeply integrated with their systems. For such a critical piece, CEO Brandon Stallard didn’t want to fiddle around for months on end building a team who would then spend months more actually building the system. So he bought a company that could do the whole thing. “I felt we could take that platform and build on it further,” he said. The plan seemed sensible enough. In addition to bringing readymade technology and a significant savings of time, the acquired team would be there to maintain and update the system after the Brandon Stallard: Strategy became a initial build. TPS knew the “train wreck.” acquired company, too. It had been using the company’s system for a year on an outsourced basis. The idea seemed like a no-brainer. Buying talent and technology through acquisitions has become a tried-and-true tactic for growth companies. It’s practically standard procedure in the tech world. Why shouldn’t TPS do the same? Stallard made the deal. TPS dropped $2 million on the company, based in Chicago. The purchase took 90 days to complete, followed by about six months of marrying the companies. As time went on, though, it became apparent the decision wasn’t turning out to be as sensible as it had looked. The technology of the acquired company didn’t give TPS the flexibility it needed. When something needed to be changed, the system was too unwieldy to get it done easily. There was no development documentation to track down likely

Eyeing an acquisition? Take note Vincent Mattina, partner in Rochester-based accounting and consulting firm Mattina, Kent and Gibbons PC, offers a few guidance points for businesses thinking about buying a team through an acquisition instead of building one in-house. One is that owning a company in another state has its own set of challenges. “Absentee ownership is generally a challenge for anybody,” Mattina said, because of the distance and inherent lack of control. Web conferences and Skype calls only go so far. He has seen many of his clients in this situation absorb the acquired company by physically moving it into the buying company’s own building, and that has worked well for them. “Entrepreneurs have to have their hands on everything,” Mattina said. Absorbing the acquired company in this manner lets the owner see how things are developing, gives the owner more control over financials and helps the new staff form loyalty to the new employer. Should things go sour, the effects of pouring more money into a project, or spending money to go in a new direction, “can be devastating on a financial statement,” Mattina said. “It could be that neither is a good financial decision, but you’ve got to choose one because staying stagnant is not an available choice.” The final, and main, piece of advice he offered was that before making a buy, a company should do its homework. This might mean hiring someone with experience in buying the type of company being targeted, or something close to it. 䡲 Gary Anglebrandt

sources of problems. “A lot of that did reside in one or maybe two people’s heads,” Stallard said. An implied, and unsettling, effect of this was loss of control over the company’s core components. More and more vital information was taking residence in the Chicago office, which put Stallard in an uneasy spot. After three years, Stallard knew he’d made the wrong call. But he had to keep what he had as he looked for something better. “Our investment was millions and millions of dollars, and to say, ‘Scrap it,’ that’s insane, right? It just wasn’t right. We decided to develop it ourselves,” Stallard said. He built “an army” of 35 developers to do the job in-house, building a system from scratch. This army worked on a project that ultimately cost another roughly $3 million. But TPS soon learned another difficult lesson: “If you’re not a software development business, you probably shouldn’t try to be one,” Stallard said. In extricating itself from one bad situation, TPS had gone down another rabbit hole, he said. It took much longer to understand the workflows that dictate what parameters a system needs to possess. The cost overruns were staggering, he said. Two years into it, Stallard had to come to terms that this path, too, was leading nowhere good. “This thing was a train wreck,” he said. That led to the third plan that eventually, last year, produced a system to TPS’ liking. The trick to getting the job done was the hiring of a CIO, who was charged with vetting systems on the market produced by other companies. The CIO

led a team of five that spent close to four months travelling and inspecting. It took six months to go from start to final decision on a product. The resulting system is what Stallard describes as a hybrid of an offthe-shelf and in-house product. It system cost $3 million over two years. The total cost, though, when counting from back when TPS first decided it needed a new system, came to about $8 million and seven years. “It makes me want to vomit when I think about it,” Stallard said. The army of 35 had to be let go. Instead, TPS uses a mostly offshore team of 12 people who do the customization work. With a system in hand to be happy with, Stallard shut down the Chicago office, after sending a trusted employee to grab critical information. “In retrospect, it was a huge mistake,” Stallard said. Hiring the right people from the start — people experienced in buying software companies, perhaps — likely would have averted disaster. Stallard hadn’t hired a CIO before because he didn’t see the value: “I was trying to save money and do it on the cheap, and a true CIO seemed to me just overhead — $100,000 to $200,000 just to give advice. If I’d spent that seven years ago, I would have saved millions.” He also said a key mistake was venturing beyond TPS’ core business. It might be a company dependent on software, but it is not a software development company. Stallard said he’d certainly be willing to buy a competitor someday, but would he buy another software developer? “No, I would not.” 䡲

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SPECIAL REPORT: SECOND STAGE

Lesson for lawyer: Be careful when delegating authority

BLUE CROSS COVERS EVERY CORNER OF YOUR BUSINESS.

By Gary Anglebrandt Special to Crain’s Detroit Business

An untenable delegation: A divorce lawyer hands over responsibilities but later has to get them back. It all came about because of following one of the principles consistently directed at second-stage companies: Learn to delegate. One of the classic pitfalls of entrepreneurship arrives when the founder of the business must trust others to manage some aspects of operations. This can be tricky because founders tend to be hands-on types who, to put it diplomatically, appreciate control. But in 2004, Jessica Woll was stressed enough trying to practice law and manage her Birmingham law firm, Woll & Woll PC , that she knew she had to delegate. Over five years, she gradually handed duties to a senior associate. This allowed her to focus on clients outside the office, be in court, travel for work and, at one point, tend to her newborn baby. But Woll learned the hard way that delegating does not mean checking out. The manager expanded the job to include tasks beyond the scope of what Woll intended. This included making decisions on client pay and sending one lawyer in place of another to court. Woll was unaware. “It took a while for that to surface. I needed to be checking in more with staff,” she said. “I look back and scratch my head — I wonder what happened.” It was Woll’s mother, her semi-retired partner in the firm, who sounded the alarm while minding the shop when Woll was traveling in early 2007. For the rest of the year, Woll tried to work out the issues, but she eventually determined the situation to be untenable. The manager demanded a full partnership, but Woll declined, offering instead a junior partner track that the employee turned down. The situation created a rift within the ranks, Woll said. Employees who had been around longer felt loyalty to Woll and her mother, while newer workers sided with the manager. Such rivalries can sour any workplace environment. At a firm specializing in sensitive divorce law, they were potentially ruinous. It wouldn’t do to have already-distraught clients walk into an office crackling with tension. “It takes so much courage for these people just to walk in the door. You’d better present a unified front ... create confidence and peace,” Woll said. Woll finally fired the manager along with four other staffers over

Biz consultant: ‘Hire slow and fire fast’ Managing staff in a small business can be tricky because everyone works so closely together, said Vincent Mattina, partner in Rochesterbased accounting and consulting firm Mattina, Kent and Gibbons PC. “As entrepreneurs, we probably don’t “If someone is let go staff as quick as we should. As a rule, hire slow and fire fast,” he said. running Entrepreneurs also fall into the trap of assuming everyone on the team has around the the same drive and emotion for the enoffice terprise. pretending to Then, when cuts have to be made, it’s hard to regroup and get things back in be somebody order, and softer skills are required. “It’s they weren’t, so different from looking at the financial piece,” Mattina said. the morale Owners who worry that firing a key damage is person might damage morale should already done.” consider that just maybe the opposite will happen. Vincent Mattina “If someone is running around the Mattina,Kent and Gibbons PC office pretending to be somebody they weren’t, the morale damage is already done. Sometimes it’s a breath of fresh air that the person is gone. The owner finally made a decision, and the bad apple is gone,” Mattina said. In the event that the person to be fired is well-liked, the owner’s recourse is to communicate openly with the staff about how the company needs to move in a new direction. “Ask for support of the staff you have,” Mattina said. And a reminder that a shakeup tends to loosen up opportunities for remaining staff members never hurts, either. As for delegation of important duties, careful thought should be given handing these things off to staff members. “If they don’t have the same motivation, you’re really wasting time,” Mattina said. 䡲

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the course of about a month and a half at the end of 2007. At the time, Woll & Woll had 17 staff and contract employees; a loss of four amounted to nearly a quarter of the workforce. She has 10 employees now. Then she had long talks with the remaining staff members through a series of meetings, where she also listened to them to hear more about what was wrong. They said there hadn’t been enough cohesion, that they needed more meetings and an atmosphere where they could talk more openly. Woll, for her part, admitted she should have been in the office more often. It’s easy for business owners to fall into the trap of assuming everyone else in the office holds the same drive and emotion for the business as the owner. Meetings help bring everyone into alignment. Woll has maintained the stepped-up meeting schedule begun in that sixmonth period of morale rebuilding, holding staff and one-on-one meetings several times a week. It took six months for morale to snap back. During that time, Woll replaced the employees who left. If she had to do it over again, Woll would have hired a management consultant who would have helped her look at the bigger picture and

maybe spotted red flags earlier. “I don’t have an MBA. I just have a successful law practice, and it grew,” Woll said. She also believes stricter boundaries between her and employees would have repressed employee urges to step over lines of authority. “More formality would have alleviated problems,” she said. Woll has not delegated as much responsibility to any one employee as did she did before, choosing instead to divide duties among more people and also to increase the number of people who directly support her legal work. Where she once relied on one paralegal, she now has four. She also doesn’t plan to delegate high-level duties again. She doesn’t plan to grow Woll & Woll into a mega-firm, so that approach works for her. The big lesson learned for Woll was that she can never again take her hand off the wheel. That includes staying sharp on all the important functions that make her business tick. “If I don’t, I may be vulnerable to an employee who knows how to do something (I don’t),” Woll said, adding that she practices this rule within reason: “I don’t know how to use the copier, but I’m sure I could figure it out.” 䡲

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Entrepreneur used volunteer work to get the word out on new biz By Gary Anglebrandt Special to Crain’s Detroit Business

Pradip Sengupta was forced to leave the corporate world during the recession. He set out to do something he’d had a mind to do for many years, start his own business. He formed IPS Technology Services in 2009 as

an IT consulting business that soon branched into staffing and application development. The Pradip Sengupta: business started He wondered: “Who out with a modthe heck knows est $35,000 in me?” revenue its first year but hit its first million in 2012, when it hit $1.2 million. Problem: One of the early conundrums a business faces is how to get the word out that the business exists, without blowing all the company’s cash in the process. “Who the heck knows me?” he thought. “I can’t go out and beg and plead, ‘Can you give me a website project?’ ” Sengupta considered, briefly, the

Integrated Productivity Systems LLC Dba: IPS Technology Services LLC Location: Troy Description: Information technology services provider President: Pradip Sengupta Employees: 23 Revenue: $1.5 million in 2014

obvious routes of placing ads through various channels and paying for booths at conferences. He didn’t want to place a single ad or set up a booth at a single conference because he didn’t think that would have enough impact. He wanted continuous ads and many booths at many conferences, or none at all. Considering the cost for the volume route, he had to go with none. Solution: He changed his strategy and approached the problem from a less direct angle. Sengupta started volunteering with business groups,

helping them organize events and worked on their boards and special committees. Setting himself to put as much energy into his volunteering as he was putting into his business, he jumped into three volunteer activities: mentoring at TechTown, organizing a health care IT committee at Automation Alley and acting as an ambassador for the Detroit Regional Chamber by going out and talking to businesses. Sengupta recommends seeking committee chair posts, of which he has had several. He also worked on strategic plans for a charity to get teenagers involved in music, and volunteered 16 hours a week at a religious temple. Volunteering goes well beyond networking, he said. The work with business groups gave Sengupta the chance to talk to new companies, and working with fellow businesspeople on committees let others learn who he is and how he works. “People see you’re serious,” he said. “I would choose volunteering anytime over networking. You get to see the same people over and over again. At a networking event, you shake hands, get business cards and

never see that person again.” For a year and a half, he spent at least 20 hours a week on these activities. It took six months before he started to feel some traction taking hold, in the form of calls coming from people he met through volunteering. In 2011, when revenue reached $350,000, he figures about 30 percent to 40 percent of his business was the result of these efforts. Later he volunteered for committee work with the local chapter of the Society for Information Manage ment , which let him rub shoulders with IT decision makers at other companies. He eventually added conference booths and event sponsorships to his marketing mix. Sengupta exhorts other business owners who might try the volunteering approach to put the huckster inside them to bed. “I never tried to sell a thing,” he said. “If you sell, you turn people off.” Risks and considerations: Volunteering is free and can be curbed when business needs are more pressing. That considerably brings down the risk, Sengupta said. But there are a few things to watch out for. One is knowing that some activities might turn out to be

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duds. Decision makers aren’t there, or the right committees aren’t available. Or worse, the organization could be filled with competitors who might end up learning too much about the new volunteer in the crowd. There could be a few misfires before finding a right fit. “If all the people are not decision makers or people who influence decision makers, I’m not going to get anything out of it,” Sengupta said. Another is the time factor. Even though time is flexible with volunteering, it’s still time absorbed out of an already tight schedule for business owners. How do you make time for it? “You just have to,” Sengupta said. Expert opinion: Advertising isn’t always the best way to get the word out, said Tom Borg, a Canton Township-based consultant who also has served on chambers of commerce committees to help his business. Borg suggested creating newsletters to send to contacts regularly, speaking at events and hosting seminars. “Get that communication link going on a regular basis,” he said. These tactics have served Borg well. He’s been quoted on local television news many times, and it didn’t cost him a penny. 䡲

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Biz owners can prepay for city parking By Marti Benedetti Special to Crain’s Detroit Business

Detroit businesses that want to cull favor with customers now can offer them discounted rates at parking kiosks. The ParkDetroit Merchant Valida tion Service allows business owners to open an online account at ParkDetroit.us, determine how much money they want to preload into the parking kiosk near their business and determine the kind of parking discount to give to customers. Merchants enter information about their business and prefund their account using a credit or debit card. Customers are given a unique five-digit validation code, which they enter into their mobile app to get their parking discounted. “This has not been widely promoted, so we don’t know how successful it will be,” said Jamaine Dickens, a city public affairs consultant for DMC Strategies in Detroit. Meanwhile, other updates to city parking: 䡲 Parking enforcement officers

have new vehicles equipped with license plate readers. The officers can see on the reader whether someone has paid his or her parking tickets. If payment has been made, the officer keeps going; if not, the monitor in the system is triggered to print out a ticket. “This same equipment will also let the department know who the absconders (six tickets or more) are and who is eligible for getting a boot on their tire and a tow,” Dickens said. 䡲 On Sept. 1, Detroit’s Municipal Parking Department resumed writing tickets citywide for those who violate parking regulations. In recent weeks, parking enforcement officers served as ambassadors, teaching drivers how to use the system instead of writing tickets. Once they figured drivers had enough time to learn the new kiosk parking system, parking enforcers resumed writing tickets for those who violate parking regulations. 䡲 With the new system, if a driver gets a parking ticket that he or she feels is unjust, fighting the ticket

Guidance

now can be done through the department’s website. This eliminates the need to go to court to contest a ticket. Officials are urging drivers to download the free ParkDetroit mobile app. It allows drivers to pay for their parking sessions using a smartphone. It sends text alerts 10 minutes before a parking session expires and provides an option to extend the parking time. 䡲 Some of the parking kiosks that now limit parking time to two hours will be converted to allow up to four hours of parking if the kiosk is near an event venue such as Comerica Park or Ford Field. 䡲 The $3.5 million kiosk parking system is a pay-by-plate system. When drivers pull a vehicle into a parking zone, they punch their license plate number into the kiosk, then enter the time they want and pay with a credit or debit card or coins. Downtown parking costs $2 an hour, Midtown $1.50 an hour and near-downtown neighborhoods $1 an hour. 䡲

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State ACOs reap savings for Medicare, profits for selves By Jay Greene jgreene@crain.com

Michigan’s 12 accountable care organizations fared better than national averages in saving Medicare money, generating profits of their own and improving quality, according to data for 2014 from the Centers for Medicare and Medicaid Services

and interviews with ACO executives. While only 32 percent, or 112, of the nation’s 353 ACOs saved enough money for Medicare to earn profits last year on the Obamacare program, half of the 12 ACOs based in Michigan made money, accounting

for $42.6 million or 10 percent of the total $422 million kept for its owners. Michigan’s 12 ACOs — including the Detroit Medical Center’s Michigan Pioneer ACO, the state’s only full-risk ACO — cared for about 266,000 Medicare beneficiaries. Overall, Medicare ACOs saved Medicare nearly $926 million in 2014, a higher number than the previous two years of the three-year demonstration program, which has been renewed for another three years until 2018. Quality also rose in 28 of 33 measurements, including depres-

sion screening, medication reconciliation, colorectal cancer screening and blood-sugar levels. Still, Medicare savings accounted for only a 1 percent reduction based on the $600 billion spent on Medicare in 2014 for its 50 million beneficiaries. Some critics have used that small amount of savings to attack the program, which was authorized under the Affordable Care Act of 2010. “It is important to put those criticisms into context,” said Roger Wiseman, president of Michigan Pioneer and DMC’s senior vice president for population health. “You

have to remind people of the growth curve of health care expenditures. Doing nothing was not an option.” In 2014, RogerWiseman: Michigan PioDoing nothing was neer ACO saved not an option. $17 million during its third year and kept $10 million. In 2013, Michigan Pioneer saved $14 million and kept $6 million. DMC is part of for-profit Tenet

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ACO FAQs What is an accountable care organization?

An ACO is a group ofhospitals, physicians orotherhealth care providers that agree to manage care,share savings and improve quality fora minimum of5,000 Medicare patients in a contract with the U.S. Centers for Medicare and Medicaid Services. Whywere ACOs created and howmanyare there?

ACOs are creations of the Patient Protection and Affordable Care Act of 2010.They are part of an effort by Medicare to reduce rising health care costs by providing incentives for hospitals, physicians and other providers to coordinate care and reduce service duplication and unnecessary visits to the hospital and emergency department. From late 2011 to 2014, Medicare contracted with 353 ACOs nationally with 7.5 million Medicare beneficiaries, or 15 percent of the total number of 50 million beneficiaries.There are 1.7 million Medicare beneficiaries in Michigan, the sixth-most of any state. Michigan’s 12 ACOs care for about 266,000 Medicare patients. Health, a Dallas-based chain with 81 hospitals in the U.S. and United Kingdom. Under Medicare’s ACO program, Pioneer ACOs assume full risk for losses and profits of patients. On the other hand, shared savings ACOs, which the 11 other ACOs in Michigan fall under, split savings 50-50 with Medicare if they meet quality targets.

How ACOs operate Sally Like, Owner Marcile’s Fashions & Bridal

ACO experts tell Crain’s that the key to savings and quality improvement is simple: Increase access to physicians, coordinate care with hospitals and specialty doctors and reduce unnecessary services outside of physician offices. Care at the right time and in the right place can lead to fewer visits to urgent care, emergency rooms and hospitalizations, they say. In Southeast Michigan, for example, Dearborn-based Oakwood ACO LLC saved Medicare $19 million and kept $8.1 million for a $13,000-permember average in its second program year in 2014 with an 87 percent quality score. In 2013, Oakwood ACO saved Medicare $17 million and kept $8.4 million. “We have been continuing to refine what we put into place initially,” said Bill Isenstein, Oakwood ACO’s executive director and COO, adding: “We look daily to see what’s happening with ER visits and hospital admissions. We reach out to patients, jointly with primary care physicians, to get them on track so they are better managed.” Unlike many ACOs, Oakwood ACO also is the insurance network organization for Oakwood Healthcare, SEE NEXT PAGE

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which is the parent company. Oakwood ACO also manages the parent’s other insurance contracts, including commercial and Medicare Advantage managed care enrollees. Isenstein said Oakwood ACO manages care for 120,000 people, including 14,300 in its Medicare ACO. Wiseman said Michigan Pioneer’s success has been driven by tactics including the coordination of patient services. “We identify those patients who had the highest need and provide resources and guide those patients to the services they need,” Wiseman said. Michigan Pioneer’s quality scores have risen steadily, from 61 percent in year one to 85 percent in the third year. Over three years, Michigan Pioneer saved $39 million and improved quality scores in each of the years for the 20,000 Medicare participants.

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Region’s ACOs score well

JIM CARPP, CISA, CIRM Director of Consulting jim.carpp@rehmann.com

Reliance ACO, a Farmington Hills-

based organization, saved Medicare more than $12 million in 2014 and kept $5.9 million for a $12,600-permember savings average. The ACO is composed of dozens of physicians and other providers in Southeast Michigan and works with hospitals representing most of the major health systems in the region. The Physician Organization of Michigan ACO, sponsored by University of Michigan Health System and its affiliated medical group IHA, saved Medicare $27 million, with $12 million retained by the ACO, saving $8,800 per member. About 122,000 Medicare enrollees participated with 6,300 providers. Last year, UM Health System became one of 12 ACOs to drop out of the Pioneer ACO program to become a shared savings ACO. UM was one of the original participants in ACOs, dating back 10 years, when it participated in the physician group practice demonstration program. As the only remaining Pioneer ACO in Michigan, Wiseman said, Michigan Pioneer has applied to Medicare for two more years as either a Pioneer ACO or a next-generation ACO. The two other ACOs in Michigan to earn money under the ACO program in 2014 were physician-led ACOs: Flint-based Greater Genesee County ACO LLC, which saved $4.2 million and earned $2.1 million for a per-member average of $9,600, and

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of Farmington Hills, which saved $9 million and earned $4.4 million for an $11,400 per-member average. Other ACOs in the shared savings program in Michigan include United Outstanding Physicians Southeast M i c h i g a n A c c o u n t a b l e C a r e , Account a b l e H e a l t h c a r e A l l i a n c e P C , St. John P r o v i d e n c e P a r t n e r s i n C a r e , Northern Michigan Health Network and Accountable Healthcare Alliance PC.

Last year, another Pioneer ACO, in Grand Blanc, dropped out of the program, owing Medicare $1.9 million. 䡲 Genesys ACO

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

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As solar grows, lawmakers debate energy law updates By Lindsay VanHulle Crainâ&#x20AC;&#x2122;s Detroit Business/Bridge Magazine

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power is worth. Testimony has wrapped up on a bill floating in the Senateâ&#x20AC;&#x2122;s energy committee that would slash compensation for rooftop solar producers. But the power struggle is expected to continue into the fall as lawmakers work to update Michi-

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ganâ&#x20AC;&#x2122;s 2008 energy law. The House also is considering energy legislation sponsored by Rep. Aric Nesbitt, R-Lawton, and a bipartisan group of House lawmakers also plans to introduce legislation that would preserve solar net metering. Some policy advocates want the Senate to focus on energy issues other than small-scale solar â&#x20AC;&#x201D; a process known as â&#x20AC;&#x153;net meteringâ&#x20AC;? â&#x20AC;&#x201D; as they debate a broader law. Their rationale? Too few users would benefit from a decision, once itâ&#x20AC;&#x2122;s rendered. Solar net metering grew by a quarter from 2013 to 2014, to 1,840 customers, according to a recent report from the Michigan Public Service Commission, the stateâ&#x20AC;&#x2122;s energy regulatory agency. Yet it still makes up less than 1 percent of Michiganâ&#x20AC;&#x2122;s total retail sales. Through net metering, people install solar arrays at their homes, businesses, schools and municipal buildings to generate power and offset their energy bills. They can sell excess electricity they produce to the utilities. The issue surfacing now is how much those individual customers should be compensated. The industry is at the beginning of a transition from a centralized grid to a more distributed system in which people can be both cus-

tomers and power generators, said Brad Klein, senior attorney at the Environmental Law and Policy Center

in Chicago, who works on cases throughout the Midwest. In some ways, it mirrors the technological advances made in other industries, such as telecommunications, over the past century, Klein said. Net metering is just one provision in a two-bill package from Sens. Mike Nofs, R-Battle Creek, and John Proos, R-St. Joseph. Their legislation also would eliminate a mandate that utilities generate some power from renewable sources, instead allowing them to consider renewables through a process known as integrated resource planning. Proosâ&#x20AC;&#x2122; bill would allow utilities to buy excess rooftop solar power at wholesale rates, while requiring net metering customers to buy power off the grid at retail rates. Thatâ&#x20AC;&#x2122;s a change from existing practice, which allows customers to collect retail rates for the power they produce. During three weeks of hearings, rooftop solar customers have said that change would kill the industry just as itâ&#x20AC;&#x2122;s growing in Michigan. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;ll go from seven figures a year down to the lower six figures a year in volume immediately,â&#x20AC;? said Mark

Hagerty, owner of Commerce Township-based Michigan Solar Solutions , which designs and installs solar power systems for homes, businesses, schools and local governments. Utilities, including Detroitâ&#x20AC;&#x2122;s DTE Energy , claim they have subsidized these small power producers at the expense of other ratepayers for years, in that they connect to the electrical grid but donâ&#x20AC;&#x2122;t pay the same price to maintain it. But the utilitiesâ&#x20AC;&#x2122; argument is based largely on the rates they charge. The MPSC says it has never studied the true costs or benefits of net metering on the grid, or whether a subsidy exists. DTE says it subsidizes net metering customers to the tune of 10 cents for every 15 cents of power generated, the difference between the average retail and wholesale rates. Currently, utilities pay retail rates to net metering customers for the power they produce, rather than the wholesale rates they pay elsewhere. â&#x20AC;&#x153;The key factor is that it should be fair to all customers, and the way itâ&#x20AC;&#x2122;s set up now â&#x20AC;Ś itâ&#x20AC;&#x2122;s really not,â&#x20AC;? DTE spokesman John Austerberry said, adding that he would support grandfathering in existing customers under current rules. äĄ˛

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CALENDAR THURSDAY SEPT. 17

New Enterprise Forum. 5-7:30 p.m. Ann Arbor Spark. Training for entrepreneurs on how to present to investors. Learn what is important to communicate and what not to do. Spark Central, Ann Arbor. Free. Contact: (734) 214-0110. To Tweet or Not to Tweet. 11 a.m.-1 p.m. Davenport University. How to create a social media strategy for your business. Speakers include Marilyn Trent, principal, Trent Creative; Christina Strickland, vice president, Crackerjack Marketing; Gordon Thorsby, account executive, Expetec Technology Services; Kathy Ossian, founder and CEO, Ossian Law PC. Automation Alley, Troy. $20 members, $40 nonmembers, $30 walk-in members, $50 walk-in nonmembers. Preregistration closes Sept. 15. Contact: (800) 427-5100; email: info@automationalley.com.

FRIDAY SEPT. 18

EcoWorks 7th Annual Breakfast.

7:30-10 a.m. EcoWorks. Keynote speaker is Jennifer Granholm. The 2015 Sustainable Community Champion Awards will also be featured. Detroit Yacht Club, Belle Isle, Detroit. $75. Contact: Alicia Miller, (313) 894-1030; email: amiller@ecoworksdetroit.org; website: ecoworksdetroit.org.

UPCOMING EVENTS Detroit Chinese Business Association 20th Anniversary Business Conference. 2-6 p.m. Sept. 21. Detroit Chinese Business Association. Tony Vernaci,

vice president for global business development, Michigan Economic Development Corp., will be a presenter. Keynote speakers include Jason Luo, president and CEO of Key Safety Systems and chairman of the DCBA Advisory Board; and Thilo Hanemann, research director of The Rhodium Group. R.J. King of DBusiness Magazine; and Brian Connors, China business development manager, MEDC, will co-host a panel discussion. Marriott Troy. $60. Contact: Tian Xi, (248) 918-0391; email: tian@dcba.com. Digital Summit Detroit. All day Sept. 22-23. Tech Media. Latest digital

marketing trends and practices from Netflix, Zappos, HubSpot, GM, Microsoft, Salesforce, NBCUniversal, Virgin America, BuzzFeed, StumbleUpon and more. Max M. Fisher Music Center, Detroit. $445 conference pass, $545 all-access pass, $695 platinum. Contact: Eric Gregg, (919) 274-2594; email: eric@techmediaco.com. The Opportunities and Challenges of a Multi-Ethnic Workplace. 5-7:30 p.m. Sept. 24. Asian Pacific American

Chamber of Commerce. Explore an increasingly important topic for Asian-influenced international businesses in the U.S.: How can a

Crain’s 2015 Health Care Leadership Summit Join Crain’s for an annual event that provides opportunities to learn about the ever-changing landscape of the health care industry, plus make the professional contacts to help navigate these changes. Held at the Marriott Renais sance Center from 7:30 a.m.-1 p.m. Oct. 28, the Health Care Leadership Summit includes keynote speaker Leah Binder, CEO of The Leapfrog Group, roundtable discussions and the Health Care Heroes awards. Can Michigan provide consumers and employers the data needed to make smart decisions in health care? A growing number of Michigan’s health insurers, hospitals and consulting firms are already doing it. Also, network with local business leaders and health care providers and discuss the latest in innovative health care strategies for 2015 and beyond. Individual tickets are $125; reserved table of 10 is $1,300. Preregistration closes Oct. 23 at 9 a.m. If available, walk-in registration will be $140 per person. For more information, contact Kacey Anderson, (313) 446-0300 or email cdbevents@crain.com.

multiethnic workplace create opportunities for companies and what challenges do companies face as their workplaces evolve into a blending of diverse ethnicities? Dickinson Wright, Troy. Free corporate and executive APACC members; $10 entrepreneur, nonprofit and individual members; $20 nonmembers. Contact: Erin Mclin, (248) 430-5855; email: erin@apacc.net. How to Get More Clients Now. 6:308:30 p.m. Sept. 24. South East Michigan Entrepreneurs Association. New ways to turn more prospects into clients. Topics include: Three steps to getting more clients; the No. 1 way business owners can create cash flow; 12 simple tips to create authentic connections; and how to increase sales by 90 percent. Keynote speaker is Lisa Mininni, host of “The Navigating Change” radio show. Schoolcraft College, Livonia. $20. Contact: ZaLonya Allen, (248) 491-3146; email: administrator@semea.info.

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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DEALS & DETAILS ACQUISITIONS & MERGERS Crosson Holdings LLC, Farmington, acquired Wolverine Flexographic LLC, Farmington, a manufacturer of inline and roll-toroll printing presses. Wolverine has hired new staff and plans to reorganize its plant to provide better workflow and handle expanding inventory, including working on an e-commerce site for products ranging from parts to entire printing presses. Website: wolverineflexo.com. Meadowbrook Insurance Group Inc., Southfield, acquired Mackinaw Administrators LLC, Brighton. Mackinaw will operate as an independent subsidiary within Meadowbrook, maintain its present

headquarters and continue to be led by its current management team. Websites: meadowbrook.com, mackinawadministrators.com.

CONTRACTS Ultraform Industries Inc., Romeo, a

metal stamping and wireform company, has purchased an AIDA 400 ton stamping press. Delivery is scheduled for November. Website: ultraformindustries.com.

Arotech Corp., Ann Arbor, announced that its North American Power System Division, which includes UEC Electronics, has been awarded a $6.7 million order from the Space and Naval Warfare Center Atlantic for the manufacture and integration of 12 Communication Emitter Sensing and Attacking System II platform integration kits. Arotech expects to complete the contract in the next 12 months. Website: arotech.com. Akervall Technologies Inc., Saline, the manufacturer of SISU Mouthguard, announced that SISU has been named the official mouthguard of the National Lacrosse League, North America’s professional indoor lacrosse league with franchises in the U.S. and Canada. Website: sisuguard.com.

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NAME CHANGE Prudential Financial Inc., Great Lakes Office, Troy, announced that

Prudential’s national career distribution system, formerly known as Agency Distribution, has been renamed Prudential Advisors. Website: prudential.com/financialadvisors/mi/troy/greatlakesoffice. Guy Hurley Blaser & Heuer LLC,

Troy, a surety and insurance firm, has changed its name to Guy Hurley Insurance & Surety Services. Telephone: (248) 519-1400. Website: ghbh.com.

NEW PRODUCTS Toggled, Troy, a developer and

Triune Specialty Trailers, Madison Heights, has completed “The Experience,” a mobile Beef Jerky Outlet retail store. The customized trailer was designed and manufactured by Triune Specialty Trailers for Beef Jerky Outlet Franchise Inc., Seymour, Tenn. Websites: triunemfg.com, beefjerkyoutlet.com.

recently broke ground on its manufacturing facility in Gomez Palacio, Mexico, and is expected to be operational by 2016. Website: hennigesautomotive.com.

producer of next-generation solidstate lighting technology and a subsidiary of Altair Engineering Inc., has added to its roster of LED lighting product licensees Dauer Manufacturing and Fusa Corp., Medley, Fla.; ETA Energy LLC, Conyers, Ga.; and Clean Life Energy LLC, Cleveland, a division of CleanLife Ventures LLC. Website: toggled.com. Paradigm Diagnostics Inc., Ann Arbor, and TME Research, Allentown, Pa., launched a precision medicine breast cancer registry to determine clinical impact of molecular profiling on patients being treated before surgery. Websites: paradigmdx.org, tmeded.com. OpTech LLC, Troy, an IT, engineer-

ing and health care talent management firm, has been extended on the U.S. Navy’s Seaport-e prime contract vehicle for technical support services for the next four years. Website: optechus.com. Munch’s Supply Co. Inc., New Lenox, Ill., a heating, ventilation and air conditioning distributor operating in Chicago and northwest Indiana, reached an agreement with Trane and American Standard Heating and Air Conditioning, both brands of Ingersoll-Rand, to become the exclusive distributor for both brands in Michigan’s lower peninsula. Munch’s is assuming operations at Trane’s existing locations at 7867 Lochlin Drive, Brighton; 30000 Stephenson Highway, Unit C, Madison Heights; and 5805 Weller Court, Suite C, Wyoming. Website: munchmichigan.com.

LifeSecure Insurance Co., Brighton,

is releasing individual hospital recovery and personal accident insurance products to new markets across the country. Both products were previously released in Michigan and Ohio. Website: yourlifesecture.com. Perceptron Inc., Plymouth, a supplier of automated industrial dimensional inspection and 3-D products, has begun remanufacturing Coordinate Measuring Machines for resale. The Perceptron Repurposed CCMs will include new CNC Controller and electronics, TouchDMIS measuring software and a Perceptron ScanR laser scanner, integrated with its TouchCloud software module. Website: perceptron.com. ProQuest LLC, Ann Arbor, has introduced an interface that makes it easier for users to complete their research tasks. After analysis of researcher behaviors on the ProQuest platform, testing with users and librarians, beta testing with customer development partners, and large scale A/B testing, the enhancements make discovery and access of ProQuest’s content more intuitive and effective. Website: proquest.com. Secure-24 LLC, Southfield, a provider of managed IT operations, application hosting and managed cloud services, has introduced a virtual desktop. The engineering desktop simplifies the management of engineering workstations. Website: secure-24.com.

NEW SERVICES EXPANSIONS

Computing Source, Madison

ing for the elderly, has opened its first headquarters at 671 E. Big Beaver Road, Suite 111, Troy. Telephone: (248) 469-0021. Website: goldenheartrochesterhills.com.

Heights, a digital evidence and legal support firm, has launched the company’s new court reporting division, which will be incorporated into its existing video deposition service. Website: computingsource.com.

Henniges Automotives Holdings Inc., Auburn Hills, a supplier of seal-

Michigan Venture Capital Association, Ann Arbor, a nonprofit trade

ing and anti-vibration systems for the global automotive market, is opening a technical and tooling center in Beijing, China, and an engineering and sales office in Munich, Germany. Also, the company

organization, launched its online Michigan Entrepreneurial & Investment Landscape Map, which allows users to sort by geographic location, industry sector or organization type. Website: michiganvca.org.

Golden Heart Senior Care-Rochester Hills, a provider of in-home care giv-

Jervis B. Webb Co., Farmington Hills, a subsidiary of Daifuku North America Holding Co., announced a training program of three classes to teach customers how to maintain and modify their SmartCart Automatic Guided Cart systems without outside assistance.The classes are designed for technicians, maintenance workers and engineers and are held at Daifuku North America’s demonstration facility in Wixom. Website: daifukuna.com. Ann Arbor Area Transportation Authority (TheRide), Ann Arbor, and Allison Transmission Holdings Inc., Indianapolis, dedicated the

first of 60 new buses equipped with new technology for fuel economy. The new buses are part of TheRide’s five-year improvement program to implement new and expanded services while replacing older buses. TheRide has received eight buses so far, with seven due in November. Another 45 buses will be delivered over the next five years. Websites: theride.org, allisontransmission.com. ZipLogix, Fraser, a real estate technology company, has launched its zipAlliance Partnership Program, providing resources and industry guidance to growing technology companies. The program fosters the development and adoption of products that help real estate professionals save time and money. Website: ziplogix.com. ProQuest LLC, Ann Arbor, has launched the next database of early European books with Collection 7, making another 7,450 titles available, bringing the program to more than 40,000 titles and 14 million pages of images from the early modern period. Early European books collections are available for purchase by libraries worldwide. Website: proquest.com. Tactical Strategies LLC, Ann Arbor, a provider that focuses on IT system strategies for businesses within health care, will expand services to include clinical analytics, risk management and measures. Website: tacstrats.com.

STARTUPS Chariot Transport LLC, a provider

of medical transport services at 20270 Middlebelt Road, Suite 7, Livonia, is now state-certified to provide transportation throughout southeast Michigan. The company will primarily provide nonemergency medical transportation for individuals with spinal cord injuries and other complex medical needs. Telephone: (248) 919-1636. Website: chariottransportllc.com.

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

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tive, is well-prepared, said Steven Lipnicki, the university’s assistant dean of students. The “8 Keys” voluntary initiative highlights ways that postsecondary institutions can help vets and service members transition to higher education, complete their college programs and obtain career-ready skills. Grand Valley’s steps have included establishing an area where student vets can relax and study; using an early-alert system that helps university staff identify, in the first semester, potential student success or challenges that can be addressed; adopting the PAVE program for all new students as a successor to a voluntary “battle buddy” mentoring initiative; and holding awareness training for faculty and staff. The university also has a new veteran resource representative, shared with Grand Rapids Community College.

REAL ESTATE AUCTIONS

ONLINE REAL ESTATE AUCTION- Weds., Sept. 30– 8AM One Michigan based bank is liquidating a large amount of their bank owned real estate at public auction. Take advantage of this opportunity and be ready to bid and buy on Sept 30!

Montague: 19.74 Acres, 7 residential parcels selling as one Stanwood: .72 acre vacant residential lot, touches a hole on St. Ives Golf Course Algonac: 2 story office building Holly Township: 1 Acre r esidential lot Swartz Creek: .24 Acre residential lot in subdivision Attica: 2.57 Acre residential par cel Mt. Clemens: 3,500 sq. ft. medical office building Howell: 3.98 vacant Acres close to I-96 Howell: 4.48 vacant Acres (2 parcels selling as a package) Linden: 14.85 Acres residential land Flint: 4.98 Acres commer cial land

These properties will sell on Sept 30 via online auction. For more info, visit LASTBIDrealestate.com or call Jordan (616) 460-8936

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Connecting with employers is an emphasis at schools throughout the state. This year, for example, Western Michigan University in Kalamazoo is building around its November “Boots to Suits” event, which brings together student vets and employers who make presentations and provide résumé and interviewing assistance. A week of activities includes a career fair and panel discussions addressing topics such as military families and how executives’ military experience changed them and “how they used those lessons to be successful” in their careers, said Bob Stewart, career development specialist in Western’s Haworth College of Business and a U.S. Navy veteran. Leading up to the November activities is a new session Stewart will run to prepare student vets to interact with employers. The session will include helping students give a 30-second commercial or elevator speech along with job interviewing tips. Employers will discuss how best to approach them about a potential job and how students should interact with a prospective employer in an interview. They also will critique résumés to help translate military experience into civilian terms. Schools are also helping in a number of financial areas, including veteran scholarships; in-state tuition for anyone who has served — even if the student veteran isn’t using federal education benefits that require in-state rates — and, at a few colleges, lowerprice, in-district tuition. One is Delta College in University Center near Bay City, which this year began offering in-district status to all GI Bill recipients. “It’s really both helping the veteran and helping us attract veterans and keep them,” said Bethany Alford, coordinator of veteran services and a reserve Navy chief petty officer. New for colleges, universities and training schools that apply is a “Veteran-Friendly School” recognition program from the state Veterans Affairs Agency. Institutions can earn bronze-, silver- or gold-level status based on their commitment to supporting student veterans and dependents. The agency announced rankings for 57 schools in August. 䡲

Flint: 26 Vacant condo lots in subdivision Burton: 6.98 acres (2 commer cial parcels) selling as one Marlette: 14,480 sq. ft. industrial building on 1.54 Acres Bad Axe: 2 story home on .2 acres3beds, 1.5 bath Port Hope: 1.93 vacant Acres Port Hope: 2 mobile homes selling as one Weidman: 1400 sq. ft. home on .86 Acres Mt. Morris: 6.72 Acres of commer cial land with 4 buildings

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That includes hiring a coordinator to be its point person and represent it in FROM PAGE 3 a multistate effort examining ways to the next few years and coming to apply and translate military training Michigan. and experience into academic credit In the state’s multipronged strategy and credentials. to help that transition, education is a Scott Herzberg, a member of the “key pivot point,” said Jeff Barnes, di- consortium’s steering committee and rector of the Michigan Veterans Affairs military and veteran services adviser Agency. at Northwestern Michigan College in Traverse City, said schools need to conEnlisting schools tinually evaluate programs they offer The Michigan Veteran Education and assess future areas of employInitiative, a program launched this ment, “so that when these veterans year, places resource representatives do land on these campuses, … (we) at college and university campuses to have the proper support pieces in help with myriad issues that affect place. veterans’ education, from financial Herzberg’s NMC position was creaid and health benefits to social and ated in 2012 as part of a commitpersonal needs. ment to make the college more miliIt begins with a conversation. tary-friendly. Steps have included a “An individual may not know what video featuring NMC vets to help services they’re looking for or are faculty and staff understand the available until we … talk through challenges and strengths of vets, vetsome of the interests that they have,” eran-specific orientation, and trainsaid Sarah Mellon, Michigan State Uni- ing faculty to better communicate versity’s veteran resource representa- with vets and be aware of classroom tive. needs, like whether they prefer to sit The initiative was created by the with their backs to the wall or in sight state veterans agency and the Michigan of the exit. College Access Network, an organizaCentral Michigan’s global campus tion that works with colleges and encompasses online students and other groups to increase Michigan’s nearly 40 satellite locations in the college readiness, participation and U.S. and Canada, 20 of which are completion rates. Participating military bases — a presence begun schools and the state split the cost of in 1971. On bases, CMU offers openthe representatives’ salaries and ben- enrollment courses and specific deefits and provide offices. Lawmakers grees, such as a master of science approved more than $1.7 million in and administration degree offered state funding. with classes at the Army’s Command Thirteen representatives are cur- General and Staff College at Fort Leavenrently on campuses. In some cases, worth, Kan., said Adam Betz, manthe reps and vets share a military past. ager of Michigan operations for “They’ll come in my office, and CMU’s global campus and a U.S. Mathey’ll immediately see my U.S. Army rine Corps veteran. Putting students on a path to sucflag on the wall,” said Mya Edwards, a cess includes mentoring. A veteran resource representaUM-developed initiative tive at Oakland Community College who served in the that’s also being used at Army National Guard. other schools in Michigan Edwards said she has and around the country is helped with issues ranging the Peer Advisors for Veterfrom forms and benefits to an Education program, or car repairs and rent. PAVE. It pairs trained and One emphasis has been paid upperclass student the college’s chapter of the Mya Edwards: vets with incoming stuStudent Veterans of America, a Helps with issues dents to discuss, in monthly coalition of student veterans from forms to car one-on-one conversations, groups on campuses that repairs to rent. areas such as how they are provides a peer-to-peer netadjusting, their academics work. Chapters may include veterans, and goals. civilians and military dependents. Peer advisers also help students One early result of the state pro- find on- and off-campus resources gram: More extensive use of available for personal issues and academic benefits. From the program’s January needs. inception through May, campus repUM’s Depression Center received resentatives had met with 475 veter- grant funding that subsidizes the ans, and 136 filed health and educa- PAVE program’s costs at other tion claims. schools that apply and are selected to use the program. Collegial colleges New this year for UM student vetAll of Michigan’s public univer- erans: a website that will list contact sities and community colleges are information for companies nationpart of a network, founded by Cen- wide looking to hire veterans as well tral Michigan University in 2010, that as other organizations offering opshares best practices and looks to portunities such as internships and increase the number of service mentoring. members and their families that It’s a next step in planning that tap educational benefits. The Con- has been unrolling since Larson’s sortium of Michigan Veterans Educators office opened in 2008. Schools say also concentrates on support that evolution is a given to meet the veterans need to obtain a creden- needs of current and future stutial leading to employment. dent veterans. This spring, the group received a Allendale-based Grand Valley State three-year, $500,000 grant from the University, among the schools to comTroy-based Kresge Foundation to build mit to the U.S. Department of Education’s its capacity and the scope of its work. “8 Keys to Veterans’ Success” initia-

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SPOTLIGHT

DMC exec Gray named to lead region’s United Way Crain’s has moved its complete list of appointments and promotions to www.crainsdetroit.com/peopleonthemove. Brief online listings for management-level positions are available at no cost, at editor’s discretion. Guaranteed print placement in this promotional feature can be purchased at the website above.

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Herman Gray, M.D., has been named president and CEO of United Way for Southeastern Michigan effective at month’s end.

Gray, who is executive vice president, pediatric health services at Detroit Medical Center, will

succeed Michael Brennan, who is stepGray ping down from a 30year career with United Way and nearly 12 years leading the Detroit-based affiliate. Before taking his current role at DMC in January 2014, Gray was president and CEO of DMC Children’s Hospital of Michigan. Gray is a graduate of the University of Michigan Medical School. He earned a master’s degree in business administration from the University of Tennessee.

Rock Gaming,Greektown executives swap roles Two executives have swapped roles within Detroit-based Rock Gaming LLC and Greektown Casi no-Hotel. Brian Eby, formerly CEO and general manager of Greektown, is now senior vice president of gaming operaEby tions for Rock Gaming, which ownsthe casinohotel. Eby replaces Jason Gregorec, now CEO and GM of Greektown. Eby, who Gregorec started at Rock Gaming last year, has held executive positions with Warner Gaming LLC and Station Casinos LLC in Las Vegas. He has a bachelor’s degree in business administration from New Mexico State University. Gregorec started at Rock Gaming in May as corporate vice president of gaming operations. He has held executive management positions at Green Valley Ranch Casino Resort & Spa in Henderson, Nev.; Majestic Star CasinoHotel in Gary, Ind.; and Tropicana Evansville in Indiana. He has a degree in finance from New York Institute of Technology. Story ideas for the Spotlight column should be directed to Senior Editor Gary Piatek at gpiatek@crain.com. Articles here are selected by editors based on news value and may duplicate items in the adjacent paid People on the Move feature.

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House bill aims to ‘level field’ of health insurance By Jay Greene jgreene@crain.com

Long-awaited legislation to reform Michigan’s insurance code is expected to be introduced within the next two weeks by Rep. Tom Leonard, R-Dewitt, chairman of the state insurance committee. Ever since Detroit-based Blue Cross Blue Shield of Michigan won state approval in 2013 to convert into a nonprofit mutual health insurer from its 33-year run as the state’s insurer of last resort, competing health insurers have been expecting the state to heed their calls to update and modernize the state’s 60-year-old insurance code. “We just want a level playing field,” said Rick Murdock, executive director of 17-member Michigan As sociation of Health Plans. In 2012, during the debate over Blue Cross conversion to a mutual, Murdock said without reforming the state insurance code, Blue Cross would only solidify its 70 percentplus market dominance. “These practical changes would allow health plans to bring products to market more quickly” and comply with Gov. Rick Snyder’s call to streamline state government, said Dominick Pallone, MAHP’s deputy director. Leonard was unavailable for comment last week. The insurance code changes would affect chapters 34 to 37, which govern disability insurance policies, HMOs, group and blanket disability insurance and small group health coverage, respectively. Pallone said one major code change would allow HMOs to provide administrative services-only products to business customers through the HMO organization. Current insurance code requires HMOs to set up separate subsidiaries to sell contracts to companies that wish to self-insure. Murdock said the change would reduce costs and increase efficiency for the insurers, and allow employers to smoothly shift to a self-insured model within the same insurer if they wish. Several HMOs already have set up separate companies, including Priority Health and Health Alliance Plan. Another code change would grant the state Department of Insur ance and Financial Services flexibility to approve product changes unless expressly prohibited under the code. “This is a modernization approach. We’d like wellness plans to incentivize behaviors to encourage people to get healthier,” Pallone said. While Murdock said discussions have been held between stakeholder groups, including Blue Cross and auto

Blue Cross rivals have been expecting the state to heed their calls to update and modernize the state’s 60year-old insurance code. insurers, only one change — time needed to complete rate approvals — has generated any controversy. Pallone said MAHP wants the maximum time for DIFS to approve rates and product filings to be set at 60 days, which is what it is now. DIFS wants to extend that time to 90 days, he said. “The insurance department says they need more time because all insurers submit information (for the insurance exchange) the first of the year” and the department is overloaded with work, Pallone said. “There may be a conflict there.” Andrea Miller, DIFS’ public information officer, said negotiations with MAHP have been productive. “We will continue to discuss our need for additional approval time and hope we can come to an agreement on that as well,” she said. Other proposed changes to the insurance code include the following: Allow insurers to submit documents exclusively through electronic communication. Codes now require electronic and hard copies to the insurance department. 䡲 Create a clear definition of a health insurer, which includes health maintenance organizations, or HMOs. This would avoid confusion between HMOs and health insurers, which also offer PPO products. 䡲 Eliminate outdated requirements for insurers and HMOs to offer indemnity policies. 䡲 Clarify that insurance mandates only apply to health insurance, not auto, life, property and casualty insurers. 䡲 Add provisions that address problems when policyholders sign up for coverage, use the policies, but don’t pay premiums. 䡲 Enable Michigan to use its own external consumer complaint resolution process and allow 60 days for consumers to appeal decisions from insurers that could include coverage or referral denials. 䡲 Centralize all codes regulating health insurance into chapter 35. 䡲 Jay Greene: (313) 446-0325 Twitter: @jaybgreene

BLUE CROSS FROM PAGE 1

the industry. Following a 2010 governmental lawsuit, Michigan Insurance Commissioner R. Kevin Clinton found most-favored-nation clauses unenforceable, and the state legislature banned the practice in March 2013. But some litigation lingers — and one possible legacy of mostfavored-nation pacts is more transparency in the way insurers reimburse hospitals.

A large claim settled Aetna, which had claimed damages approaching $2 billion in a 2011 federal lawsuit before U.S. District Judge Denise Page Hood in Detroit, quietly settled its case against Blue Cross in May. Terms of the agreement were not disclosed. Attorneys at Gibson Dunn & Crutcher LLP, representing Aetna in the case, confirmed the settlement but declined further comment. Detroit-based Blue Cross also would not comment on the Aetna or HAP lawsuits. The state has seen a great deal more insurer participation and transparency in the ways insurers present their consumer rates, billing and filing information since the litigation first surfaced, said Executive Director Rick Murdock of the Michigan Association of Health Plans. But it’s difficult to determine how much of that change was due to the end of most-favored nations versus the arrival of Obamacare and its private insurance exchanges. The organization needs

But Aetna did not parto do further study on ticipate in the Shane what market forces have Group settlement, and recently affected competiHAP of Michigan opted tion, he said. out of it in late 2014 to “We’re seeing some bring its own lawsuit bechanging dynamics in the fore the Shane deal was fiindividual and smallnalized. business markets for The HAP case has been sure,” he said. “It’s been a Rick Murdock: idle for months, as Blue more open process, and “It’s been a more Cross has tried for nearly we’re seeing both more open process.” a year to disqualify Honig detail and more transman Miller Schwartz and Cohn LLP parency.” and one of its attorneys, who had Another claim stalled also represented 12 hospitals in the The Aetna lawsuit is one of sev- Aetna lawsuit. Blue Cross claims eral that surfaced after the Michi- the law firm’s defense of hospitals, gan attorney general and the U.S. who had previously opposed Department of Justice filed a joint Aetna’s claims of anticompetitive lawsuit of their own in 2010 over conduct by Blue Cross, now crethe contracting practice. The gov- ates a conflict of interest in repreernment agencies agreed to dis- senting HAP on the same claim. miss the original Justice suit in Honigman contends that claim March 2013, after the ban. is baseless, and the hospitals have For its part, Aetna had claimed not objected to its HAP representadamages of more than $600 mil- tion. David Ettinger, leader of the lion between 2006 and 2013, which antitrust and trade regulation would be tripled to nearly $2 bil- practice group at Honigman, delion under federal antitrust law, clined to comment last week. over Blue Cross contracts with At the time Blue Cross made hospitals statewide. that claim, however, the Shane In March of this year, Hood ap- class action and the Aetna lawsuit proved a $29.99 million settlement were still pending in court. Now in a separate lawsuit with various they aren’t, and the hospitals are competitor insurance companies, not part of the HAP lawsuit itself — self-insured companies and em- so it’s unclear whether Blue Cross ployees with co-payments who still feels a conflict exists. were treated at the Michigan hosNo date is set for Hood to rule. pitals. The settlement involved The HAP lawsuit has made no only the timeframe during which progress in court since before those most-favored-nation agree- Aetna’s settlement, but it appears ments were in effect. to be the last pending federal anThat lawsuit, brought by Hills- titrust suit against Blue Cross in dale-based Shane Group Inc . later Detroit. 䡲 Chad Halcom: (313) 446-6796 absorbed several other suits in fedTwitter: @chadhalcom eral court.

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“Housing is one of the big things underlying the skills gap or the talent shortage, particularly when you’re talking about younger workers,” said Sarah Lucas, regional planning department manager for Networks Northwest, a Traverse Citybased firm that assists with workforce and business development across 10 counties. “We hear often — almost daily — about businesses who can’t fill jobs because they can’t find people who have the skills to work them. “At the same time, we hear from young people who want to live up here, are able to find jobs up here but … can’t take the job because they can’t find a place to live. Or, it’s too expensive, or they have to drive too far from the place they can afford.” What young professionals need is workforce housing, said Allison Beers, 36, owner of the Traverse City-based meeting and event planning firm Events North and chairwoman of the Traverse City Young Professionals networking group. “With a lot of the jobs paying $25,000 to $35,000, you can’t afford a $1,400-a-month apartment — or, if you are, you’re living with four people,” Beers said. “We have a lot of great, beautiful places in town, but they are high-end condos. And so for young people, they want to live where they can work and walk and bike and come downtown and have dinner and go run an errand.” Beers said she hasn’t heard of people who haven’t taken jobs because they can’t find housing. But she does know of people who move 15 minutes from downtown because that’s the closest they can afford to live and of people who post to Facebook in search of roommates when leases expire. “We need to get ahead of it before it is an issue,” she said.

information economy. Large tech and professional companies, except in health care and education, Uphill climb typically don’t set up in small towns because they Addressing the talent don’t have a large enough shortage will be critical as talent pool, Glazer said. Traverse City and sur“Knowledge-based emrounding communities in Lou Glazer: Young the northwestern Lower people don’t set up ployers, even though they have to pay higher wages — Peninsula deal with reces- in small towns. and obviously, they’d rather sion-era growing pains. Traverse City has fewer workers not pay higher wages — are concenthan it did close to a decade ago, be- trating in bigger metros because fore the recession sent many of that’s the only place they can find a them packing in search of jobs, ac- concentration of workers,” he said. “Raising wages or lowering houscording to data from the U.S. Census Bureau’s American Community Survey. ing costs are two ways to change the Many positions also aren’t paying value proposition, but I don’t know enough to keep pace with inflation. that that’s enough.” Even some better-paying positions The region’s chamber of commay go begging. Business leaders merce is trying to address the attriare concerned about an aging tion problem through new efforts to group of engineers and machine promote living and working in operators nearing retirement with- northern Michigan. But solving the out a full pipeline of younger work- affordable-housing problem reers to replace them. mains the top policy priority. Like many small and rural towns Attracting people to tourism and across the country, Traverse City hospitality jobs can be harder, Glazer faces an uphill climb because of said, since those workers often have young professionals’ preference to higher transportation costs because live in dense, metropolitan cities, they live farther from work and don’t said Lou Glazer, president of the have access to public transit. Ann Arbor-based think tank Michi A minimum-wage worker would gan Future Inc., which studies talent need to work close to two full-time retention amid the transition to an jobs to afford a two-bedroom apart-

to figure out how to handle the affordable-housing issue,” said Laura Galbraith, executive director of Traverse City-based Venture North Funding & Development, the region’s economic development agency. “The talent attraction piece is still kind of segmented by industry. “We will have to be more innovative.”

The housing problem

ment at market rates in Grand Traverse County, estimated at $825 a month this year, according to data from the Washington, D.C.-based National Low Income Housing Coalition

included in a recent housing study by Networks Northwest. To afford that rent on a standard 40-hour week, a person would need to earn at least $15.87 an hour or about $33,000 a year. Yet that income would be out of reach for most of the region’s service workers, according to American Community Survey data: Median annual earnings for a retail worker were $18,287 in 2013, the most recent year available. Lodging and food service workers earned $13,682 and employees in entertainment or recreation jobs $20,442. An affordable rental in Traverse City is generally considered to cost about $650 a month, Lucas said. Data in the Networks Northwest report suggest that people in Grand Traverse County making 30 percent of the 2015 area median income of $69,200 could afford to pay $519 in monthly rent. Grand Traverse County residents who earn $11.25 an hour, estimated to be the mean hourly wage for workers who rent, could afford to pay $585 per month. “Most people right now are trying

Both Traverse City and greater Grand Traverse County are made up mostly of owner-occupied homes. Traverse City has more than 2,500 rental units within city limits or about 39 percent of the city’s total occupied housing stock, according to 2013 data from the American Community Survey. The data don’t break down to show how many of those are downtown or how many might be seasonal. More than half of renters in the city — 58 percent — pay $750 a month or more to lease an apartment or house. The median monthly rent is $808. In Grand Traverse County, which has about 8,500 rental units, rentals make up just a quarter of all occupied housing. Renters countywide also pay more than in the city — nearly 65 percent pay at least $750 per month, and median monthly rent is $847, ACS data show. Advocates of affordable housing say the shortage of rentals is not isolated to Traverse City. Housing costs have a disproportionate impact on people who work in Traverse City but live farther out — particularly those with lower incomes — because of the added transportation and energy costs. Many people in rural areas choose to live there because rent can be cheaper, but they often have no reliable public transportation and rely on propane heat. Networks Northwest said propane can cost three times as much as natural gas in some rural counties, including Kalkaska and Antrim. In its study, the agency found the problem has been exacerbated by both demographic shifts and policy choices. Most new home construction in

the region has emphasized singlefamily homes on large rural lots, its authors wrote. But the demand for rentals is rising faster than units are being built — from seniors trying to downsize, families with lingering economic constraints keeping them from buying a home and young professionals who are delaying marriage and kids. “At its simplest, the phrase ‘affordable housing’ simply refers to housing that costs 30 percent or less of a household’s income,” wrote the authors of Networks Northwest’s study. That figure can increase to 45 percent for housing and transit combined, Lucas said. In some places in the northwestern Lower Peninsula, she added, some people pay 60 percent or more of their income on those two expenses. “We try to focus on the need to locate new housing development near employment, near schools, near shopping, so people have the option to walk or bike to work,” Lucas said, adding that it’s a longterm solution. “We’re seeing what happens when you don’t do that.”

Growing sector The rental crunch makes it more challenging for employers to land new hires. An exception to the rule might be health care. It was the fastest-growing employment sector in Traverse City over much of the past decade, according to American Community Survey data. Galbraith of Traverse City’s economic development agency said health care consistently has been a growing industry that may have had an easier time recruiting doctors or nurses with attractive pay — unlike, say, construction or manufacturing, which are just beginning to pick up after the recession. Overall, though, the region is struggling to attract and keep a talented workforce. The Traverse City area’s jobless rate, while lower than the state’s, has been dropping steadily for several years. But so has the size of its labor SEE NEXT PAGE

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force — from a peak of 78,812 in 2006 to 74,833 in 2014, the most recent year available in state records. That would indicate potential employees are leaving the area or dropping out of the workforce altogether, which happens when the unemployed stop looking for work. The labor force has ticked upward slightly since 2012 but remains below the prerecession peak. The region’s economy is still heavily tourism-based, much of it during the summer. In fact, a third of the city’s total employment pool in 2013 consisted of workers in three industries: retail; lodging and food service; and arts, recreation and entertainment, according to the American Community Survey. At least seven of the 10 mostwanted job postings by occupation in the region for July were in retail or other service fields, encompassing retail clerks and supervisors, housekeepers, cooks, food service supervisors, customer service representatives and waiters, according to data from the Michigan Department of Technology, Management and Budget. In total, 69 percent of the postings required less than a college degree. Truck drivers and registered nurses were the two most in-demand positions. Restaurants and other service employers are having a hard time finding housing for their workers, particularly those who need short-term seasonal housing. But the issue also affects professional and management employees, Lucas said. Glazer of Michigan Future said

BEER FROM PAGE 3

Rieth said. “We’re continuing to expand and evolve, but the window of opportunity will shut — not soon, but it will come to an end, so we’d be remiss not to look at the opportunities out there.”

State craft beer expansions Other Michigan brewers are expanding or recently have expanded as well, including Kalamazoo-based

places like Traverse City are challenged to maximize their tourism economies while building other sectors, such as agriculture, health care, education and some smallscale manufacturing. It will be tough for the city — and smaller towns like it — to attract major companies to set up corporate headquarters or offices in fields such as finance, telecommunications and software development because of their limited talent pool, he said. “None of that’s going to small towns,” Glazer said. “To some degree, they’re stuck.”

Yet, he added, “For northern Michigan, they’re in better shape than anywhere else because they are more attractive.”

Bell’s Brewing Co.; Battle Creek-based Arcadia Brewing Co. ; and Grand Rapids-based Founders Brewing Co.

brewer operation, “Now is the time tions, but we’re still Chicago’s Goose Is conservative. ” land, which was ac- to make moves. Cottongim said quired by InBev in We see the lack Witch’s Hat, which 2011. produces 1,500 Virtue’s owners of growth as a barrels of craft beer told the online threat because annually, is simply brewing website too small to be on Brewhound that we could be the radar of large the acquisition al- looked over investors — and lows the cider makhe’s grateful for it. and forgotten.” ers to expand distri“I don’t see Ryan Cottongim,Witch’s Hat bution. someone coming South Lyon- Brewing Co. in, like they did at based Witch’s Hat Lagunitas or Brewing Co. expandFounders, and give ed to an 8,000me enough money square-foot location from an unas- to expand like that. There’s just not suming, 1,600-square-foot strip mall going to be enough room in the space in December 2014 with the market,” he said. use of loans from the U.S. Small Busi“There’s a ton of room for us to ness Administration. grow in our region. We could own Ryan Cottongim, owner and head Michigan, and that’s pretty great for of brewing operations at Witch’s Hat, us.” said he’s also exploring multiple Infante of Miller Canfield said the ways to expand the business. rapid growth and big-dollar deals Witch’s Hat soon will start can- will begin to slow, eventually. But ning its flagship beer, Train Hopper right now, it’s an open market. IPA, through the use of a canning “There’s a shift happening right service called Michigan Mobile Can - now,” he said. “You’re not going to ning . The use of a vendor allows keep tens of millions of dollars Witch’s Hat to test its canned beer dumped into breweries. Small on the market before investing in a breweries will continue to fill the high-cost canning line of its own, market, but right now the big boys Cottongim said. are still coming into the market. “Now is the time to make moves,” “Maybe the definition of what’s he said. “We see the lack of growth local is changing — and that’s good as a threat because we could be for brewers right now.” 䡲 Dustin Walsh: (313) 446-6042 looked over and forgotten. Beer is Twitter: @dustinpwalsh going crazy, so we’re exploring op-

In December 2014, Founders sold a 30 percent stake to MahouSan Miguel Group to help fuel its expansion. San Miguel, founded in 1890, is the largest craft brewer in Spain. Last week, Virtue Cider sold a majority stake to beer giants AnheuserBusch InBev NV . The craft cider maker, headquartered in the Allegan County town of Fennville, will operate under another former craft

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: Arboretum Ventures ..............................................11 3 Atwater Brewing ......................................................3 3 BarFly Ventures ......................................................3 Beaumont Hospital ..............................................112 Bloom Sluggett Morgan ........................................115 Blue Cross Blue Shield of Michigan ................11, 31 3 Cascade Partners ....................................................3 29 Central Michigan University ..............................2 Cherry Capital Foods ............................................111 Cooper-Standard Automotive ............................118 4 Crain Communications ..........................................4 34 Delphinus Medical Technologies........................3 29 Delta College ..........................................................2 24 Detroit Medical Center ........................................2 Domino’s Pizza ......................................................118 Dow Chemical ........................................................118 Dow Corning ............................................................118 Eastern Market ........................................................111 FarmLink ..................................................................112 Faurecia North America ......................................118 FCA US ....................................................................118 Federal-Mogul ........................................................118 Ghafari Associates ................................................118 Goodwill Industries of Northern Michigan ......113 29 Grand Valley State University ............................2 Health Alliance Plan of Michigan ..........................11 Inteva Products ......................................................118 22 IPS Technology Services ....................................2 Kelly Services ..........................................................118

rate that Networks Northwest identified as necessary just to afford a marketrate apartment. So what to do? Lucas of NetSarah Lucas: works Northwest Local governments said local govcan help. ernments can help by amending zoning rules to incentivize smaller homes or affordable units, such as offering payments in lieu of taxes to private developers. Traverse City has an ordinance on the books that allows developers to build one additional market-rate unit for each affordable unit they include in a multifamily building, she said, but it’s voluntary and hasn’t yet been used. Other possible policy changes: Launching partnerships between developers and nonprofit housing agencies to integrate more units into planned projects; creating a public housing trust fund with a dedicated revenue source that can subsidize affordable-housing development; and encouraging construction of new upscale rentals, rather than condos, to free up cheaper apartments for lower-income tenants. “I think we all know what the problems are. We’re just trying to get our hands around how to fix it,” said Rob Bacigalupi, executive director of the city’s Downtown Development Authority. “One agency can’t solve them all, but hopefully together we can.” 䡲

Loma Farm ..............................................................111 20, 21 Mattina, Kent and Gibbons ..........................2 Meijer ..................................................................111, 14 Metaldyne ..............................................................118 31 Michigan Association of Health Plans ..............3 Mich. Dept. of Agriculture/Rural Development 12 31 Michi. Dept. of Insurance, Financial Services ..3 32 Michigan Future ....................................................3 24 Michigan Pioneer ACO ........................................2 29 Michigan State University ..................................2 29 Michigan Veterans Affairs Agency ....................2 3 Miller, Canfield, Paddock and Stone ....................3 Morse Marketing Connections ..........................112 MSU Center for Regional Food Systems ..........112 MSX International ................................................118 32 Networks Northwest ..........................................3 29 Northwestern Michigan College ........................2 29 Oakland Community College ............................2 24 Oakwood ACO ........................................................2 TI Automotive ........................................................118 Toggled........................................................................77 TPS Logistics ..........................................................119 32 Traverse City Young Professionals ....................3 3 University of Michigan ............................................3 32 Venture North Funding and Development ......3 29 Western Michigan University ............................2 33 Witch’s Hat Brewing ............................................3 Woll & Woll ........................................................119, 21 Ziebart ......................................................................118

Paying more? A wage survey hasn’t been done in several years, Galbraith said, but anecdotally she has heard that some employers are beginning to pay more in an effort to compete for talent. She said some employers are offering pay above Michigan’s $8.15 base wage, to the tune of $9 to $12 an hour. Still, that’s not the $15.87 hourly

Lindsay VanHulle: (517) 657-2204 Twitter: @LindsayVanHulle

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ARBORETUM

An exit strategy Arboretum Ventures, arguably the most successful venture capital firm in the state in recent years, has had six major exits since 2008:

FROM PAGE 1

cost of health care, that take costs out of the system,” Petersen said. “It’s not as if we’re running out of opportunities to do that. The landscape is as attractive as it has ever been.” Managing Director Jan Garfinkle added, “We’ll stick to our knitting.” Arboretum typically invests between $10 million and $15 million in its portfolio companies over a series of rounds as they hit development milestones, Garfinkle said. That means the company will be able to invest in at least 15 additional companies from this fund. Managing Director Paul McCreadie said Arboretum is already in due diligence on six possible investments from the new fund. Petersen said the company has invested in 35 companies since being founded in 2002. He said the 2003 fund of $24 million and 2007 fund of $73 million both rank in the top quartile of venture capitals funds raised nationally in those years. Petersen said new investors include three health care systems that he is not allowed to identify, one of them in Michigan. Returning investors include the Ann Arbor-based Renaissance Venture Capital Fund and the Troy-based Kresge Foundation.

䡲 HealthMedia Inc., Ann Arbor, which was sold for $200 million. 䡲 Accuri Cytometers Inc., Ann Arbor, which was sold for $205 million. 䡲 HandyLab Inc., Ann Arbor, which was sold for $275 million. 䡲 CardioMEMS Inc., Atlanta, which was sold for $435 million. 䡲 Esperion Therapeutics Inc. (Nasdaq: ESPR), Ann Arbor, and Goleta, Calif.-based Inogen Inc., which had initial public offerings. “Those six exits have returned more than $3 billion in value,” said Jan Garfinkle, an Arboretum managing director.

Delphinus raises $39.5M for cancer detector Plymouth Township-based Del phinus Medical Technologies Inc. , which uses ultrasound to make 3D images for the detection of breast cancer, announced last week that it has raised a venture capital round of $39.5 million. Investors say it is the largest round ever in Michigan for a medical device company. The largest round of venture capital ever in the state was the $59.5 million raised in 2014 by Plymouth Township-based ProNAi Therapeutics Inc. This round was led by Madison, Wis.-based Venture Investors LLC and joined by previous investors — Ann Arbor-based Arboretum Ventures LLC , Ann Arbor-based North Coast Technology Investors LP

and Chris Rizik, CEO and fund manager at Renaissance Venture Capital, said he previously invested in Arboretum’s second and third funds: “Arboretum II was our first investment back in 2008. We literally closed on that investment the day after our own first closing.” Robert Manilla, chief investment officer of the $3.5 billion Kresge Foundation, told Crain’s that in 2006, “my team spent considerable time looking for an institutionalquality asset manager in Michigan. After considerable due diligence, we invested in their 2007 fund and

Farmington

Hills-based

Beringea LLC — and by Grand Rapids-based Hopen Life Science Ventures and Waycross Ventures of

Menlo Park, Calif. Delphinus’ technology was spun out from the Barbara Ann Karmanos Cancer Institute in 2009 after

have been investors in each of their successive funds. “I have watched the organization grow from a small Michigan health care venture firm to a nationally recognized health care investor. …Their 2007 fund is our top-performing U.S.

10 years of research. In 2010, Delphinus raised a VC round of $8 million and in 2013 a round of $11 million. Mark Forchette, Delphinus president and CEO, told Crain’s that the company, based in the Michigan Life Science and Innovation Center, will use the money to fund trials starting this year on 10,000 women with dense breast tissue. “This gives us the capital we need to get the system to market,” Forchette said. The Delphinus device, marketed as the SoftVue System, looks like a bed with a hole near the top. Patients lie down, with a breast through the hole. The breast is immersed in water and surrounded by a ring containing 2,048 ultrasound sensors, which generate data converted into 3-D images. Before being spun off in 2010, Delphinus’ technology had more than a decade of research and more than $19 million in funding, 䡲

venture fund of that vintage, and their 2011 fund, while still early in its life, is progressing well.” Other VC experts said Arboretum should be thanked for restoring confidence for investing in Midwest firms.

Jonathan Murray, who runs the Ann Arbor office of Pittsburghbased Draper Triangle Ventures , said Arboretum has delivered consistent returns. “What’s really important is they’re helping the limited-partner community in Michigan find out it’s possible to invest in Midwest companies and make money,” Murray said, referring by the term “limited partners” to the institutional investors, including foundations and nonprofits, that some think have been too slow to invest in the state. Patti Glaza, vice president of Invest Detroit and managing director of its two investment funds, the Detroit Innovate and First Step funds, said Arboretum’s strategy of investing in life sciences firms has proven wise. Glaza said Arboretum’s track record has opened the door for other VC firms by proving that you can have strong returns by investing in Michigan investment firms that have a Midwest focus. News that Arboretum has closed on its new fund follows the news last week that Arboretum was part of a $39.5 million funding round in Plymouth Township-based Delphi nus Medical Technologies Inc. , thought to be the largest single investment in a medical device company in state history. Arboretum’s share of that round came from its third fund. 䡲 Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

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WEEK

ON THE WEB SEPT. 5-11

Restoration begins on Freer House garden 35

Detroit Digits

A numbers-focused look at this week’s headlines:

estoration has begun on the historic Freer House garden at Wayne State University, at the Detroit home of the late industrialist and art collector Charles Lang Freer. The $250,000 project, expected to take two years to complete, will include a new driveway, flowers and plants, and a railing around the property at 71 E. Ferry St. Plans call for the eventual creation of a visitor center.

ON THE MOVE 䡲 Matthew Clayson, former executive director of the Detroit Creative Corridor Center, has been named vice president, general counsel, business development and governmental affairs for Southfield-based car shopper Web program Detroit Trading Co. 䡲 Chris Priest, deputy strategy director for Gov. Rick Snyder, was named Michigan’s Medicaid director, AP reported. He’ll also be deputy director of the Medical Services Administration, replacing the retired Steve Fitton.

COMPANY NEWS 䡲 Ford Motor Co. announced a $180,000 commitment to the efforts of the USC Shoah Foundation – The Institute for Visual History and Education and founder Steven Spielberg to get the stories of Holocaust

survivors and witnesses heard. At the foundation’s annual gala in Dearborn, Ford Executive Chairman Bill Ford was honored with its Ambassador for Humanity Award.

䡲 Henniges Automotive Holdings Inc., the Auburn Hills-based auto-

motive sealing and anti-vibration component supplier, was acquired by China’s AVIC Automotive Systems Holding Co. Ltd. Terms of the deal were not disclosed. 䡲 The Michigan Gaming Control Board ordered Greektown Casino LLC in Detroit to pay $529,500 in fines for 25 regulatory violations that occurred before Dan Gilbert’s management team took over the Greektown Casino-Hotel. Total revenue for Greektown, MGM Grand Detroit and MotorCity Casino Hotel fell 6.4 percent in August from July after gains earlier in the summer, the board said. 䡲 XPO Logistics Inc., a Greenwich, Conn.-based acquisitive supply chain services company, agreed to buy Ann Arbor-based trucker Con-way Inc. in an all-cash deal valued at $3 billion, Bloomberg reported. XPO said the deal would create the secondlargest less-than-truckload operator in North America. 䡲 Sidney, Neb.-based Cabela’s

The number of years fine dining restaurant The Lark has operated in West Bloomfield. The awardwinning 50-seat restaurant is planning to close by Dec. 23.

$35M

The sale price of the 450,000square-foot Bank of America building in Troy to New York Citybased Sovereign Partners LLC. The price tag was much lower than the $45 million to $75 million some analysts predicted the building would fetch on the market.

6,000

The spectator capacity at Keyworth Stadium in Hamtramck following the proposed completion of $3 million in renovations by Detroit City Football Club. The semipro soccer team hopes to move its games to the stadium in advance of a possible move to a higher-level league. Inc. is considering a location at the proposed Outlets of Southeast Michigan site in Chesterfield Township for a new store, according to a township official. It would be the fourth Michigan location for the outdoor gear retailer, which has stores in Dundee, Grandville and Saginaw. 䡲 Indiana-based auto supplier Stant Corp. will shutter a Romeo plant and lay off 167 employees by mid-November, but it said it is moving some corporate and engineering positions into a new technical center in Rochester Hills. 䡲 Platinum Equity founder and Pistons owner Tom Gores is buying his firm’s stake in the National Basketball Association team, giving him 100 percent of the franchise, a partner in the firm said. Gores had held a 51 percent stake in the team since buying it and Palace Sports & Entertainment in 2011. 䡲 Defense giant Lockheed Martin Corp. will protest a $6.75 billion U.S. Army award in Macomb County for Wisconsin-based Oshkosh Defense to make the Joint Light Tactical Vehicle, but competitor AM General LLC will pass on its right to object. 䡲 Techstars, the Denver-based organization that runs tech accelerators around the country, will host a boot camp for military veterans at Ford Field Oct. 23-25. The Detroit camp will educate veterans and their spouses about how to build technology startups. The program is free; application deadline at www.patriotbootcamp.org is Sept. 14. 䡲 The American Institute of Architects Detroit chapter named 11 projects — three by Smith-

GroupJJR — as annual Honor Award winners. More on the awards, to be presented Sept. 24, is at detroitdesignfestival.com. 䡲 Months after entering into Chapter 11 bankruptcy protection, Olga’s Kitchen Inc. announced the closing of its downtown Detroit location at the One Campus Martius building. 䡲 The nonprofit Detroit Garment Group is expanding an industrial sewing certificate program across the state at community colleges in what will be called the Michigan Industrial Sewing Consortium.

OTHER NEWS 䡲 State Rep. Cindy Gamrat was expelled from office and Rep. Todd Courser resigned after the two Republicans admitted to misconduct in covering up their extramarital affair, AP reported. By House vote during a marathon session, Gamrat became the fourth legislator in Michigan history to be kicked out, and Courser resigned when it became clear he would be voted out. 䡲 According to Farmington Hills-based Realcomp Ltd. II, 5,248 homes and condominiums were sold in Wayne, Oakland, Macomb and Livingston counties last month, up 7.4 percent from August 2014, and home and condo median sale prices rose 5.2 percent, to $161,000. 䡲 President Barack Obama promoted his College Promise Initiative, which would include two years of free community college education, in an address at Macomb Community College’s Warren campus. 䡲 Former Michigan Gov. James Blanchard and his wife, Janet, donated $1 million to Michigan State University to create the Spartan Statesmanship Award for Distinguished Public Service and a related lecture series, AP reported. Blanchard is an MSU alumnus. 䡲 The University of Michigan will spend $100 million over the next five years in its new Data Science Initiative to create opportunities for students and faculty researchers to tap into the potential of “big data,” AP reported. 䡲 Detroit Public Schools, run by a state-appointed manager because of its financial strains, made plans to sell $121 million in taxexempt notes. The notes maturing in August being sold through the Michigan Finance Authority were priced to yield 5.75 percent — about 5.5 percentage points more than one-year benchmark municipal bonds — according to data compiled by Bloomberg.

OBITUARIES 䡲 Joan Gehrke, a longtime nonprofit fundraiser who was named a Crain’s Health Care Hero in 2010 for her work with the St. John Hospital Foundation, died Sept. 3. She was 67.

RUMBLINGS This mac and cheese is made for football Saturdays an comfort food really make everything better — especially if your football team isn’t winning? Sweet Lorraine’s “Fabulous Mac n’ Cheez” and the University of Michigan recently signed a development deal to bring the restaurant’s macaroni and cheese to Michigan Stadium for this fall’s season. Sweet Lorraine’s will have two kiosks in the stadium. The main level kiosk will serve Classic Mac, Bacon Cheddar Mac and Pesto Mac. The Jack Roth Club Level kiosk will feature a similar menu but will also include Sweet Lorraine’s Lobster BLT Mac. A “brick and mortar” restaurant location will open inside the university’s Crisler Center basketball arena with a similar menu to the Big House’s main level kiosk. Plans for a location inside Yost Ice Arena are being finalized. Meanwhile, another Detroit comfort food option is now available to make at home. Sanders cream puff shells are now available in the freezer section at select Michigan Kroger stores, in

Sanders Chocolate & Ice Cream Shoppes and online at www.sanderscandy.com. They are now sold in a

resealable pouch — to aid in pacing that comfort food consumption.

Symposium to host famed co-working space CEO Next month’s Urban Entrepreneurship Symposium, to be held Oct. 23 at the College for Creative Studies, will feature Miguel McKelvey as keynote speaker. McKelvey is co-founder and chief creative officer for New York City-based WeWork, a provider of co-working workspace for entrepreneurs, freelancers and startups that was founded in 2010. W. David Tarver, founder and president of the Urban Entrepreneurship Initiative and the chief organizer of the symposium, said McKelvey is a perfect kenote choice. “With a forprofit startup company valued Miguel McKelvey at $10 billion and geared to finding shared workspace in urban areas, Miguel McKelvey and WeWork epitomize urban entrepreneurship,” Tarver said. The symposium will discussions, problem solving and networking with a goal of inspiring businesses to develop ideas to address challenges in urban communities. Last year’s event, held at the University of Michigan in Ann Arbor, drew nearly 300 people.

Sweet Lorraine’s is serving up its “Fabulous Mac n’ Cheez” for University of Michigan football, basketball and hockey fans. Event sponsors are UM’s Innovate Blue program, which oversees entrepreneurship programs at the university; the Michigan State University Eli Broad College of Business; Wayne State University; Comerica Bank; Fifth Third Bank; Invest Detroit; the Michigan Economic Development Corp.; mQrg LLC; the New Economy Initiative; and Rock Ventures LLC. More information can be found at www.urbanei.org

Lineup is set for fifth Detroit Design Festival The Detroit Creative Corridor Center will host its fifth annual Detroit Design Festival Sept. 22-26. The festival, held in multiple locations throughout the city, is designed to economically impact and develop the region’s design and creative talent. Highlights of this year’s festival include lectures and panels from Detroit designers; Eastern Market After Dark, with more than 30 studios and shops; a design village sponsored by Dwell Magazine; a youth day on Sept. 26; and studio workshops. Five installations from local and international artists will also be displayed along the Dequindre Cut on Sept. 26. Detroit Creative Corridor is hosting a kickoff party on Sept. 17 from 5:30 to 8:30 p.m. at St. Vincent Corktown in Detroit. Sponsors include Ally Financial Inc., FCA US LLC, Art Van Furniture Inc., the Detroit Riverfront Conservancy, Quicken Loans Inc., Domino’s Pizza Inc., Crain’s Detroit Business and others. For more information or to request tickets, see detroitdesignfestival.com. The Creative Corridor is an advocacy organization funded by the U.S. Small Business Administration, Michigan Economic Development Corp., The Kresge Foundation, Surdna Foundation, New Economy Initiative and the John S. and John L. Knight Foundation. 䡲

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