Crain's Detroit Business, Nov. 23, 2015 issue by Crain's Detroit Business

20151123-NEWS--0001-NAT-CCI-CD_--

11/20/2015

5:16 PM

Page 1

CRAIN’S Readers first for 30 Years

DETROIT BUSINESS

Pie makers rev up for crimp-a-thon to make their holiday dough, PAGE 3

NOVEMBER 23-29, 2015

Campbell Ewald maps future Paper and digital strategy helps agency win clients, reverse declines By Bill Shea bshea@crain.com

LARRY PEPLIN

Campbell Ewald CEO Jim Palmer (left) and Kevin Wertz,president of its Detroit, Los Angeles and San Antonio offices,are winning business with a customer“map” tool.

City pension funds to resume investing New rules aim to prevent bribery, kickbacks of old vestment portfolios and changes made in asset allocation. Detroit’s two multibillion-dollar The post-bankruptcy landscape pension funds for city workers are includes pension fund babysitters poised to invest money for the first and new investment rules aimed at time since the city preventing the sort emerged from bankof bribery and kickPension facts ruptcy and a public back scandals that corruption scandal Detroit General saw five former pencost retirees more than Retirement System sion officials and ■ Assets: $2 billion $97 million. businesspeople conThe funds control ■ Liabilities: $3.2 billion victed of federal $5 billion in assets and crimes this fall. ■ Active members: 5,389 are at a pivotal moAll investments ment to pick new in- ■ Retirees: 9,737 are being overseen vestments designed to Detroit Police & Fire by independent reap returns for more Retirement System committees poputhan 25,000 retirees, lated by people with ■ Assets: $3.3 billion active workers and finance and investbeneficiaries reeling ■ Liabilities: $4 billion ment backgrounds, from pension and ■ Active members: 3,164 including members benefit cuts that ■ Retirees: 9,228 appointed by Gov. helped Detroit exit the Rick Snyder. That’s a largest municipal new level of overbankruptcy in U.S. history almost sight and replaces the old system of one year ago. pension fund boards approving inThe pending investments follow SEE PENSIONS, PAGE 24 a lengthy review of the funds’ inBy Robert Snell

Leaders at Detroit-based marketer Campbell Ewald sought a map to guide a restructuring at the beleaguered agency, and it turned out to be a literal type of map that is helping the firm adapt to a changing advertising world. The firm in the past year has begun using a heavily customized paper and digital system to map customer relationships for their clients, and management has said it is part of the path to reverse five

years of flagship client losses and financial declines. The agency developed what it calls the Consumer Experience Journey Map last year, and Campbell Ewald CEO Jim Palmer said it has been used in pitches to six new client wins in the past five months and to manage current clients more effectively. “This is one of the main reasons why we’re winning what we’re winning,” Palmer said. The client management system, which is similar to project management tools used by computer pro-

TOWER

By Kirk Pinho

ambitions N

NEWSPAPER

SEE AGENCY, PAGE 24

Hotel rooms, offices, restaurant among plans for the Cadillac

rsnell@crain.com

crainsdetroit.com Vol. 31 No 48

grammers, is part of Palmer’s business strategy to reshape the agency into what he calls “Campbell Ewald 2.0” as it adapts to the changing demands of modern advertising. Other elements of the strategy include new senior management hires and refocusing the agency on doing more quick-turn digital content while focusing on social media and real-time analytics, and applying the brakes to the old-school (and expensive) advertising habits of monthslong TV commercial shoots.

$2 a copy. $59 a year.

JOHN D’ANGELO

The revamp of the Cadillac Tower includes plans for a totally new lobby, already underway, along with talks for a substantial conversion of floors to hotel space.

kpinho@crain.com

early 100 years ago, the 40story Cadillac Tower in downtown Detroit was one of the tallest buildings in North America. Today, it is trying to regain its place among giants. With a $4 million lobby renovation nearing completion in January, the owners of the 88-year-old building on Cadillac Square just a stone’s throw from Campus Martius Park have broader ambitions. Discussions between the owners, Brooklyn-based Capital Invest Al liance, and several undisclosed hotel brands are underway for a possible conversion of up to nine floors into hotel space, said Paul DeBono, vice president of Southfield-based Farb man Group, which leases the property to tenants and manages it. That could mean the first hotel rooms that close to Campus Martius, DeBono said. He envisions a boutique hotel, along the lines of what’s proposed for the former Wurlitzer Co. building on Broadway Street downtown by New York Citybased Ash NYC , which is underway with a $20 million conversion of the building into a 97-room hotel. Residential space is also being considered, but there are no active plans for it, he said. Then, of course, there is the dearth of large blocks of quality office space in the central business district. With the city of Detroit formally vacating its 172,000 square feet in the building just over a month ago, Farbman is now marSEE CADILLAC, PAGE 23

20151123-NEWS--0002-NAT-CCI-CD_--

11/20/2015

3:36 PM

Page 1

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

MICHIGAN

MICH-CELLANEOUS

BRIEFS

䡲 Matthew Missad, CEO of Lansing Township-based Universal Forest Products Inc., was named to Fortune magazine’s Businessperson of the Year list, which ranks the nation’s top 50 corporate leaders. Missad, CEO of the lumber products company since 2011, was ranked 45th. Fortune noted his rise from his initial work for the company as a high school maintenance crew member to his recent overseeing of Universal’s first acquisition outside of North America, in the Australia market. 䡲 Grand Rapids tech firm Appropos LLC has expanded its operations to Germany by opening a sales and support office in Munich to support deployment of its Envoy softwareas-a-service platform, MiBiz reported. The Envoy platform — described as the “Swiss Army knife” of wholesale business-to-business software — allows sales personnel and retailers to order products, check inventory, digitally display product and more, said the 4-year-old company. 䡲 Even as Flint’s recent water contamination crisis was widely publicized, the city has been making quiet progress on another front. The Genesee County Land Bank Au thority has demolished more than 1,766 blighted houses in Flint since 2014, using federal grant money. That, reports Bridge Magazine, exceeds its stated goal of 1,600 home demolitions when the city was awarded more than $20 million in

Las Vegas company to bring big data to Grand Rapids Not everything hatched in Vegas stays in Vegas. The Las Vegas data company Switch has announced plans to build a high-tech data center near Grand Rapids that it said would be the largest such facility in the eastern U.S. Pending approval of tax breaks by Michigan lawmakers, Switch would create a $5 billion, 2 million-squarefoot Supernap data center campus in Caledonia, in and around a pyramid-shaped building formerly owned by Steelcase Inc., The Associated Press reported. Switch, which has sites in Las Vegas and Reno, Nev., said part of the appeal is that Michigan is far from traditional earthquake zones and other natural risks on the coasts. Switch customers include some of the biggest names in banking, entertainment and technology. Meanwhile, Education Campus In vestors , an education group that hoped to buy the iconic Steelcase pyramid, filed a lawsuit last week, claiming the office furniture company and its real estate broker re-

neged on a deal to sell the property for $3 million last May, MLive.com reported.

Mich. Tech bowling alley becomes linchpin for ideas The basement of Michigan Tech ’s Memorial Union used to be a place for knocking down bowling pins. By next semester, if renovations go well, it will be a place for building up dreams. About 100 Tech students, faculty and staff recently gathered at the union to brainstorm that transformation and help design Michigan Tech’s first makerspace — a lab, workshop and hangout where anyone in the university community will be able to go to turn their ideas into prototype realities, according to The Daily Mining Gazette of Houghton. The ideas at the gathering were turned into floor plans and debated by groups that merged them into proposals, sometimes even modeling them out of Play-Doh and pipe cleaners. It was not immediately clear if the public would be able to use the makerspace.

federal blight-removal funds in 2013. The Flint program also boasts lower average demolition costs than those in Detroit, which received more than two times as much funding. 䡲 SpartanNash is remodeling six of its Michigan grocery stores, including Family Fare stores in Holland, Zeeland and Marshall and D&W Fresh Market outlets in Grand Rapids and Petoskey, MLive.com reported. SpartanNash is based in Byron Township near Grand Rapids. The remodels either have been completed or will be by year’s end. 䡲 Lt. Gov. Brian Calley signed an executive order designed to bring increased job opportunities for people with disabilities, The Associated Press reported. The order establishes Employment First in Michigan, which seeks to improve access to workplace support and services for people with disabilities. 䡲 The Lansing region is taking steps to develop its fledgling particle acceleration industry. The Lansing Economic Area Partnership created a strategic plan to attract new businesses to the region that relate to research at Michigan State University ’s National Superconducting Cyclotron Laboratory and elsewhere, the Lansing State Journal reported. The plan identifies nearly 200 businesses globally that could support the growing industry in Lansing through advanced manufacturing, biomedical engineering and information technology. 䡲 Downtown Muskegon will soon

INSIDE THIS ISSUE BANKRUPTCIES . . . . . . . . . . . . . . . . . 22 CALENDAR . . . . . . . . . . . . . . . . . . . . . . . 18 CLASSIFIED ADS . . . . . . . . . . . . . . . . 21 DEALS & DETAILS . . . . . . . . . . . . . . . 19 OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . 8 OTHER VOICES . . . . . . . . . . . . . . . . . 8, 9 PEOPLE . . . . . . . . . . . . . . . . . . . . . . . . . 20 RUMBLINGS . . . . . . . . . . . . . . . . . . . . 26 WEEK ON THE WEB . . . . . . . . . . . . . . 26

COMPANY INDEX: SEE PAGE 25 have a new hangout with the planned opening of a distillery. Michael Brower, co-owner of Pigeon Hill Brewing Co., and Mark Fellwock, co-founder of the Holland-based Coppercraft Distillery , announced the creation of 18th Amendment Spirits Co., MLive.com reported. The distillery will house a craft distillery bar. 䡲 The news was bleak, at best, for two long-popular major-metro area dance halls. In Bay City, the owners of Pulaski Hall decided to significantly slash its sale price to $50,000 from $100,000 in an effort to sell the more-than-century-old hall, bar and banquet facility long at the epicenter of the city’s Polish community. Meanwhile, MLive.com reported, demolition began on Club Ludwig , one of the Jackson area’s most popular dance halls for nearly 60 years. The site owner said he hopes to replace the club with — wait for it — a funeral home. 䡲

Protect your intellectual property and put it to work When you’ve captured the proverbial “lightning in a bottle,” protecting it and putting it to work go hand-in-hand. This is the foundation of our approach, which includes: 1. understanding the potential for your vision; 2. developing a practical strategy for protection and commercialization; and 3. defending your IP with a formidable litigation team. With this sound foundation, your IP can work harder and smarter for you. Learn more at WNJ.com.

A BETTER PARTNERSH IP ® By providing discerning and proactive le egal counse e l, we build a better partnership with w cll ients.

86 8 66 6.. 5 53 3 3. 3 . 30 30 018 118 8

20151123-NEWS--0003-NAT-CCI-CD_--

11/20/2015

5:16 PM

Page 1

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

Henry Ford: Contract loss won’t hurt growth By Jay Greene jgreene@crain.com

Executives of Henry Ford Health System told Crain’s last week that the five-hospital system’s growth plans will not be affected by the loss of a lucrative regional Medicaid contract by its HAP Midwest Health Plan. But when the state rejected HAP Midwest’s bid to continue serving 87,000 Medicaid beneficiaries in Southeast Michigan as it had for 35

Health system says it’s negotiating sale, transfer of HAP Midwest Medicaid members years, Detroit-based Henry Ford effectively lost 10 percent of its revenue and 20 percent of its net income based on projections for this year. Henry Ford officials said Friday that they are negotiating a sale and transfer of HAP Midwest Medicaid members in Southeast Michigan regions it lost to an unspecified health plan.

The contract loss will also mean at least some job losses at HAP Midwest, though Henry Ford Health is trying to place as many people as possible in new jobs. In mid-October, the Michigan De partment of Health and Human Ser vices , which administers Medicaid

for 1.7 million recipients, recommended 11 HMO contract winners

for six-year, $42 billion program. After six Medicaid HMOs appealed decisions late last month, the Michigan State Administrative Board made final rulings last week. The contracts are expected to be signed within days. “We are disappointed about HAP Midwest. It contributed financial benefits” to Henry Ford, said Wright

Lassiter III, Henry Ford’s president. “We are financially strong this year and expect a strong financial year next year. This doesn’t change any decisions we have made.” For the first nine months of this year, Henry Ford generated net income of $104 million on revenue of $3.77 billion for a 2.8 percent margin, according to the system’s unaudited financial statement. SEE HAP, PAGE 23

Accelerate Michigan: The show must go on Despite funding uncertainty, officials confident … of next year By Tom Henderson thenderson@crain.com

day before Thanksgiving. “It’s crazy ... a really tough juggling act,” she said. Welcome to the World Series of pie, the time when “everybody’s in the kitchen,” as Sara Whipple of Zingerman’s Bakehouse said. Pie production peaks this time of year, with sales nationwide in late November almost seven times as high as they are during a normal week in March or May, according to Nielsen data. December brings a second big wave of pie buyers, but demand is more spread out. “People party for the whole month, and we’re rocking and rolling,” said Achatz. For Thanksgiving, though, the rush for pumpkin or apple or berry pies is compressed into just two or three days. While many smaller pie shops and bak-

In one form or another, in one place or another, despite the likely loss of major funding support from the Michigan Economic Development Corp., there will be a seventh annual Accelerate Michigan Innovation event next November. The MEDC allocated $1.35 million over the past two years for the event, nearly half of AMI’s two-year budget of $3 million, but Fredrick Molnar, the MEDC’s vice president of entrepreneurship and innovation, said his budget doesn’t have anything earmarked for next year. “We’re at the end of our budget process, and Accelerate Michigan is not on it,” said Molnar. Despite that hit, David Egner, executive director of the New Economy Initiative for Southeast Michigan, told Crain’s: “The momentum is such, the event will go at least one more year, and I hope it will be able to go a few more years after that.” Egner helped found AMI in 2010, and the NEI has been a major financial supporter. “We’re definitely a go for next year,” said Lauren Bigelow, the event’s executive director. Rumors and worries that the plug might be pulled on one of the most lucrative business plan competitions in the U.S. were swirling at this

SEE PIES, PAGE 25

SEE ACCELERATE, PAGE 22

LON HORWEDEL

Amy Emberling, co-managing partner and owner of Zingerman's Bakehouse, places dough into pie tins before taking them off to a dough press and hand-crimping the top of the crusts at the Ann Arbor bakery last week.

Let them make pie For busy bakers, ‘everybody’s in the kitchen’ for holidays By Vickie Elmer Special to Crain’s Detroit Business

or pie makers, today’s the start of an enormous bake-a-thon. Instead of their normal 10-hour stints, the ovens at Grand Traverse Pie Co. ’s 15 stores will run a nonstop 50,000-pie marathon this morning through Wednesday. At Zingerman’s Bakehouse , all the marketing and accounting staff come into the Ann Arbor kitchens to crimp the edges of pies, box them or otherwise lend a hand. Pie sales are expected to grow 20 percent from last year. Achatz Handmade Pie Co. calls in former staffers and “kid brothers” for this busiest week of the year. Co-owner Wendy Achatz figures the company sells six normal weeks’ worth of pies on just the Wednes-

MUST READS OF THE WEEK Connecting through the decades

Interest piques

Joseph Hudson Jr. reflects on a lifetime near center of local corporate, civic, philanthropic life, Page 4

Bankers beyond primed for rising rates as Fed gets ready to end eight years of record lows, Page 11

20151123-NEWS--0004-NAT-CCI-CD_--

11/20/2015

4:49 PM

Page 1

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

Q&A: JOSEPH HUDSON JR.

Prior to award, Hudson reflects on community service By Sherri Welch swelch@crain.com

When Detroit was burning, Michigan’s governor and Detroit’s mayor came to Joseph Hudson Jr. At their behest, Hudson convened New Detroit , the first urban coalition in the U.S., to look at what went wrong leading up to the Detroit riots in 1967, what needed to change in terms of racial disparities and inequities, and how to make that change happen. That’s just one of many corporate, civic and philanthropic hats Hudson, 84, has worn during his 59year career. The retired chairman and CEO of J.L. Hudson Co . department stores and vice chairman and director of Dayton Hudson Corp . was elected in 1985 as the first president and CEO of the newly merged Detroit Medical Center , a role he held for five years.

EXPANDING:

He has served on many corporate and nonprofit boards and led the City of Detroit Arts Commission for 11 years and the United Founda tion , now known as United Way for Southeastern Michigan.

Hudson was founding chairman of the Com -

Joseph Hudson Jr.: Honored for his commitment.

munity Founda tion of Southeast Michigan and was a director of De troit Renaissance ,

now known as Business Leaders for Michigan , for

17 years until 2007. And he continues to serve on the boards of organizations including the Community Foundation; the Detroit Institute of Arts, as an emeritus trustee; and the Hudson-Webber Foundation, for which he has been a

Machine manufacturer with a $1 million line of credit

Helping stafﬁng companies, consultants, distributors and more with business cash ﬂow solutions. › A/R Financing › Lines of Credit

(248) 658-1100

www.hitachibusinessﬁnance.com

trustee since 1956. He holds honorary doctor of humanities degrees from the University of Detroit Mercy , Wayne State Univer sity and Michigan State University and has received numerous awards. Soon, he’ll receive another. Hudson will be presented with the Alan E. Schwartz Community Leadership Award at a Dec. 1 Detroit Economic Club luncheon in recognition of his work, spirit and commitment to the region. Hudson spoke with Crain’s senior reporter Sherri Welch last week about his past contributions, changes in corporate philanthropy, progress made on racial equality, endowments and work that remains. What led to the formation of New Detroit?

New Detroit was formed several days after the Saturday night riots. There was no charter and no other similar organization in the nation and no agenda to start. We were all invited by the governor and mayor to come together to share what we found in terms of needs to be addressed in the community. That broke down to a large series of issues: police-community relations, fair-employment practices, housing, public recognition of needs for health care — the whole panorama of services and relationships. I invited 39 people to serve on the committee, CEOs for major corporations and a number of people who were providing community service. And quite surprising to many people in the community, I invited three fairly young community activists — they were black men. We also had a number of black women involved in community service. That diversity on the committee brought us down to earth at the very first meetings. Everyone would go around the table and talk about his perspective. Because of the urgency coming out of the riots, the first year, we set an aggressive agenda of what needed to be addressed and improvements. In the early years of New Detroit, there was a high level of visibility for New Detroit and a lot of action that resulted. Corporations led the charge. What about the years since then? Is there work yet to be done on improving racial disparities and relations?

In different parts of the country, there continues to be racial tension. What was an instructive process in 1967 still needs to be addressed. There are still plenty of things in the Detroit community that need to be addressed. The public school system is totally inadequate. One can be hopeful the groups that have come together in the last year can get down to identify programs and financing that will bring Detroit out of the nation’s bottom learning records to high levels of perform-

About the award Joseph Hudson Jr. will be presented with the Alan E. Schwartz Community Leadership Award at a Detroit Economic Club luncheon in recognition of his work, spirit and commitment to the region.

Detroit Free Press columnist Rochelle Riley will talk with Hudson about lessons from the past, shifts in community and philanthropic leadership over the years and exciting plans for the future. When: 11:30 a.m.-1:30 p.m. Dec. 1 Location: MotorCity Casino Hotel Tickets: $45 members, $55 guests of members, $75 nonmembers. For more details or to buy tickets, go to econclub.org.

ance. That’s just one of many things we have to continue to work on. One of the charges of the Community Foundation has been building en dowments in the region. Are we making progress on that front?

The idea came along that we were not taking advantage of what cities like Chicago, Cleveland and New York had with organizations working on endowments. We were very late to leaving assets in the community through private, family foundations. When I was first getting involved in civic activities, there were older foundations like Kresge , McGregor , Skillman and Hudson-Webber. But private support came largely from individuals and corporations. Fast forward to 2015, and you have the Ralph C. Wilson Jr. Founda tion that was established with $1.2 billion in assets. Before that there was the (William ) Davidson Founda tion and the (Fred A. and Barbara M. ) Erb Foundation . It’s more in style these days for families who’ve been leaders in the community and enjoyed good economic advantages to leave bequests to create foundations. We’re making tremendous progress. Are nonprofit agencies and institu tions making progress on the endow ment front?

Every one of the cultural organizations got caught in the bad years, suffered badly from not having endowments to carry them through. They suffered dramatic programmatic cutbacks. With the Community Foundation picking up momentum over the past 25 years, every civic or cultural organization recognizes they need to build their own endowment. The community still suffers from too modest of endowments, but nonprofits are out there aggressively raising permanent endowment. The Community Foundation has grown to $750 million in assets. At the same time, you have all the individual cultural institutions and certainly the educational institutions in the state having very rapid growth in endowment support. The need for endow-

ment and growing them has been a recognized emphasis. And we’re picking up pace on it. Why is it important that our cultural institutions and other nonprofits have an endowment in place?

Organizations have all suffered through economic down periods, having to cut staff and programs. In the good years, you need to raise endowment to have stability during tough times. How has the private sector’s civic and leadership role in the region changed over the past couple of decades?

I find there still is a large, enthusiastic pool of people committed to public service, whether it’s civic or cultural activity. When I first got involved with United Way, there was a give-once-for-all campaign. It was felt there was always a proliferation of agencies running independent campaigns. Detroit was a leader in the way of raising monies for agencies as giveonce-for-all. That was bought into by corporations and labor unions. The drive included health care institutions and other civic needs and was made through payroll deduction. There are many more campaigns now. That is a difference. Detroit in those days — the ’50s, ’60s and ’70s — also had a lot of corporate national headquarters here, with three or four national banks and several utilities. Through consolidations, there aren’t as many major corporations to draw upon their hierarchy as there once were. It’s interesting how it’s developed. Looking at the banking community, for example, NBD went through a number of iterations and now is part of J.P. Morgan Chase & Co. J.P. Morgan has invested millions of dollars in Detroit in recent years. They’re working, in a sense, like a locally headquartered company, continuing the tradition of what had come before. Others in the banking community are not as forthcoming after moving their headquarters. But J.P. Morgan’s support shows an out-of-town company can still deliver important assistance. My own company, all that’s left is Target stores. They started with a philosophy Dayton’s had of being a very strong philanthropic contributor, as Hudson’s had been. Target continues that in the community. It is possible for companies headquartered out of town to support the community, and we’re getting quite a few. What are you proudest of when you look back?

I am very fortunate to be healthy, live in Detroit and still participate in numerous civic activities with wellqualified volunteers working on the renaissance of Detroit. We are making progress. 䡲 Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

DBpageAD_DBpageAD.qxd 11/18/2015 10:47 AM Page 1

Avoid being overrun by the holiday rush. The holidays are coming. Get your business ready with the best devices on the best network. So you can easily handle more customers and more sales. Better matters. Save up to $400 when you trade in your phone and buy a new 4G LTE smartphone. New 2-yr activation on $34.99+ plan required. $400 = $150 instant credit* + $150 bill credit + $100 smartphone trade-in credit.

vzw.com/myrep

Offer expires 12/31/15. Account credits applied within 2-3 billing cycles. Trade-in must be in good working condition. Bill Credit will be removed from account if line is suspended or changed to non-qualifying price plan after activation. Bill credit not available on upgrades. *Devices eligible for instant discount: Kyocera Brigadier, BlackBerry Classic, LG G3, Samsung Galaxy S5 16GB, DROID Turbo 32GB, DROID Turbo 64GB, Samsung Galaxy Note 4, LG G Pad 10.1, Novatel 6620, Samsung Galaxy TabÂŽ 4 10.1, LG G4, Samsung Galaxy S6 32GB, Samsung Galaxy Note 5, Samsung Galaxy Tab E 9.6. Activation/upgrade fee/line: $40. IMPORTANT CONSUMER INFORMATION: Corporate Subscribers Only. Subject to Major Acct Agmt, Calling Plan, & credit approval. Up to $350 early termination fee/line. Offers & coverage, varying by svc, not available everywhere; see vzw.com. While supplies last. Restocking fee may apply. DROID is a trademark of Lucasfilm Ltd. and its related companies. Used under license. ÂŠ 2015 Verizon. 76375

20151123-NEWS--0006-NAT-CCI-CD_--

11/20/2015

3:38 PM

Page 1

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

$5M gift targets OU biz school, athletics

Business driven. Data informed.

Struggling to make critical talent decisions?

Comprehensive labor-market analysis from WIN can help. www.win-semich.org/data-research

By Chad Halcom chalcom@crain.com

Oakland University has a $5 million commitment from alumni Craig and Ann Stinson as lead gifts toward enhancing its business school and athletics programs, the university plans to announce Nov. 23. Craig Stinson, a former CEO of Breeze Industrial Products and adviser to Chicago private equity firm Wind Point Partners, and his wife expect to allocate about $3 million to the business school and $2 million to the the athletic department. The gifts will go toward improving the Stinson Student Advancement Center in the business school, and to naming a new Stinson Family Stu dent-Athlete Development Center. Both departments are in need of facility improvements. Trustees in October authorized requests for architectural and design proposals for the business school and athletics. It expects to review those in February. It has not yet been determined how much of the donation would go to facilities compared with student services and programs. When Ann and I were students here back in the 1980s, the universi-

ty got about 80 percent of its total funding from the state. Now we get 16 percent. It’s important to be able to call upon donors and inspire others to give and be impactful,” Craig Stinson said last week. “Ann and I always felt like the business school was in a kind of back seat. And in the last 10 years, we have been working with the university to really help elevate its status within the OU community.” OU President George Hynd said about 95 percent of recent OU graduates continue to live and work in Michigan, making the university a top producer of local talent. Both Stinsons have business degrees, Craig in finance and Ann in marketing. Craig Stinson was part of the presidential search committee that appointed Hynd and also chairs the business school advisory board of visitors. Both also said facility constraints are a concern for the school, which had 8,000 students when they attended. The university reported record fall enrollment of 20,711 after 17 years of growth. 䡲 Chad Halcom: (313) 446-6796 Twitter: @chadhalcom

Keep your business heading in the right direction.

Treasury Management from FirstMerit Bank When John talked to FirstMerit Bank’s Treasury Management team, his goal was to increase his company’s working capital. Together, they came up with a plan to help John effectively manage receivables, control payments, and improve his company’s overall cash ﬂow. Now John has all the tools he needs to keep his business moving in the right direction — forward.

TO L E A R N MOR E, C O N T A C T :

David Lochner, President, FirstMerit Michigan, at 248-228-1620 or david.lochner@ﬁrstmerit.com. Follow the latest market trends @ﬁrstmerit_mkt

ﬁrstmerit.com Member FDIC 2411_FM15

20151123-NEWS--0007-NAT-CCI-CD_--

11/20/2015

4:25 PM

Page 1

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

Despite good intentions, BIDCOs failed to fill lending gap By Tom Henderson thenderson@crain.com

On Nov. 25, 1985, Crainâ&#x20AC;&#x2122;s published a story about a Senate committee in Lansing approving a BIDCO, an acronym for business and industrial corporation, whose purpose was to fill the gap in funding for new businesses between banks and venture capitalists. It was a gap that wouldnâ&#x20AC;&#x2122;t be filled for long or very successfully. The idea was that young businesses that didnâ&#x20AC;&#x2122;t have pristine credit or topnotch collateral would pay more Joseph Reid III: than bank rates President of the for BIDCO loans two remaining but at a cheaper BIDCOs in Michigan. cost than venture capitalists charged for equity investments. The Legislature approved BIDCOs in 1986. At the time, a typical interest rate for one of their loans was about 20 percent, with BIDCOs also often negotiating a share of revenue or warrants to purchase stock at low prices later as part of their deals. It was briefly a growth industry. Fifteen BIDCOs were licensed over

LOOKING BACK: Thirty years ago, Crainâ&#x20AC;&#x2122;s reported on state government approval of BIDCOs, which would provide alternative funding for new businesses. Mostly, it didnâ&#x20AC;&#x2122;t work. More at crainsdetroit.com/30 the next few years, but by 2000, only seven were still in existence, five of them barely hanging on. Today, there are just two, Asset BIDCO LLC and Onset BIDCO LLC, both run in Lansing by Joseph Reid III, who is president of both. â&#x20AC;&#x153;It was a great concept about capital formation that had a lot of flaws in the implementation,â&#x20AC;? said Scott Eisenberg, managing partner of investment banking firm of Amherst Partners LLC. in Birmingham. Eisenberg was with arguably the most successful of the BIDCOs, Onset BIDCO, which was formed in 1988 and sold in 1994 to the now-defunct Lansing-based Capital Bancorp. â&#x20AC;&#x153;Onset was the largest BIDCO at formation, with $10 million. Most of the others were $4 million or $5 million, and you canâ&#x20AC;&#x2122;t make money with a fund that size,â&#x20AC;? Eisenberg said. â&#x20AC;&#x153;Onsetâ&#x20AC;&#x2122;s portfolio was wildly successful. We invested in 22 companies and had a return of 20 percent, but a lot of the BIDCOs had portfolios only a mother could love,â&#x20AC;? he said. Another problem, Eisenberg said, is that while the surviving BIDCOs

are now limited liability corporations, they were originally formed as C-Corps, which meant they generally paid higher tax rates than private equity and venture capital firms. Reid agreed with Eisenberg that most BIDCOs were fatally underfunded from the start. â&#x20AC;&#x153;A lot of them had $2 million or $3 million to lend, then they hired staff and opened offices and were upside down before they got going,â&#x20AC;? he said. But â&#x20AC;&#x153;weâ&#x20AC;&#x2122;re a survivor. ... Weâ&#x20AC;&#x2122;re profitable and weâ&#x20AC;&#x2122;re here to stay.â&#x20AC;? Reid said his BIDCOs do between 10 and 15 deals a year, for as small as $50,000 and as large as $2 million. They also do straight loans and equity investments. â&#x20AC;&#x153;A lot of our deals are short-term loans, bridge financing to help companies clean things up to the point where they can get a bank loan,â&#x20AC;? he said. Reid said that although assetbased lenders have formed since the brief BIDCOs boom to help fill the same funding gap, there is still a need, particularly with banksâ&#x20AC;&#x2122; greater caution post-recession.

â&#x20AC;&#x153;Regulators have tied the banksâ&#x20AC;&#x2122; hands,â&#x20AC;? Reid said. â&#x20AC;&#x153;So many businesses are struggling to get financing despite good collateral. Thereâ&#x20AC;&#x2122;s such a dramatic need for what we do, Iâ&#x20AC;&#x2122;m surprised weâ&#x20AC;&#x2122;re the only BIDCOs left.â&#x20AC;? Rochester-based Hennessey Capi tal LLC, an asset-based lender, was founded in 2002 and bought in 2012 by Connecticut-based Hitachi Capital America Corp.. In 2013, Mackinac Financial Corp., the holding company for mBank, a community bank based in Manistique, formed a subsidiary in Birmingham, Mackinac Commercial Credit LLC, to do asset-based lending. The most active local asset-based lender, Troy-based Crestmark Bank, has a national focus. In the first nine months this year, it says, it loaned $61 million to 56 new clients in 16 states and Canadian provinces. David Provost is chairman and CEO of Troy-based Talmer Bank and Trust, the stateâ&#x20AC;&#x2122;s fastest-growing bank, having bought the assets of several troubled banks in Michigan and the Midwest as they were shut down by regulators.

But he was not as successful with a foray into BIDCOs when he was president of the Bank of Bloomfield Hills in 1991. Provost said the bank invested $50,000 in Southfield-based Liberty BIDCO Investment Corp., in part to make a return on investment, but more so because it would introduce him to companies that presumably would need a variety of traditional bank services as they matured. Liberty grew through buying other BIDCOs, and by 1998 was high flying, showing up on a Crainâ&#x20AC;&#x2122;s list of fastest-growing private companies. But in 1999, nine of its 57 investments went out of business, causing Liberty to write off almost a third of its $35 million portfolio. By 2000, it was in default on its bank loans, and by 2002, it was out of business. â&#x20AC;&#x153;BIDCOs were going to do loans banks couldnâ&#x20AC;&#x2122;t or wouldnâ&#x20AC;&#x2122;t do,â&#x20AC;? Provost said. That most BIDCOs failed â&#x20AC;&#x153;shows you when banks canâ&#x20AC;&#x2122;t do a deal, thereâ&#x20AC;&#x2122;s probably a good reason.â&#x20AC;? He said the bank ended up writing off its entire investment. As for landing future customers, the bank didnâ&#x20AC;&#x2122;t do any of that, either. â&#x20AC;&#x153;We didnâ&#x20AC;&#x2122;t get one,â&#x20AC;? said Provost. â&#x20AC;&#x153;Things didnâ&#x20AC;&#x2122;t work out to our expectations.â&#x20AC;? äĄ˛

GIVING KIDS SPACE TO

BE HEALTHY KIDS FOR 10 YEARS IN SOUTHEAST MICHIGAN

HELP US REACH OUR GOAL! DDQLDOOH KDUPDQRVÂˇ :RUN IW OXW KHOSV FKLOGUHQ FRPEDW REHVLW\ GHFUHDVH VWUHVV DQG LQFUHDVH VHOI HVWHHP WKURXJK \RJD DQG QXWULWLRQ HGXFDWLRQ MDNH D \HDU HQG JLIW WRGD\

www.dkwio.org

RHVROXWH WKH QHZ VWDQGDUG LQ EXLOGLQJ LQWHOOLJHQFH LV SURXG WR VXSSRUW DQG FRQJUDWXODWHV DDQLDOOH KDUPDQRVÂˇ :RUN IW OXW RQ 10 \HDUV RI H[FHOOHQFH LQ KHOSLQJ LPSURYH WKH OLYHV RI WKRXVDQGV RI FKLOGUHQ DFURVV VRXWKHDVW MLFKLJDQ DQG VHWWLQJ WKHP RQ D OLIHORQJ SDWK RI KHDOWK DQG KDSSLQHVV .

20151123-NEWS--0008,0009-NAT-CCI-CD_--

11/20/2015

4:37 PM

Page 1

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

CRAIN’S DETROIT BUSINESS

OPINION State should weigh tax breaks structure M

ichigan is in contention for a major data center, and it’s a big deal — $5 billion in investment and 1,000 high-quality jobs, according to the projections. The project would be a 2 million-square-foot center, which its owner, Las Vegas-based Switch, says would be the largest in the eastern U.S. It would be south of Grand Rapids in the former Steelcase Corporate Development Center. Standing between Michigan and the center, apparently, are tax incentives. Bills have been introduced in the House and Senate that would provide exemptions from certain sales, use and property taxes. Are the exemptions worth it? It’s hard to tell. HBs 5074-76 and SBs 10-12 have only recently been introduced, and there isn’t yet a fiscal analysis. Gov. Rick Snyder has not weighed in. These types of centers have received a lot of attention and are often highly sought after. But they sometimes do not produce as many jobs as expected, and local communities do not necessarily reap enough tax revenue to compensate for the services provided because of the incentives. Communities that don’t have the centers worry that an entire state is subsidizing a benefit for one community. So, we believe the question should be this: How can everyone win? The state needs good jobs and, as a Michigan Future report notes (See story, Page 10), the state particularly needs jobs that are part of the information economy. But local governments have been under stress since the recession, and state policies have helped contribute to that, according to a Michigan State University analysis reported by Bridge Magazine. Swift action may be called for, but it shouldn’t take place before strategic thought.

City pension funds on better path As Robert Snell reports on Page 1, Detroit’s two municipal pension funds are in position to make investments again for the first time since emerging from bankruptcy. The funds’ portfolios have been assessed, more investment oversight has been put in place and a strategy has been developed to better protect the interests of city employees. The funds had many problems, including underfunding, corruption and board members who were underqualified to make investment decisions. All of those meant the sole purpose of a pension fund — producing promised benefits for those it covers — was forgotten. So in the future, for example, real estate investments are likely to be in REITs or other commingled investments, rather than individual projects like the Westin Book Cadillac or the Grand Traverse Resort, where the risks often outweigh the potential rewards. It also means the cronyism that sometimes led to corruption should be a thing of the past. But memories can be short, so the more firmly a proper structure is set in place, the better.

Keep philanthropy from going wrong ow is it possible that Yale Uni-

H versity decides to return a $20

million gift to Texan billionaire Lee Bass after a dispute regarding the use of the gift? Or country singer Garth Brooks gives $500,000 to a small Oklahoma hospital and later wants his money back? Or more than 40 years later the heirs of the A&P supermarket fortune sue Princeton University to return a $35 million gift — now grown to $880 million — because Princeton was not using the fund for its intended purpose? The answer, in short, is bad planning. Major gifts often come from the heart, a gift with the best intentions. And yet, these gifts are often made with many expectations or assumptions that are not clearly spelled out. A donor may not want to appear ungracious, and the charity often will accede to any restrictions just to get the gift, thinking “Someone else can figure out how

OTHER VOICES: Mark Neithercut

Neithercut is president of Neithercut Philanthropy Advisors in Detroit.

we will implement these requirements later.” Yet a major charitable gift is an important business transaction. Donors and their advisers should give some thought to how unexpected outcomes would be handled. If a donor gives XYZ University $10 million for a chemistry building and it agrees to name the building after the donor, what happens if the building burns down two years later? If the university intends to rebuild, does the new building get the

same name? Furthermore, donors tend to put unrealistic or overly demanding restrictions on major gifts. Donors and their advisers should ask themselves if any of these restrictions harm or restrict the organization? It is not uncommon for overly restricted gifts to cost a charity more to implement than the face value of the gift. As we approach the end of the year, many families turn their thoughts to charitable giving. If a major gift is contemplated, consult your professional adviser and remember a few important guidelines: 1) Be sure to assess the financial health and leadership stability of the nonprofit, 2) clearly state all expectations in writing, 3) be wary of too many restrictions and 4) if you dearly love this organization, consider making part of your gift for operations and even endowment, as this will ensure its long-term viability. 䡲

LETTERS

Reported C-section rate data not comparable Editor: An Oct. 12 blog by Jay Greene (“National C-section rate high, but Beaumont among Detroit-area hospitals that cite improvement”) stated that Beaumont Hospital in Royal Oak is “bucking the national trend of increasing C-sections by cutting its rate by one-third in only six months.” For comparison, he offered that Beaumont’s C-section rate of 14.6 percent is down from 21 percent, and then referred to Leapfrog data in which he pointed out that only 28 percent of Michigan’s hospitals report this data. Beaumont does not report to Leapfrog. The blog implies that Beaumont’s C-section numbers are considerably lower than the Leapfrogreporting hospitals. However,

Send your letters: Crain’s Detroit

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

Beaumont’s data on its C-section rate is using its Primary C-section rate, which is different than the comparison hospitals use to report to Leapfrog. Leapfrog asks us to report our NTSV C-section rate, which counts first-time pregnancies that have reached the 37th week or later mark and consist of one fetus in the headdown position. The rate is derived

by the number of NTSV patients who end up with C-sections divided by total NTSV patients. The Primary C-section rate is based on the entire labor and delivery population of a hospital. It is the number of C-sections divided by the total number of all deliveries expressed as a percentage. The difference in methodology means the NTSV C-section rate will generally be higher than the Primary C-section rate. The NTSV C-section rate has gained interest, and national research has been using this specific definition and patient population. The emphasis is on reducing the NTSV C-section rate because it SEE NEXT PAGE

20151123-NEWS--0008,0009-NAT-CCI-CD_--

11/20/2015

10:51 AM

Page 2

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

Patient-centered medical homes in Michigan improve care, cut costs ichigan

employers

who

M shoulder health care expenses

for their workforce are optimistic that a new patient care model is helping to transform health care delivery in Michigan. Corporations and small-business owners should continue to push for the model’s implementation to help bring down costs. Michigan is one of eight states testing a patient-centered medical home (PCMH) model through the Centers for Medicare and Medicaid Services in a multiyear, multipayer project. Physicians and practices that have adopted the PCMH model take a “whole person” approach and coordinate care across all providers and settings, helping consumers navigate the increasingly complex health care system. A PCMH team may include any health care provider relevant to the patient’s health issues. The results are beginning to show positive health outcomes and cost savings. Supporters include major job providers and insurers including Blue Cross and Blue Shield of Michigan, Health Alliance Plan and

OTHER VOICES: Jeffrey Brasie

Brasie is executive director of the Michigan Primary Care Consortium, a nonprofit working to transform Michigan’s primary care delivery system.

Upper Peninsula Health Plan, among others. As the PCMH model proliferates,

Michigan’s employers should benefit not only with lower health care expenses, but also through employees who are more productive due to fewer health problems and work absences. After fewer than five years implementing the new model, primary care practices report improvements in the biggest health care challenges facing Michigan’s population — obesity, diabetes, hypertension and other issues that affect our aging residents in large numbers and lead to chronic, costly hospital and emergency room visits. Adult patients in PCMH-desig-

nated practices had a 26 percent lower rate of hospital admissions for common conditions that respond to office-based care. Blue Cross-designated PCMH practices also had an 8.7 percent lower rate of adult high-tech radiology use, and a 10.9 percent lower rate of adult emergency room visits. PCMH-designated practices had a 16.3 percent lower rate of pediatric emergency room visits and a 22.4 percent lower rate of pediatric emergency room visits for common chronic and acute conditions, such as asthma. Blue Cross estimates that over

the past six years, it has saved $512 million through disease prevention, reduced hospitalizations and emergency room visits, and management of common acute and chronic medical conditions that have improved patient care outcomes. When primary care providers engage patients in their care and are accountable for its quality, the incidence of disease-specific mortality declines. As Michigan residents access health care services, they should ask for and expect to be part of a patient-centered medical home practice through a primary care provider. 䡲

FROM PREVIOUS PAGE

eliminates some of the higher-risk scenarios such as twins or breech birth. These patients often are at higher risk of C-section. The NTSV C-section rate as reported in the article averages approximately 27 percent in those reporting in Michigan with a target goal of less than 23.9 percent by 2020. At St. Joseph Mercy Ann Arbor and St. Joseph Mercy Oakland, Leapfrog-reported NTSV rates are 26.4 percent and 30.5 percent, respectively. St. Joseph Mercy Ann Arbor and Oakland have also been working on decreasing C-section rates. In Ann Arbor, our NTSV has remained steady, but our Primary C-section rate has decreased with a similar focus as Beaumont’s — our most recent Primary rate, in September 2015, was 13.2 percent; in 2015, the average has been 17.3 percent. At St. Joseph Mercy Oakland, our Primary C-section rate (CY 2015 thru June) is 15 percent (down from 18.5 percent in 2014). Our Leapfrogreported NTSV rate was 30.5 percent for 2014. Year to date through June 2015, we reduced the NTSV to 25 percent. While we applaud all our colleagues in their efforts to provide safe, cost-effective and responsible care, we would like to point out that you are not comparing “apples to apples” when applying Beaumont’s Primary C-section metrics to those of Leapfrog-reporting hospitals.

I expec¶ my bank §o:

Know my business, not just my balance. Some business owners expect more than just an account. They expect their bank to understand their business. When it’s time, come to Comerica. And discover why we’re the leading bank for business,* ranked among the top 5% of U.S. banks with distinctive quality.**

RAISE YOUR EXPECTATIONS.

Business

Wealth Management

Personal

comerica.com Gayle Moyer, M.D. Director of obstetric patient safety St.Joseph Mercy Ann Arbor

Fabian Fregoli, M.D. Vice president, quality and patient safety St.Joseph Mercy Oakland

MEMBER FDIC. EQUAL OPPORTUNITY LENDER. *Top 25 U.S. financial holding companies, based on commercial and industrial loans outstanding. Data provided by SNL Financial, December 2014. **Greenwich Associates is a leading provider of global market intelligence and advisory services to the financial services industry. For Middle Market, the Greenwich Excellence Awards are based on nearly 13,000 market research interviews with U.S. companies with sales revenues of $10-500 million, and honorees were recognized by their customers as providing superior quality of products, service and coverage. Among more than 750 banks evaluated, Comerica ranked within the top three percent of banks with “distinctive quality” and “performing at a differentiated level relative to peers.” For Small Business, the Greenwich Excellence Awards are based on more than 15,000 market research interviews with U.S. companies with annual revenues of $1-10 million, and honorees were recognized by their customers as providing superior quality of products, service and coverage. Among more CBP-5200-07 11/15 than 750 banks evaluated, Comerica ranked within the top five percent of small business banks with “distinctive quality” and “performing at a differentiated level relative to peers.”

20151123-NEWS--0010-NAT-CCI-CD_--

11/20/2015

11:40 AM

Page 1

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

Survey: State held down by per capita income, education By Lindsay VanHulle Crain’s Detroit Business/Bridge Magazine

LANSING — Michigan is struggling to achieve economic prosperity during a boom time for the auto industry, with low per-capita income and fewer than a third of its residents holding bachelor’s degrees, new research to be released today shows. The state that gave birth to cars now ranks in the bottom half nationally on those two measures, according to the study conducted by University of Michigan economist Don Grimes and Lou Glazer, president of Ann Arbor-based think tank Michigan Future Inc. The researchers’ findings reveal that Michigan shed workers and wages by 2 percent since 2007, the start of the last economic downturn, despite growth of roughly 1 percent nationally in both areas. Detroit was hit harder, because the city disproportionately was affected by the auto industry’s woes. What the trends mean for Michigan, Glazer said, is that the state no longer can rely on high-paying, lowskilled manufacturing jobs — the jobs that built its middle class starting with Henry Ford’s promise of a $5 daily wage a century ago — if it wants to prosper. Rather, he said, Michigan needs to put more of its residents to work, concentrate more people with fouryear degrees in its cities and speed

up the transition to a knowledgebased service economy — all traits of more-prosperous states. “This is something that basically has never happened in Michigan,” said Glazer, whose Michigan Future think tank studies talent and the Lou Glazer: The old formula doesn’t transition to an information work anymore. economy. “What we’re basically saying is, the formula that worked for Michigan in the 20th century … does not work in the 21st century.” That shift has been going on for several years, partly because the auto industry had inflated Michigan’s per-capita income relative to the rest of the country even though the state had a lower percentage of college graduates. When the auto sector collapsed during the recession, it took income levels with it. In 2000, Michigan had the 18th-best per-capita income in the U.S.; in 2013, the state had fallen to 37th, according to state data and the Michigan Future report. That same year, Michigan ranked 33rd for the share of adults with a bachelor’s degree. Glazer and Grimes analyzed economic and education data from 2007 to 2014 and compared Michi-

gan to both national averages and other states. They did a similar analysis for the metropolitan regions in Detroit and Grand Rapids, comparing both regions to other U.S. metros with at least 1 million people. They found the only sector nationally to add jobs and raise wages was high-education services, which includes finance, health care and social services. Other sectors they studied include low-education services, which includes lower-paying jobs in such fields as retail and tourism; low-education goods, often lowskilled manufacturing jobs; and high-education goods, a sector that has the fewest employees and includes oil and gas extraction and aerospace, chemical and computer manufacturing. The only way a state today can land on top 10 lists for employment, wages or income is either to have a wealth of energy resources, like Alaska and North Dakota, or have a high concentration of adults with bachelor’s degrees, Glazer said. The trends don’t necessarily indicate causation, merely correlation. But places that perform well by those measures place less of an emphasis on making things, Glazer said. The idea that Michigan should aim to be a top 10 economy state has other researchers’ attention.

LISA SAWYER

Business Leaders for Michigan , the state’s business roundtable, released a study this month showing that Michigan continues to languish in the bottom half of states

Providing valuable solutions We’re ready to deliver Rehmann’s dedicated professionals devote their knowledge and industry experience to customizing the ideal approach for your ﬁnancial institution. We can help you thrive in the marketplace with audit, tax, regulatory compliance, IT and consulting services. Contact us today to learn how our team can help your institution thrive.

CPA

One Team Your re Futu ts

ultan

Cons

orate Corp ors tigat Inves

Detroit, Ann Arbor, Farmington Hills, Troy rehmann.com | 866.799.9580

Liz Ziesmer, CPA, CBA Principal Director of Financial Institutions liz.ziesmer@rehmann.com | 616.975.4100

when it comes to income metrics. In 2014, Michigan ranked 34th in per-capita GDP and 36th in percapita personal income and had the fifth-worst unemployment rate in the nation, ranking 46th, according to BLM’s study. But signs of optimism are emerging: The state’s per-capita personal income growth rate ranked 10th, while its per-capita GDP growth rate was third-fastest in the country, according to the study. Grimes and Glazer found: 䡲 Detroit is doing better in higheducation service fields than places like Milwaukee and Pittsburgh, former manufacturing-heavy cities now transitioning to knowledge economies. That could be because metro Detroit has a greater concentration of knowledge jobs in the auto industry, from engineering to design, Glazer said. Metro Detroit had an average wage of $68,222 in high-education services in 2014, compared with $62,480 in Milwaukee and $65,988 in Pittsburgh. 䡲 Wages are low in Grand Rapids. The region had an overall average wage of $43,801 in 2014, compared to $54,168 in Detroit, $56,337 in Minneapolis and $69,427 in Boston. The Grand Rapids area ranked 49th of 52 U.S. metropolitan areas with a population of at least 1 million, and last when factoring for knowledgebased jobs’ share of total wages, data show. The good news: Michigan is adding jobs at a faster rate than the nation, and the state has better college attainment rates among younger people — ages 25-34 — than across the population as a whole. Yet, Glazer said, “no question, it’s still low.” 䡲 Lindsay VanHulle: (517) 657-2204 Twitter: @LindsayVanHulle

20151123-NEWS--0011-NAT-CCI-CD_--

11/20/2015

11:54 AM

Page 1

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

SPECIAL REPORT: TOM HENDERSON thenderson@crain.com Twitter: @tomhenderson2

Sorting out the fallout of low interest rates he federal funds interest rate at which banks borrow, known as the overnight rate, is set by the Federal Reserve. It has averaged 5.93 percent since 1971, with the all-time high of 20 percent set in March 1980. In December 2008, during the Great Recession, it hit the all-time low of 0.25 percent and has remained there. Regulators say low rates were crucial to staving off a depression. Free-market advocates say the Fed did too much for far too long with unintended consequences. One of those critics is Jim Grant, the founder and editor of Grant’s Interest Rate Observer, a twice-monthly newsletter for financial insiders at a pricey $1,175 annually. He was one of the guest speakers Nov. 12 at the annual economic outlook lunch put on by the CFA Society of Detroit at the Westin Hotel in Southfield. He told the chartered financial analysts in the crowd, not to their surprise, that record-low interest rates had both intended and unintended consequences. An intended consequence? Pulling consumption forward, with low rates being just fine for auto sales, for example, which as of September were humming along for U.S. manufacturers at an annual rate of 18.2 million units. And an unintended consequence? “Pushing failure back in time,” he said. “Companies that ought to leave this life and make room for other entrepreneurs continue to muddle along.” Radio Shack, which filed for Chapter 11 bankruptcy protection in February, is the prime example, he said. Record-low rates and borrowed cash kept it on life support. “It was an unwarranted extension of a sick business,” he said. Jason Trennert, chairman and CEO of New York City-based Strategas Research Partners, was the other keynote speaker. Also critical of the Fed , he nonetheless gave a relatively rosy forecast. With a recession unlikely, he said, a bear market for equities is also unlikely. Although stock markets have had a long run-up, “the real bubble isn’t in publicly traded companies, it’s in the private-equity industry,” he said. Private equity firms had $700 billion in assets in 2000; today, they have $3.5 trillion, Trennert said. And investors should be leery of hedge funds, which have grown from about $30 billion in 2008 to about $130 billion now. Despite their reputations, hedge funds have been getting beaten by traditional money managers. “It’s the cult of activist hedge funds,” he said. “They used to be called raiders. Now they’re called activists, which is great PR.” 䡲

INSIDE

FINANCE

Huron Valley State Bank plans to grow, Page 14 All state banks in Michigan see stars in new ratings report, Page 14

“Even if we got just three-eighths of a percentage point, that would mean $1 million a year to our bottom line.” David Provost, chairman and CEO, Talmer Bank and Trust

Generating interest Local bank executives see potential December rate hike by the Fed as long overdue By Tom Henderson thenderson@crain.com

ank stocks jumped on Nov. 6, immediately after the U.S. Bureau of Labor Statistics announced that the economy added 271,000 jobs in October, much better than economists had been projecting. The feeling on Wall Street was that such a good jobs number meant the Federal Reserve was more likely than not to start raising record-low interest rates in December instead of waiting until next year, and rising interest rates in turn would be good, naturally, for institutions that charge interest. The share prices of 13 state, regional and national banks with branches in

Michigan that trade publicly were all up that Friday morning. Dallas-based Comerica Bancorp Inc., for example, was up $2.01 to $47.44; New York City-based J.P. Morgan Chase & Co. rose $2.59 to $69.03; Pittsburgh-based PNC Financial Services Inc. rose $3.44 to $96.08; Rhode Island-based Citizens Financial Group Inc. was up $1.36 to $25.97; Troy-based Flagstar Bancorp Inc. was up 60 cents to $23.40; and Troy-based Talmer Bancorp Inc. was up 58 cents to $18.13. “There’s an old expression. You’d rather have a quick ‘no’ than a slow ‘maybe,’ and bankers are glad the slow ‘maybe’ is about over,” said John Donnelly, managing director of Grosse Pointe-based Donnelly Pen man & Partners , an investment bank that

Traders in the S&P 500 stock index futures pit at the Chicago Board ofTrade react to news in October 2008 that the Federal Reserve would cut the interest rate. Expected soon is news that the Fed will finally increase the rate. PHOTO BY SCOTT OLSON

focuses on financial institutions. The “slow ‘maybe’ ” referred to the many months of hints and teases by the Fed that it was about to raise rates. An increase seemed likely in September until the large swings in financial markets in August. The Fed sets what is called the federal funds, or overnight, rate at which banks borrow. It has averaged 5.93 percent since 1971, with the all-time high of 20 percent set in March 1980. In December 2008, in hopes of keeping the Great Recession from becoming a depression, the Fed set what it calls its target range at the all-time low of zero to 0.25 percent, and it has remained there ever since. SEE RATE, PAGE 12

20151123-NEWS--0012,0013-NAT-CCI-CD_--

11/20/2015

10:52 AM

Page 1

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

SPECIAL REPORT: FINANCE

RATE FROM PAGE 11

CONGRATULATIONS TO THE 2015 ACCELERATE MICHIGAN INNOVATION COMPETITION WINNERS! With more than 300 Michigan companies vying for funding in 2015, 14 companies captured cash prizes. Top award winners were:

GRAND PRIZE: $500,000

BY SECTOR: $25,000 NEXT GENERATION MANUFACTURING

LIFE SCIENCE

MEDICAL DEVICES

ADVANCED MATERIALS

INFORMATION TECHNOLOGY

PRODUCTS AND SERVICES

RUNNER UP: $100,000

If a quick “no” is better than a slow “maybe,” then a “yes,” is much, much better than a “no,” said Donnelly. And the Fed seems poised to say “yes” to higher rates. Donnelly said being able to generate more interest-based income will be more important to community banks than large national and regional banks. He said larger banks generate about half their income from fee-based sources, such as mortgage operations, treasury management for businesses, and trust and wealth management for the wealthy.

Cash returns, little interest ALTERNATIVE ENERGY

ADVANCED TRANSPORTATION

PEOPLE’S CHOICE ($10,000 PRIZE)

SPONSORS

www.acceleratemichigan.org

Community banks don’t often have the resources to offer a full line of fee-based services. “Their percentage of fee-based income might typically be only 10 or 20 percent,” Donnelly said. “Clearly this is going to be a big help, particularly for community banks, who are rate sensitive,” said J. Grant Smith, president and CEO of Clarkston State Bank. Many community banks have added to their noninterest income side of the ledger as interest rates continued to stay at or near zero, and Clarkston State Bank was one of them. Smith said his bank has been able to generate income in recent years through offering treasury management to business owners. He said the bank decided not to get into the mortgage business but is considering offering wealth management services. “It appears the Fed is going to raise interest rates in December, and that’s particularly good for community banks. We should become more profitable in a rising interest rate environment,” said Jack Shubitowski, president and CEO of Milford-based Huron Valley State Bank. “We started doing residential mortgages two years ago, and it’s been very successful generating

revenue for us,” he said. Large regional banks, already accustomed to getting a high percentage of revenue from the noninterest side of the business, focused even more on that business, said Dave Girodat, president and CEO of the eastern Michigan market for Cincinnati-based Fifth Third Bank. “We’ve really focused on our commercial customers and valueadded advisory services,” he said, including wealth and investment management, treasury management and currency management for cash business like grocery stores and gas stations. Even so, Girodat said he is looking forward to getting back to where bankers can make more profit the old-fashioned way, through charging higher interest. “A normalized rate environment is a positive thing,” he said.

Buyers in a turbulent time “A rate increase is overdue,” said Patrick Fehring, president and CEO of Farmington Hills-based Level One Bank . “That interest rate was put into effect during emergency times, and obviously the economy has come a long way since. … Any time there is excessive interference by the government, it gets in the way.” Level One was launched in October 2007, just in time for the Great Recession. The timing was good for Fehring, because when the recession hit, his bank, unlike established banks, didn’t have much exposure to bad loans. Over the years, he was able to buy the assets of several troubled banks as they were closed by state and federal regulators. More recently, Level One has bought healthy area banks. In October, it announced it was buying Farmington Hills-based Bank of Michigan, whose $110 million in assets will give Fehring’s bank more than $1 billion in assets when the deal closes in the first quarter. “For us, if there was a silver lining to low interest rates, it created a sense of urgency to create a growth strategy,” he said. “In a low-interest SEE NEXT PAGE

EXPERIENCE THE DIFFERENCE EXPERIENCE GHD CPAS AND ADVISORS

Why Have an Ordinary Holiday Event

Achieving success requires a team that stands out. The professionals at GHD have years of experience helping our clients obtain success through innovative and customized services. Let our team help you reach your goals. Contact us today!

when you can have an

Andiamo Event Andiamo is the perfect place to celebrate an extraordinary event on any budget. • Accommodations for groups of 10-700 • Experienced staff to assist with private or corporate events • Off-site catering services also available

Every Meal is a Celebration

Accounting and Assurance Services Tax Planning and Preparation

+, (

'4%7 %(:-7367

BLOOMFIELD TOWNSHIP • CLARKSTON • DEARBORN • DETROIT RIVERFRONT GROSSE POINTE WOODS • LIVONIA • ROYAL OAK • STERLING HEIGHTS • WARREN

andiamoitalia.com

www.ghdcpa.com | 586-772-8100 21420 Greater Mack Avenue | St. Clair Shores, MI 48080

20151123-NEWS--0012,0013-NAT-CCI-CD_--

11/20/2015

10:52 AM

Page 2

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

SPECIAL REPORT: FINANCE FROM PREVIOUS PAGE

environment, it’s hard to be profitable unless you get bigger faster. Instead of getting a traditional spread on interest, to get the same dollar volume, you have to do more volume.” His growth strategy meant launching a commercial lending business, which now employs about 17 bankers, and a residential mortgage department, which now employs about 25 bankers. “Those were pretty big investments for a community bank at the end of a recession,” he said. But they paid off. Like Level One, Talmer Bank and Trust , which was also launched in 2007, has thrived despite an unprecedented stretch of record low interest rates. Like Level One, Talmer, which now has about $6.4 billion in assets, grew by acquiring the assets of a string of failed banks, starting with Citizens First Bank in Port Huron in 2010. David Provost, chairman and CEO of Talmer Bank and Trust, said his bank is required to have $300 million set aside as reserves against future losses. “We earn nothing on that now,” he said. “Even if we got just threeeighths of a percentage point, that would mean $1 million a year to our bottom line.” Provost has been a banker since 1976. “I remember in 1980, we were charging 20 percent for a car loan and paying 15 percent on a CD,” he said.

Home loan at 18.5 percent? “I bought my first home 25 years ago, and I was paying 10 percent, which was a great loan then,” said Jim Ciroli, CFO of Troy-based Flagstar Bank. He said higher interest rates will help the bank generate more income, and happier customers, too. “It wouldn’t be bad to be in an environment where we weren’t being vilified for offering low interest rates. And we are being vilified,” he said. Flagstar’s brightly lit LED billboards around town trumpet interest rates that he says are generally better than the competition’s, but often get criticized by the public. Last week, for example, Flagstar’s website was offering an interest rate of 1.05 percent on savings accounts. It was also offering rates of 3.319 percent on locked-in mortgages and as low as 2.99 percent on home equity loans. Ric DeVore, the president of the Michigan market for Pittsburghbased PNC , also remembers much higher rates early in his career. “My first house was in Allen Park in 1981, and our interest rate was 18 and a half percent, and that was a deal,” he said. “I got a discount because I worked for the bank. My brother later got a loan at just below 10 percent and I remember saying, ‘I thought we’d never see loans that low again.’ ” DeVore said he expects the Fed to raise interest rates by a quarter percentage point in December and

“It wouldn’t be bad to be in an environment where we weren’t being vilified for offering low interest rates. And we are being vilified.” Jim Ciroli,CFO,FlagstarBank

in each of the following four quarters. That will allow PNC to begin generating more interest revenue on new loans, but he said it will also lower the hit on existing loans, such as home-equity loans, as they reset. For years now, “every rate that renews renews at a lower

rate,” he said. And that, said DeVore, comes at a time when banks have had to spend more money on nonrevenue-producing items, such as more vigilant cybersecurity and the higher cost of compliance after the Dodd-Frank Act tightened regulations. DeVore said the long-term

squeeze on interest income has reinforced a motto for him with his fellow bankers at PNC. “A dollar is not a dollar,” he said. “A dollar of interest income is worth less than a dollar in fee income, because you have to reserve money against those accounts.” Despite a rise in interest rates, and interest income, his bankers will continue to focus, and receive better bonuses, based on lines of business with recurring fees, such 401(k)s and treasury and cash management for business owners. The Bank of Ann Arbor has added to its fee-based income by getting into mortgage lending and adding trust services and wealth manage-

ment. And in 2013, it bought Ann Arbor-based Ervin Leasing Co., a national equipment leasing and finance company founded in 1978. “We’ve had an increased emphasis on fee-based income,” said Tim Marshall, the bank’s president and CEO. He said that the Fed starting to raise interest rates won’t be a big deal right away from a monetary point of view, because it will only be a quarter of a percent, “but from a psychological standpoint? It will be big, especially if we can get shortterm and long-term rates moving in tandem.” 䡲 Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

Three generations and counting—on you. At a certain level of wealth, one’s wants, needs and desires invariably change. The merits of a family foundation, for example, become clearer. Philanthropy, and the values it imparts to younger generations, takes on greater meaning. And the long-term balance between family wealth and family unity becomes ever more important. These and other issues relevant to generational wealth are best served by an advisor with long-term stability, unimpeachable integrity and proven competence. In short, the Family and Foundation Services Division of Greenleaf Trust. We listen, guide and serve your family from today’s generation to the next in a manner that is remarkable for its attentive, discrete and wholly reliable service. Greenleaf Trust knows family matters—in every meaning of the phrase. Call us to learn more.

3 4 9 7 7 wo o dwa r d av e n u e b i r m i n g h a m , m i 4 8 0 0 9

g r e e n l e a f t ru st. c o m

248.530.6200

20151123-NEWS--0014-NAT-CCI-CD_--

11/20/2015

10:50 AM

Page 1

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

SPECIAL REPORT: FINANCE

All banks with HQ in Michigan seeing stars

䡲䡲

Ann Arbor State Bank Bank of Michigan, Farmington Hills, is being bought by Farmington Hills-based Level One Bank 䡲 Troy-based Crestmark Bank 䡲 Dearborn Federal Savings Bank 䡲 Detroit-based First Independence Bank 䡲 First State Bank of St. Clair Shores 䡲 Hantz Bank of Southfield 䡲 Milford-based Huron Valley State Bank 䡲 Level One Bank, Farmington Hills

䡲 Bingham Farms-based Main Street Bank 䡲 Southfield-based Sterling Bank and Trust 䡲 Troy-based Talmer Bank 䡲 Ann Arbor-based University Bank. Regional and national banks operating here that got five stars include: 䡲 Dallas-based Comerica Bank 䡲 New Orleans-based Crescent Bank & Trust 䡲 Cincinnati-based Fifth Third Bank 䡲 Akron, Ohio-based FirstMerit Bank 䡲 Cleveland-based KeyBank; 䡲 Chicago-based PrivateBank & Trust Of the 262 credit unions in Michigan, 140 got five stars. Only two got zero stars — Latvian Her itage Federal Credit Union of Grand Rapids and Shoreline Federal Credit Union of Norton Shores. Thirty-nine of them are in metro Detroit: 䡲 Affinity Group Credit Union of Pontiac 䡲 Alliance Catholic Credit Union of Southfield 䡲 Central Macomb Community Credit Union of Mt. Clemens 䡲 Chief Financial Federal Credit Union of Rochester Hills 䡲 Chiropractic Federal Credit Union of Farmington 䡲 Community Choice Credit Union of Farmington Hills 䡲 Community Financial Credit Union of Plymouth 䡲 Construction Federal Credit Union of Bingham Farms

䡲

Cornerstone Community Financial Credit Union

of Auburn Hills

JANUARY 2015

JONE

S IND U

Ecorse

䡲 Electrical Workers Local 58 Credit Union of Detroit 䡲 FME Federal Credit Union of Roseville 䡲 Genisys Credit Union of Auburn Hills 䡲 International UAW Federal Credit Union of Detroit 䡲 Lincoln Park Community Credit Union 䡲 Memberfocus Community Credit Union of

Dearborn

䡲 Michigan Educational Credit Union of Plymouth 䡲 Michigan First Credit Union of Lathrup Village 䡲 Michigan Schools and Government Credit Union

of Clinton Township

䡲

Motor City Co-op Credit Union of Clinton

Township

䡲 Parda Federal Credit Union of Rochester 䡲 Parkside Credit Union of Livonia 䡲 Employees Federal Credit Union of Southfield 䡲 Sterling Heights Community Federal Credit

Union 䡲 T&I Credit Union of Clawson 䡲 Tandem Federal Credit Union of Warren 䡲 Teamsters Credit Union of Detroit 䡲 The Local Credit Union of Sterling Heights 䡲 Unity Credit Union of Warren 䡲 Vibe Credit Union of Novi 䡲 Village Community Credit Union of Dearborn 䡲 Walled Lake Schools Employees Federal Credit Union of Wolverine Lake 䡲 Wayne-Westland Federal Credit Union of Westland 䡲 Westacres Credit Union of West Bloomfield

Township

䡲 Credit Union Advantage of Southfield 䡲 Credit Union One of Ferndale

DOW

䡲 DFCU Financial Credit Union of Dearborn 䡲 Diversified Members Credit Union of Detroit 䡲 Downriver Community Federal Credit Union of

䡲

Zeal Credit Union of Livonia. 䡲 Tom Henderson

NOVEMBER 2015

State banks hit the bottom in March 2010, according to the quarterly ratings from Fort Lauderdale, Fla.-based BauerFinancial Inc. The company tracks the health of banks and credit unions, rating them from zero to five stars. That March, 15 banks, many of them in Southeast Michigan, got zero stars. Twenty-three, many of them in the Upper Peninsula, whose isolation helped them avoid some of the mortgage frenzy that led to the Great Recession, had the top rating of five stars. Today, there are no banks headquartered in Michigan with a zero-star rating. One bank with branches here, Guaranty Bank of Glendale, Wis., did get zero stars. The much improved economic climate now is partially responsible for the improved ratings. But the main reason for the lack of zero-star banks is that most of them were put out of their misery by state and federal regulators, including Community Central Bank of Mt. Clemens, the Bank of Dearborn , Peoples State Bank of Madison Heights and Paramount Bank of Farmington Hills. Today, there are 52 state banks with five-star ratings. There are 13 top-rated banks in Southeast Michigan. They are:

STRI

AL A VERA G

When markets dropped, did your advisor harvest losses?

Come learn how our process and technology deliver results.

TH AU G U ST 25

The market recently dropped 12% from peak to trough in August. Did your investment advisor harvest tax losses before the rebound in October? If not, you missed out. Did your advisor rebalance your portfolio? If not, you missed out. These are just two of the reasons why so many smart investors are moving their portfolios to Schechter Wealth.

2 4 8 . 7 3 1 . 9 5 0 0 | W W W . S C H E C H T E R W E A LT H . C O M

Milford bank seeks $5M and growth By Tom Henderson thenderson@crain.com

Milford-based Huron Valley State Bank , a small two-branch community bank that has consistently been profitable in recent years, earning a string of five-star ratings from Fort Lauderdale, Fla.-based bank ratings firm BauerFinancial Inc., is planning to grow the business. To do so, it has formed a holding company, the Huron Valley Bancorp Inc., through which it plans to raise up to $5 million through a sale of stock, debt or a combination of both, said President and CEO Jack Shubitowski. “We’ve been talking to investment bankers and they tell us that’s a small raise. We say it’s just the right size, it’s all we need,” he said. “We were one of the few banks in the state that didn’t have a holding company, and having one gives us greater flexibility to raise capital and borrow. Our growth is organic and we need to be able to fund it adequately.” He said loan growth is up 14 percent year-to-date. Shubitowski plans to decide by the end of the year how to raise the money. He said it will be used to fund high demand for loans and possibly to buy branches at a discount from larger banks. “With larger banks closing branches, it provides an opportunity for us,” he said. Shubitowski said another advantage of raising money through a holding company is even if it is borrowed money, once it is funneled to the bank it goes on the bank’s book as capital, increasing its tier-one ratio of capital to assets. The bank had what Shubitowski described as a strong third quarter. Net income was $278,000, or 33 cents a share, up from $210,000 or 26 cents a share, in the third quarter last year. After-tax return on average equity, a measure of profitability, was 9.64 percent for the quarter, up from 7.91 percent in the same quarter last year. Total assets were $112.6 million, up 15 percent in a year; total loans were $98.3 million, up 17 percent; and deposits were $98.8 million, up 15 percent. Net income for the first nine months was $781,000, an increase of 61 percent over the first nine months last year. Huron Valley was founded in 2005 by Clarkston Financial Corp., which sold its 55 percent stake in the bank in 2008 as the Great Recession hit. Unencumbered by bad legacy debt on its books, Huron Valley came through the recession relatively unscathed. 䡲 Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

20151123-NEWS--0015-NAT-CCI-CD_--

11/20/2015

10:49 AM

Page 1

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

SPECIAL REPORT: FINANCE

Survey: 94% of life science companies plan ’16 acquisition By Tom Henderson thenderson@crain.com

Executives at life science companies around the world think it’s a good time to go shopping. Fully 94 percent of life science companies are planning to do an acquisition next year, according to a global survey of 100 senior executives. Seventy percent of those planning acquisitions say they will focus on the hot sector of personalized medicine, where treatments and products are tailored specifically for individuals, often based on their genetic information. Companies said personalized medicine offers higher returns even though the patient population is much smaller. “The future of medicine is to have the right “The M&A medicine for the boom in right patient and the life the right sciences dose at the sector right time,” Carol looks set to said Loepere, a continue.” partner in Nick Cheek, Remark Pittsburghbased law firm Reed Smith LLP , which conducted the survey on behalf of the Londonbased Mergermarket Group. According to the survey, the first six months of 2015 saw about $164.3 billion in M&A activity in life sciences, an increase of almost 53 percent over the same period a year ago. Most of that involved U.S. companies, with 82 deals worth more than $112 billion. Ninety-one percent of U.S. respondents say they expect their M&A to be cross border. Deal flow continued strongly in the second half of the year, including the $40.5 billion purchase of the generics division of Dublin-based Allergen plc by Teva Pharmaceutical of Israel. Deal flow did get sidetracked briefly on Nov. 13 when Dutch drugmaker Mylan NV said it had lost its seven-month, $26 billion takeover bid for Perrigo Co. plc, the Allegan drug company formally headquartered in Dublin for tax purposes. Mylan had to get more than 50 percent of Perrigo’s shareholders to approve the offer by the 8 a.m. deadline on Nov. 13, but secured only 40 percent. But analysts said Perrigo remained a takeover target of companies envious of its tax rates in Ireland. “Businesses are getting more strategic about where they want to focus,” said Diane Frenier, a partner at Reed Smith. “They have money on the balance sheet that they want to put to use for shareholders, and they’re looking for ways to add value.” “The M&A boom in the life sciences sector looks set to continue.

Deal volumes are on track to beat 2014, itself the busiest year for transactions since the financial crisis seven years ago,” said Nick Cheek, global managing editor of Remark, the events and publications division of the Mergermarket Group. “Despite considerable uncertainty, transactions will continue apace,

as life sciences companies work out where the pieces will fall for their strategies,” he said. According to the survey, over the next 12 months, U.S. companies intend to increase investment in marketing and distribution (29 percent of respondents), as well as clinical trials (21 percent) and late-stage

R&D (18 percent). The greatest challenges to growth are changes in health care policy and reimbursements (29 percent) and high drug development costs (24 percent). For the report, Reed Smith surveyed companies in Asia, North America and Europe.

Thirty-four percent were companies with between $100 million and $1 billion in revenue, 33 percent were between $1 billion and $5 billion, and 33 percent were larger than $5 billion. Read the full report at http://dealdimensions.reedsmith. com/life-sciences. 䡲

Intellectual Property | Litigation | Technology

Transactional experience on par with the major Silicon Valley law firms. – BRAD KANCIGOR, ASSOCIATE GC Synopsys, Inc

YOUNG BASILE. Strategic advisors to the world’s most innovative companies. ANN ARBOR

TROY

SILICON VALLEY

CHICAGO

www.youngbasile.com

COMMERCIAL LENDING

TREASURY MANAGEMENT

BUSINESS SERVICES

State-of-the-art technology. Local banking know-how. Your hometown advantage. Banking local means our experts are always by your side. Whether providing local insight to market conditions or guiding you with state-of-the-art products designed to optimize cash flow and finance growth, you can count on us for world-class banking. Since 1917, we’ve been anchored right here in our community helping businesses move forward with decisions that come out of our office – and not out of state. It’s banking big…even when you’re banking local.

Give us a call today. www.thefsb.com/business | 866-372-1275

DBpageAD_DBpageAD.qxd 11/12/2015 9:47 AM Page 1

20151123-NEWS--0017-NAT-CCI-CD_--

11/20/2015

10:48 AM

Page 1

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

CRAIN'S LIST: MICHIGAN BANKS

$ Rank

$ ' "

# ! ( )

(+ & ) *

% %

(+ & )

% %

J.P. Morgan Chase & Co. 611 Woodward Ave., Detroit 48226 (313) 256-8500; www.jpmorganchase.com

John Carter market president

$39,107.1 $36,983.4

249

$1,030,317.9

5,296

Comerica Bank 411 W. Lafayette, Detroit 48226 (248) 371-5000; www.comerica.com

Michael Ritchie Michigan market president

27,493.6 25,848.7

215

30,244.7

261

PNC Bank

Ric DeVore regional president for Detroit and Southeast Michigan

16,346.6 15,590.8

216

221,641.3

2,561

Bank of America 2600 W. Big Beaver Road, Troy 48084 (800) 643-9600; www.bankofamerica.com

Matthew Elliott market president for Michigan

15,677.1 13,174.8

127

1,153,891.7

4,734

Fifth Third Bank 1000 Town Center, Southfield 48075 (800) 246-5372; www.53.com

David Girodat president and CEO, Eastern Michigan

15,161.6 13,788.1

246

90,226.3

1,093

Huntington National Bank

John Irwin region president

9,489.6 8,335.2

191

44,482.9

569

Flagstar Bancorp Inc. 5151 Corporate Drive, Troy 48098-2639 (248) 312-2000; www.flagstar.com

Alessandro DiNello president and CEO

7,885.1 6,856.2

100

0.0

Chemical Financial Corp. (Chemical Bank) 235 E. Main St., Midland 48640-0569 (989) 839-5350; www.chemicalbankmi.com

David Ramaker chairman, president and CEO

6,364.4 5,234.8

181

0.0

FirstMerit Michigan

Sandra Pierce chairman and CEO

5,107.6 5,345.2

138

14,660.2

232

Michael Dolson, state director, commercial banking; Karen Minghine-Hagenian, executive vice president, consumer banking David Provost chairman, president and CEO

4,951.0 4,542.4

68,388.2

753

3,084.0 2,068.2

1,205.3

755 W. Big Beaver Road, Troy 48084 (800) 243-7274; www.pnc.com

801 W. Big Beaver Road, Suite 500, Troy 48084-4724 (248) 244-3541; www.huntington.com

900 Tower Drive, Suite 100, Troy 48098 (248) 293-3040; www.firstmerit.com

Charter One Bank B 27777 Franklin Road, Southfield 48034 (248) 226-7998; www.charterone.com

Talmer Bancorp Inc. 2301 W. Big Beaver Road, Suite 525, Troy 48084 (248) 649-2301; www.talmerbank.com

Wells Fargo & Co. 101 W. Washington St., Marquette 49855 (906) 228-1203; www.wellsfargo.com

Sang Kim regional president

2,690.6 2,489.9

1,083,601.4

6,214

TCF Bank 17440 College Parkway, Livonia 48152 (734) 542-2900; www.tcfbank.com

Joseph Doyle president, Michigan

2,600.3 2,484.4

13,401.7

343

Mercantile Bank Corp. 310 Leonard St. NW, Grand Rapids 49504 (616) 242-7760; www.mercbank.com

Michael Price chairman, president and CEO

2,280.6 2,319.8

0.0

Independent Bank Corp.

William Kessel president and CEO

1,998.7 1,941.2

0.0

Old National Bank 2723 S. State St., Ann Arbor 48104 (734) 887-2600; www.oldnational.com

Todd Clark region CEO

1,332.9 NA

7,549.6

152

Macatawa Bank Corp. 10753 Macatawa Drive, Holland 49424 (616) 820-1444; www.macatawabank.com

Ronald Haan president and CEO

1,332.9 1,218.4

0.0

KeyBank N.A.

Kirk Albert president, Michigan

1,150.8 1,046.8

71,418.3

979

MBT Financial Corp. (Monroe Bank & Trust) 102 E. Front St., Monroe 48160 (734) 241-3431; www.mbandt.com

H. Douglas Chaffin president and CEO

1,122.8 1,051.5

0.0

Isabella Bank Corp. 401 N. Main, Mt. Pleasant 48858 (989) 772-9471; www.isabellabank.com

Jae Evans, CEO Dennis Angner president and CFO

1,094.5 1,063.1

0.0

230 W. Main St., Ionia 48846 (800) 355-0641; www.ibcp.com

100 S. Main, P.O. Box 8612, Ann Arbor 48107 (800) 539-2968; www.keybank.com

This list ranks banks and bank holding companies with a presence in Michigan. Figures are from the FDIC's deposit market reports, which are based on the branch/office deposits for all FDIC-insured institutions as of June 30. It is not a complete listing but the most comprehensive available. Companies are listed with the address and top executive of their main metro Detroit office. Actual figures may vary. NA = not available.

B Charter One is a brand name of Citizens Bank, N.A. LIST RESEARCHED BY FDIC

LOOKING BACK: CONSOLIDATION MEANS FEWER BANKS, BANK HEADQUARTERS IN MICHIGAN The national bank consolidation binge that has seemingly put new signs out in front of your local branch every few years has changed an industry that was once hyperlocal. As recently as 1985, state law prohibited banks in Michigan from having branches more than 25 miles from their headquarters. But that year, Ohio, Indiana and Michigan opened their borders to each othersâ&#x20AC;&#x2122; banks. And in 1997,

federal legislation opened interstate banking across the U.S. Hereâ&#x20AC;&#x2122;s the genealogy of some of Michiganâ&#x20AC;&#x2122;s biggest bank networks: äĄ˛ One of the first big acquisitions happened in 1995, when the National Bank of Detroit was bought by the First National Bank of Chicago . Since then, the bank has been bought by Chicago-based Bank One Corp. , which was later bought by New York City-based J.P. Morgan Chase & Co. äĄ˛ In 1997, Cleveland-based Na -

tional City Corp. bought Kalamazoobased First of America , and in 2008, Pittsburgh-based PNC Financial Ser vices Group Inc. bought National City. äĄ˛ More recently, Akron, Ohiobased FirstMerit Corp. bought Flintbased Citizens Republic Bancorp Inc. In February, shareholders at Novibased Lotus Bancorp Inc. approved the bankâ&#x20AC;&#x2122;s acquisition by Farmington Hills-based Level One Bancorp Inc., and last month, Level One announced it was buying Farmington

Hills-based Bank of Michigan. In 1985, all Michigan banks were headquartered here. Now, eight of the 10 largest banks in the state by deposits are headquartered in other states. The exceptions: Troy-based Flagstar Bank at No. 7 and Midlandbased Chemical Bank at No. 8. Another change: Large banks have been shedding branches that in the days of the 25-mile rule were geographically necessary, and in the world of tapping on a smart-

phone arenâ&#x20AC;&#x2122;t. Last year, Bank of America agreed to sell 24 of its branches in Michigan to Columbus, Ohio-based Hunting ton Bancshares Inc., which is expanding its footprint here. And Jack Shubitowski, president and CEO of Milford-based Huron Valley State Bank, has formed a holding company to borrow money or sell shares to fund the acquisition of branches big banks no longer want. Tom Henderson

20151123-NEWS--0018-NAT-CCI-CD_--

11/20/2015

10:47 AM

Page 1

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

CALENDAR UPCOMING EVENTS Inside the CEO Mind . 8-10 a.m. Dec. 1 . Detroit

Regional Chamber.

Hammer

Kouhaila Ham mer , CEO, Gha fari Associates LLC , shares her

story and unique perspective on leadership. Hammer is the board president of the Engineering Society of Detroit and is on the Detroit Regional Chamber board of directors. Cranbrook Institute of Science, Bloomfield Hills. $30 chamber members, $55 nonmembers. Preregistration is required; no refunds will be given. Contact: Beverly Maddox, (313) 596-0343; email: bmaddox@detroitchamber.com. Successful Turnarounds: The U.S. Banking Industry and Detroit . 11:30 a.m.-1:30 p.m. Dec. 7 . Detroit Economic Club. Speaker is Bruce Van Saun , chairman and CEO, Citizens Financial Group . Westin

Book Cadillac, Detroit. $45 DEC members, $55 guests of DEC members, $75 nonmembers. Contact: (313) 963-8547; email: info@econclub.org. State of the Region . 5-7 p.m. Dec. 9 . Detroit Regional

HOST YOUR HOLIDAY EVENT AT A PISTONS GAME! Book your suite in December and receive a complimentary champagne toast.

Pistons.com/premium

(248) 377-8477 * L IM ITED IN V EN TORY AVAIL ABLE

Chamber. The chamber will release its second annual State of the Region, which offers an analysis of the economic indicators related to business growth, talent, innovation and international commerce for Southeast Michigan. Westin Book Cadillac, Detroit. $30 chamber members, $595 to join. Contact: Janelle Arbuckle, (313) 596-0340; email: jarbuckle@detroitchamber.org. Michigan Supreme Court Justices .

11:30 a.m.-1:30 p.m. Dec. 15 . With Justice Bridget Mary McCormack and Chief Justice Robert Young Jr . MotorCity Casino Hotel, Detroit. $45 DEC members, $55 guests of DEC members, $75 nonmembers. Phone: (313) 963-8547; email: info@econclub.org. Multicultural media luncheon . 11 a.m.-2 p.m. Jan. 14 . The Ajamu Group LLC. Honors ethnic groups for their achievements in the automotive industry. Keynote speaker is Heisman Trophy winner Tim Brown on “Managing Your Brand’s Image.” Portion of the proceeds benefits Orchards Children’s Services of Michigan and Project Medishare of Haiti. Westin Book Cadillac, Detroit. $75 general admission; $150 VIP admission including reception with Tim Brown after lunch. Contact: Cheryl Ajamu,

(248) 223-0904; email: cheryl.ajamu@ajamugroup.com; website: www.ajamugroup.com. Professional Leadership — The Jack Aronson Story . 7:30-9 a.m. Jan. 20 .

Leadership Oakland. Featuring Jack Aronson, Aronson founder, Garden Fresh . MSU Management Education Center, Troy. $32 members, $36 nonmembers. Website: leadershipoakland.com. Detroit Policy Conference . 7:30 a.m. Feb. 24 . Detroit Regional Chamber. Keynote remarks by David Maraniss , Pulitzer Prizewinning journalist. MotorCity Casino Hotel, Detroit. $159 chamber members, $225 nonmembers. Contact: Janelle Arbuckle, (313) 596-0340; email: jarbuckle@detroitchamber.org.

Calendar guidelines. Visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

20151123-NEWS--0019-NAT-CCI-CD_--

11/20/2015

10:47 AM

Page 1

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

ACQUISITIONS & MERGERS Penske Automotive Group Inc., Bloomfield Hills, announced it has acquired Audi Eatontown, Porsche Monmouth, Jaguar Monmouth and Land Rover Monmouth in Monmouth County, N.J., from Schneider Nelson Auto Group. The franchises are expected annually to sell approximately 2,400 new and used vehicles and generate about $175 million in revenue. Website: penskeautomotive.com. BorgWarner Inc., Auburn Hills, a global powertrain supplier, has finalized its acquisition of Remy International Inc., Pendleton, Ind., a manufacturer of rotating electrical components. Websites: borgwarner.com, remyinc.com. MC3 Cardiopulmonary, Dexter, a

medical device company, announced it has acquired surgical cannula product assets, including brand names such as Sarns Soft-Flow Arterial Cannula, from Terumo Cardiovascular Systems Corp., Ann Arbor. MC3 will build a 60,000-square-foot manufacturing facility on its Dexter campus, with the goal of bringing back Sarns Soft-Flow Arterial Cannula during the first half of 2016. Websites: mc3corp.com, terumo-cvs.com. Greg Frazier CPA PLLC, Detroit, an accounting firm and Microsoftcertified partner, completed the development of a cloud-based field service tracking and billing application that runs on Microsoft Azure for Silversmith Inc., an engineering company in Gaylord that provides hardware and software that automatically collect data and enable the processing of billable transactions through Microsoft Dynamics GP. Websites: silversmithinc.com, gfcpa.com.

DEALS & DETAILS traffic, next to the Gibraltar Trade Center, Mt. Clemens. Website: 5staroutdoor.com. Weber Shandwick, Birmingham, has been appointed public relations agency of record for MGM Grand Detroit, a unit of MGM Resorts International, Las Vegas. Website: webershandwick.com. Agree Realty Corp., Bloomfield Hills, and Meridian Restaurants Unlimited LC, Ogden, Utah, a franchise operator of 80 Burger King restaurants in Arizona, Minnesota, Montana, North Dakota, Utah and Wyoming, announced they have entered into an agreement to develop up to 10 more Burger King restaurants operated by Meridian in the regions in which they operate. Website: agreerealty.com. Qualitech, Bingham Farms, a

technology integrator and software reseller, was selected by Hillside Investments, Plymouth, a property management company, to purchase the Skyline Property

Management Solution. Hillside Investments also contracted for Skyline training. Websites: hillside-investments.com, qualitech.net. Rubicon Genomics Inc., Ann Arbor, announced an agreement with Eurofins Genomics for U.S. distribution of its DNA library preparation products, including the ThruPLEX DNA-sequencing kit and Rubicon’s new ThruPLEX Plasma-sequencing kit. Eurofins Scientific, Luxembourg, sells selected bioanalytical products worldwide. Websites: rubicongenomics.com, eurofinsgenomics.com.

EXPANSIONS Luby’s Fuddruckers Restaurants LLC, Houston, part of Luby’s Inc., has

opened a Fuddrucker’s restaurant at 13883 Lakeside Circle, Sterling Heights. Regional franchisee is Dean Antonis of AG Foods LLC. Telephone: (586) 566-7002. Website: fuddruckers.com. Aspen Dental Management Inc.,

East Syracuse, N.Y., has opened an Aspen Dental of Michigan PC office at 4929 S. Baldwin Road, Suite 104, Lake Orion. Telephone: (248) 426-7209. Website: aspendental.com.

Evergreen Road, Southfield. Saad Habba of S&Z Investment LLC is the franchisee. Telephone: (248) 809-6714. Website: fuddruckers.com.

Minacs Group USA Inc., Farming-

Carbon Media Group LLC, Bing-

NEW PRODUCTS ton Hills, an outsourcing business solutions company, is opening a center in Richmond, Va. Website: minacs.com.

ham Farms, a digital media firm, announced that CarbonTV is launching a new original series “American Harvest,” a docu-series about farming. “American Harvest” is airing on RFD-TV and is available on demand and for free at www.carbontv.com and through the CarbonTV apps on Roku, Samsung Smart TVs and Xbox One.

Domino’s Pizza’s Inc., Ann Arbor, has opened a store in Minsk, Belarus. DPEU Franchising is the franchisee for the brand in Belarus. Website: dominos.com. Re/Max of Southeastern Michigan, Troy, opened Re/Max Dynamic, 7495 N. Telegraph Road, Monroe. The office is owned and managed by broker/owner Craig Bollerud. Telephone: (734) 2641502. Website: dynamic.remaxdetroit.com.

Hino Trucks, Novi, a Toyota Group company, has expanded its Insight platform to create a connected vehicle for all customers. The platform delivers telematics, remote diagnostics and case management. This platform will be standard fit across all 2017 models. Website: hino.com.

Mattress USA Inc., Brighton, has opened a U.S. Mattress warehouse and store at 35799 Industrial Road, Livonia. Website: us-mattress.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.

MOVES Luby’s Fuddruckers Restaurants LLC, Houston, part of Luby’s Inc.,

announced that the Fuddruckers restaurant at 42757 Woodward Ave., Bloomfield Township, has moved to 25309

Finance Experience

In Your Corner.

ZipLogix LLC, Fraser, a real estate technology company, announced that Realty Pilot LLC, Phoenix, a virtual, cloud-computing enterprise technology platform for real estate professionals, has been added to the zipAlliance Program. Also, the California, South Carolina and the Hawaii associations of realtors have renewed agreements to offer ZipLogix’s zipTMS as to all their members. The Texas and Wisconsin realtors associations renewed their agreements to provide real estate professionals access to their official forms and zipForm Plus Software. Website: ziplogix.com.

Ŷ Commercial, asset-based and real

estate finance. Ŷ Loan restructuring and workouts,

mergers and acquisitions.

CONTRACTS Alchemy Group, Troy, a marketing agency, has added Custom Home Health Inc., Royal Oak; The Community House, Birmingham; and Orlans Group, Troy, to its client

roster. Website: alchemygp.com. 5 Star Outdoor LLC, West Bloomfield Township, an outdoor advertising business, has built its first digital billboard face on I-94 at Joy Boulevard for southbound

First Tier Ranking in Corporate Law and Commercial and Construction Litigation

Contact Michael Romaya at mjromaya@varnumlaw.com

Detroit

Novi

Grand Rapids

Kalamazoo

Grand Haven

Lansing

20151123-NEWS--0020-NAT-CCI-CD_--

11/20/2015

11:40 AM

Page 1

ADVERTISING SECTION

PEOPLE: SPOTLIGHT

Crain’s has moved its complete list of appointments and promotions to www.crainsdetroit.com/peopleonthemove. Guaranteed placement in print and online can be purchased at this website.

Ford Estates CEO Wood named Lions president Rod Wood, who had been president and CEO of Ford Estates since 2007, has been named president of the Detroit Lions. Wood, 55, will oversee the business side of the National Foot ball League

AUTOMOTIVE

MANUFACTURING

STAFFING & SERVICES

Susan Kampe

Katie Clow

Shelby Medina

Chief Information Officer,

Director of Risk and Treasury Services,

Director Business Development,

Carhartt, Inc.

G-TECH Services, Inc.

Cooper Standard Susan Kampe will be responsible for leading the transformation of the Company’s information technology (IT) function consistent with Cooper Standard’s Profitable Growth Strategy. Most recently served as managing partner and founder of Zang Consulting, a business technology consulting and IT services company. Prior, she held IT executive roles with Johnson Controls and Meritor (formally Arvin Meritor) for more than 10 years.

Clow had been a Senior Manager of Risk and Treasury Services since 2012 at Carhartt, where she was responsible for evaluating risk and developing a cash flow forecasting model that allowed for proactive solutions for financing Carhartt’s growth. Clow will manage Carhartt's corporate insurance program and treasury needs, assess business practices to ensure risks are mitigated and transferred appropriately, forecast and manage cash flow, and evaluate foreign currency and commodity risk.

LAW Edward S. Gusky

MANUFACTURING

Attorney, Kotz Sangster Wysocki P.C. Edward S. Gusky, an attorney with Kotz Sangster Wysocki P.C., has been appointed Real Estate Practice Group Leader. Mr. Gusky focuses on all aspects of real estate law, including complex acquisition and financing transactions. He represents borrowers and lenders in sophisticated financial transactions, including multi-family, assisted living, commercial shopping and office in Michigan and throughout the nation. He has extensive experience representing borrowers with multi-family loans insured by HUD/FHA, closing transactions in excess of $400,000,000. Mr. Gusky, a graduate of the University of Michigan Law School, is licensed to practice in Michigan and New York. He holds a Martindale-Hubbell AV Preeminent Ranking.

ENGINEERING & CONSULTING E'Lois Thomas Chief Administrative Officer, SEEL, LLC Thomas reports directly to Louis E. James, CEO, with direct responsibility for Purchasing and Contract Management with all clients as well as all Administration for SEEL. Her role internally includes management of Finance, IT and Risk Management. After working for SEEL’s parent company for numerous years, Thomas joined SEEL in 2011 as a Program Mgr. Thomas has served as Corp Controller with an automotive company, Deputy Finance Director with a local municipality and VP at a small nonprofit.

David Bone Vice President of Business Planning, Carhartt, Inc. David Bone will provide oversight for Carhartt’s new business planning team which includes three distinct functional areas – Partnership Planning, Central Planning, and Strategic Planning and Pricing. Bone worked at American Eagle Outfitters in several leadership positions, including Director of Planning, Merchandise Planner and Planning Manager. He also received substantial merchandising experience at Montgomery Ward and Famous Footwear.

Medina will spearhead GTECH's efforts to market and brand across a broader industry scale and establish a new sales program for the firm. She brings more than 12 years of sales, professional staffing, management, and team leadership experience. Medina joins G-TECH from Volt Workforce Solutions, where she served as Sales Manager and Senior Business Development Manager. Shelby consistently exceeded sales revenue goals and added new companies to her previous employer’s client lists.

TECHNOLOGY Robert M Fulk Chief Operating Officer, COO, Centric HERO Learning Systems Rob will manage the HERO learning system technology, business, marketing, and software development teams. He has the responsibility of scaling the platform with customers across the USA, South America, and Europe and expanding the business globally. Entrepreneurial focused executive serving Fortune 100 corporate, education, and government institutions across verticals - streamlining operations to support strategic objectives. Former CEO of CourseWeaver, CTO Federal Program, EVP HR Partners.

Keith Reynolds

Carhartt, Inc. Reynolds will be responsible for driving Carhartt’s distribution strategy for the Farm and Ranch channel, as well as leading the business and team that serves the strategic Farm and Ranch accounts. Prior to Carhartt, Reynolds served as Vice President of Merchandising at Tractor Supply Co. Also, Reynolds previously owned a company that imported and sold lawn/garden items, toys and commercial bath products to mass channel and specialty stores.

St. John promotes Hoban as president in Detroit Warren-based St. John Providence Health System promoted Robert Hoban to president of St. John Hospital and Medical Center in Detroit. Hoban, 60, replaces David Brooks, who left in June to become president of St.

Robert Hoban

Joseph Mercy Ann Arbor and St. Joseph Mercy Livingston.

Hoban previously was president of St. John Providence Care Continuum.

MANUFACTURING Strategic Account Director for Carhartt's Farm and Ranch Channel,

team and report directly to owner and Rod Wood Chairman Martha Ford. Ford also announced the creation of an advisory board to search for a general manager for the team. The board is comprised of Ford family members and the team’s board that includes Ford, Martha Ford Morse, Sheila Ford Hamp, Bill Ford Jr., Eliz abeth Ford Kontulis and Wood. Prior to joining Ford Estates, which advises the Ford family on business and investments, Wood was executive vice president of wealth management for Wilmington Trust Co. in Delaware and served in various executive positions at Comerica Bank. The move comes after Martha Ford fired President Tom Lewand and General Manager Martin Mayhew in a management shakeup.

Davidson Foundation hires Ziraldo, 2 others IN THE 2016 NORTH AMERICAN INTERNATIONAL AUTO SHOW GUIDE *2014 SHOW STATISTICS

Advertising information: Marla Wise at mwise@crain.com (313) 446-6032 CLOSE DATE: Dec. 7, 2015 PUBLISH DATE: JAN. 18, 2016

IN PARTNERSHIP WITH

The Southfield-based William Davidson Foundation has hired three program/grant managers, among them John Ziraldo, former president and CEO of Lighthouse of Oakland County, who will serve as a senior program officer for Southeast Michigan. Also new are Kari Alterman, as a senior program officer of Jewish life portfolios, and Suzanne Moran, who in August was named the first grant manager for the foundation. Alterman was Detroit regional director for the American Jewish Committee in Bloomfield Hills, and Moran was grants manager for the Detroitbased Skillman Foundation. 䡲

20151123-NEWS--0021-NAT-CCI-CD_--

11/20/2015

4:54 PM

Page 1

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

Crain launches digital biz publications in 9 U.S. markets By Marti Benedetti mbenedetti@crain.com

Crain Communications Inc. last

week launched a series of personalized, digital business publications in nine U.S. markets as part of a plan to expand the Crain brand nationwide as it approaches its 100th anniversary. The markets for the Mondaythrough-Friday morning email newsletters are Boston, Philadelphia, Atlanta, Houston, Dallas, San Francisco, Silicon Valley, Los Angeles and Washington, D.C. The new publications are being added to Crain’s established city business journal brands in New York, Chicago, Detroit and Cleveland, including Crain’s Detroit Business. Next year marks Detroit-based Crain Communications’ centennial. Under the tagline “Business News Just Got Personal,” each brand will carry the Crain name and market, such as Crain’s Boston, Crain’s Los Angeles and Crain’s Houston.

Crain hired 11 journalists to manage the brands and provide content. The nine new brands expand the company’s mission to provide onestop news sources for business leaders. “For almost 100 years, Crain has been the leading source of business news for top executives and decision-makers in the U.S. and abroad,” KC Crain, executive vice president and director of corporate operations at Crain Communications, said in a news release. “The launch of these new brands offers Crain the ability to better grow our audience with daily and breaking business news in our readers’ hometowns and customized to their preferences.” The new city business brands feature email newsletters that customize content based on reader preferences and engagement. Daily content includes a mix of curated local and industry business

AUCTIONS

“The launch of these new brands offers Crain the ability to better grow our audience with daily and breaking business news in our readers’ hometowns.” KC Crain,executive vice president and directorofcorporate operations,Crain Communications

news, articles from Crain publications and original content, including a series titled “If I Knew Then …” featuring interviews with local industry leaders. “While the way we deliver content continues to evolve, what remains the same is our commitment to giving readers a business edge every day by providing the news most important to them,” Crain said. Crain has appointed Sean Flanagan as publisher of the new brands. Formerly the vice president and worldwide publisher of National Geographic, Flanagan previously held positions at Maxim, Reader’s

Digest and Men’s Health magazines. Technology being employed includes customer relationship management software, which is designed to help businesses manage customer data and interaction, and “technology around email that hones in on what people want,” Crain said. “Success for this is greater reader engagement and growth, seeing more people sign up for the emails,” KC Crain said. “We’re excited to see what happens in its first couple weeks.” The company said that in the past when Crain launched a new

REAL ESTATE

real estate

auctions

Investment Home Auctions Bid Online December 4-11

publication, it cost millions of dollars, but with the latest technology, it can simultaneously launch nine new digital brands at a much lower cost. KC Crain said the company is starting this now because current technology allows for it. “And we’re being smart about using our data,” he said. Readers can sign up to receive the free e-newsletters by visiting Crains.com. The company’s portfolio also includes Automotive News, Autoweek, Advertising Age, Modern Healthcare, Plastics News, Business Insurance and Pensions & Investments. 䡲

AUCTIONS

COMMERCIAL PROPERTIES

AUCTION

MULTI-TENANT INDUSTRIAL BUILDINGS

By Order of the Court Appointed Receiver

Monroe Golf & Country Club

Donald Ross Design - Located at 611 Cole Road, Monroe, MI

10 ~ 2,400 Sq. Ft. and 5 ~ 1,500 Sq. Ft. Bldgs 34,000 Sq. Ft. Total ~ Utilities Indivually Metered $1.5M O.B.O. ~ 10% Cap ********************** 50 Acres Residential Land on 25 Mi Rd. Just E. of Gratiot. WNS on prop - $650K O.B.O. ********************* GRAND BLANC ~ 9 - 50 ft. Lots in very nice sub all together, City WNS, paved Rd. $8500 Ea. O.B.O. ********************** 14,000 Sq. Ft. Off. Bldg, Sterling Heights on Van Dyke N. of 17 MI Rd. $950K ~ 90% Leased

BILL MCMACHEN ~ 586-915-4441 billmcmachen@comcast.net

11735 Kennebec St, Detroit

16817 Asbury Park, Detroit

DETROIT, MI • 11735 Kennebec Street 3BR 1BA 1,207+/- sf home. Built in 1930. Nominal Opening Bid: $500 Bid Online Only at auctionnetwork.com Auction Starts: 10am EST, Mon Dec 7 Auction Ends: 12:40pm EST, Fri Dec 11 DETROIT, MI • 11095 Findlay St • 11130 Portlance St • 11257 Roxbury St • 11401 Minden St. • 11420 Engleside St • 12505 Laing St • 13074 Kilbourne St • 14907 Saint Marys St • 15490 Asbury Park • 15838 Washburn St

MARKET PLACE

DETROIT, MI • 16817 Asbury Park 3BR 1BA 797+/- sf occupied home. Nominal Opening Bid: $5,000 Bid Online Only at auctionnetwork.com Auction Starts: 10am EST, Mon Dec 7 Auction Ends: 2:30pm EST, Fri Dec 11

• 15844 Lindsay St • 15894 Bringard Dr • 16257 Manning St • 16567 Mark Twain St • 17359-63 Wisconsin St • 17559 Santa Rosa Dr • 17583 Stoepel St • 17597 Stoepel St • 17605 Stoepel St • 18111-13 Santa Barbara • 18244 Stansbury St

• 18290 Prairie St. • 18291 Faust Ave • 18301 Mendota St • 18685 Prest Street • 18831 Charest St • 18911 Rosemont Ave • 19006-10 Moross Rd • 19763-69 Schaefer Hwy • 20034 Ferguson St • 5315 Lodewyck St • 5945 Three Mile Dr

• 6143 Hereford St • 6403 Brace St • 7022 Thatcher • 7245 Evergreen Ave • 9269 Philip St • 9925 Somerset Ave

MISCELLANEOUS

ĉĀĀġĉąāġĊąĀĀŏŏđŏŏ333ċ$1 /+*) ./$ ((ċ +) Auction in Conjunction with Steve Reeser MI Real Estate License 650414079

WARREN, MI • 8663 Jewett Ave

800.982.0425 • williamsauction.com/MI MI DANIEL SCOTT NELSON RE LIC 6502380607; WILLIAMS & WILLIAMS RE LIC 6505363368. BUYER’S PREMIUM MAY APPLY.

SURVEY

29.2% are with companies contemplating moving/ expanding. Help them ﬁnd you by advertising in Crain’s Real Estate section.

ANALYZE MATCH

CrainsDetroit.com/JobConnect |

313.446.6086 • FAX: 313.446. 034 7 E-Mail: cdbclassif ied@crain.com

• Cross-Dock Services • Trucking Services • Diverse Supplier • Reasonable Rates

Call 810-701-0833

JOB FRONT

EASTPOINTE, MI • 16821 E 8 Mile Rd

The Crain’s reader:

NEED WAREHOUSING? Plymouth & Livonia Area

'HFHPEHU WK DW 3 0

Advertise your Products and Services in Crain’s Detroit Business

POSITIONS AVAILABLE

SENIOR STAMPING PROCESS AUTOMATION ENGINEER for Christy Industries Inc., in Troy, MI. Duties: Support design of transfer press automations through computer-aided simulations; create automation press curves from existing stamping plant equip; program & dev software apps for automation & part handling, & apply FEA to solve stamping & structural design problems; coor. stamping ops in support of new program launches, inc’l determining tool & die specs; interface w/ tooling eng’rs re product & die design, design for manufacturability, & quality assurance testing; dev auto component mfg tools & dies in accordance w/ given specs, inc’l providing design support; process & determine automation reqs for progressive, tandem & transfer dies; maintain CAD data for data tracking & storage, & organize data exchange b/twn customers & Transfer Kinematics team; train Designers & Program Mgrs to maximize prod’n speeds by optimizing die designs; supervise Transfer Kinematics team. Req’s: Mas. Deg. in Ind’l or Mech’l Eng’g, or foreign equiv; 2 yrs of exp in a mfg or mech’l eng’g pos’n in auto industry. Will also accept Bach. Deg. & 5 yrs of app. work exp. Exp must inc’l: Sheet metal stamping & die processing, inc’g associated FEA tools for formability simulation; die construction standards for draw, trim, flange, re-strike, cam trim, & flange ops, inc’l stamping & transfer press automation simulation; Unigraphics NX9 & CATIA CAD systems for parts & assembly design & surface modeling; FEA analysis for stamping die strength validation & vibration analysis w/ Nastran or LS-DYNA; programming Windows apps or MS Excel for motion calculations; & mechanism simulation & optimization w/ MBD software, inc’l customizing MBD software for press automation simulations. Exp can be acq’d concurrently. Apply: cdtjobs@cosma.com. Identify Sr. Stamping Process Automation Eng’r pos. EOE.

20151123-NEWS--0022-NAT-CCI-CD_--

ACCELERATE FROM PAGE 3

year’s Accelerate Michigan event Nov. 5 at Orchestra Hall in Detroit, where 10 finalists made their pitches for the first-place prize of $500,000. During the strolling dinner that preceded the announcement that Banza LLC, a Detroit company founded last year to make pasta from chickpeas, had won the grand prize, and as a jazz band played, conversation by attendees alternated between praising the caliber of entrants this year and wondering whether there would be another Accelerate Michigan next year. Those rumors and worries were reinforced by a comment made a little later by Bigelow at the podium on the Orchestra Hall stage before the winners were announced. “We’re about to go into stormy waters over the next 12 to 24 months. Let’s hope for smooth sailing after that,” she said. Recent turmoil at the MEDC started the waters roiling. Mike Finney, then president and CEO of the MEDC, co-founded Accelerate Michigan with Egner, and the organization had been a big booster ever since. But the MEDC has long been a target of Republican legislators for its support of a range of entrepreneurial programs, and it suffered a budget cut of 27 percent and 65 layoffs on Oct. 1. Ironically, Egner was one of the

11/20/2015

4:27 PM

Page 1

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

reasons for the worries. Late in October, he announced he was leaving the NEI to join the Ralph C. Wilson Jr. Foundation as CEO on Jan. 1. The NEI was launched in 2009 with a fund of $100 million raised from regional and national foundations to help spur economic development in Southeast Michigan. The NEI raised a much smaller second fund of $35 million last year, and no decision has been made yet on whether there will be a third fund. But Egner said that whether or not the NEI raises a third fund, “the NEI has it in its budget next year to go another round with Accelerate Michigan.” He declined to disclose an amount but said it would be substantial. He said the NEI contributed $1 million to the first Accelerate Michigan and has contributed declining amounts since as other organizations and sponsors came on board. Bigelow said the NEI contributed $350,000 for the most recent event. Funding commitments for next year include $250,000 from Ann Arbor Spark’s Pre-Seed Capital Fund, $150,000 from Detroit-based Invest Michigan and $50,000 from Invest Detroit’s First Step Fund for the grandprize winner. Molnar said he and his staff met last week to evaluate the recent Accelerate Michigan event. “I consider the event a success,” he said. “It highlights what is going on in the state of Michigan, but that’s not to say it can’t be done more effi-

ciently or cheaper. They might want to take a look at other venues.” The agenda this year included an opening reception Tuesday night in the Guardian Building, pitches by the 55 semifinalist companies in three conference rooms at the Westin Book Cadillac on Wednesday and Thursday, and the finals Thursday night. Molnar didn’t rule out the possibility of being persuaded by Egner, Bigelow and Martin Dober at Invest Detroit to have the MEDC change its mind about funding. “Can I take something we have earmarked money for and work it so we can give some of that money to Accelerate Michigan? I don’t have an answer for that yet. I’ll look into it,” he said. “I’ll try to look at alternatives, but there’s no guarantee.” Bigelow said she’s open to cutting costs. “We’ll figure out how to keep the integrity and quality of the event and cut corners on the things that aren’t so important,” she said. She said she is open to finding other venues, too, but likes the Westin because it can provide three large conference rooms for the semifinal judging and likes Orchestra Hall because it helps showcase Detroit and is a setting that helps draw attention to the event. “This has done everything everyone involved at the beginning wanted to accomplish. It’s not a program that’s getting old or stale,” said Skip Simms, senior vice president at Ann Arbor Spark. He said the quality of finalists has improved year by year, and the number of out-of-state venture capitalists who serve as preliminary online judges or fly in to serve as judges at the semifinal pitches has gone up every year. Invest Michigan, a nonprofit that manages the $6.8 million Michigan Pre-Seed Fund 2.0, contributes $100,000 toward the $500,000 firstplace award and $50,000 toward the $100,000 runner-up prize. The runner-up prize was won this year by Ann Arbor-based Genomenon Inc., a University of Michigan spinoff that focuses on personalized medicine through genomic information. “The pipeline that comes through Accelerate Michigan is extremely strong,” said Charlie Moret, Invest Michigan’s president and CEO. “I went to my first Accelerate Michigan in 2012, two days after I came to town. It was my first introduction to the ecosystem here, and I was completely jazzed,” he said. “One of the questions I had coming here was: Would there be adequate deal flow? There was a fire hose of deal flow.” “This has become a crucial mustgo-to event in the state of Michigan,” said Dober, a vice president at Invest Detroit and former vice president at MEDC. “It’s really important, and it needs to take place every year. The 10 finalists this year were the best we’ve had. There wasn’t a dud in the mix.” Invest Detroit is the fiduciary for the event, with all funding flowing through it. “We will continue to be the fiduciary,” said Dober, who said he is meeting with Egner this week to find out the size of the NEI contribution. He said the bills are still coming in

Several past winners, finalists have had further success

LON HORWEDEL

Mina Sooch is CEO of ProNAi Therapeutics, an Accelerate Michigan semifinal-

ist in 2010; it had an initial public offering of $158 million in July. “We wanted to turn Michigan from a flyover state to a fly-to state,” said David Egner, executive director of the New Economy Initiative for Southeast Michigan , who helped launch the Accelerate Michigan Innovation event in 2010. The idea, he said, was to have a business plan competition with a big enough grand prize — $500,000 — to attract the attention of venture capitalists from around the country and provide the winner with enough capital, $500,000, to make a difference. “We would not be around if it were not for the Accelerate Michigan money we won,” said Kaylan Handique, the president and CEO of Ann Arbor-based DeNovo Sci ences Inc., which won the grand prize in 2011 for its medical device for early-stage cancer detection. Since then, DeNovo has raised more than $7 million, including $1.3 million last month, and is planning for a big equity raise next year. “We wouldn’t have got any of that money without the attention we got from Accelerate Michigan,” he said. Danny Ellis, president and CEO of SkySpecs Inc., Ann Arbor, said: “If we had not won Accelerate Michigan last year, there’s a good chance we would either have moved the company to another state or gone out of business.” The company’s drones do infrastructure inspection, and earlier this month it closed on a funding round of $3 million. This year, Accelerate Michigan surveyed semifinalists for the first

and being paid, but he is confident there will be money left to put toward next year’s event. “I’m not sure how much it will be after we pay this year’s event, but it will be substantial,” he said. “When we started this thing, I thought it would have a shelf life of 10 years, and I still think it will,” Egner said. “People around the country are trying to copy it. It would be a shame if we stopped it.” Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

five years of the event. The 119 respondents said they went on to raise more than $550 million in funding following their exposure at the event. Here are some of them: Plymouth Township-based ProNAi Therapeutics Inc. was a semifinalist in 2010, then a struggling drug-development company kept afloat by a series of small angel investments. In 2014, ProNAi raised a venture capital round of $59.5 million, the largest in state history, and in July this year had an initial public offering of $158 million. Ann Arbor-based LLamasoft Inc., a maker of supply chain software, won $25,000 as a sector winner in 2011, raised a VC round of $6 million in 2012 and in October got an investment of $50 million from New York-based Gold man, Sachs & Co. , the largest VC round for an IT company in state history. Ann Arbor-based Compendia Bioscience was a semifinalist in 2010. It later raised $5.7 million and in 2012 was sold for $50 million. Vestaron Corp., a biotech in Kalamazoo, was a semifinalist in 2010. It has raised $14 million in venture capital since. Algal Scientific Corp. of Plymouth Township won first place in 2012 for its technology, which grows algae as an antibiotic-free food for farm animals. Algal has since gone on to raise $10 million, most of that from out-ofstate investors. Tom Henderson

BANKRUPTCIES The following business filed for protection in U.S. Bankruptcy Court in Detroit Nov. 13-19. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation. Assurity Insurance Agency I LLC , 1908 Woodside Circle, Commerce Township, voluntary Chapter 7. Assets: $20,000; liabilities: $52,000. Natalie Broda

20151123-NEWS--0023-NAT-CCI-CD_--

11/20/2015

4:27 PM

Page 1

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

23 When Meridian approached the

CADILLAC

Detroit Economic Growth Corp., which

staffs the DDA, Rosko’s development rights were suspended until the new development plans collapsed last year. Then the rights reverted back to Rosko, which has to submit a development plan next year. So for the time being, Cadillac Tower is in search of a neighbor.

FROM PAGE 1

keting the 350,000-square-foot building as one of the few remaining downtown where you can find contiguous space totaling 50,000 square feet or more. “Nothing like it in the CBD,” DeBono said. “One of the main focuses will be ownership reinvesting in the building and actively working to upgrade the building class overall.” Along with adding at least one new restaurant to the city’s growing roster, all this is to bring the pre-Depression era building — complete with its nearly windowless western side — into the 21st century after a tumultuous ownership history, planned developments next door that went bust, and years of vying for the attention its flashier compatriots receive.

‘A complete overhaul’ Walking into Cadillac Tower today, you’d be surprised to learn, with its exposed pipes and unfinished walls, that renovations to the two-story lobby are nearly complete after about six months of work. Among the improvements are new granite, an updated entryway, new business directories in the lobby, a pair of new restrooms, new tile, wall finishes, and lighting. Southfield-based Huntington Con struction Co. is construction manager, and Detroit-based Neumann/Smith Architecture is the project architect. Perhaps the most striking, however, is what will surround a pair of elevators that would go up to the possible hotel space on the third through 11th floors. Designed by Neumann/Smith and manufactured by Livonia-based Quality Met alcraft Inc. , the plan calls for a twostory wall made of laser-cut metal panels featuring Detroit neighbor-

HAP FROM PAGE 1

During the same period in 2014, Henry Ford recorded net income of $15.4 million on revenue of $3.46 billion, for a 0.4 percent margin. So far this year, HAP Midwest has posted $20 million in profit and has contributed more than $70 million in income to Henry Ford since it was acquired in 2011. Projected revenue this year is $500 million. Lassiter said Henry Ford plans to close on the acquisition of Flintbased HealthPlus of Michigan later this year, which would add $410 million in projected annual revenue. Early next year, Henry Ford plans to merge with Jackson-based Alle giance Health and add a projected $500 million in annual revenue. The system also plans to build a $110 million outpatient cancer center in Detroit near Henry Ford Hospital, he said. Despite the expected $500 million annual revenue hit from HAP Midwest, Henry Ford officials project it will grow into a $5.5 billion health company by mid-2016. Lassiter said multiple health plans have signaled interest in buying HAP Midwest’s Medicaid busi-

KIRK PINHO

The two-story lobby at Cadillac Tower is still under construction after about six months of work. hoods and streets that together will compose a skyline of the city, said Jaimelyn Neher, a Neumann/Smith designer. Street names will protrude from the panels to add texture. “It’s a complete overhaul. We are taking something that was many generations (old) and making it firstgeneration,” DeBono said. Once the lobby renovations are complete, efforts to lease the approximately 180,000 square feet of available office space will begin. “We were kind of handcuffed” by Detroit’s lease, DeBono said. “We didn’t have much space in our arsenal to go out and lease, and now we have a big chunk, and we are rethinking the building.” Current main tenants are the De troit Public Lighting Authority ; the human services nonprofit Travelers Aid Society Detroit ; Rex Worldwide ; and Toledo-based Mannik & Smith Group Inc. If all goes well for Capital Alliance and Farbman Group, expect that roster to grow. “There are not a lot of large blocks for users downtown that are looking to potentially move,” said Jim Berkemeier, vice president in the Southfield office of Advocate Commercial Real Estate Advisors. Among those with 20,000 square feet of contiguous space available are the buildings at 211 W. Fort St.; the Ford Building at 615 Griswold St.; the Marquette Building at 243 W. Congress St.; and the Madison Office

ness, but he said the system could not disclose the names because of confidentiality agreements. However, six Medicaid HMOs have been approved for Region 9 and eight for Region 10. Region 9 includes the counties of Washtenaw, Livingston, Jackson, Hillsdale, Lenawee and Monroe, and Region 10 is Wayne, Oakland and Macomb. Plans serving both regions are Aetna Better Health of Michigan, Blue Cross Complete of Michigan, McLaren Health Plan, Meridian Health Plan of Michigan, Molina Healthcare of Michigan and UnitedHealthcare Community Plan. A lawsuit is still being contemplated to reinstate HAP Midwest to regions 9 and 10, Lassiter said, but options are limited because Medicaid members need to be contacted this week about changes in health plans. “The state’s process handcuffs us,” he said. “If we don’t affirmatively take steps to transfer members, it will be done for us” by the state. Therefore, Lassiter said the smoothest transition would be for Henry Ford to sell those regions’ membership to a single health plan. A membership transfer would satisfy two goals, he said. First, it would ensure continuity of care for HAP

Building , formerly Pricewaterhouse Coopers LP , at 1900 St. Antoine St.,

Cadillac Tower, built in 1927 by John Barlum, in recent years has had a troubled relationship history, full of would-be suitors who never turned out to be long-term relationship material. In 2003, it was purchased by New York City-based Northern Group Inc. for $15.4 million. Then six years ago, the company lost control of Cadillac Tower under order from a federal judge after a $17.5 million loan on the building went into default, and a financial overseer from Farbman Group was appointed, Crain’s reported at the time. Cadillac Tower was just one of five buildings Northern Group bought between 2003 and 2007 and let slip into foreclosure. In all, $95 million in unpaid loans were left behind. And then there have been the prospective Cadillac Tower neighbors that never materialized. Northern Group announced the Cadillac Centre development, a $150 million entertainment and apartment complex on the Monroe Block, in January 2008 to fanfare. The development was expected to include 84 apartments, a cinema, a health club, 22,000 square feet of space for small-

er boutique retail and a 100,000square-foot space for a larger retailer. But those plans were announced just two weeks before the text-message scandal that eventually brought down then-Detroit Mayor Kwame Kilpatrick, one of the project’s chief proponents. In October 2008, the deal went dead after Northern Group changed plans and a key deadline was missed. Fast-forward to 2013, when Detroit-based Meridian Health unveiled plans to build a $111 million, 16story skyscraper on the Monroe Block, next to Cadillac Tower and bounded by Monroe, Farmer and Bates streets, Woodward and Cadillac Square east of the former Com puware Corp. headquarters building. But plans for that 320,000-squarefoot building were scuttled last year due to changing economic factors and the cost of new construction versus leasing. Instead of building a new headquarters next to Cadillac Tower, Meridian opted to jointly purchase the 1.1 million-square-foot Compuware building with Dan Gilbert’s Bedrock Real Estate Services LLC for $142 million last year. As part of an agreement five years ago to bring Quicken Loans Inc. downtown from the suburbs, Gilbert’s Rosko Development Co. LLC, registered to one of his closest confidants, has development rights for the Monroe Block with the Downtown Develop ment Authority, owner of the property.

Midwest members. Second, it would generate a return on investment from HAP Midwest, Lassiter said. Ed Chadwick, Henry Ford’s CFO, said the substantial income HAP Midwest generated for the nonprofit system over the years has helped to cover losses incurred by Henry Ford’s physicians and hospitals for treating the Medicaid patients. “The state has not provided rate increases for 14 years,” Chadwick said. “Providers (physicians and hospitals) are generally underpaid by Medicaid and people lose money” providing Medicaid care. Chadwick said state officials made a grave mistake in not rewarding integrated systems like Henry Ford and Lansing-based Sparrow Health System , which also had its HMO ejected from the Medicaid program, for providing efficient and coordinated care for more than 110,000 combined patients. “We are a leader in the nation, and this process just killed that,” Chadwick said. “There are economic consequences to Ford, and it makes it harder for us to provide care on integrated basis going forward.” One result from the contract loss could be layoffs of some of the 150

employees at HAP Midwest, said Jim Connelly, CEO of Health Alliance Plan of Michigan , which oversees HAP Midwest. “There are severe implications for employment levels. We were stripped of 90 percent of our Medicaid business,” said Connelly, adding: “We are working through that (job needs) assessment.” Late last week, Susan Schwandt, a HAP spokesperson, said between “50 to 100 HAP Midwest Health Plan jobs are being evaluated for redeployment throughout” the Henry Ford system. It was not known how many jobs HAP Midwest would need to administer the only territory it would still have, Region 6 in mid-Michigan and the Thumb. With only 1,000 members left for HAP Midwest in St. Clair County, Connelly said adjustments need to be made to be ready to accept new members Jan. 1. Region 6 includes St. Clair, Lapeer, Genesee, Shiawassee, Sanilac, Tuscola and Huron counties. Another result will be the loss of continuity for many HAP Midwest members, the majority of whom are Arab-Americans, Hispanic and African-Americans, Connelly said.

said Steve Morris, principal of Farmington Hills-based Axis Advisors LLC.

A dearth of neighbors

Lower rent, high upside The building does face challenges for leasing such as small floors of about 10,000 square feet and no landlord-owned parking, Morris and other brokers said. But still, they said Capital Invest is wise to spend millions on the building to bring it up to speed. “It offers an alternative to the rents that are going up around it,” Morris said. “The trend is that rents continue to go up north of $20 (per square foot). But this building can compete and make good money at under $20.” Rents at some of the buildings around Campus Martius start at $21 or $22 per square foot. Asking rent at Cadillac Tower is about $16.50 per square foot currently, DeBono said. But “rates are likely to only creep upward on the office side as more renovations are completed at the building,” DeBono said. DeBono said tenant parking is much easier on the east side of Woodward Avenue than the west, and that many current tenants in the 30 percent occupied building “don’t have problems finding parking spaces just a few blocks east.” Regardless, the building improvements and possible redevelopment of some of its space are welcome news, said Danny Samson, chief development officer of Detroit-based Sterling Group. “It’s a good plan and it’s a long time in the making,” he said. 䡲 Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

“Hassan Jaber (executive director of ACCESS) spoke eloquently” at last

week’s hearing before the state administrative board, Connelly said. “The majority of his constituency used HAP Midwest for decades. Many are immigrants and have language and cultural difficulties that could disrupt their care.” with another plan. ACCESS is a Dearborn-based Arab-American community organization with 70,000 members. Because of the dense population in Southeast Michigan, however, many physicians contract with multiple Medicaid health plans, including physicians employed by the Henry Ford Medical Group, sources said. Besides HAP Midwest, another big loser in the contract wars was 21,000-member Sparrow PHP, which lost Region 7 and includes the counties of Ingham, Clinton and Eaton. Dennis Reese, CEO of Physicians Health Plan and Sparrow PHP, said the company also is considering the legal avenue. If that fails, PHP has made arrangements to transfer members to another plan. Physicians Health Plan is a commercial plan with 60,000 members. 䡲 Jay Greene: (313) 446-0325 Twitter: @jaybgreene

20151123-NEWS--0024-NAT-CCI-CD_--

11/20/2015

5:06 PM

Page 1

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

AGENCY FROM PAGE 1

Campbell Ewald also now does work such as app development, interactive design, and list and data management as part of its holistic approach to managing a client and its customers. Part of the strategy is to eliminate as much ad fraud — online content being clicked on by computer “bots” rather than real people is a hot topic in the ad industry — as possible. The change in how it does business has been necessary for Campbell Ewald to stave off further bad news. Over the past several years, Campbell Ewald has suffered a string of high-profile account losses: General Motors stripped the massive Chevrolet account away in 2010 after 91 years with the agency, and then the U.S. Postal Service went elsewhere after a decade. Last year, the $280 million Cadillac account was lost. “We’ve had some really challenging days,” Palmer, 57, said. Because of the economy and the vagaries of the advertising world, a handful of smaller clients also jumped agencies, and headcount at Campbell Ewald fell from more than 1,200 a decade ago to about 500 today. Revenue also slumped, dropping nearly 53 percent from a high of $239.2 million in 2007 to $113.4 million last year, according to yearly estimates from Advertising Age. Campbell Ewald is the 94th-largest U.S. advertising shop by revenue. Palmer, a 24-year veteran of the agency who became CEO in 2013, declined to comment on specific financial data, but did say CE isn’t in the red. “This has always been a profitable agency,” he said. The agency’s corporate owner, New York City-based ad holding firm Interpublic Group of Cos., doesn’t disclose individual agency revenue. Making matters worse, the U.S. Navy announced earlier this year it would transition its $457 million recruiting marketing account, which has been with Campbell Ewald for 15 years, to New York City-based rival Young & Rubicam Inc.

Anchors going away? The Navy account is one of CE’s largest, along with Kaiser Permanente and USAA, and the agency responded with a series of appeals and court actions to keep the work. It’s accusing the Navy of unfair treatment in the procurement process. Palmer said a hearing on the matter in the U.S. Court of Federal Claims will happen in December or January. “We’re going to make a strong case that we followed the procurement to the letter,” he said. The loss of the Navy account, which Campbell Ewald continues to work on during the appeals process, won’t be catastrophic for the agency. At worst, fewer than two dozen jobs could be lost — or none at all if the agency continues to pick up new work. “We don’t fear that like we did,” Palmer said. The agency is better positioned now to absorb the loss than

PENSIONS FROM PAGE 1

vestments with, in some cases, friends, acquaintances and businesspeople who lavished board members with cash, gifts and free trips to the Caribbean. The Detroit pension funds, meanwhile, continue to dump individual real estate investments. Some real estate deals were tied up in the corruption scandal, while others were bad investments, like the Westin Book Cadillac Detroit hotel, pension officials said. “There’s still garbage in the portfolio that needs to be cleaned up, and we’re working hard on that,” said Ryan Bigelow, the funds’ investment officer. “The Book Cadillac was a dog.” By the end of November, the Police and Fire Retirement System pension fund could hire two firms to manage a $150 million investment in global low-volatility stocks, Bigelow said. The investment represents 5 percent of the $3 billion pension fund. The strategy is aimed at protecting against the kind of losses seen during the 2008 global financial crisis, Bigelow said.

it was six months ago, thanks to its new client mapping system and new accounts. And if the Navy does end up with Y&R, Campbell Ewald will pursue the U.S. Army’s recruiting work that will be up for grabs in the next couple of years, Palmer said. New York City-based McCann World Group Inc. in April got a one-year, $200 million contract to handle the Army’s recruiting marketing. It will be a new-look Campbell Ewald that pitches for the work.

Mapping a strategy Palmer credits the client/customer mapping system and the philosophy around it for the agency’s rebound. The map — a literal, massive paper on a table or mounted on a wall, but also used digitally on tablets and phones — is a visual representation of a customer decision-making cycle for a particular client, along with vertical categories for the agency’s handling of aspects of the cycle. CE management termed it a playbook for clients and the agency. It includes the processes and tools available for the client and agency to affect different parts of how the client’s customers interact with a product or service. It uses real-time analytics to measure effectiveness and react to problems. It also does databased market predictions. “The less guessing you do, the better,” said Palmer, who called the timing of the development of the client mapping system “serendipity” for the agency’s renaissance. For example, the agency last week had a map spread on a conference room wall showing how people in California make decisions to opt into, or not opt into, the state’s federally mandated health insurance exchange, Covered California. The map illustrated why a Californian may choose to buy insurance, such as because of sickness or injury, and it showed the lifecycle of that person’s involvement with Covered California and how marketing affected things along that timeline. The intent is to illustrate opportunities to bolster advertising at weak points, where messaging is working, and what sort of marketing works best. CE has created 50 such maps, 13 of them for USAA. One of the key figures in retooling the agency around the processes is Kevin Wertz, one of several management promotions and new hires by Palmer as part of his reinvention strategy. Last year, Palmer promoted Wertz, 42, to president of the Detroit, Los Angeles and San Antonio offices. The New York office has its own president. Wertz joined the agency in 2007 and led the opening of the Texas office in 2009 and the successful pitch of the USAA account serviced there. Palmer and Wertz credit the mapping for helping it win a batch of new clients: In June, CE picked up the advertising account for Detroit-based Henry Ford Health System, and it won a three-year, $150 million contract to market Covered California. It also recently picked up work for Minneapolis-based hotel

“Low-volatility stocks don’t always lead to the highest return, but it does provide a little protection when the markets are really frothy or when there is significant downward pressure,” he said. The stock strategy also could help the fund reach its assumed annual investment return of 6.75 percent, he added. The return target was set by the two pension funds during the city’s bankruptcy case. The Police and Fire fund’s investments are being overseen by a ninemember board led by Robert Smith, chairman and CEO of Spero-Smith Investment Advisers Inc. of Cleveland. Smith is among five members appointed by the state as part of the bankruptcy case. He is helping oversee a pension fund that has survived bankruptcy and corruption that involved paying pension officials bribes and kickbacks and, in return, receiving millions from the funds. “One great benefit of a crisis is that there is a sense among the people who are in charge now about ‘never again,’ ” Smith said. The city’s General Retirement Sys tem pension fund, meanwhile, could hire multiple firms to oversee

the fund’s fixed-income portfolio early next year as part of a broader restructuring. The number of firms is undetermined, Bigelow said. The selection process will be overseen by a seven-member investment committee headed by Ken Whipple, retired chairman and CEO of CMS Energy Corp. The pending investments and oversight are wise moves, said Eric Scorsone, a Michigan State University economist. “They will protect the retirement income of folks who earned these benefits and protect the city from any financial burden,” he said. Both committees are dominated by members with professional investment experience who can provide a layer of oversight and skill, Whipple said. The committees also should eliminate the chance politically connected or bribe-paying businesspeople could obtain multimillion-dollar deals from the pension funds, officials said. “That is absolutely out of the question,” said Mark Diaz, president of the Detroit Police Officers As sociation. Diaz sits on the Police and

chain Country Inns & Suites by Carlson , online travel agency Travelocity , and Empire State Development Corp. , New York State’s chief economic development agency. The last is a twoyear deal worth $150 million with a pair of one-year options. Major current Campbell Ewald clients include the Detroit Lions , T h e D i s t r i c t D e t r o i t , D o w C h e m i c a l C o . , M o t o r C i t y C a s i n o Hotel, Atkins Nutritionals Inc., LifeLock Inc., Snuggle, Edward Jones, Country Crock and Carolinas HealthCare System. CE continues to do some General Motors work, such as the glossy Cadillac magazine and OnStar. The agency is finalizing a national agency-of-record relationship with a major firm that Palmer said he cannot yet disclose. The new work and philosophical changes have improved agency morale, too. “We’re back on a growing trajectory,” Wertz said.

Staffing changes In addition to development of the mapping system and philosophy in how it handles clients, Palmer said, the agency is in the process of re-staffing. It spent $15 million to move into five floors of the office warehouse attached to Ford Field in January 2014. It had been in Warren since the late 1970s. While Palmer expects headcount to remain the same, the agency will adjust its mix of jobs to meet the needs of its mapping strategy for clients. “This has been the basis for reinvention of our staff,” he said. That staff has to create advertising messaging, branding, content, campaigns (and the agency has to bid the right price), for the mapping system and philosophical changes to have any value. “This, with good ideas, is really powerful. With bad ideas, it’s just a map,” said Palmer. New leadership is charged with making sure the agency that coined iconic taglines such as “See the USA in Your Chevrolet” develops creative content that meets client needs. For example, Jo Shoesmith was hired in August away from Leo Burnett Chicago as executive creative director based in Los Angeles, and Zenaida Torres was added as group account director from DDB California. Palmer this month hired Wojtek Szumowski away from Crispin Porter+Bogusky to be the agency’s director of invention strategy. His job is not only to oversee the creative strategy departments across all four offices but also to quarterback CE’s “Invention Strategy,” aimed at inspiring “invention of new forms of storytelling and new emotional links between people, brands, technology and culture.” One business strategy that dates back to the agency’s 1911 founding by Frank Campbell and Henry Ewald continues to work: Being a one-stop shop. “We built this all under one roof to serve clients,” Wertz said. “We’ve always been built as an integrated agency.” 䡲 Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

Fire pension fund board and its investment committee. “The idea of someone bringing in a friend to the table, that’s not happening,” Diaz said. Both pension funds, meanwhile, are shifting away from individual real estate investments and are shedding properties when possible. In the future, the city retirement systems are more likely to participate in a commingled real estate fund with other investors. “It’s a risk thing,” Whipple said. “If a single hotel goes down, pensioners aren’t going to take a hit. The fund manager could invest in 100 Book Cadillac hotels and spread the risk.” Both pension funds were involved in a complex 2006 financing transaction that renovated the Book Cadillac Hotel. The GRS pension fund loaned $9 million toward the Book Cadillac project, while the Police and Fire pension fund backed a $15 million loan from First Independence Bank. The investments are tied up in a lawsuit that alleges a secretive scheme bumped the Carpenters Pension Trust Fund ahead of other investors, including the pension funds.

“The Book Cadillac is going to be reasonably successful financially and a good thing for the city, but things like that are way too highrisk,” Whipple said. “That’s a thing that the pension funds don’t have any business investing in.” The pension funds have been unloading property in recent months. In March, Dan Gilbert purchased the 1 million-square-foot One Detroit Center building downtown for $100 million. The Detroit Police and Fire Retirement System fund owned a 10 percent stake in the building and parking deck. That investment previously was handled by MayfieldGentry Realty Advisors LLC , a firm owned by Chauncey Mayfield. He was sentenced in October to three years’ probation after being convicted in the pension fund corruption case. He was among six pension fund officials and businessmen found guilty of crimes following a corruption trial last year. Mayfield’s firm was replaced, but incomplete records have made it difficult, if not impossible, for the pension fund to assess investments made years earlier.

20151123-NEWS--0025-NAT-CCI-CD_--

11/20/2015

4:28 PM

Page 1

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

CRAIN’S

PIES

DETROIT BUSINESS

FROM PAGE 3

www.crainsdetroit.com

eries are closed, Achatz stays open on Thanksgiving Day until 2 p.m. Many grocery stores are open, too. “We’re gracing a lot of tables at Thanksgiving. That’s pretty special,” said Mike Busley, co-owner of Grand Traverse Pie Co. Instead of selling 150 pies a day, its Traverse City restaurant will send 2,000 pies out on Wednesday, he estimated. Thanksgiving week accounts for about 7 percent of the 700,000 pies Grand Traverse sells annually in all 15 outlets, wholesale and online. Grand Traverse is seeing strong growth in pies as gifts, Busley said. Many go to family or friends or businesses that want to show appreciation to their clients. One recently purchased 150 custom pies with “thank you” cut into the top crust, he said.

Starting early At Love’s Custard Pie, which bakes and sells at Eastern Market in Detroit, the orders started in October. Donnie Love, co-owner with her husband, Allen, keeps a running list of customer requests. “The last few days, you get a lot of calls,” said Allen Love, estimating that the couple will bake close to 100 pies for Thanksgiving, more than double the normal weekly sales. Pie preparation starts right after the Fourth of July at Chesterfield Township-based Achatz, when its bakers commence creating raw frozen pies. They are stored in a local deep freeze, then are shipped to grocery store customers out of state in the fall. Its frozen, ready-tobake line goes out by the semitruckloads to Canada and grocers in the Mid-Atlantic states. Starting in September, both Achatz and Grand Traverse Pie executives start estimating out how many apples and how much canned pumpkin, sugar and flour to buy. “We pre-buy all that and get it in house” said Tim Rice, a Grand Traverse Pie vice president. Pie is a seasonal dish with regional flavor preferences. Banana cream and pumpkin are popular in Texas, and pecan is a favorite in the south, said Robin Henley, a consultant with Synergy Restaurant Consultants, based in San Antonio. For restaurants that bake them in-house, “there’s good profitability,” she said, better than cheesecake. The favorite flavor this time of

Editor-in-Chief Keith E. Crain Group Publisher Mary Kramer, (313) 446-0399 or mkramer@crain.com Associate Publisher Marla Wise, (313) 446-6032 or mwise@crain.com Editor Jennette Smith, (313) 446-1622 or jhsmith@crain.com Executive Editor Cindy Goodaker, (313) 446-0460 or cgoodaker@crain.com Director, Digital Strategy, Audience Development Nancy Hanus, (313) 446-1621 or nhanus@crain.com Managing Editor Michael Lee, (313) 446-1630 or malee@crain.com Managing Editor/Custom and Special Projects Daniel Duggan, (313) 446-0414 or dduggan@crain.com Assistant Managing Editor Kristin Bull, (313) 446-1608 or kbull@crain.com News Editor Beth Reeber Valone, (313) 446-5875 or bvalone@crain.com Senior Editor Gary Piatek, (313) 446-0357 or gpiatek@crain.com Research and Data Editor Sonya Hill,(313) 446-0402 orshill@crain.com Editorial Support (313) 446-0419; YahNica Crawford, (313) 446-0329 Newsroom (313) 446-0329, FAX (313) 446-1687 , TIP LINE (313) 446-6766

PHOTOS BY LON HORWEDEL

Carlos Gonzales (above) adds milk to pie dough in one of the giant mixers inside Zingerman's Bakehouse in Ann Arbor last week.

The bakery expects pie sales to grow 20 percent over last year. Zingerman’s uses an automated dough press (below left) but bakers crimp the edges of the pie crust by hand.

ADVERTISING

year, of course, is pumpkin or sweet potato, but others sell well, too. At Zingerman’s, apple wins runner-up popularity and cranberry walnut is the most unusual. “Some people are not quite sure what it is,” said Whipple, who noted that it uses the same brown sugar and vanilla filling as pecan and yet the cranberries give it a tart flavor, too. At Achatz, “most everybody gets our signature” Michigan four-berry, Wendy Achatz said. And at Grand Traverse, pecan pie is the secondmost popular choice for Thanksgiving dinner. Because of the big bump in business, pie companies hire plenty of seasonal help. At Achatz, former staffers and managers return to its stores, including one woman who’s eight months pregnant and will sit on a stool and run the cash register for a few days, Wendy Achatz said.

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: Achatz Handmade Pie....................................... 3 Asset BIDCO........................................................ 7 Bank of Ann Arbor ............................................ 13 Campbell Ewald .................................................. 1 Clarkston State Bank....................................... 12 Crain Communications.................................... 21 Donnelly Penman & Partners.......................... 11 Farbman Group ................................................... 1 Fifth Third Bank................................................. 12 Flagstar Bancorp ............................................... 11 Grand Traverse Pie ............................................. 3 Health Alliance Plan of Michigan..................... 3 Henry Ford Health System ............................... 3 Huron Valley State Bank ............................ 12, 14

REPORTERS Jay Greene, senior reporter Covers health care, insurance, energy, utilities and the environment. (313) 446-0325 or jgreene@crain.com Chad Halcom Covers litigation, the defense industry and education. (313) 446-6796 or chalcom@crain.com Tom Henderson Covers banking, finance, technology and biotechnology. (313) 446-0337 or thenderson@crain.com Kirk Pinho Covers real estate, Oakland and Macomb counties. (313) 446-0412 or kpinho@crain.com Bill Shea, enterprise editor Covers media, advertising and marketing, the business of sports, and transportation. (313) 446-1626 or bshea@crain.com Robert Snell, reporter Covers city of Detroit and regional politics. (313) 446-1654 or rsnell@crain.com Lindsay VanHulle, Lansing reporter. (517) 6572204 or lvanhulle@crain.com Dustin Walsh, senior reporter Covers the business of law, auto suppliers, manufacturing and steel. (313) 446-6042 or dwalsh@crain.com Sherri Welch, senior reporter Covers nonprofits, services, retail and hospitality. (313) 446-1694 or swelch@crain.com

Invest Detroit ................................................... 22 Invest Michigan ................................................ 22 Love’s Custard Pie ........................................... 25 Michigan Economic Development .................. 3 Michigan Future................................................ 10 Neumann/Smith Architecture ...................... 23 New Economy Initiative for SE Michigan ... 3, 22 Oakland University ............................................ 6 Onset BIDCO ....................................................... 7 Physicians Health Plan ................................... 23 PNC Financial Services.................................... 13 ProNAI Therapeutics....................................... 22 Talmer Bancorp.............................................. 7, 11 Zingerman’s Bakehouse.................................... 3

Sales Inquiries (313) 446-6032; FAX (313) 393-0997 Sales Manager Tammy Rokowski Senior Account Executive Matthew J. Langan Advertising Sales Christine Galasso, Catherine Grace, Joe Miller, Sarah Stachowicz Classified Sales Manager Angela Schutte, (313) 446-6051 Classified Sales Lynn Calcaterra, (313) 446-6086 Events Manager Kacey Anderson Creative Services Director Pierrette Templeton Senior Art Director Sylvia Kolaski Marketing Coordinator Ariel Black Special Projects Coordinator Keenan Covington Sales Support Suzanne Janik, YahNica Crawford Editorial Assistant Nancy Powers Production Manager Wendy Kobylarz Production Supervisor Andrew Spanos

CUSTOMER SERVICE

After some unfavorable experiences with temporary workers, the bakery crew said, “We’ll all work OT, we’ll all work 65 hours a week to get it done,” she said. Yet the addition of new wholesale clients, including one grocery chain that’s already reordered pecan pies, mean the company did hire about 20 temps to supplement the 60 year-round bakery staffers. Wendy Achatz still helps out in the kitchen at the company started in 1993 that has grown to more than $10 million in revenue. But she noted that, at 51, she feels the effort in her back and knees. “I was only pressing shells for eight hours. I used to be able to do 16 hours,” she said.

Daylong effort In October, Zingerman’s Bakehouse, which has about $10 million in annual revenue, brings on close to 30 temporary staffers, a 23 per-

cent boost. They work through the end of December baking pies, then cookies and cakes for Christmas holidays. The crew prepares pie shells ahead, using a “pie stamper” — a mechanized device that removes the need for a rolling pin and shapes the dough to the pie plate. The pie shells are stacked and frozen, ready to be filled with fresh apple or pumpkin pie filling this week. “People are making pies all day long, filling and baking, filling and baking,” Whipple said. “We do our best not to run out.” One idea, though, did run its course quickly. Zingerman’s Bakehouse created a Thanksgiving cake for a couple of years, decorated with fondant and a cute, googly eyed turkey on top. “We sold a few but not very many,” said Whipple, so the cake was discontinued. “They want pie.” 䡲

Main Number: Call (877) 824-9374 or customerservice@crainsdetroit.com Subscriptions $59 one year, $98 two years. Out of state, $79 one year, $138 for two years. Outside U.S.A., add $48 per year to out-of-state rate for surface mail. Call (313) 446-0450 or (877) 824-9374. Single Copies (877) 824-9374 Reprints (212) 210-0750; or Krista Bora at kbora@crain.com To find a date a story was published (313) 4460406 or e-mail infocenter@crain.com Crain’s Detroit Business is published by Crain Communications Inc. Chairman Keith E. Crain President Rance Crain Treasurer Mary Kay Crain Executive Vice President/Operations William A. Morrow Executive Vice President/Director of Strategic Operations Chris Crain Executive Vice President/Director of Corporate Operations KC Crain Vice President/Production & Manufacturing Dave Kamis Chief Financial Officer Thomas Stevens Chief Information Officer Anthony DiPonio G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Editorial & Business Offices 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET CRAIN’S DETROITBUSINESS ISSN # 0882-1992 is published weekly,except fora special issue the third weekof November,and no issue the third weekofDecemberby Crain Communications Inc.at 1155 Gratiot Ave.,Detroit MI 48207-2732.Periodicals postage paid at Detroit,MI and additional mailing offices.POSTMASTER: Send address changes to CRAIN’S DETROITBUSINESS,Circulation Department,P.O.Box07925,Detroit,MI 48207-9732. GST# 136760444.Printed in U.S.A. Entire contents copyright 2015 byCrain Communications Inc.All rights reserved.Reproduction oruse ofeditorial content in anymannerwithout permission is strictly prohibited.

20151123-NEWS--0026-NAT-CCI-CD_--

11/20/2015

WEEK he Detroit Lions will have a new radio flagship home in 2016 — WJR-AM 760, new team President Rod Wood announced Friday on WJR’s “Paul W. Smith Show.” WJR, a 50,000 watt news/talk station, is owned by Atlanta-based Cumulus Media Inc. Financial terms of the deal were not disclosed. The Lions’ radio rights have been with CBS Radio Inc.-owned WXYT-FM 97.1 since 2004. Accusations that the Lions sought to stifle criticism on WXYT emerged shortly after the formal announcement and were denied by the team.

COMPANY NEWS 䡲 Dan Gilbert, founder and chairman of Detroit-based Quicken Loans Inc. and Rock Ventures LLC, is in talks to buy a city-owned parking garage underneath the former Hudson’s store site on Woodward Avenue, a highly desirable downtown Detroit property. Gilbert is willing to pay about $15 million for the 900-space Premier Underground Garage, a source with knowledge of the negotiations told Crain’s. 䡲 SOK Venture LLC, an affiliate of Livonia-based Team Schostak Family Restaurants, won an auction for the bankrupt assets of Troy-based Olga’s Kitchen Inc. with a $10.95 million bid. SOK was competing with Troybased joint venture Cosmo Hospitality LLC for the 26 Olga’s restaurants. 䡲 Daimler Trucks plans to invest $375 million to bring production of medium-duty engines to its Redford Township manufacturing facility. The company said the new production will add more than 158 jobs. 䡲 Truck Hero Inc., an Ann Arborbased maker and seller of aftermarket parts for trucks and SUVs, canceled a planned initial public offering Friday after finding that the appetite for its stock was short of expectations. 䡲 About 130 employees of vinyl wall graphics maker Fathead and football helmet maker Xenith LLC are taking three floors in the former Kresge building at 1201 Woodward Ave. in downtown Detroit. 䡲 Atwater Brewing Co. this week will open a biergarten and taphouse adjacent to its Rivertown brewery in Detroit. The 5,000square-foot space at 237 Joseph Campau includes a full-service restaurant. Renovations cost approximately $100,000, Atwater owner Mark Rieth told Crain’s. 䡲 The Detroit City Council approved a Renaissance Zone tax exemption for supplier Sakthi Automotive Group USA Inc. aimed at enabling a $60 million investment

Page 1

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 3 , 2 0 1 5

Lions to switch radio flagship to WJR for 2016

5:30 PM

ON THE WEB NOV. 14-20

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

22,000 The square footage of the Nike Detroit store to open in the spring at 1261 Woodward Ave. Dan Gilbert, chairman of Quicken Loans Inc. and Rock Ventures LLC and owner of the building Nike will occupy, confirmed plans for the store via Twitter.

$13.4 M

The total value of legacy grants made to 18 local nonprofits from the Ralph C. Wilson Jr. Foundation. The grants range from $25,000 to $2 million to fund organizations supported by the late Wilson, who owned the Buffalo Bills and Grosse Pointe Park-based Ralph Wilson Equity Fund LLC.

The number of corporate suites to be part of the new Detroit Red Wings arena opening in 2017, all of which have been sold. The corporate suites at the new arena lease for more than $300,000 per year in increments from seven to 10 years.

on the Southwest Detroit waterfront. Sakthi is expanding to produce aluminum castings with a nontraditional workforce of convicted felons. 䡲 Detroit-based DTE Energy Co. said it will spend $415 million over the next five years to replace power poles and add electric lines and equipment in an effort to continue improving power reliability in Southeast Michigan. 䡲 Detroit-based General Motors Co. and Dykema Gossett PLLC and Dearborn-based Ford Motor Co. were among seven Michigan companies on a list of more than 400 U.S. firms to earn 100 percent scores on the Human Rights Campaign Foundation’s 2016 Corporate Equality Index. The index surveys and grades companies’ policies toward lesbian, gay, bisexual and transgender people. 䡲 Bloomfield Hills-based Penske Automotive Group Inc. bought Schneider Nelson Auto Group in a deal expected to add four stores in New Jersey, Automotive News reported.

with children involved in the Detroit gym’s after-school youth program. Footage from the visit on Ray’s Thanksgiving special is to air at 2 p.m. Nov. 25 on WDIV-Channel 4. 䡲 Detroit Bike Share, the first public bike share program for greater downtown, rolled forward with a three-year financial commitment of an undisclosed amount from Detroit-based Henry Ford Health System/Health Alliance Plan. 䡲 Anthony Tersigni, the former CEO of what is now St. John Providence Health System, agreed to donate $1 million to St. John Hospital and Medical Center in Detroit to enhance its neonatal intensive care unit and birthing center. 䡲 The U.S. General Services Administration announced plans to spend nearly $75 million to renovate an office building at 985 Michigan Ave. in Detroit and consolidate Internal Revenue Service workers in it.

䡲 313 Brazilian Jiu-Jitsu LLC

opened in 1,800 square feet in the former S.S. Kresge Corp. headquarters in Detroit. 䡲 In a letter to Pontiac Mayor Deirdre Waterman, Oakland County Executive L. Brooks Patterson urged Waterman to stop accepting Syrian refugees because of security risks. 䡲 The Detroit Symphony Orchestra was set to debut “Symphony in D,” a compilation of city sounds chosen from more than 100 hours of audio and some 15,000 sound clips submitted by Detroiters. 䡲 Dearborn physician Hicham Elhorr, owner and president of House Calls Physicians PLLC, must serve six years in federal prison and pay more than $2 million in restitution for running a Medicare fraud scheme through his practice. He was sentenced on a charge of conspiracy to commit health care fraud.

OBITUARIES 䡲 Sandy Eiler, co-founder and president of Ann Arbor-based Eiler Communications, died Nov. 18 from injuries suffered in a car crash. She was 73. 䡲 Mark Murvay, founder and former owner of Warren-based cutting tools and fasteners supplier M.A. Murvay Inc. (now M.A. Murvay LLC), died Nov. 13. He was 76. 䡲

RUMBLINGS Skillman CEO draws fire in school debt blame game onya Allen, president and CEO of the Detroit-based Skillman Foundation, won’t perpetuate the blame game lawmakers accused her of playing last week when she said the state should not count on foundation funds for Detroit Public Schools debt. Allen also co-chairs the Coalition

for the Future of Detroit Schoolchildren, which

hosted a roundtable on the school district’s educational landscape last week, and said Tonya Allen: “We foundations are all working hard.” weren’t inclined to invest in retiring district debt that had built up under state oversight. Some lawmakers then accused the coalition of playing a blame game, and focusing on handouts or politics rather than schoolchildren. “I don’t think that’s worthy of (another) comment,” Allen said Friday. “We are all working hard on tough issues and need to be spending our time on addressing the needs of Detroit schoolchildren.” House Speaker Kevin Cotter, RMt. Pleasant, said in a statement last week that the coalition has done more than most to derail Detroit school reform. Gov. Rick Snyder has a $715 million plan to split the district into two entities — one to improve academics and another to pay down $515 million in debt. “Blaming the state for the financial failures of DPS is like blaming a relief pitcher who enters the game in the ninth inning already down 20 runs ... ,” he said. “If the coalition is so hell-bent on preventing a deal to reform Detroit’s schools, they should do the right thing for the kids and stand aside so the rest of us can work together to try to fix this.” Rep. Tim Kelly, R-Saginaw Township, said in a separate statement that foundations that spend millions per year to help improve academics may also share blame for the district’s failures.

‘Desire,’ maybe? The M-1 Rail streetcar line officially gets a name Tuesday, after Dan Gilbert’s Quicken Loans Inc. bought the naming rights earlier this year. Quicken is the largest single corporate donor to the $137 million streetcar project, now under construction and scheduled for completion in early 2017. The company increased its capital contribution from $3 million to $10 million. An announcement is coming 10 a.m. Tuesday outside the former Compuware Corp. headquarters in Campus Martius. On hand will be Quicken President and Chief Marketing Officer Jay Farner; Sommer Woods, vice president of external affairs for M-1 Rail; and President and CEO Tony Michaels of The Parade Co. The 3.3-mile rail loop will run along Woodward Avenue from Congress Street downtown to Grand Boulevard in New Center. Organizers project 5,000 to 8,000 riders daily. Gilbert and Roger Penske co-chair the rail project. Matt Cullen, president and CEO of Gilbert’s Rock Ventures LLC, is CEO of M-1 Rail.

CityLoft returns downtown Somerset Collection CityLoft returns this week to downtown Detroit, offering a new wine and beer bar from Townhouse restaurant, and with the wares of 30-plus retailers for the holidays. The retail pop-up returns for a fifth holiday season, this time in a larger venue on the ground floor of Bedrock Real Estate Services’ building at 1001 Woodward Ave. with several new retailers. Somerset Collection is also moving The Detroit Shoppe from 1261 Woodward Ave. to a new, 3,000square-foot store at 1520 Woodward, clearing the way for Nike Inc. to move in and open a 22,000square-foot community store. New CityLoft retailers this year include Bachrach, Banana Republic, Chico’s, Coach, Crate and Barrel, Eileen Fisher, Henri Bendel, L’occitane, Louis Vuitton, Soma Intimates, True Religion and Vera Bradley. 䡲

A night to celebrate

OTHER NEWS 䡲 Emmy award-winning reporter Karen Drew was named anchor of WDIV-Channel 4’s 4 p.m. newscast, beginning Dec. 21. She will replace Ruth Spencer, who is retiring from the Detroit TV station in December. 䡲 Celebrity chef Rachael Ray brought her TV show and about $50,000 worth of appliances to Downtown Boxing Gym and visited

AARON ECKELS

The winners ofCrain’s annual 40 under 40 awards gathered Nov. 19 in an event at the Detroit Marriott Renaissance Center. The program honors high achievers who have made an impact as executives, managers, entrepreneurs and community leaders.

DBpageAD_DBpageAD.qxd 11/20/2015 3:44 PM Page 1

DETROIT HOMECOMING 2015 BROUGHT MORE THAN 170 EXPATS BACK TO THEIR HOMETOWN TO

RECHARGE, REINVEST AND REDISCOVER THE CITY.

SECOND ANNUAL DETROIT HOMECOMING

Crain's Detroit Business invited 170 prominent Detroit area "expats" to reconnect with their hometown, see first-hand the reinvention taking place, and discover opportunities to reinvest in Detroit. Maybe The Detroit Homecoming was historic. But we know it was just a beginning. The “expat” Detroiters are now on a mission to make a difference in their hometown. You can read about it — and see the video — at detroithomecoming.com. “Detroit's foundation is rooted in innovation, and that's evident by the great people it produces. I leave this year's event extremely confident that Detroit will flourish again, and soon. I can feel the momentum continuing to build.” ANDREW MOERS, President, Ask Partner Network at Ask.com, a division of IAC

“For years, when asked about Detroit, I've replied that it's not just where your grow up, it's a heritage. Becoming connected with so many other expats, who feel the same way, will help create conscientious and thoughtful contributions to Detroit.” MICHELE VARIAN, Owner, Michele Varian

“I was truly humbled and inspired by all of the amazing and wonderful things my fellow expats are doing and have committed to doing for the great city of Detroit. Meeting expats from all over the globe who are not only visionaries but disrupters who are helping to foster the change taking place has inspired me to come back and also make a difference.” ANDREA DESY, Broker, Douglas Elliman Real Estate

“Homecoming opened my eyes to all the amazing passion, activity and results that are rebuilding the city of Detroit. I came away thinking there is no better canvas for a young entrepreneur to make impact than what we have going in Detroit.” NICK SHAH, Co-founder and COO, Ampush

“In 25 years of participating in various events, the 2015 Detroit Homecoming made a lasting impression. The opportunity to directly see and hear about the tangible progress being made in Detroit was incredible.” BILL KOTCHER, Vice President, Superior Supply & Steel

“The Homecoming went above and beyond all of my expectations. I was blown away by the enthusiasm, and the subsequent excitement of fellow expats to talk and engage afterwards to find out synergies to work together. I am very excited for next year and bringing one of my businesses back to my hometown.” SHAWN WARD, President, Ward & Fifth Consulting

ATTENDEES INCLUDED Jay Adelson, General Partner, Center Electric | Shane Battier, Co-founder, The Battier Take Charge Foundation |Martha Boudreau, EVP and Chief Marketing & Communications Officer, AARP Gwendolyn Butler, Vice Chairwoamn, Capri Capital Partners | Bradley Cooper, Managing Director, Capital Z Partners | Laurent Crenshaw, Head of Federal Public Policy, Yelp | Kerry Duggan, Associate Director for Policy, Office of Vice President Joe Biden | Ron Fournier, Senior Political Columnist, National Journal | George Gervin, Marketing Director, George Gervin Foundation | Elzie “LZ” Granderson, Columnist, CNN and ESPN | Deborah Hopkins, CEO, Citi Ventures | Mike Jbara, EVP of Technology and Business Processes, Warner Music Group | Randall Kaplan, Managing Member, JUMP Investors | Adriana Karaboutis, EVP of Technology and Business Solutions, Biogen | Christopher Keogh, Regiona Head of Private Wealth Managmement, Goldman Sachs | Charlene Li, Principal Analyst, Altimeter | David Maraniss, Associate Editor, Washington Post | Karen McDonald, Head of Talent Management, Zurich North America | Ann Marie Petach, Board Member, JLL & BlackRock Institutional Trust Lisa Pollina, Board of Directos, Ritchie Bros. Auctioners | John Rhea, Managing Partner, RHEAL Capital Management | Teresa Sebastian, President and CEO, The Dominion Asset Group | Actor Tom Skerritt | Michael Soenen, CEO, Soenen Capital | Lauryn Williams, Olympian and President, Lauryn Williams Inc. | Bob Woodruff, Correspondent, ABC News

Find out what happened and keep up with future plans as they unfold.

News, information, video and photo galleries available at DetroitHomecoming.com

DBpageAD_DBpageAD.qxd 11/18/2015 11:35 AM Page 1

David Girodat, BBA ’85, MSF ’92 Regional President, Eastern Michigan Fifth Third Bank

At Walsh College, real-world insights and practical knowledge from the conference room are taught in the classroom. That’s why many of our alumni have become respected business leaders. If you’re looking for a degree that will help you become a future business leader, turn to Walsh.

REGISTRATION STARTS NOVEMBER 23

GET STARTED AT WALSHCOLLEGE.EDU/WINTER

TR ROY CLIN NTON T WP

NOVI PORT HURON