Crain's Detroit Business, May 9, 2016 issue by Crain's Detroit Business

A story space with room for robots. Does that compute? Page 3 MAY 9-15, 2016

Pistons biz scorecard improves Return to playoffs, growing fan interest drive team’s financial comeback By Bill Shea bshea@crain.com

The Detroit Pistons made the playoffs this year for the first time in seven seasons, and from a business perspective, they were profitable with an improving financial outlook. A winning record and playoff berth have improved the team’s per-game revenue totals. At their nadir a few years ago, the Pistons were generating about $600,000 per game compared to the NBA average of about $1 million. Now they’re at about $750,000 per game, a figure that includes all ticket and food and beverage sales, but not merchandise revenue. Over 41 home games, that represents about $6 million in new game-day revenue growth for the season. With merchandise and ancillary sales such as corporate sponsorships, the overall new revenue total is likely higher. The Pistons had $154 million in total revenue for the 2014-15 season, Forbes.com estimated in January, and that number is expected to be higher when the financial site calcu-

Fewer trees, but still scenic Sleeping Bear Dunes National Lakeshore and the surrounding communities in northwest Michigan are preparing for the coming tourist season less than a year removed from a 100 mph windstorm that tore into the vistas of “the most beautiful place in America.” Crain’s Michigan Business, Page 9

DUANE BURLESON/ASSOCIATED PRESS

Detroit Pistons owner Tom Gores during the first half of an NBA basketball game against the Orlando Magic in March.

A winning record and playoff berth have improved the team’s per-game revenue totals.

lates the totals for this season next year. “I feel very strongly our gameday revenue has picked up dramatically,” said Dennis Mannion, president of the Pistons and Palace Sports & Entertainment. And it likely will pick up even more in 2016-17 with a to-be-determined ticket price increase that Mannion said will

be “modest.” To boost revenue, the Pistons also will continue to refine their use of dynamic ticket pricing, a real-time digital technology that uses software that measures 20 factors to determine the best market price (for the team) of single-game tickets. Attendance improved modestly this season, to 16,515 per

game over 41 home games at the 21,231-seat Palace of Auburn Hills. That ranked 25th in the 30-team NBA and was an improvement of more than 1,200 per game over the previous season. When the Pistons win, they lead the league in attendance, something they did SEE PISTONS, PAGE 32

“If that place comes down, it will cut the heart out of the Detroit music business.” Ed Wolfrum, former engineer, United Sound Systems

Drug accusations jeopardize future of legendary Detroit recording studio By Robert Snell rsnell@crain.com

A landmark Detroit recording studio threatened by the I-94 widening project is in jeopardy again because the historic venue was bought with alleged drug money, according to federal court records. United Sound Systems Recording Studios, where Aretha Franklin, Bob Seger and Motown Record Corp.

founder Berry Gordy recorded hits, factors into a bizarre case involving coast-to-coast manhunts, a $3 billion highway project and two alleged drug dealers, including one who had hair and eyebrow transplant surgery while hiding from federal agents, according to court records. The federal court records chronicle a troubled chapter for

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the nation’s oldest independent recording studio. The studio drew attention last year when Detroit City Council designated it a historic district. This means it would require city approval before the venue could be demolished to accommodate the widening of I-94. Late last month, federal prosecutors asked a judge to have the Midtown property forfeited to the government because the studio allegedly was purchased with money from alleged drug dealer

United Sound Systems opened in 1933

as a producer of ad jingles. It’s since recorded classic pop, rock and R&B.

ROBERT SNELL

Hommie Records, was a fugitive for

Dwayne Richards, according to a court filing. Richards, 44, who owned Detroit record label Big

four years before being caught in metro Detroit in January. The legal fight could give the Justice Department a prime piece of Midtown real estate and remove an obstacle slowing progress on the federally funded I-94 project. The project is being redrawn to SEE STUDIO, PAGE 33

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MICHIGAN

BRIEFS ‘I’ve got your back,’ Obama tells Flint residents in visit

Sipping filtered city water to show it is again drinkable, President Barack Obama promised last week to ride herd on government leaders at all levels until every drop of water flowing into homes in Flint is safe to use. During a visit Wednesday to the beleaguered city, Obama also promised that the aging pipes that contaminated the water with lead will be replaced but cautioned that the project will take time. Obama said he wanted to use the crisis to make long-term improvements to the city, The Associated Press reported. Obama was greeted at the Flint airport by Michigan Gov. Rick Snyder, who has been heavily criticized for his administration’s handling of the crisis; Flint Mayor Karen Weaver and other officials. Obama spoke after he was briefed on the federal response to the water contamination and had met privately with nine residents. “I’ve got your back,” Obama told a crowd at a high school gym-

ASSOCIATED PRESS

President Barack Obama drinks water as he speaks at Flint Northwestern High School about the water crisis.

nasium. He called providing safe drinking water a basic responsibility of government. After coughing several times during his remarks, Obama asked for and drank from a glass of water.

MICH-CELLANEOUS n Brembo North America Inc. con-

ducted the first pour at its new cast iron foundry built at its Homer brake parts production facility, Tire Business reported. The $100 million Homer cast iron foundry is the fourth in Brembo’s worldwide foundry network and the first Brembo cast iron foundry in North America. It is the third factory that Plymouth-based

Brembo North America has expanded or built at the Homer manufacturing site in Calhoun County. At full capacity, the foundry will be capable of 80,000 tons of brake disc castings annually. n Kansas City-based Commerce Bank plans to open a commercial banking office in downtown Grand Rapids, MLive.com reported. Commerce Bank, a subsidiary of Commerce Bancshares Inc., serves customers in 191 locations in Missouri, Kansas, Oklahoma, central Illinois and Denver. n Aeropostale Inc., the New York City-based teen-clothing chain that recently filed for bankruptcy, said it plans to close 154 stores immediately, including locations in Howell, Jackson, Muskegon, Traverse City and in Fort Gratiot near Port Huron, Bloomberg reported. Mall-based retailers such as Aeropostale have struggled to adapt to online sales and the changing tastes of teenagers. n Reservations are available for three daily nonstop flights from Lansing’s Capital Region International Airport to Chicago. Service launches Aug. 23, the Lansing State Journal reported. The American Airlines flights represent a major upgrade in service to Lansing, airport CEO Robert Selig said. n Mercy Health Muskegon announced final design plans for its new $271 million, 267-bed medical center, to be located on the Mercy campus in Muskegon, the

Grand Rapids Business Journal reported. The facility will bring all Mercy Health Muskegon inpatient services together at a central location. Set for completion by June 2019, it will feature a state-of-theart emergency department and optimized patient flows. n Alberta-based pipeline company Enbridge said it expects $62 million in fines and penalties related to a 2010 Michigan oil spill, AP reported. In a filing with the Securities and Exchange Commission, Enbridge said $55 million represents penalties under federal water law. The company said about 20,000 barrels of oil spilled into the Kalamazoo River system near Marshall from a ruptured line. n Kellogg’s profit declined in the first quarter as the maker of Frosted Flakes, Froot Loops and Pop Tarts continued to fight sluggish cereal sales, AP reported. The Battle Creek-based company said sales slipped 1.2 percent for its

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INSIDE THIS ISSUE

CALENDAR ....................................... 28 CLASSIFIED ADS............................. 29 DEALS & DETAILS............................27 KEITH CRAIN.......................................6 MARY KRAMER ..................................9 OPINION ..............................................6 PEOPLE ............................................. 28 RUMBLINGS ..................................... 34 WEEK ON THE WEB ........................ 34

COMPANY INDEX: SEE PAGE 33 flagship U.S. Morning Foods cereals segment; the dip reflects the ongoing struggles for Kellogg and rival General Mills Inc. as Americans increasingly reach for alternatives at breakfast. Still, Kellogg CEO John Bryant expressed confidence that the company would end the year with positive cereal sales. That would mark the first time Kellogg’s U.S. cereal sales were positive since 2012, he said.

Corrections n The story “Taubman’s former CFO looks forward to new challenge at Soave,” on Page 1 of the May 2 issue, should have said Tony Soave sold City Management Corp. to Waste Management in 1998. The date of the sale was incorrect. n An article on Page 9 of the May 2 issue incorrectly reported that a rooftop restaurant is part of the plan for the Best Western Premier hotel in the round tower of the former Holiday Inn of Southfield. The rooftop restaurant was part of an earlier plan but is no longer feasible, according to the building’s ownership group.

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

COURTESY 826MICHIGAN

Young authors read at an Alternatives for Girls book reading affiliated with 826michigan.

Creative writing nonprofit to add Eastern Market hub By Sherri Welch swelch@crain.com

Ann Arbor-based 826michigan plans to bring robots and children to Eastern Market’s Winder Street this fall, with the opening of the Detroit Robot Factory store and a creative writing and tutoring lab. The affiliate of 826 National, a San Francisco-based nonprofit co-founded by novelist Dave Eggers, has signed a long-term lease for a 400-square-foot storefront and about 3,500 square feet of space on the second floor of 1351 Winder St., around the corner from Rocky’s Historic Eastern Market. Renovations to the space began early this spring and are expected to wrap up in July in time to furnish the space for an October

opening. Detroit-based Laavu Studio is the architect on the project. 826michigan has raised about $1.1 million toward a $1.5 million target to fund the Eastern Market site and to expand its programs in the city, Executive Director Amanda Uhle said. Amanda Uhle: That inExpanding writing cludes grants of programs for kids. $150,000 from both the West Bloomfield Township-based Dresner Foundation and the Miami-based John S. and James L. Knight Foundation, $200,000 from

the Troy-based Kresge Foundation and a $30,000 grant over three years from the Indianapolis-based Robert & Toni Bader Charitable Foundation, whose founders had grand-

parents who worked in Eastern Market years ago. The new site will enable 826michigan to expand the creative writing programs it has offered in Detroit classrooms and local libraries for the past three years, and to begin offering free after-school, drop-in tutoring and creative writing workshops on subjects from silly to serious and opportunities for students to get their writing published. Affiliates of 826 use a storefront to attract children and inquisitive passersby. SEE HUB, PAGE 30

Room for big dreams at Hudson’s site? Earlier this month, the Downtown Development Authority approved a modified development

agreement with a Dan Gilbert-affiliated entity to construct a new high-rise building on the site of the former J.L. Hudson’s department store on Woodward. What could be in store for the two-acre site that has been vacant since the department store was imploded 18 years ago? Crain’s reporter Kirk Pinho spoke with Urban planning expert Robert Gibbs, managing principal of Birmingham-based Gibbs Planning Group Inc. For his take on the project, turn to Page 31.

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Law firms create dedicated automated-vehicle teams By Lindsay VanHulle

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LANSING â&#x20AC;&#x201D; Some Michigan law firms are taking their traditional automotive practices into new territory by devoting teams to connected and autonomous vehicles. Firms such as Butzel Long in Ann Arbor and Miller, Canfield, Paddock and Stone PLC in Detroit are among the first to jump into this space. While they have represented automotive clients for years, the autonomous-vehicle groups are relatively young â&#x20AC;&#x201D; much like the industry itself. Jennifer Dukarski, an attorney with the connected-car and autonomous-vehicles team at Butzel Long, described the work as â&#x20AC;&#x153;very traditional legal issues, but in a very new context.â&#x20AC;? â&#x20AC;&#x153;Part of the reason that we think a specialty team is important is because of the technical elements,â&#x20AC;? Dukarski said. Butzel attorneys specialize in everything from technical elements and federal regulations to broadband communications and cybersecurity, she said. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s not your average-Joe automotive team,â&#x20AC;? Dukarski said. Butzel Longâ&#x20AC;&#x2122;s connected-vehicle team has 11 members who work in all of the firmâ&#x20AC;&#x2122;s Michigan offices, including Detroit, and in Washington, D.C. At least half of their work relates to connectivity, she said. The team started about three years ago with an idea for a practice group that could look not only at up-and-coming vehicle connectivity issues but also urban mobility issues and ride-sharing services such as Uber and Lyft, Dukarski said. Miller Canfieldâ&#x20AC;&#x2122;s team has existed for about a year, said RickWalawender, a co-director of the autonomous-vehicle practice team in Detroit. It formed after the firm began to receive calls from new entrants into the industry, he said â&#x20AC;&#x201D; mostly software companies that wanted to do work with connected vehicles. â&#x20AC;&#x153;Some are startups, but, frankly, a lot of them are companies that have been doing this for years and years and years and really never seriously got into the auto industry,â&#x20AC;? Walaâ&#x20AC;&#x201C; wender said. Several client companies realized they needed legal counsel because the automotive industry differs from many with its regulatory climate, procurement practices and liability requirements, he said. Several other firms have connected-car legal teams, adding up to 70plus Michigan attorneys. Other examples: Honigman Miller Schwartz and Cohn LLP, Detroit; Brooks Kushman PC, Southfield; Warner Norcross & Judd LLP, Grand Rapids (10 attorneys); Bowman and Brooke LLP, Bloomfield Hills (20); Reising Ethington PC, Troy; Darrow Mustafa PC, Northville; Quinn Law Group PLLC, Novi; and Kemp Klein Law Firm in Troy. Miller Canfieldâ&#x20AC;&#x2122;s autonomous-vehicle team has about 20 members,

Jennifer Dukarski: Rick Walawender: No â&#x20AC;&#x153;average-Joe â&#x20AC;&#x153;Dozens of clientsâ&#x20AC;? automotive team.â&#x20AC;? in car automation.

with the groupâ&#x20AC;&#x2122;s leaders holding expertise in corporate law, information technology and regulation. Attorneys handle traditional automotive issues, such as regulation and recalls, while navigating new-to-the-industry challenges such as data privacy and intellectual-property rights. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve done it sort of on that track as a specialized team, realizing that probably in 10 years, itâ&#x20AC;&#x2122;s going

to displace the automotive team that we have,â&#x20AC;? Walawender said. Neither firm shared revenue figures. Miller Canfield can count â&#x20AC;&#x153;dozens of clientsâ&#x20AC;? that are involved in vehicle automation in some way, Walawender said. About half are software-based and new to the auto industry. Dukarski said Butzel Long attracts new clients each time its attorneys participate in events or panel discussions.

From Midwest to West Both attorneys said the teams offer a unique look at the emerging industry. Detroit â&#x20AC;&#x201D; and Michigan at large â&#x20AC;&#x201D; are trying to compete with California tech companies to be the first to develop and market a self-driving car. Other innovations SEE NEXT PAGE

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C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6 FROM PREVIOUS PAGE

are in testing stages — including connectivity, or the ability of vehicles to communicate wirelessly with each other and with sensors in road signs to warn of upcoming hazards. Much of Butzel Long’s work involves “introducing Silicon Valley to Detroit and introducing Detroit to Silicon Valley,” Dukarski said. Her firm represents clients in both places. Dukarski said she often helps traditional auto companies and tech firms negotiate agreements, given the inherent differences in their businesses. “When we ... take our traditional manufactured car parts out to the Valley, they’re negotiating like you’re negotiating a software agreement,” she said, adding that when tech firms come to Detroit, auto industry terms “are completely foreign to them.” “A lot of time I feel like, more than anything, I’m acting like an interpreter, which is another exciting area in and of itself,” she said. “In negotiations, what’s great is Silicon Valley brings a new way of thinking that I think is an infusion needed in the auto industry. They bring to us a rapid pace of change; they bring to us a little more risk-taking than we’re accustomed to. They bring to us thinking outside the box.” Detroit auto companies are learning to pay attention to risks they may not have considered, such as cybersecurity, Dukarski said. And Silicon Valley tech firms are learning that the auto industry can’t tolerate patches and upgrades the way software customers do. The competition among companies doing R&D has forced the auto industry to speed up, Walawender said. While the industry is used to five- to 10-year vehicle life cycles, he said, West Coast software companies and venture capital firms “think in terms of months, not in years.”

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Raising issues A challenge on the horizon will be for a Detroit company to figure out how to monetize all the data that will be collected from connected and autonomous vehicles while still protecting user privacy, attorneys said. In addition, Walawender said, as connected-vehicle research advances, it will require governments to invest in smart infrastructure equipped with sensors that can talk to vehicles and alert them about dangers. He said his work involves advising government officials on finance issues. Those who want to attract the automated-vehicle industry to their towns will need to consider how they can offer the infrastructure those cars will need, he said. That raises issues about the type of system to be used, how it will be financed and who will manage it, Walawender said. “They could be sort of put at every traffic light or within every traffic signal and even signs along the road. Or they could even be embedded into the pavement,” he said. “Remember, this is the kind of thing that will help facilitate cars being able to track what’s going on in inclement weather or during snowstorms, or things like that, when its own sensors might not be fully adequate.”

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OPINION I

For Delta, some turbulence in Tokyo

t’s easy to take Detroit Metropolitan Airport for granted. Until you risk losing a nonstop international flight. Last week, Delta Air Lines Inc.’s new CEO, Ed Bastian, told Bloomberg news service that Shanghai soon will be the center of Delta’s Asian operations rather than Tokyo — a concession, perhaps, to a realization that new rules could allow Delta’s chief competitors — United and American — the opportunity to fly into a downtown Tokyo airport while Delta is stuck at Narita International Airport — about 50 miles away. Delta is vying with United and American for some daytime landing slots the Japanese will distribute to foreign carriers from the U.S., but the competitors already have partnerships with Japanese airlines. Delta does not. Its filings with U.S. officials seek direct access from Minneapolis, Atlanta and Los Angeles — but not Detroit. But if Delta loses out, it may cut service to Narita, too, as passenger traffic falls off. That may concern Michigan business travelers who fly Delta to Narita — and then on to another Asian destination. Of course, there’s another solution: Keep the routes at Narita — but charge significantly less than the competition.

A bit of karma for Comerica Comerica Bank’s big headquarters move to Dallas in 2007 was its way of getting out from under its image as a stodgy, Rust Belt manufacturing bank. But some activist investors are now clamoring for Comerica to put itself on the block because it’s underperforming compared with peer institutions based on share price and return on equity. One analyst told Bloomberg Radio that the bank hadn’t generated acceptable returns for the past eight years. (Let’s see ... the headquarters move was announced, well, just about eight years ago.) The problem: 8 percent of Comerica’s lending portfolio is in energy loans. Texas has a lot of poor-performing fracking and oil companies. Last fall, The Wall Street Journal reported that Comerica had labeled about $1 billion worth of energy loans — about a third or its total energy loan portfolio — as “criticized,” meaning the bank itself had concerns about the financial condition of those borrowers. In a call with analysts in April, Chairman and CEO Ralph Babb acknowledged the bank was looking at “multiple options.” Two questions: Is the bank for sale? And who would want to — or could — buy it? Comerica doesn’t break out results by state. But we would guess that the bread-and-butter middle-market business that the bank has in Michigan is one of its only bright spots. Ironic that the old Rust Belt may be the bank’s brightest spot. Go figure.

TALK ON THE WEB Re: Obama’s visit to Flint spotlights economic disparity Man ... talk about using a crisis in a depressed city to get as much political mileage out of it as possible. How bla-

tant is the attempt to represent the Flint water crisis as an “illustration of enduring U.S. economic inequality.” Do they want to bring the rest of America down to the same level or raise the level of the economically depressed? I can’t tell, truthfully. I just want to say “thank you” to Rick Snyder for his leadership in the time of crisis. People miss that we need good leaders the most in time of crisis, rather than targeting them. Mark Bleckley

Hey, Mark, you do know that Obama is not running for anything, right? Is Snyder paying you to say nice things? Snyder belongs in jail.

DownriverDem

Re: Senate passes budget plan with 2 prison closures “Prisoners moved to a privately

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

owned facility” doesn’t sound like cost-cutting to me. Parole more prisoners and get back to us once we can simply close some facilities. BrewPubNate

Re: Michigan races to stay in driver’s seat on autonomous vehicle legislation Glad Michigan is not surrendering the opportunities the connected or autonomous vehicle will bring now and for future generations. The biggest challenge will be the prevention of hacking of software. As we move from software only being a threat to a person’s monetary security to physical safety as well, there will be an opportunity that can

also be leveraged into our defense weapons being turned against us. Let the brilliant and passionate minds innovate the solution — hopefully from Michigan! NoSpinJustFacts

Re: Oakland County expected to add 44,000 jobs over next three years Wow, such a different picture than the Republicans paint about the jobs picture. Gone from wreckage under Bush to thriving under Obama. Should be thankful and let this be a lesson for the upcoming election. John

Re: 2 more guilty pleas in Detroit school corruption scandal Sickening. I feel so badly for these kids that are being robbed by the people who are supposed to be looking out for their future. ADA3

It’s been a long road back Just about a year ago, I had scheduled a procedure to replace my aortic heart valve. A new procedure that would require just a few hours in the operating room, a few days in the hospital and back to work in something around a week. It didn’t quite work out that way. They needed three tries to get the valve in the heart, taking almost 15 hours in the operating room. Complications arose and, as a friend said, I went into the “big sleep” for almost a couple of months. Unfortunately, when I awoke, I had to learn how to walk

KEITH CRAIN Editor in chief

all over again. Thanks to some great physical therapists, I am down to one cane and hopefully will be able to toss it away soon. It has been a very long recovery. But the world keeps moving. We

are still losing American soldiers in the Middle East, and wars and terrorism still seem to be our biggest threats. The U.S. has picked a Republican nominee for president, and the Democrats are still fussing over whether Hillary will be indicted or be their party’s choice. The Detroit school system is still in shambles, as it has been for the past few decades. And whenever you think it’s getting better, corruption rears its ugly head, with school principals no less. And teachers who want to strike. And in spite of the good job our

mayor of Detroit is doing, he has to wrestle with corruption under his watch. This time on his proudest accomplishment, the demolition of housing. Where did all the money go? Michigan does not seem to be gearing up for the presidential race quite yet. With the personalities in the race, it's bound to be a barn burner. There is already speculation on the next Michigan governor’s race in 2018, but I am still rooting for my favorite, Congresswoman Candice Miller, to agree to run. And while our company is cele-

brating its centennial, I watch the Indy 500 celebrate its 100th race and my friend Roger Penske celebrating his 50th year in motor sports, a great accomplishment. The more things change. Detroit is still on the comeback trail and seems to be getting stronger every day. Mr. Gilbert doesn't seem to have satisfied his appetite for real estate; his buying knows no bounds. I owe a lot of people thanks for filling in for me while I was ill. Recovery has been a very long road, but we are very close to the end.

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

Oakland County expected to add 44,000 jobs By Robert Snell rsnell@crain.com

Oakland County will add 44,000 jobs during the next three years and the unemployment rate will drop to 3.3 percent, University of Michigan economists forecasted during an outlook lunch last week. The projected growth follows seven years of economic recovery from the 2009 recession in Oakland County, when the county's unemployment rate was 13 percent. During the past five years, the county has added 94,500 jobs, and more than 40 percent were in high-wage industries. The assessment from UM economists George Fulton and Donald Grimes came ahead of the 31st annual Oakland County Economic

Outlook luncheon May 5 at the Detroit Troy Marriott in Troy. Oakland County can be considered a great economy over the next three years due to sustained job growth among higher-wage industries, falling unemployment approaching historical lows, moderate inflation and growing real wages, Fulton told reporters during a news conference. Oakland County is projected to add 14,000 jobs this year, more than 14,500 next year and more than 15,500 in 2018. The county's 15.2 percent job

growth since 2009 outpaced the nation (8 percent) and the state (9.6 percent). “I don’t think you can overstate how much of an improvement Oakland County has had over the last seven years, and going forward,” Grimes said. The forecast and job growth reflects Oakland County’s focus on helping create high-paying jobs (annual salaries of $75,000 more) in emerging sectors over the last 12 years, Oakland County Executive L. Brooks Patterson said. He cited growth in health care

— Southfield-based Beaumont Health has replaced General Motors Co. as the county’s largest employ-

er — and information technology fields as examples. In the past 12 years, almost 400 emerging-sector companies have invested $3.5 billion in Oakland County and created more than 61,000 jobs, Patterson said. “That’s where the growth is, that’s where the sustainable jobs are and where the incomes are better,” he said. Job growth is expected to average 2 percent annually through

2018, fueled by expansion in sectors that include testing labs, merchant wholesalers in durable goods, engineering services, management and technical consulting services, computer systems design and related services. Motor vehicle manufacturing jobs are expected to rise slightly during the next three years. By 2018, auto factory jobs will account for 2.7 percent of jobs in Oakland County, according to the forecast. Robert Snell: (313) 446-1654 Twitter: @RobertSnellnews

Ford ad agency takes new name Team Detroit, the Dearborn-based firm handling Ford Motor Co.’s advertising, has a new name: GTB. The agency’s British advertising holding company parent, WPP, said in a statement on Thursday that it has brought Team Detroit, London-based Blue Hive (which handles Ford’s overseas marketing), and Minneapolis-based Retail First (Ford dealer advertising) under the GTB name. GTB stands for Global Team Blue and will operate across six continents and 49 offices. Its headquarters remains in Dearborn. New York City-based Hudson Rouge, which handles advertising for Ford’s Lincoln brand, will retain its name. Unifying the three firms under the GTB name is a means to emphasize the agency’s unified global services model. They have begun using the GTB name, brand identity, website and logo. Team Detroit was created by WPP in 2006 as a conglomeration of six sibling agencies — JWT, Young & Rubicam, Wunderman, Ogilvy & Mather, MEC and Mindshare — to handle Ford’s now-$2.5 billion marketing account. Its current non-Ford clients include St. Louis-based Nestlé Purina Petcare, Milwaukee-based Johnson Controls Inc., Bryan, Ohio-based Etch-A-Sketch maker Ohio Art, Stockholm/London-based Spotify, and St. Louis-based Anheuser-Busch Companies Inc. Toby Barlow, chief content officer at GTB, will continue reporting to COO Kim Brink, who will keep reporting to GTB CEO Satish Korde, formerly Team Detroit chief executive. Team Detroit, Blue Hive and Retail First previously operated under one P&L and will continue to do so as GTB. — Bill Shea, Crain’s Detroit Business and Advertising Age

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C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

Civilla nonprofit examines social issues

Founders: Innovation starts with putting people before organizational charts By Marti Benedetti mbenedetti@crain.com

A new nonprofit is designing around people’s needs to make their lives better — or, at least, a little easier. “We talk to people and design (a project) to meet their needs,” said Michael Brennan, a Civilla co-founder. “Too often, we design around the needs of the institution.” Civilla was started last year by Brennan, a longtime United Way ex-

ecutive, and Civilla’s COO, Adam Selzer, who is also a design fellow and lecturer at the Hasso Plattner Institute of Design at Stanford University and a former design director at the United Way. The two met when Brennan took a few months’ leave from United Way to learn about creative leadership and design innovation at Stanford. “What became clear quickly was Mike was doing circles around the

other attendees,” Selzer said. “He invited me to Detroit, where I met a lot of people, and my wife and I moved there in 2014. “While we were both working at the United Way, we started sharing observations about how organizations and leaders were set up to make changes.” The process was difficult. Selzer said Civilla looks for leaders “for whom doing the same thing they have been doing is more painful than exploring something new. We like to play a role in uncovering how large institutions can adapt to meet the needs of the people they are try-

ing to serve.” The Civilla space, which takes the better part of a floor in the TechTown Detroit building in Midtown, teems with creativity. Roughly illustratMichael Brennan: ed ideas and A different way to photos are taped expansive approach design. to walls. The furnishings scattered around the big space are stylish but worn, and a ga-

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zebo-size, wood-pallet structure is being built to encourage dreams. Civilla’s mission is best illustrated by a photo on the wall, Brennan said. It shows a man cutting through a well-worn path on the grass in a park, rather than taking the longer route on the brick pedestrian walkway. Instead of designing for the status quo, Civilla concentrates on designing to better satisfy people’s needs. Civilla has a few customers, but Brennan said it was too early to disclose customer names or specific projects. Civilla’s earliest funders were the Ford Motor Co. Fund and the Kresge Foundation, he said. The organization has a $500,000 operating budget for this fiscal year. A for-profit Civilla LLC “is not activated yet,” Brennan said. The nonprofit has a fellowship program consisting of Detroit students and students from Boston, Toronto, Spain and Vietnam. The fellows work in teams with Brennan and Selzer as educators. “What they are doing is highly interactive and visual,” Brennan said. The fellows create their own flexible work space. “I’m using some of what I taught at Stanford,” Selzer said. “Fellows are launching different design probes into the community to see if they can create something of value.” The organization does not operate in a vacuum. Instead, it thrives on collaboration. For example, Human Scale Studio President Chad Rochkind keeps his desk there. As an urban planner, he is out in the field a lot, spending maybe eight hours a week in the Civilla space. But he enjoys the connections that have developed between what he is doing (making Detroit a more people-friendly city) and Civilla’s goals. “We bounce ideas off each other,” Rochkind said. “We have a similar philosophy but come from different disciplines.” When one of the fellows came to Detroit to work for Civilla, she learned her expertise and area of interest was better-suited for Human Scale. So she now works with Rochkind. After learning Rochkind had a knack for poetry, he was appointed Civilla’s poet laureate. His work is featured prominently in the work space. Ken Whipple, a former Ford Motor Co. executive and retired chairman and CEO of CMS Energy Corp., is a Civilla groupie of sorts. When he’s downtown for a United Way for Southeastern Michigan board meeting or other business meetings, he said, he likes to stop by to see what Civilla is doing. Whipple said Brennan’s enthusiasm for human-centered design is contagious. “I’m amazed at the things he’s been able to do and the people he has brought through here in a short period,” Whipple said. He added that Brennan excels at attracting people to Civilla so he can demonstrate what they are working on. “I’m hopeful they have a pretty good chance of making it.”

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

SPECIAL REPORT: MICHIGAN BUSINESS MARY KRAMER Publisher

mkramer@crain.com Twitter: @mkramercrain

Bombast from past puts Trump rhetoric in perspective Whenever the tone or substance of what passes this year as political “discourse” gets to me, I think back to a highlight of 2015: Seeing “Hamilton” on Broadway. It’s hard to understate the exhilaration of watching history come alive on the stage in an unsanitized, unpolitically correct way. The rivalries, the jealousies and the insults that Alexander Hamilton, Thomas Jefferson and other key players threw at one another were remarkable. Today, kids — and adults — are memorizing those rap-infused lyrics. But even at their nastiest, the barbs traded by the historic figures seem elevated from what we’re watching — live — in the presidential race. Historically, though, newspapers in the U.S. rarely concealed their political leanings in news stories. Hamilton himself founded the New York Post to advance his views. “Fairness” and “objectivity” were concepts adopted in the 20th century — and perhaps abandoned in the 21st. Today, many blogs, websites, talk-radio shows and cable TV shows tread the same ground as their ancestors from the 18th and 19th centuries. So in this curious political year, of what earlier public figure does Donald Trump remind you most? Teddy Roosevelt, Andrew Jackson, Minnesota’s populist Jesse Ventura and even Ronald Reagan when he challenged Gerald Ford in 1976 have been replies when I’ve posed the question. But I recall a figure closer to home: Geoffrey Fieger in his ill-fated run for governor of Michigan in 1998. The hair, the bombast, the insults — and the distance between each candidate and the party for whom he is carrying the standard: Fieger was to Michigan “establishment” Democrats what The Donald has been to the Republican equivalent. I haven’t seen a lot of establishment Republican figures, including many business leaders, run to the Trump banner, either. Will Michigan’s big donors write checks for Trump? Pundits seem mixed on whether Trump could take Michigan in November. He may suffer the same fate as Fieger, who lost to incumbent John Engler, 62 percent to 38 percent. But as the rhetoric escalates, remember, America has heard it before. According to a story by William Perkins in the Columbus Dispatch this month, Jefferson once described arch-foe John Adams as a “blind, bald, crippled, toothless man who is a hideous hermaphrodite character with neither the force and fitness of a man, nor the gentleness and sensibility of a woman.” Kind of makes everything else — even Trump — sound mainstream. Mary Kramer is publisher of Crain’s Detroit Business. Catch her take on business news at 6:10 a.m. Mondays on the Paul W. Smith show on WJR AM 760 and in her blog at www.crainsdetroit.com.

Matt Wiesen, owner of three Glen Arbor businesses — Crystal River Outfitters, The Cyclery and M22 Glen Arbor — is ready for tourists after cleaning up damage caused by last summer’s devastating wind and hail storm. PHOTO BY JOHN L. RUSSELL

WINDED, not wounded By Amy Lane

Special to Crain’s Michigan Business

At the three recreation and retail businesses that he and wife Katy own in northwest Michigan’s Glen Arbor, Matt Wiesen is again ready for the biggest season of the year. New kayaks and stand-up paddleboards replace those punctured by trees that fell in last August’s devastating storm. Building damage has been fixed and an equipment delivery vehicle repaired. And generators that have been purchased stand available to provide backup electricity — just in case. “We’re heading into this summer, business as usual, and ready for a good year,” said Wiesen, of Crystal River Outfitters, The Cyclery and M22 Glen Arbor. “I think there’s a good buzz around town where people are ready to see the tourists Fallen trees cover M-109 into Glen Arbor after a storm last August. COURTESY U.S. COAST GUARD AIR STATION, TRAVERSE CITY

start showing up again and show them what we’ve done to rebuild and clean up. “And show them Glen Arbor is still the same beautiful place that they visited in the past, and we are welcoming them.” The same, but also different. Pockets of downed trees in the Glen Arbor area and Sleeping Bear Dunes National Lakeshore remain visible and powerful reminders of the winds that reached 100 mph and snapped huge trees like toothpicks, leaving roads impassable and residents and businesses without electricity for days. It was an event that shook community functions, livelihoods, pastimes and emotions.

One year after a 100-mph storm tore into the tip of northwest Michigan, the region is ready for tourists

But in the days and weeks following, debris and thousands of trees were cleared, structures repaired and footing regained in an area that has lived in the spirit of Sleeping Bear’s being named “the most beautiful place in America” by viewers of ABC’s “Good Morning America” in 2011.

Changing landscapes “Sleeping Bear Dunes — we’re still the most beautiful place in America … with just fewer trees,” said Michael Buhler, treasurer and co-owner of Leelanau Coffee Roasting Co. in Glen Arbor. At the park, National Park Service crews from Sleeping Bear

and other national parks cleared hazardous trees in many areas, including Glen Haven, Pierce Stocking Scenic Drive, the Dune Climb and Dune Trail and the D.H. Day Campground. Assistance included the Friends of Sleeping Bear Dunes, an organization that financially and physically supports numerous park operations and resources. The group, working with the Park Service, coordinated volunteers who initially tackled clearing trees and debris from sections of the Sleeping Bear Heritage Trail, a 17-mile hard-surface trail managed and maintained by the group. Merrith Baughman, chief of interpretation and visitor services at the park, said the extent of the acreage affected by the storm will be known after on-the-ground mapping is SEE TOURISTS, PAGE 10

With care and feeding, Sleeping Bear wakes up area economy, Page 12.

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

SPECIAL REPORT: MICHIGAN BUSINESS

TOURISTS

“We had good weather and great tourism following the storm. ... We had people coming around looking for storm porn. … They wanted to see the devastation.”

FROM PAGE 9

done this summer. But the park’s storm cleanup cost about $400,000, funded through its annual budget and National Park Service emergency money. In the storm’s aftermath, key attractions and areas were closed to visitors. But in a park that’s more than 71,000 acres and encompasses long stretches of lakeshore, beach access and water recreation areas, campgrounds and North and South Manitou islands, visitors could be directed to other options, Baughman said. “The message we really stressed was that the park had been impacted by the storm, but the park wasn’t closed,” she said. The park’s August visitation suffered a nearly 7.5 percent drop, from 388,000 visitors in August 2014 to 359,000 last year. However, visitation “rebounded really quickly,” and September-through-December numbers were strong, Baughman said. While the storm-related damage “may have impacted short term in the month of August, it definitely didn’t drive people away,” she said. And the park still reached record numbers in 2015, ending the year with 1,535,633 visitors, compared with the past peak of 1,531,560 in 2012 — the year after Sleeping Bear’s “Good Morning America” designation. As the storm moved across Leelanau and Grand Traverse counties and beyond, it left a trail of private and public property damage that reached an estimated $29.7 million in Leelanau and $15.4 million in Grand Traverse. Losses also hit the bottom lines of businesses in the region. Grand Traverse Resort and Spa outside Traverse City was without electricity for 24 hours, losing power during the primary arrival time of attendees to the Management Briefing Seminars put on by the Center for Automotive Research that would fill the resort. The resort was able to

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Maintenance

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Michael Buhler, Leelanau Coffee Roasting

fall ever,” which helped make up for the revenue loss.

Fall harvest of business

JOHN L. RUSSELL

The area of Sleeping Bear Sand Dunes that overlooks Glen Lake known as Alligator Hill, shortly after the storms devastated the area last summer. keep the conference functioning, escorting guests with flashlights when needed, changing menus to feature items that didn’t need to be cooked or could be prepared offsite, and powering the resort’s largest meeting room with a generator. Even so, the resort didn’t charge for guest rooms for the day without power — a “substantial” business effect of the storm that added up to a six-digit figure, said Tim Norman, the resort’s general manager. The Homestead Resort in Glen Arbor carried on with a wedding in the storm’s wake but was without power for several days and lost current guests as well as those holding reservations. More subtle than the visible impacts of the storm, however, was lightning-strike damage to the resort’s phone system. “We never thought of the phone system being impaired. And by the next morning, we were starting to figure out there was a problem," said resort President Bob Kuras. By late that day, it was apparent there was a serious problem. “People would call, and we wouldn’t even know they were calling,” Kuras said. “If agents were busy, there was no voicemail or automatic forward to the next agent. The phone would just ring.” He said phone service was im-

Safety

paired for probably three months or more and affected bookings well into other seasons. “People who are fond of Lake Michigan, fond of this place, make their reservations early,” Kuras said. “When you can’t get through on the telephone, I would imagine people called elsewhere.” He said phone-related costs totaled about $800,000, of which probably $150,000 was for repairs. The rest was estimated lost revenue. Leelanau Vacation Rentals, which handles rentals of Homestead condominiums and homes and cottages on area lakes and in communities, had a mixed experience coming out of the storm. Without power, many renters left and were given a full refund for the remainder of the week, CEO Ranae Ihme said. Those who stayed received a reduced rate. But the revenue loss, which Ihme said was around $60,000, was limited in duration. While nearly all of Leelanau’s 147 rental properties at the time suffered damage, sister maintenance company Glen Arbor Outdoor was able to remove trees and make repairs in time for the next round of renters to arrive the following week, just as the power came back on. “Having that service company tied into us was a saving grace,” Ihme said. And “the fall was our best

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The fall produced welcome traffic for many businesses that took a storm-related hit. Buhler at Leelanau Coffee Roasting said the loss of electricity for five days following the storm left the business “dead in the water” — unable to roast coffee, ship orders to wholesale customers around the country and operate the retail café, all during the busiest week of the season. The biggest impact came at the café, where the five-day loss in revenue equated to about 6 percent of the café’s total annual revenue and 10 percent of its profit, Buhler said, declining to state dollar figures. Business interruption insurance covered the loss of food in freezers and other perishable items, as well as two of the five days of revenue loss. But strong retail customer numbers in September and October helped compensate, adding revenue for the business and hours for its employees, Buhler said. “We had good weather and great tourism following the storm,” he said. “It didn’t scare it away. That was one of our biggest worries. “We had people coming around looking for storm porn. … They wanted to see the devastation.” In the storm’s wake, some considerations were made more certain. Leelanau Coffee is looking to add a generator at the café and already did so at a new Maple City location that will house wholesale and roasting operations, including an eightfold increase in roasting capacity. Similarly, Matt and Katy Wiesen

purchased individual generators for their three stores. When the storm knocked out electricity, the shops were closed for five days and reopened in a limited capacity after that, thanks to a generator Matt hauled from their house each morning. He declined to state revenue loss but said it was “a substantial amount of money” that business interruption insurance didn’t fully replace. “In the grand scheme of things, it’s nowhere near what we would normally generate for revenue during that stretch,” Wiesen said. “It’s always our busiest week of the year. We’ve got a short window of opportunity, so to lose that week, it hurt. “But we had a really strong fall, which helped ease the burden of being closed that week.” Property damage, like tree damage to the delivery vehicle and a garage roof, was covered through auto and building insurance, he said.

The power of fundraising For nine employees whose vehicles were damaged in the storm, the M22 store donated $10 for each sale of “LOVE Glen Arbor” T-shirts, raising more than $7,000 to help repair or replace the employees’ vehicles. Wiesen said he and his wife and M22 store founders Matt and Keegan Myers wanted to find a way to help employees. And now, the store is donating 22 percent of all sales of LOVE Glen Arbor items to Friends of Sleeping Bear Dunes for its continued work in the park. Private monetary contributions have played significant roles in the area’s restoration, supplementing SEE NEXT PAGE

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C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

SPECIAL REPORT: MICHIGAN BUSINESS FROM PREVIOUS PAGE

federal, state and local money spent on storm cleanup causes. Among them: about $48,000 generated through “Bring the Arbor Back to Glen Arbor” — a campaign launched by Cherry Republic Inc. President Bob Sutherland to address needs and, he said, “take this devastating setback for Glen Arbor and … get it behind us.” Sutherland said the tally includes $8,000 from Cherry Republic and $2,000 from the Traverse City-based Utopia Foundation, a nonprofit founded in 2007 by his brother, Paul Sutherland. Utopia handled donations to the campaign. So far, $10,000 has gone to help private property owners with tree cleanup, and another $10,000 contribution is planned to help clear debris, cut up trees and remove stumps on another section of property in Glen Arbor, Sutherland said. Another $10,000 was disbursed to Friends of Sleeping Bear Dunes. That group’s storm cleanup on sections of the Heritage Trail dispatched teams of volunteers including chainsaw operators certified by the Park Service who worked from 10 a.m. to 4 p.m. They were followed by Park Service crews who tackled bigger and more tangled trees, said Kerry Kelly, the nonprofit’s chairman of the board. “Every day we were able to make

JOHN L. RUSSELL

Bob Sutherland, president of Cherry Republic Inc., launched the “Bring the Arbor Back to Glen Arbor” campaign after storms devastated the area last year.

a lot of progress,” he said. Over six days, 138 volunteers worked 1,052 hours to remove fallen trees and open the trail. The Friends organization received $10,000 for storm recovery from the Muncie, Ind.-based Edmund F. and Virginia B. Ball Foundation Inc. It also received $5,266 donated

from sales of a book chronicling the storm and its destruction through pictures, commentary and narrative written by retired Detroit Free Press political editor Bob Campbell. Traverse City publisher Mission Point Press donated to Friends of Sleeping Bear $1 for each copy sold of Storm Struck: When Supercharged

Winds Slammed Northwest Michigan. The Cottage Book Shop in Glen Arbor added $1 to the publisher’s donation for copies it sold, Kelly said. Some of the money has helped pay for equipment and safety gear, he said. “One of the things about this storm is it helped us to understand what kinds of things we were lacking in, in order to prepare for an event like this,” Kelly said. “Whereas we had one small chainsaw before, clearly that was not enough. People were using their own equipment. “We purchased more axes, saws, helmets, vests, loppers,” which are scissors used to prune twigs and

small branches. “We just realized that, when you have 100 people show up for a work day, (and) you don’t have any tools … how are you going to go out and prepare them for work? We’re just trying to get stocked up, so if we have another event like this, we will be more prepared.” Donations have supported Glen Arbor Township’s recovery. The township received $28,500 in unsolicited contributions that it disbursed with the assistance of a “Re-Arbor Glen Arbor” community task force formed to help the township prioritize how the money should be used, said township Supervisor John Soderholm. The contributions have helped pay to clean up debris remaining after state and county road clearance work and to plant nearly three dozen trees last fall “to present a new, fresh face for the community come spring,” Soderholm said. Trail clearance work still remains in the national park’s Alligator Hill, which suffered massive damage that Soderholm likens to a giant going bowling in the forest. And on the Heritage Trail, there soon will be two interpretive signs that will explain the event: the weather circumstances and how what are called straight-line winds knocked down the trees; as well as the Park Service philosophy of letting areas recover naturally from

such storm “blow-downs,” including leaving downed trees and debris that do not pose hazards. Shrubs and saplings can start to fill in forest gaps; dead and decaying trees can provide habitat for birds, bats, insects and other animals and return nutrients to the soil; and mature hardwood forest eventually returns, the Park Service says.

‘It will come back’ “It’s going to take time; it’s going to take decades,” said Baughman, the Sleeping Bear park official. “But … forest has evolved with these kind of blow-downs. It will come back.” The trail signs, a team effort of the Friends group and park, are expected to be installed this month. As the summer tourist season approaches, there’s anticipation and optimism. At Glen Arbor’s Leelanau Vacation Rentals, Ihme said her bookings for the season are up 26 percent from last year at this time, in part reflecting a strong economy. And at Cherry Republic, Sutherland said he’s “really looking forward to this summer and getting back to all the fun that we have up here. And also seeing our summer people’s reaction to Glen Arbor one year later, and to the park. “Come and see a town and how much we have rebounded from this,” he said. “But understand that there is still more to do.”

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Every year, more than 1 million people visit Sleeping Bear Dunes National Lakeshore, known for its massive shoreline sand dunes and land and water recreation. But visitors may not know all it takes to make the 71,210-acre national park run, including employees, volunteers, nonprofit contributions, a $4.2 million annual budget and additional revenue from fees. Visitors also may not comprehend Sleeping Bear's sizable footprint. The park encompasses 65 miles of Lake Michigan shoreline, including on the mainland and North and South Manitou Islands; more than 100 miles of trails; an agricultural landscape; 366 historic buildings and features; and campgrounds, beach access and picnic areas. Its presence manifests itself in

numerous ways, including tourism that feeds into the economies of nearby communities. A National Park Service report on visitor spending in the nation’s parks, released last month, pegged the 2015 local economic impact from Sleeping Bear at $205.8 million. In all, more than 1.5 million visitors, including 1.3 million nonlocal visitors, Baughman: spent $163.4 Sleeping Bear’s million in the visitor services region. That chief. money supported 2,586 jobs and was spread among hotels, restaurants, retailers, gas stations and other segments of the economy. The park is a draw that returns tourists year after year, said Mi-

chael Buhler, treasurer and co-owner of Leelanau Coffee Roasting Co. in Glen Arbor. Sleeping Bear operates with about 55 permanent employees and seasonal temporary employees — last year, 73 — who work generally from mid-May through Labor Day, said Merrith Baughman, the park’s chief of interpretation and visitor services. And beyond that are scores of volunteers — more than 2,000 last year. They contributed 58,000 hours to the park, including at campgrounds, beaches and trails, Baughman said. Among the volunteers are members of two nonprofit organizations that physically and financially support park operations: Friends of Sleeping Bear Dunes and Preserve Historic Sleeping Bear. The Friends of Sleeping Bear Dunes, formed in 1994, has about 300 people who annually regularly volunteer in various activities, said Kerry Kelly, chairman of the nonprofit’s board. Some are “ambassadors” who ride, walk or ski the Sleeping Bear Heritage Trail, answering visitor questions and reporting on the trail’s condition. A small number also do heavy maintenance on the trail and groom it for winter cross-country skiing. Some of the group’s additional contributions to the park include purchasing equipment to provide free Wi-Fi at the visitor center, helping develop visitor guidebooks and providing grants to support summer interns . In all, Friends of Sleeping Bear Dunes’ support in fiscal 2015 totaled $11,682 in direct grants to the park and $55,765 through inkind project spending. Preserve Historic Sleeping Bear formed in 1998 to preserve late1800s to early 1900s structures and features at the park, including farms, outbuildings, log cabins, schoolhouses and maritime buildings. The group’s work includes interpretive, educational and preservation projects in the Port Oneida Rural Historic District — a farming community with 18 farmsteads and 121 buildings in their original locations on 3,400 acres at the northern end of the park. Preservation can bring new life to properties in ways that expand the experience for visitors. On North Manitou Island, for example, Preserve Historic Sleeping Bear is restoring a former hotel. The hope is to provide an option beyond camping on the island and make it accessible to more visitors, said Susan Pocklington, the organization’s executive director.

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

SPECIAL REPORT: MICHIGAN BUSINESS

Grand Rapids company stays on message with checkout belt biz By Tom Henderson thenderson@crain.com

Handstand Innovations LLC of Grand Rapids is trying to get the message out: It is raising a financing round of $1 million to ramp up production and marketing of its ad-bearing products, which brighten up, and clean up, the traditional black belt you set your groceries on in supermarket checkout lanes. You know those belts, the ones that are sticky with blood that leaked out of the baby back ribs package from two customers ago, and show spots of white from milk or yogurt, not to mention the invisible germs from the sick baby whose mom set her on the belt for a second? Handstand Innovations’ product is called MessageWrap, a custom-made belt that fits around the traditional black belt at the checkout counter. It has an antibacterial coating, which kills those baby germs, as well as anything trying to fester in the blood or milk stains. The belt also carries advertising messages. Target recently used MessageWrap’s full-color, high-definition belts to alert customers in 210 stores around the country to the latest installment of “Star Wars,” and not so incidentally to remind them of all the “Star Wars” merchandise

on sale. “Target had heard about our belts and called us,” said Handstand COO Trent Hartwig. “We gave them a quote, and two hours later, we got a call back saying we’d been approved. It was quite a feat for us to execute that big an order in three weeks. We didn’t get much sleep.” Belts needed to be installed on 1,050 conveyor belts. The belts can carry 20 square feet of advertising. Hartwig said a typical cost for a retailer to rent the conveyor belt wrap and ad of its choice is $200 per belt for eight to 12 weeks. Other customers have included Sam’s Club, Albertsons, Costco and Roundy’s Supermarkets Inc. Hartwig said he has agreed to terms to install a large number of belts for a major national retailer he can’t name, because the contract hasn’t been signed yet. Joe Wood is vice president of marketing for Milwaukee-based Roundy’s, which operates 150 supermarkets under several brands in Wisconsin and Illinois. He said he used MessageWrap in a single store in Madison, Wis., a year ago, and was surprised at how successful it was. “We wanted to promote the pharmacy in the store, so we had a message on the belt that said, ‘Look

One of the grocery store black belts from Hand-

stand Innovations

promoted merchandise related to the latest “Star Wars” movie. MESSAGEWRAP

over your left shoulder,’ and when customers looked over their shoulder, there was the pharmacy,” he said. He said a follow-up survey showed 85 percent customer awareness, “and that’s really high,” he said. Wood said he has been using MessageWrap in 60 stores in Milwaukee and is about to roll it out to his Pick ’n Save brand stores throughout the state. Wood said he was surprised by how much positive customer feedback he got from a small message along the side of his ads that said the belts were antimicrobial. “That resonated with customers,” said Wood, who praised Handstand Innovations’ service. “They’re very responsive and focused on keeping the client satis-

fied. They get their installations done quickly, and they’re quick to follow up to make sure everything is all right,” he said. Hartwig said MessageWrap is being used in pilot programs for retailers in Australia, Puerto Rico, Canada, Israel and the Dominican Republic. He recently made a pitch for capital at a meeting of the Great Lakes Angels at the UHY Advisors headquarters in Farmington Hills. The company was founded in 2012 by Hartwig; Susan Vanderploeg, who was a member of senior management at Meijer Inc. from 1996-2007 and is chairman of the board; and her son, Nathan Vanderploeg, a University of Michigan economics major, who is CEO. The company employs seven. Making it easier to raise equity capi-

tal is a U.S. patent that was granted in March 2015. Other patents are pending in Europe, Brazil and Canada, according to Hartwig. Handstand Innovations raised its first investment of $600,000 from Compass Marketing Inc., a marketing firm in Annapolis, Md. Compass helps Handstand with business development and marketing strategies for MessageWrap. Mol Belting Systems Inc. of Grand Rapids, which makes conveyor belts for a range of industries, including supplying 70 percent of the checkout conveyor belts at retailers nationwide, makes the MessageWrap belts that fit over the traditional black belts. The advertising on MessageWrap belts is printed by Source One Digital of Muskegon, a full-service digital printing company. Hartwig said $400,000 has been raised so far for the Series B round of $1 million. He said the company had revenue of $500,000 in 2015 and projects revenue of $2.5 million this year. “After we raise this round, we should be able to fund growth out of cash flow,” said Hartwig, who said the company is hiring account managers and a graphic designer. Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

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*Credit products subject to credit approval. Proof of practitioner disability and malpractice insurance, along with medical license in good standing with State, required on all dental and medical requests. Minimum individual credit score of 700 required for all borrowers involved. See banker for additional details. Member FDIC Karen reflects a composite of clients with whom we’ve worked; she does not represent any one person. 5371_FM16

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

WORLDWATCH WHERE MICHIGAN DOES BUSINESS

Autoliv Inc. Based: Auburn Hills Operations: Technical centers

are in Elmshorn and Dachau, production plants are in Braunschweig and Döbeln, and a development center is in Schweinfurt. Employees: 2,100 Products: Seatbelts, front and side airbags and radar systems Top executives: Jens Eisfeld, Germany managing director; Franck Roussel, vice president of steering wheels; Frank Kohrs, vice president of seatbelts; Frank Melzer, president of electronics Clients: Automotive OEMs

Belfor Holdings Inc. Based: Birmingham Operations: German

headquarters in Duisburg, with 30 offices throughout Germany Employees: 800 Products: Building, property and machinery restoration after fire and water damage, and document drying Top executive: Elvir Kolak, managing director

Cooper-Standard Automotive Inc. Based: Novi Operations: Headquarters and

manufacturing facilities in Mannheim, manufacturing facilities in Grünberg and Hockenheim and manufacturing and technical facilities in Lindau and Schelklingen Employees: 1,990 Products/Services: Systems for anti-vibration, fluid transfer, fuel and break delivery and sealing Top executive: Fernando de Miguel, senior vice president and president for Europe Clients: Include BMW, Daimler AG, Dura Automotive Systems, Ford Motor Co., Geely, General Motors Co., Magna, Porsche, Tata Motors, Veritas AG, Volkswagen and Webasto

Dayco Products LLC Based: Troy Operations: Sales and admin

office in Viernheim Employees: 20

Products/Services: Sales in the auto and industrial markets Top executive: Bruno Vallillo, president of Europe, the Middle East, India and Africa Clients: Global automotive and industrial manufacturers

Domino's Pizza Inc. Based: Ann Arbor Operations: Eight pizza stores in

Germany and a joint venture that has led to the purchase of Joey’s Pizza, with 220 stores

GERMANY

ith a nominal 2015 GDP of $3.3 trillion, Germany is the world’s sixth-largest economy. The country has a highly skilled labor force, according to the CIA World Factbook, but the economy is facing new challenges due to the increasing immigration and refugees. The government is also planning to invest 15 billion euros in the next two years to encourage private investment. Among Germany’s biggest exports are chemicals, machinery, vehicles, computer and electronic products. Its largest export partners are France (9.6 percent), the United Kingdom (7.9 percent), the United States (6.9 percent) and the Netherlands (6.9 percent). Among its biggest imports are oil and gas, machinery, data processing equipment, metals, and pharmaceuticals. Its largest import partners are the Netherlands (13.8 percent), France (8 percent), China (6.6 percent) and Belgium (6.3 percent). Each World Watch features a different country. If you know of a Michigan company that exports, manufactures abroad or has facilities abroad, email Gary Piatek, senior editor, at gpiatek@crain.com. COMING UP

June: Mexico | July: United Kingdom Employees: 150 (with up to 2,000 once conversion is complete) Products: Pizza, pasta, wings, breadsticks Clients: Retail customers Top executive: Don Meij, CEO of Domino's Pizza Enterprises

Dow Chemical Co. Based: Midland Operations: German

headquarters in Schwalbach and plants in Ahlen, Bitterfeld, Böhlen, Bomlitz, Leuna, Rheinmünster, Rastatt, Schkopau, Stade and Teutschenthal Employees: 5,000 Products/Services: Base and specialty chemicals for food, pharmaceuticals and construction, adhesives and raw material for polyurethanes Top executive: Willem Huisman, president of Dow Germany

Dow Corning Corp. Based: Midland Operations: A manufacturing

plant in Wiesbaden Employees: 360

Products/Services: Siliconebased materials used in the automotive, construction, electronics, personal and health care industries Top executive: Klaus Hoffman, president of Western Europe for Dow Corning

FCA US LLC Based: Detroit Operations: An FCA Germany AG

headquarters, sales and technical training center in Frankfurt and about 550 dealerships and workshops throughout the country Employees: 340 Products/Services: Dealerships and workshops offer sales and service for Fiat, Jeep, Abarth, Lancia, Fiat Professional and Mopar Top executive: Giorgio Gorelli, CEO of FCA Germany AG

Federal-Mogul Corp. Based: Southfield Powertrain operations:

Manufacturing facilities in Beckedorf, Blumberg, Dresden, Friedberg, Herdorf, Neuhaus and Stadtallendorf and technical centers and manufacturing facilities in Wiesbaden, Nuremberg, Barsinghausen and Burscheid Products/Services: Valve train, rings, liners, sealing, friction, ignition, pistons and bearings Motorparts operations: A manufacturing facility in Glinde, a technical center in Bad Camberg and a regional office in Ludwigsburg Employees: 8,800 Top executives: Gian Maria Olivetti, chief technology officer for Federal-Mogul Powertrain; Martin Hendricks, president Europe, Middle East and Africa for Federal-Mogul Motorparts

Ford Motor Co. Based: Dearborn Operations: Ford of Europe and

Ford-Werke GmbH (Ford of Germany) headquarters in Cologne as well as a plant and other facilities in Saarlouis; a research center in Aachen Employees: 25,000 Products/Services: Producing, selling and servicing Ford brand vehicles such as the Ford Focus, the Ford C-MAX/Grand C-MAX and the Ford Fiesta in 50 markets Top executives: Jim Farley, president and CEO for Ford of Europe; Bernhard Mattes, chairman for Ford of Germany

General Motors Co. Based: Detroit Operations: European subsidiary Adam Opel AG headquarters,

technical development and design center in Rüsselsheim and production plants in Rüsselsheim, Kaiserslautern and Eisenach Employees: 18,250 Products/Services: Vehicles including ADAM, Astra, Cascada, Combo, Corsa, GTC, Insignia, KARL, Meriva, Mokka, Movano, Vivaro and Zafira Tourer Top executive: Karl-Thomas Neumann, chairman of the management board of Opel Group GmbH

Kelly Services Inc. Based: Troy Operations: Headquarters in

Hamburg plus 19 offices throughout the country, including Berlin, Cologne, Frankfurt and Munich Employees: 130 Products/Services: Staffing services for commercial, professional and technical positions Top executive: Thomas Schenk, vice president and managing director country group Germany

Key Safety Systems Inc. Based: Sterling Heights Operations: Technical center in

Raunheim and a satellite sales office in Munich Employees: 280 Products/Services: Development and testing of safety systems and support for administration, finance, program management and sales functions for facilities in Italy, France, Macedonia, Romania and the UK Top executive: Ralph Caspari, president of passive safety Europe and managing director of KSS

Deutschland GmbH Clients: Include Aston Martin Ltd., Audi AG, Bentley Motors Ltd., Daimler AG, Fiat SpA, Ford Motor Co., General Motors Co., Hyundai Motor Co., Jaguar Land Rover Ltd., Porsche AG, Peugeot S.A., Renault-Nissan Alliance, Toyota and Volkswagen AG

MPG Inc. Based: Southfield Operations: Technology centers

in Dieburg and Zell am Harmersbach and manufacturing plants in Zell am Harmersbach and Nuremberg Employees: 650 Products/Services: Vibration damper applications, process development of ready-forassembly forgings and forged components combined with advanced machining operations Top executives: Christoph Guhe, vice president and general manager of global forged products; Juergen Depp, vice president of engineering and business development for vibration control systems Clients: Include Audi, BMW, Robert Bosch GmbH, Dana Corp., Daimler AG, Getrag, Magna Powertrain, Schaeffler Group, Volkswagen AG and ZF/TRW

Penske Automotive Group Based: Bloomfield Hills Operations: Automotive retail

vehicle dealerships in Aachen, Alsdorf, Bad Münstereifel, Darmstadt, Düren, Erkelenz, Eschborn, Eschweiler, Frankfurt, Fulda-Petersberg, Geilenkirchen, Hamburg, Heinsberg, Mannheim, Offenbach, Simmerath, Skoda, Stolberg, Übach-Palenberg and Wächtersbach Employees: 1,250 Products/Services: Sales of new and used cars and trucks as well as vehicle service and parts sales Top executive: Jens Werner, CEO of continental Europe

TI Automotive Ltd. Based: Auburn Hills Operations: 11 manufacturing

plants and two tech centers, in Bremen, Ettlingen, Heidelberg, Fuldabrück, Ingolstadt, Isenbüttel, Leipzig, Neunkirchen, Neutraubling and Rastatt Employees: 1,900 Products: Include fuel tank systems, brake and fuel lines, fluid carrying systems bundles, fuel pumps, powertrain components, HVAC systems, tubing Top executives: Bogdan Mieszczak, managing director, FCS Europe; Albert Boecker, global product and advanced engineering director, tank systems Clients: Daimler AG, Audi AG, Volkswagen AG, BMW AG, Ford Motor Co., General Motors Co., Jaguar Land Rover Ltd., MAN, Porsche AG, Lamborghini SpA, Volvo Car Corp., Renault-Nissan, Kautex Textron GMBH & Co., Inergy Automotive Systems LLC, TI Automotive LLC and Magna International Inc.

Compiled by Natalie Broda

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

SPECIAL REPORT: VETERANS IN THE WORKPLACE

Value of veterans Returning service members bring skills, leadership to the workplace

Vietnam veteran Keith King has seen the pendulum swing to where companies actively seek America’s veterans. PHOTO/LARRY PEPLIN

By Bill Shea bshea@crain.com

In the summer of 1970, Keith King was a 19-year-old M-60 machine gunner with the U.S. Army’s military police protecting supply convoys running ammunition along the dangerous routes to American troops fighting in South Vietnam’s war-torn Central Highlands. A year later, the Detroit native’s enlistment term complete, King was told by those processing his transition to back to civilian life not to wear his uniform. It was an ugly era for those leaving the military. The public was weary of the war, and protesters were said to insult veterans. Corporate America was skeptical of Vietnam veterans for many years, too, he said, and many companies didn’t want to know about applicants’ Vietnam service. “It was detrimental to me in my

business career. I took it off my résumé,” said King, who spent decades in broadcast sales and advertising before launching an organization to certify veteran-owned businesses a few years ago. Forty-five years after King left the Army, the pendulum has swung the other direction, and companies actively seek America’s veterans of the wars in Afghanistan and Iraq. They’re seen as offering skills and leadership that civilians don’t always bring to the table, especially as the military has grown increasingly complex with technology and systems, said King, who now is president of the Detroit-based National Veteran Business Development Council.

Pipeline of returning vets slowing The pipeline of veterans, however, could slow in coming years

and create a demand for ex-service members that gives them an advantage in the workplace not seen since after World War II. That’s because the Pentagon is under orders to slash its manpower numbers to meet budgetary constraints. If opposition withing the ranks and on Capitol Hill don’t hold sway, under the current budget the Army must cut 30,000 troops by fiscal 2018. That would leave 450,000 active-duty soldiers, making it the smallest U.S. Army since 1940, before conscription ballooned the ranks on the eve of World War II. By the end of World War II, there were 12 million men in uniform, and the original G.I. Bill provided them money for college or vocational training along with low-interest home mortgages and loans to start a business. “The educational portion of that is what really drove the

King (right) stands alongside a U.S Army military police armored car on

a road in the Central Highlands of South Vietnam in 1970.

change in society in America,” King said. “We became a society with a high percentage of people leaving the farm and coming into the city. That created the suburbs. They came home, went to school, and had the opportunity to get jobs.” In 1968, at the height of the Vietnam War, the Pentagon had 3.5

million active-duty troops, including 1.5 million in the Army. The numbers have slowly dwindled since. Today, the most recent headcount from the Pentagon shows 1.3 million men and women in the Army, Marine Corps, Air Force, Navy, and Coast Guard. That’s the lowest SEE VETERANS, PAGE 16

Companies try to end disconnect many vets feel in corporate world By Dustin Walsh Crain’s Detroit Business

With a glut of U.S. military veterans returning to the workforce due to the wind down of forces in the Middle East, employers remain vigilant in hiring those with military experience. Corporations, including those in Southeast Michigan, in turn have upped their marketing and promotion of veteran hiring in recent years. But once veterans enter corpo-

rate America — there are 275,000 veterans in the Michigan labor force — they are less content than in their military career and struggle to adjust to life in button downs instead of fatigues, according to a November 2015 study by New York-based research firm Center for Talent Innovation. Roughly two-thirds of those surveyed said they weren’t using three or more of the skills applicable to their job and only 2 percent

“In the military, you ... live and die with your team. There’s naturally a lower level of commitment in the corporate world.” Scott Prygoski, Cooper-Standard

said an executive advocates on their behalf, compared to 19 percent of men and 13 percent of women who are nonveterans. “In the military, you quite literally live and die with your team,” said Scott Prygoski, director of information technology for Novibased Cooper-Standard Holdings Inc., a West Point graduate and former captain in the U.S. Army. “There’s naturally a lower level of commitment in the corporate

world. It’s a 9-to-5 with no weekends, so (vets) feel less connected and engaged.” Prygoski leads Cooper-Standard’s veterans affinity group, which it chartered in November, to address issues faced by the company’s veterans. “There’s a chain of command in the military, but in the corporate world it’s a chain of influence,” Prygoski said. “These vets used to go SEE DISCONNECT, PAGE 17

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SPECIAL REPORT: VETERANS IN THE WORKPLACE

VETERANS FROM PAGE 15

troop strength since 2001, according to federal data. Michigan has the 11th-largest veteran population, state and federal data show. There were 658,469 known veterans as of 2014, the most recent accounting available. The majority of those are Vietnam vets (237,675), followed by those who have served since 1990 (155,745). The U.S. militaryâ&#x20AC;&#x2122;s post-9/11 peak manpower was 1.43 million in 2003, with the Armyâ&#x20AC;&#x2122;s peak of 566,045 coming in 2010. The Army alone has cut 80,000 troops since 2012, and barring a change in policy under the next president (or another war), troop levels will fall further. That means there will be a burst of new veterans in the workforce

Want to Help Veterans? Veteran-owned businesses (VOBs) hire more veterans. Using Veteran-owned businesses enhances corporate diversity goals, and demonstrates support of the contributions military members have made on behalf of our country. NVBDC provides corporations with a robust database to find Service Disabled Veteran Owned Businesses (SDVOBs and VOBs) by industries, locations, skills and various codes. Participation in a nationwide information and referral network helps to meet Federal Government veteran business subcontracting requirements, and to market to an increasingly loyal consumer group. By helping veteran businesses grow, weâ&#x20AC;&#x2122;re helping our veterans, their families and the community.

for a few years as the services cut troops, but then the flow of new vets will be reduced to numbers not seen since before 9/11.

A smaller pool Thatâ&#x20AC;&#x2122;s likely to mean the corporate world will compete for the smaller pool of veterans, especially those with technical skills and experience that translate into civilian jobs, King said. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s kind of like college recruiting. Some are in a place they can demand only the best academic students,â&#x20AC;? he said. â&#x20AC;&#x153;When (vets) come out, theyâ&#x20AC;&#x2122;re going to come out with a pretty good opportunity for employment. We have a lot of demand. If they did IT security, computers, drones, worked on nuclear-powered submarines, weâ&#x20AC;&#x2122;ve got a job for them.â&#x20AC;? While America has had troops deployed in combat since 2001, the veterans of current conflicts donâ&#x20AC;&#x2122;t account for the largest cohort of former service members. Veterans who served during World War II, the Korean War, and the Vietnam era accounted for 42 percent (8.9 million) of the total veteran population in 2015. The remainder are 7 million veterans of the first Gulf War and subsequent conflicts, and 5.3 million who served in peacetime, records show. About 9 percent of all veterans are women. â&#x20AC;&#x153;America has been pretty good at making veterans. Weâ&#x20AC;&#x2122;re not always good at taking care of them. Weâ&#x20AC;&#x2122;ve been through drawdowns before, only to rebuild,â&#x20AC;? King said. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m always a little cautious when we start talking about politicians and their decision on exactly how many active-duty troops theyâ&#x20AC;&#x2122;re going to let go. But assuming they do, weâ&#x20AC;&#x2122;re going to have to reintegrate all these people into normal society.â&#x20AC;?

A variety of skills, abilities Whatever the manpower totals of the active-duty armed forces,

veterans can offer employers a variety of skill experiences, such as expertise in computers, engines and other technology, medical training and leadership. Enlisted personnel account for the largest portion of veterans. For example, for every 10 Marine enlisted personnel, there is one officer. In the more technically oriented Air Force, that ratio is close to three airmen for every one officer. Enlisted personnel must have at least a high school diploma or GED, while officers have college degrees. Officers appeal to companies because they attend regular SEE NEXT PAGE

Military might Here is a look at the U.S. militaryâ&#x20AC;&#x2122;s total active-duty troop strength at key points since the eve of World War II. 1939: 334,472 (start of World War II overseas) 1941: 1.8 million (start of

conscription, beginning of World War II for U.S.)

1945: 12.2 million (end of World War II) 1950: 1.46 million (start of Korean

War)

1953: 3.55 million (Korean War cease fire) 1965: 2.7 million (first large formations of U.S. combat troops to Vietnam) 1968: 3.5 million (height of Vietnam

War)

1987: 2.17 million (peak of post-

Vietnam strength)

1990: 2 million (First Gulf War) 2001: 1.38 million (9/11) 2003: 1.43 million (start of Iraq War,

peak post-9/11 strength)

2016: 1.34 million (current armed forces manpower total as of March 31) Source: U.S. Department of Defenseâ&#x20AC;&#x2122;s Defense Manpower Data Center; The National World War II Museum; Department of Veterans Affairs

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C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

SPECIAL REPORT: VETERANS IN THE WORKPLACE

DISCONNECT FROM PAGE 15

to their CO (commanding officer) to get something done, now they have to set up meetings with purchasing and manufacturing and tooling; the chain of command is foggy, and we’re here to help them understand and navigate this paradigm shift.” The group, which has 40 members, also provides mentoring, education and camaraderie, Prygoski said. Keith King, president of the Detroit-based National Veteran Business Development Council, said companies not focusing on internal veteran development are missing out on potential leaders. “An officer is really running a multimillion-dollar operation with hundreds of employees, but employers don’t think of it in those terms,” said King, an Army veteran who served in the Vietnam War. “Smart companies are not only

FROM PREVIOUS PAGE

training and classroom instruction at military staff colleges and many earn advanced degrees during their military careers. It’s not just technical abilities that veterans offer, said Ken Huxley, a retired U.S. Air Force colonel who manages talent acquisition for Detroit-based Strategic Staffing Solutions and runs its veteran hiring initiative. Veterans also offer employers organizational abilities, respect, loyalty and the ability to work in a structured environment, he said. One factor affecting the pace of veteran hiring, Huxley said, is the nation’s economic health. “A lot will depend on where the economy is at the time these folks stream out of the military,” he said. “That will determine how much opportunity these folks have.” If Washington continues to reduce troop strength and the stream of veterans into the workplace tightens, it’s important that civilian employers continue their emphasis on hiring former service members, Huxley said. “My hope is corporate America will continue its campaign to recognize and bring those veterans into their workforce,” said Huxley, who joined the Air Force after graduating from Wayne State University in 1979 and retired in 2005 after a military career primarily in human relations management. Whatever the economic situation, the federal government has made great strides in aiding new veterans, Huxley said. That always hasn’t been the case. “The Department of Defense and Veterans Administration do a pretty good job of providing programs that help veterans transition into the workforce or continue their education,” he said. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

Scott Prygoski: Helps vets at Cooper-Standard Holdings.

Sandy Ennis: Works with DTE’s veteran and minority workforce.

committed to hiring vets, but also understand the value of their experience. It’s much easier to teach an

employee work skills; it’s difficult to teach someone to be a leader. Vets already have those skills in place.” Detroit-based DTE Energy Co. recognized that it was missing the boat in developing its veteran workforce. The energy provider created a new position in late 2014, promoting Sandy Ennis to vice president of diversity and inclusion, with the mission of improving engagement of its veteran and minority workforce. It hasn’t been easy, Ennis said. “(Vets) tend to be a stalwart group; they are used to taking orders and keeping their head

down,” Ennis said. “There wasn’t a lot of self-identification, and no one was saying ‘help us’; but as we started to hire more veterans, we began to understand the climate and how we leverage their different skill sets.” DTE is currently trying to establish its own affinity group for veterans, their families and any other advocates for veterans at the company. “There is untapped talent there,” Ennis said. “Veterans bring diverse characteristics, such as problem-solving skills, innovative thinking, etc., and that makes for a strong business case to help them

achieve their potential.” King said companies pushing beyond the recruitment of veterans to encompassing development plans represents a sea change in the stigmatization of veterans. “The change in society has been tremendously positive,” King said. “Being in the military, going to war, that changes your perception. It’s not normal. It’s an extreme. But what I’ve seen lately, companies nurturing (veteran) employees ... that’s a tremendous asset for both the employer and employee.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

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C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

SPECIAL REPORT: VETERANS IN THE WORKPLACE

A perfect storm By Jeff Johnston

It wasn’t the first time he had to step it up.

When Hurricane Ike roared ashore in Texas on Sept. 13, 2008, its 110 mph winds and 20-foot storm surge scored a direct hit on the U.S. Coast Guard station on Galveston Island. Base housing, galleys and docks were destroyed. “This one was a beast,” Coast Guard Reservist Percy Jenkins recalls. “The whole island was a mess.” Rebuilding was a mess, too, as numerous contractors began to bump elbows. It was Jenkins’ job to create order. Jenkins in 2008 was a reservist and former residential builder in Kalamazoo. The Coast Guard had called him back to active duty in Galveston for his construction background, but this would be his first experience with large government contracts. When he found he could navigate the labyrinthine world of federal construction contracting, “that started the wheels spinning.” He saw that with enough hard work, he could become a successful government contractor. “I knew at that point I needed to step up my game,” he said.

‘Should have been in prison’

Special to Crain's Detroit Business

Growing up in the 1970s and ‘80s near San Antonio, Texas, Jenkins was on a fast track to nowhere. “I represent that statistic that should have been in prison,” he said. From public intoxication at age 16 to poaching deer a couple of years later, “I got in trouble for so much.” In court on that poaching charge, Jenkins caught a break. His mother vowed military service would shape up her son. The judge said OK, and Jenkins signed up for the Coast Guard. Four days after his belated high school graduation in 1985, he was in boot camp. The Coast Guard took him to New Jersey, Virginia, Mississippi, Detroit and Seattle. He left after nine years and settled near his wife’s family in the Kalamazoo area and hired in at Kalamazoo’s water department while eyeing a career as a public safety officer, building on the firefighting, policing and search-and-rescue skills he’d developed in the Guard. Along

Hurricane sends Coast Guard veteran down a new, successful path ties. A back injury sidelined him in November 2005. “I believe God decided I’d had enough,” he said. After months of physical therapy and two surgeries, in November 2006 he received a disability retirement from Public Safety. He adjusted his Reserve activities and shut down his construction company to concentrate on healing.

Choosing a new road

Percy Jenkins: “I need ... to give back.”

the way, he started a residential construction company. While at a firefighting academy, Jenkins listened when a U.S. Navy veteran told him he’d be a fool not to build on his nine years of military service, so he enlisted in the Coast Guard Reserve in 1996 with an eye toward earning his full pension and other benefits. From 1998-2005, he worked full time as a K-9 officer for the Kalamazoo Department of Public Safety, managed nine builders and remodelers at his construction business and served his Reserve du-

Then came Ike, and in its wake Jenkins saw a new path for himself. He earned a bachelor’s degree in business management and technology from Downers Grove, Ill.-based DeVry University, specializing in project management. In exchange for four years of additional service time, Jenkins paid only small fees for college. His tuition costs of at least $250 per credit hour were covered. “The tuition assistance — that was priceless,” he said. Jenkins also earned project manager professional certification through the Project Management Institute, based in Newtown Square, Pa. Then he met Mike Odrobina on

a project in 2010. Jenkins, in the government, knew contracting. Odrobina, in private business, knew construction. Recognizing how they complemented each other, they teamed up to form W4 Construction Group LLC in April 2013, with Jenkins as founder and CEO and Odrobina as general manager. It was a reflection of lessons Jenkins learned in the service: value leadership, find the smartest people, make good decisions. “You have to have the right team,” he said. It helps to capitalize on other advantages, too. For Jenkins, one of those was eligibility for the U.S. Small Business Administration’s 8(a) Business Development Program. In a nutshell, 8(a) serves approved small businesses owned and run by minorities with diminished capital and credit opportunities. The nine-year program offers training, mentoring and competitive perks including bidding and sole-source contracts set aside for 8(a) companies. Businesses must balance their SEE NEXT PAGE

Each year, the American Diabetes Association and the Father’s Day Council honor over 100 men from across the country as outstanding fathers and community leaders through local Father of the Year Awards. Please join us in congratulating the 2016 honorees representing the Metro Detroit Area. The honorees will be recognized on Tuesday, June 7, 2016 at Cobo Center.

Dennis W. Archer

06.07.16 Cobo Center

Chairman & CEO Dennis W. Archer PLLC Chairman Emeritus Dickinson Wright PLLC

Bill Dirksen

VP Labor Affairs Ford Motor Company

To reserve your corporate table or sponsor the Father of the Year Awards Gala, visit www.diabetes.org/fotydetroit or call Stephanie Camalo at (248) 433-3830 ext. 6695.

John Welsh

Founder/Co-Owner Michigan Evaluation Group

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

SPECIAL REPORT: VETERANS IN THE WORKPLACE

Resources for veterans American Red Cross of Southeastern Michigan

Helps coordinate job certification training for veterans and provides scholarships to offset the cost to attend the Red Cross nurse assistant training program. Ford Motor Co. in February announced that it is sponsoring 175 such scholarships. Red Cross also provides emergency financial assistance and resources to veterans unable to receive other government and social service agency aid: redcross.org/mi/detroit.

Brain Injury Association of Michigan In conjunction with the U.S. Department of Veterans Affairs, the association helps business owners understand and deal with veterans with brain injuries or post-traumatic stress disorder: biami.org or (800) 772-4323.

Emmanuel House Recovery Program, Detroit Provides housing, drug and alcohol rehabilitation, employment assistance, resume writing, interview skill-building, a temporary address for employment purposes, and transportation to and from jobs: emmanuelhouserecovery. org or (313) 270-4099.

Employer Partnership of the Armed Forces U.S. Army Reserve and National Guard program provides employers a direct link to service members seeking employment. The organization’s Hero 2 Hired website is a comprehensive job portal for all service members: h2h.jobs or vets.gov/ veterans-employment-center.

repairing and remodeling transitional housing for homeless veterans: homedepotfoundation.org, click on “veterans.”

Inforum Center for Leadership Inforum offers Next 4 Vets, a custom leadership program to help women veterans build successful and rewarding careers. Program consists of four half-day group sessions and two oneon-one coaching sessions. The next group of sessions will be offered next spring. Sign up in December: inforummichigan.org/ next4vets or Deborah Young at dyoung@inforummichigan.org or (313) 324-0236.

JVS The Veterans Empowerment Tools program helps vets with service-related disabilities reintegrate into the community. Services include support groups, one-on-one support, and vocational and educational counseling. To qualify, a veteran must have a 10 percent service-connected disability, an open case with the VA Vocational Rehabilitation Unit and Employment Chapter 11 services and be referred to JVS by a VA counselor. Sign up at ebenefits.va.gov/ebenefits/jobs or at jvsdet.org/whowe-serve and click on “veterans.”

Michigan Veterans Affairs Agency State agency oversees veterans services in addition to the Michigan National Guard and Michigan Volunteer Defense Force: michigan.gov/dmva.

Michigan Veterans Foundation, Detroit

This Small Business Administration program provides services including transitional housing, life skills and employment training, job opportunities and referrals, transportation and legal assistance: michiganveteransfoundation.org.

Military OneSource This U.S. Department of Defense program provides resources and support to active-duty National Guard and Reserve service members and their families. The Employee Assistance Program section on its website provides access to articles, podcasts and videos, among other resources, specific to military programs and military family concerns such as career, education, financial and legal information: militaryone source.com.

National Foundation for Veteran Redeployment Serves as a conduit for training, human resource networking, and financial support for U.S. veterans interested in career opportunities in the oil and gas industry. Offers training, job placement and relocation funding: idealist.org/view/ nonprofit/HsFXZfG3xb3p/.

Pure Michigan Talent Connect State employment services for veterans that include helping employers looking to hire veterans, information on education and training and other resources: mitalent.org/veteran.

Salvation Army Eastern Michigan Division

Home Depot Foundation

Michigan Small Business Development Center

Partners with nonprofit organizations to address the housing needs of veterans, from building ramps and home renovations to

Offers free training to veterans who want to launch or build businesses: sbdcmichigan.org: (616) 331-7480 sbdcmichigan@gvsu.edu.

Operates transitional housing sites for homeless veterans in Detroit and in Monroe. A location in Macomb County is planned. Also

Keys to success

upon leaving the service. Jenkins said retraining and internship programs could make a difference — along with a stronger VA. “The support through the VA is not there,” he said, blaming underfunding and politicians. “Don’t get me started.”

FROM PREVIOUS PAGE

government contracts with commercial work. Required planning, annual reviews and other evaluations help keep companies on track. Jenkins said the SBA grants 8(a) status to 25 percent of applicants. It approved W4 Construction Group in 2014. Since then, the program has helped W4 win contracts including its biggest so far: $2 million to renovate the fire alarm systems of eight buildings at Naval Station Great Lakes near Chicago. W4 secured more than $8 million in contracts before the company finished its second year. Revenue in 2015 was $200,000.

If you ask Jenkins, being a veteran is a key to his success. Military service taught him discipline, confidence and leadership — qualities he seeks when hiring. At least five of W4’s 12 current or prospective employees are veterans. Vets tend to have the right mindset and relevant skills, Jenkins said, but he knows there’s a perception that “veterans who go to war, they come back with (Post-Traumatic Stress Disorder), they’re not going to be reliable.” While the U.S. Department of Veterans Affairs finds employment and earnings comparable for post9/11 veterans and non-veterans, about half of veterans experience some period of unemployment

‘Doing something right’ Jenkins believes hiring and supporting veterans is good for business and for the soul. “I need to be able to give back,” he said — something he does by mentoring an up-and-coming veteran businessman. U.S. Army veteran Bradney Napier loves part-time substitute teaching, but he looks forward to when his full-time demolition and asbestos removal company will

A listing of services available to veterans and their families

provides substance abuse treatment and casework services: usc. salvationarmy.org/usc/www_usc_ detroithl.nsf.

benefits.va.gov/detroit/index.asp.

Southwest Housing Solutions, Detroit Piquette Square, a 150-unit apartment project in Detroit, provides mental health counseling, substance abuse treatment, on-site job training, and other services to help veterans develop independent living skills: swsol.org/ piquette-square-for-veterans/.

Helps veterans start and manage a business, learn how to get loans and other information at sba.gov, then search for veterans. The SBA also instituted a new online contracting tutorial to help veterans and military spouses who own small businesses identify and win federal contracting: sba.gov/ sba-learning-center/search/ training. Michigan@sba.gov.

TechShop Detroit

VetBizCentral

This fully equipped fabrication and design space includes everything from plasma cutters to 3-D printers. Free one-year memberships good at any TechShop. CEO Mark Hatch is himself a veteran: techshop.ws/ts_detroit.html.

Assists veterans, active duty, Guard and Reserve members in the formation and expansion of their businesses through training and counseling, networking, mentoring programs and more: vetbizcentral.org or (810) 767-8387.

United Way for Southeastern Michigan, Detroit

Veteran’s Haven, Wayne

Its 2-1-1 information hotline and database offers veterans referrals for everything from benefits assistance, financial assistance, food, transportation, housing, vocational rehabilitation, workforce development, and health care to counseling and disability resources: liveunitedsem.org/get-help.

U.S. Small Business Administration

Provides food, clothing, transitional housing and medical supplies: (734) 728-0527 or vetshaven info.org.

Volunteers of America-Michigan Jobs and housing programs provide case management services, transportation assistance and other services: voami.org/veterans.

University of Detroit Mercy Law School

Wins for Warriors Foundation

The law school’s Veterans Law Clinic works with low-income veterans to help obtain their benefits and address legal and professional needs: law.udmercy.edu or (313) 596-0235.

A nonprofit organization founded by Detroit Tigers pitcher Justin Verlander that advocates for and invests in resources that engage veterans and their families: winsforwarriors.org .

U.S. Department of Veterans Affairs Detroit Regional Benefit Office Helps veterans connect with benefit programs and other resources: pay all the bills. Napier Industries LLC, moving from Ann Arbor to

Jackson, is working toward 8(a) status with Jenkins’ help. The two men talk by phone and go on job walks together, inspecting prospective contracts to judge whether they can be done “on time and under budget,” Napier said. “That’s always the most important part.” W4 also has hired Napier as a subcontractor on jobs. Networking like this is crucial. Napier met Jenkins through VetBizCentral, a nonprofit that helps veterans and active-duty service members in Michigan, Ohio and Indiana form and expand businesses. Similar organizations such as the Detroit-based nonprofit National Veteran Business Development Council and veteran-friendly banks

This list was compiled with the help of VetBizCentral and by researching websites and calling organizations. It is not a complete listing of all services available to veterans and their families, but a sampling of common sources.

offer more opportunities to connect and get ahead. Napier, a service-disabled Gulf War veteran who served from 199094, said the intelligence-gathering skills he honed as a cavalry scout translate well to checking out demolition jobs. But it’s Jenkins who taught him how to be patient, do things the right way and get results. Does Jenkins worry that he’s helping to nurture a potential competitor? No, he said. Instead, he asks himself this: “What legacy are we going to leave behind? You’re only on this earth for so long.” With that in mind, he sees Napier’s growth as a measure of his own worth. “If you succeed, we’re doing something right.”

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

CRAIN'S LIST: MICHIGAN DEFENSE CONTRACTORS

Ranked by 2015 value of new contracts Rank

Company Address Phone; website

Top executive

Value of new Dept. of Defense contracts 2015 ($000,000)

Contracting agency

Principal place of work

Products or services provided

General Dynamics Land Systems 38500 Mound Road, Sterling Heights 48310 (586) 825-4000; www.gdls.com

Gary Whited, president

$876.0

Department of Army, Defense Logistics Agency

Sterling Heights

Military armored vehicles, tank and tank component manufacturing, combat assault and tactical vehicles

AAR Mobility 201 Haynes St., Cadillac 49601 (231) 779-8800; www.aarcorp.com

Mark Platko, general manager

372.5

Defense Logistics Agency

Michigan

Shipping and storage containers, shelters and accessories

BAE Systems Inc. 34201 Van Dyke Ave., Sterling Heights 48312 (586) 795-2220; www.baesystems.com

Mark Signorelli, VP and GM, combat vehicles

151.5

Department of the Army and Navy Sterling Heights

Leverage the ground combat vehicle technology for a future fighting vehicle system

Loc Performance Products Inc. 13505 N. Haggerty Road, Plymouth 48170 (734) 453-2300; www.locperformance.com

Louis Burr, president

79.0

Army Contracting Command

Plymouth

Machining and assembly of driveline, suspension and engine components for military and off-road vehicles

Wolverine World Wide Inc. 9341 Courtland Drive NE, Rockford 49351 (616) 866-5500; www.wolverineworldwide.com

Blake Krueger, chairman, president and CEO

66.4

Defense Logistics Agency

Michigan

Military and uniform footwear

L-3 Communications Corp. 76 Getty St., Muskegon 49442 (231) 724-2151; www.l-3com.com

Michael Strianese, chairman, president and CEO

46.3

Department of the Army

Muskegon

System technical support, 123 Bradley Fighting Vehicle transmissions and ancillary hardware

Avon Protection Systems Inc. 503 Eighth St., Cadillac 49601-1370 (231) 779-6200; www.avon-protection.com

John Kime, COO

25.3

Department of the Army

TBD B

Respiratory protective equipment

PAT GD Joint Venture LLC 2927 Waterview Drive, Rochester Hills 48309 (248) 299-2410; www.pat-engineering.com

Martin Harti, president and Asif Bhatti, director

24.4

Avfuel 47 W. Ellsworth, Ann Arbor 48106-1387 (734) 663-6466; www.avfuel.com

Craig Sinock, president and CEO

22.5

Defense Logistics Agency

Michigan and New Mexico

Design and construction of an approximately 165 meter floating pier for use by the Iraqi Navy and dredging of the adjacent harbor and navigational channel Supply into-plane jet fuel

Peckham Vocational Industries Inc. 3510 Capital City Blvd., Lansing 48906 (517) 316-4000; www.peckham.org

Mitchell Tomlinson, president and CEO

20.0

Department of the Army

TBD B

18.6

8 9

Communication Professionals Inc. 23933 Research Drive, Farmington Hills 48335 (248) 557-0100; www.cpgp.com

Andrew Wallace, president and CEO

17.0

Clean and repair unserviceable, but economically repairable organizational clothing and individual equipment for the regional logistics support center program, Northeast region A subsidiary of RMA Group, and the authorized global distributor of Ford Motor Co. products. Provides vehicle sales and after-sales support in developing countries and post-conflict markets to government agencies, aid missions, and nongovernmental organizations Computer support and services

Gregg Williams, chairman, president and CEO

11.5

Develop turbine engines

Williams International Co. LLC 2280 E. West Maple Road, Commerce Township 48390 (248) 624-5200; www.williams-int.com

Coordinated Defense Supply Systems Inc. 44570 Morley Drive, Clinton Township 48036 (586) 307-3450; www.cdssinc.com

Michael A. Jozefiak IV, president and CEO

9.8

DLA, Air Force, Army, Marines, Navy and other government agencies

Clinton Township Manufactured parts, distributor and supplier for more than 500 companies. We also package and crate for the military and other defense contractors

LimnoTech 501 Avis Drive, Ann Arbor 48108 (734) 332-1200; www.limno.com

Paul Freedman, president

7.4

Department of the Army

TBD B

MDA-Information Systems LLC 1200 Joe Hall Drive, Ypsilanti 48197 (734) 480-5000; www.mdaus.com

Herbert Satterlee, CEO

7.1

Department of Air Force

Ypsilanti

Trijicon Inc. 49385 Shafer Road, Wixom 48393-2869 (248) 960-7700; www.trijicon.com

Stephen Bindon, president

6.9

Department of the Navy

Wixom

MTU America Inc. 39525 MacKenzie Drive, Novi 48188 (248) 560-8888; www.mtu-online.com

Matthias Vogel, president and CEO

6.9

Department of the Navy

Walbridge Aldinger Co. 777 Woodward Ave., Suite 300, Detroit 48226 (313) 963-8000; www.walbridge.com

John Rakolta Jr., chairman and CEO

2.2

U.S. Army Corps of Engineers

FutureNet Group Inc. 12801 Auburn St., Detroit 48223 (313) 544-7117; www.futurenetgroup.com

Perry Mehta, president and CEO

1.7

Department of Interior

Friedrichshafen, Manufactures large diesel engines, propulsion and Germany (70 drive systems percent), and Kristinehamn, Sweden (30 percent) Ft. Bragg, N.C. Construction of federal facilities, automotive manufacturing plants, higher education facilities, airport terminals, hospitals and industrial buildings Washington, DC Providing IT subject matter expertise for the Department of Interior

Pratt & Miller Engineering & Fabrication Inc. 29600 W. K. Smith Drive, New Hudson 48165 (248) 446-9800 ; prattmiller.com

Jim Miller, president

0.1

10 11

17 19 20 21

Tom Whitcraft, director Global Fleet Sales 24725 W. 12 Mile Road, Suite 114, Southfield 48034 (248) 327-6483; ford.globalfleetsales.net

Development and application of predictive mathematical models to solve environmental challenges through multidisciplinary integration of science and engineering Develop two editions of its signature diagnostics systems software, as well as for engineering studies Optical sighting and ranging equipment

Complete the build, integration, final testing and evaluation for the occupant centric platform and technology enabled capability demonstrator test asset

This list of leading defense contractors is an approximate compilation of companies headquartered in Michigan with new contracts with the U.S. Department of Defense. Information was provided by the companies, U.S. Federal Procurement Data System and U.S. Department of Defense. It is not a complete listing but the most comprehensive available. Figures do not include contracts that are indefinite-delivery, indefinite-quantity, multi-vendor or subject to future task orders. NA = not available.

B Work location will be determined with each order. LIST RESEARCHED BY SONYA D. HILL

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

SPECIAL REPORT: SECOND STAGE

Hardwired FOR GROWTH

Longtime tech business gets ahead by staying current By Tom Henderson thenderson@crain.com

COURTESY OF KLA LABORATORIES INC.

A KLA bus, circa 1956.

KLA through the years 1929: KLA Laboratories Inc. founded in Detroit, lands Ford Motor Co. as customer. 1933: General Motors becomes customer. 1935: Detroit Tigers become customer. 1942: Chrysler Corp. signs as customer.

The Great Recession struck fear into a lot of business owners and executives. It struck fear, too, into Matt O’Bryan, the president and CEO of Dearborn-based KLA Laboratories Inc., a company that does a range of IT and communication services, including installing audio and visual systems, building Wi-Fi networks and providing event production services. But O’Bryan didn’t see the recession as a time for retrenching, he saw it as an opportunity to reinvent a company that was founded on the eve of the Great Depression in 1929. As a result of the reinvention, revenue, profits and employment have grown sharply. It followed a long-held pattern of managing with an eye toward future growth by adjusting with the times. The year it was founded, KLA began providing audio equipment and services to Ford Motor Co. It has been managing loudspeaker systems for the Detroit Tigers since 1935, and when Motown was founded in 1959 and not yet known as Hitsville, U.S.A., it was KLA that

sold it the microphones that such future stars as the Four Tops, the Temptations and the Supremes sang into. Despite its launch as the Depression began, KLA was consistently profitable over the years, but O’Bryan said that streak looked in jeopardy in 2007, as revenue and profits tumbled. Although the Great Recession didn’t formally begin until December 2007, KLA felt its impact months earlier as Ford, seeing auto sales shrink, began cutting back on the business it gave suppliers, including KLA. O’Bryan decided to expand one of his lines of business. Instead of merely doing cabling for local area networks and Wi-Fi networks that others were building, KLA would begin installing and selling the higher-margin hardware components that go into those networks. He also expanded KLA’s geographic footprint, and formed a Network Services Division and a Network Staging Center. “Our market was shrinking. We were losing revenue. I felt if we didn’t get aggressive, we were going to be in trouble,” said O’Bryan.

The division and center supported his decision to start designing and building wireless local area networks and to develop expertise in distributed antenna systems, whereby small antennas are spaced throughout sports stadiums, conference centers and large business enterprises like hospitals, smoothing out cell reception and eliminating the need for large, costly antennas. Such systems are complicated and require a lot of cabling and engineering to link such things as antennas, passive splitters, feeders and active-repeater amplifiers. Previously, KLA supplied the cabling, and others did the engineering and sold the hardware. “When KLA was founded in 1929, it was an advanced-technology company. And this let us remain an advanced-technology company,” he said. Doing entire systems instead of just the cabling “has been a big part of our growth.” O’Bryan, a member of the 2007 class of Crain’s 40 under 40, has been rewarded for refusing to hunker down in the recession. SEE KLA, PAGE 22

COURTESY OF KLA LABORATORIES INC.

A 1942 war bond rally on Woodward Avenue. 1947: Pat O’Bryan hired. 1951: Detroit Lions sign as customer. 1954: Oakland Hills Country Club sign. 1956: O’Bryan becomes part owner.

1959: Company sells microphone to recording company soon to be called Motown. 1965: O’Bryan acquires controlling interest. 1973: Company moves to Dearborn. 1991: O’Bryan dies; his wife, Norma, becomes president. Matt O’Bryan is named vice president of operations and brother Donald VP of sales. 2002: Norma sells the business to Matt, Donald and their sister, Mary. Matt is named president and COO. 2007: In the face of the Great Recession, KLA expands to building wireless Wi-Fi networks and distributed antenna systems. 2010: Company installs Wi-Fi at University of Michigan football stadium. 2014: Company builds network at Michigan State University's stadium. 2016: Company opens offices in Ohio and Nevada.

KLA Laboratories President and CEO Matt O’Bryan has been rewarded for being aggressive with the company during tough economic times. PHOTO BY TOM HENDERSON

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

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KLA

SPECIAL REPORT: SECOND STAGE

FROM PAGE 21

Pre-recession, KLA employed 50 and had revenue of $10 million. By 2009, KLA was down to 38 employees and $6 million in revenue. From 2010-2015, though, with its expanded offerings, revenue climbed to $30 million, with profits up steeply. Today, the company employs 150 and could hit $40 million in revenue this year. O’Bryan expects to hire another 50. Last June, the company opened its Technical Engineering Center on Century Drive in Dearborn. Its headquarters and sales and marketing offices remain at Chase Road in Dearborn. The goal for clients of installing very expensive and labor-intensive distributed antenna systems is both social and commercial. The systems allow customers at large sporting events, for example, to get clear signals so they can tweet about goals and tackles and share photos on social media. They are the same systems that allow fans at Tigers games to buy game-used items through apps on their phones and have them delivered to their seats, or to upgrade to better, and more expensive, seats. At some venues, customers willing to pay extra can order food on their phone and have it delivered. In addition to its 81 years of ser-

vice to the Tigers, KLA landed the Detroit Lions in 1951, Oakland Hills Country Club in 1954 and The Palace of Auburn Hills and the Detroit Pistons in 1987. Since 2010, it has installed antenna systems at the University of Michigan’s Big House in Ann Arbor, Spartan Stadium at Michigan State University and Ohio Stadium at Ohio State University. On April 8, KLA opened an office in Grove City, Ohio, a suburb of Columbus, to support its Buckeye state customers, including the city of Columbus, Adena Health System, Ohio State and Big Lots. On April 26, the company announced a deal with Phoenix-based Trucom, a subsidiary of internet services company TPT Global Tech Inc., to provide an array of services. KLA will open a west region office in Nevada in June.

From humble beginnings KLA was founded by three friends who gave the company its initials — James Kraus, David Ludwigson and Stanley Almas. The company installed antennas, radio transmission gear and time-keeping systems for early customers such as Ford, General Motors and Packard Motors. It also installed sound systems at churches, schools, government offices and sports venues. It also, according to company lore, installed and operated sound systems at speakeasies.

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In the 1940s and 1950s, KLA became a leading retailer and distributor of radios, record players and sound equipment. Eventually, it ran nine retail outlets, several inside J.L. Hudson Co. stores. City buses of the day had big banners on the side, advertising the “Ampro Hi-Fi 2-speed” tape recorders available at the KLA store at 7375 Woodward Ave. for just $159. A photo on display at KLA’s tech center shows tens of thousands of Detroiters jammed onto Woodward Avenue near the old Hudson’s building. It was a war-bonds drive during World War II. There are speakers visible in the photo. They and the rest of the sound system were installed by KLA. In 1947, the company made a crucial hire, giving Pat O’Bryan a job after he returned home from a stint in the U.S. Army. O’Bryan began purchasing stock from the founders and by 1964 owned a controlling interest. A reinvention occurred in 1973, when O’Bryan decided to sell off the retail locations and concentrate on installing commercial electronic and communications systems. Two of the old stores remain in operation: Pointe Electronics Co. in Grosse Pointe Woods and Almas Hi-Fi Stereo Inc. in Royal Oak. In 1978, KLA installed the cabling system for GM’s first broadband local area network and eventually would install networks at plants around the country. In 1991, Pat O’Bryan died, with his wife, Norma, assuming the title of president. Son Matt had a business degree from Cleary University but wasn’t sure what he wanted to do for a living. There were offers to buy the company, and his mother convened a family meeting. “It was a quick meeting,” said Matt. They would keep KLA in the family. Matt, who started with the company in shipping and receiving when he was 16, was named vice president of operations. His brother, Don, headed sales. “It was the fork in the road in life,” said Matt. In 2002, Norma sold the company to Matt, Don and their sister, Mary, who started working at KLA in 1986, answering phones. Today, she is marketing director and in charge of business development. Don is senior project manager of distributed antenna systems. Rob Todd, president of Houston-based Amplified Solutions Inc., has hired KLA as a contractor for jobs at the Palace, Joe Louis Arena and DTE Energy Music Theatre. “KLA can do everything. They’re a big part of our design-build,” Todd said. “When they need to make decisions, they make them quickly, and their engineering is the best.” Los Angeles-based Boingo Wireless Inc. is installing Wi-Fi at Detroit Metropolitan Airport with KLA. “We gave KLA an aggressive schedule to get the network running by the middle of May, and they’re going to meet it,” said Steve Boucher, a Boingo vice president. “I’m about to give them a project in Van Andel Arena in Grand Rapids.”

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

SPECIAL REPORT: SECOND STAGE

Interior design company finds good pay lures, retains good employees Alisha said.

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Location: Birmingham

Expert opinion: Some startups,

Scavolini is an Italian brand of kitchen and bath interior design products. Sisters Niki and Alisha Serras, along with third partner (and husband to Alisha) Brian Gamache, opened their Scavolini dealership in Birmingham in 2010. They followed it up with a store in Chicago in 2014 and have a lease signed to open one in Boston this year. Washington, D.C., is another market in their sights. Problem: Issues with benefits and compensation arose not long after the Chicago store opened. One employee was fired and another quit, and the owners saw pay was at the heart of the issue. Trying to save money in their early years of business, theyâ&#x20AC;&#x2122;d veered toward the low end of the pay scale in their industry. They did not offer health insurance. That this was a problem became clearer when they struggled to find replacements. In one case they made an offer that was rejected. For stores where just two or three salespeople handle the lionâ&#x20AC;&#x2122;s share of the business, the loss of these employees was devastating. The owners pitched in to fill the gap, which served to keep the business alive, but not growing. â&#x20AC;&#x153;We remained stagnant, and for any new business, thatâ&#x20AC;&#x2122;s like the hand of death,â&#x20AC;? Niki said. The whole affair cost the business about $1 million. â&#x20AC;&#x153;It set back our second year in business (in Chicago). It was like our first year all over again,â&#x20AC;? Alisha said. Solution: The solution was obvious: Pay up. They increased benefits and compensation by $15,000 to $20,000 per worker, a cost that included new health insurance, vision and dental coverage. This caused compensation costs to increase 20 percent from 2014 to 2015. Risks and considerations: While the solution was obvious, its effectiveness was less so. It takes up to a year to get a person trained, Niki said. Between making the sale and then designing and constructing a clientâ&#x20AC;&#x2122;s project, thereâ&#x20AC;&#x2122;s a long lead time of several months on deals, so proven experience is slow to come. If a new, and now better-paid, employee doesnâ&#x20AC;&#x2122;t fit, it might be a year before itâ&#x20AC;&#x2122;s obvious. And then the company is back at square one, with another year to repeat the same process. Since the changes were made so recently, and not all at once, the owners arenâ&#x20AC;&#x2122;t sure if the investment will lead to more revenue. But they donâ&#x20AC;&#x2122;t see any going back. Previously the owners, who take little salary for themselves as

About Scavolini

ganglebrandt@crain.com

145

DES

By Gary Anglebrandt

105

DBpageAD_DBpageAD.qxd 4/26/2016 1:59 PM Page 1

Thank you. As we celebrate our 75th year, our gratitude toward Michigan businesses has never been greater. From good times to bad and back again, weâ&#x20AC;&#x2122;ve been honored to partner with hundreds of terrific organizations. Our commitment to Pure Michigan Business Connect has introduced us to even more great leaders we hope will also benefit from The Rehmann Experience â&#x20AC;&#x201D; our forwardthinking service model that offers more ideas, more service and more experience.

RACHEL LOCRICCHIO, CPA

RYAN KRAUSE, CPA

CHRISTINE SLADE, CPA

Senior Manager rachel.locricchio@rehmann.com

Principal ryan.krause@rehmann.com

Senior Manager christine.slade@rehmann.com

CPAs & Consultants Wealth Advisors Corporate Investigators

rehmann.com

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

CRAIN'S LIST: LARGEST MICHIGAN ACCOUNTING FIRMS

Ranked by number of Michigan employees (Includes Southeast Michigan employees) Rank

Company Address Phone; Website

Managing partner(s)

Number of employees in Michigan Jan. 2016/ 2015

Number of employees Southeast Michigan Jan. 2016/ 2015

Number of Michigan Number of employees Michigan engaged in employees audit/ engaged in accounting taxes

Number of Michigan employees engaged in consulting

Number of Michigan employees engaged in other

Number of CPAs Michigan Jan. 2016/ 2015

Number of CPAs Southeast Michigan Jan. 2016/ 2015

Plante Moran PLLC 27400 Northwestern Highway, Southfield 48037 (248) 352-2500; www.plantemoran.com

Gordon Krater

1,503 1,440

1,062 1,013

504

287

379

333

617 593

401 387

Deloitte LLP and its subsidiaries 200 Renaissance Center, Suite 3900, Detroit 48243-1895 (313) 396-3000; www.deloitte.com

Mark Davidoff

1,083 1,059

1,001 977

415

248

252

168

315 NA

278 265

PricewaterhouseCoopers LLP 500 Woodward Ave., Detroit 48226 (313) 394-6000; www.pwc.com

Ramesh Telang

764 791

764 761

387

168

115

421 408

421 415

Ernst & Young LLP 777 Woodward Ave., Suite 1000, Detroit 48226 (313) 628-7100; www.ey.com

George Lenyo

674 647

589 562

194

192

179

109

253 NA

212 205

Rehmann LLC 1500 W. Big Beaver Road, 2nd Floor, Troy 48084 (248) 952-5000; rehmann.com

Randy Rupp

605 575

288 260

189

113

165

138

257 NA

132 124

BDO USA LLP 755 W. Big Beaver Road, Suite 1900, Troy 48084 (248) 362-2100; www.bdo.com

Fred Rozelle, Assurance Regional and Office Managing Partner; John Marquardt, Tax Office Managing Partner Heather Paquette

562 481

135 110

155

180

223

147 140

52 44

352 334

291 283

132

71 NA

71 141

6 7

KPMG LLP 150 W. Jefferson Ave., Suite 1900, Detroit 48226 (313) 230-3000; www.kpmg.com

UHY LLP Chrysler House, 719 Griswold St., Suite 630, Detroit 48226 (313) 964-1040; www.uhy-us.com

Thomas Callan, CEO

351 330

120

111

169 NA

169 145

Doeren Mayhew & Co. PC 305 W. Big Beaver Road, Suite 200, Troy 48084 (248) 244-3000; www.doeren.com

Mark Crawford

226 204

225 204

107

97 88

96 88

Yeo & Yeo PC 3023 Davenport, Saginaw 48602 (989) 793-9830; www.yeoandyeo.com

Thomas Hollerback, president and CEO

215 215

37 40

86 85

22 25

Chuck Frayer, office managing partner

196 NA

11 NA

Crowe Horwath 55 Campau Ave. N.W., Grand Rapids 49503 (616) 774-0774 ; www.crowehorwath.com/offices/ grandrapids/

76 62

3 NA

Baker Tilly Virchow Krause LLP 2000 Town Center Suite 900, Southfield 48075 (248) 372-7300; www.bakertilly.com

Marina Houghton

123 130

43 NA

43 92

Grant Thornton LLP 27777 Franklin Road, Suite 800, Southfield 48034 (248) 262-1950; www.grantthornton.com

Dan Zittnan

104 101

39 NA

39 41

Cohen & Co. B 21420 Greater Mack Ave., St. Clair Shores 48080 (586) 772-8100; www.cohencpa.com

Robert MacKinlay

77 77

26 NA

26 30

Clayton & McKervey PC 2000 Town Center, Suite 1800, Southfield 48075 (248) 208-8860; www.claytonmckervey.com

Robert Dutkiewicz

71 67

31 NA

31 34

Gordon Advisors PC 1301 W. Long Lake Road, Suite 200, Troy 48098-6319 (248) 952-0200; www.gordoncpa.com

Alan Steinberg, CPA and David Bojanic, CPA

62 62

62 NA

31 31

Mattina Kent & Gibbons 1214 N. Main St., Rochester 48307 (248) 601-9500; www.mkgpc.com

Vincent Mattina Jr CPA

41 37

27 25

21 21

21 13

Derderian, Kann, Seyferth & Salucci PC 3001 W. Big Beaver, Suite 700, Troy 48084 (248) 649-3400; www.DKSScpas.com

Ursula Scroggs

37 35

20 NA

20 19

Echelbarger, Himebaugh, Tamm and Co. 2301 East Paris Avenue SE, Grand Rapids 49546 (616) 575-3482; www.ehtc.com

David Echelbarger, CPA, CGMA

34 NA

0 NA

9 NA

0 NA

Fenner Melstrom and Dooling PLC 355 S. Old Woodward, Suite 200, Birmingham 48009 (248) 258-8900; www.fmdcpas.com

Michael Gottshall

32 32

19 NA

19 19

Polk and Associates PLC 30600 Telegraph Suite 2191, Bingham Farms 48025 (248) 645-5700; www.polkcpa.com

Richard Williams

32 NA

8 8

8 NA

Alan C. Young & Associates PC 7310 Woodward Ave., Suite 740, Detroit 48202 (313) 873-7500; www.alancyoung.com

Alan Young

31 30

7 7

Richard Edwards

29 30

Edwards, Ellis, Stanley, Armstrong, Bowren, Krizan & Co. PC 2155 Butterfield Drive, Suite 305A, Troy 48084 (248) 643-4545; www.cpasandadvisors.com

16 16

Metzler Locricchio Serra & Co., P.C. 1800 W. Big Beaver Road, Suite 100, Troy 48084 (248) 822-9010; www.mlscocpa.com

Michael Locricchio

28 28

9 NA

9 9

Iannuzzi, Manetta & Co. PC 1175 W. Long Lake Road, Suite 201, Troy 48098 (248) 641-0005; www.imc-cpa.com

Frank Iannuzzi

27 29

15 NA

17 13

MRPR Group PC 28411 Northwestern Highway, Suite 800, Southfield 48034 (248) 357-9000; www.mrpr.com

Mark Rottermond

27 27

19 NA

19 17

This list of accounting firms is an approximate compilation of the largest such companies in Michigan. It is not a complete listing but the most comprehensive available. Unless otherwise noted, information was provided by the companies. Companies with headquarters elsewhere are listed with the address and top executive of their main Michigan office. NA = not available.

B Formerly Godfrey Hammel, Danneels & Co. PC. Bought by Cohen & Co. Ltd. of Cleveland in January and rebranded as Cohen & Co., effective Feb. 1. LIST RESEARCHED BY SONYA D. HILL

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

CRAIN'S LIST: LARGEST STAFFING-SERVICE COMPANIES

Ranked by 2015 revenue Company Address Rank Phone; website

Top local executive(s)

Revenue ($000,000) 2015

Revenue ($000,000) 2014

Average daily employment 2015

Annual payroll 2015

No. of W-2 forms issued 2015

No. of offices in metro Detroit 2015

$5,518.2

$5,562.7

150,000

550,000

Kelly Services Inc. 999 W. Big Beaver Road, Troy 48084 (248) 362-4444; www.kellyservices.com

Carl Camden president and CEO

Tata Technologies Inc. 41050 W. 11 Mile Road, Novi 48375-1302 (248) 426-1482; www.tatatechnologies.com

Warren Harris, CEO and managing director

420.0

424.0

775

Acro Service Corp. 39209 W. Six Mile Road, Suite 250, Livonia 48152 (734) 591-1100; www.acrocorp.com

Ron Shahani president and CEO

318.3

260.2

4,000

171.3

13,000

The Bartech Group Inc. B 27777 Franklin Road, Suite 600, Southfield 48034 (248) 208-4300; www.bartechgroup.com

David Barfield chairman, president and CEO

305.5

243.3

4,397

128.0

2,270

Strategic Staffing Solutions Inc. 645 Griswold St., Suite 2900, Detroit 48226 (313) 596-6900; www.strategicstaff.com

Cynthia Pasky president and CEO

303.0

264.0

3,200

190.0

3,000

Vision Information Technologies Inc. 3031 W. Grand Blvd., Suite 600, Detroit 48202 (877) 768-7222; www.visionit.com

David Segura, CEO; Christine Rice, president

251.0

219.0

Stefanini Inc. 27335 W. 11 Mile Road, Southfield 48033 (800) 522-4400; www.stefanini.com

Antonio Moreira, CEO, North America and Asia-Pacific

220.0

200.0

1,436

0.0

2,117

Danlaw Inc. 41131 Vincenti Court, Novi 48375 (248) 476-5571; www.danlawinc.com

Raju Dandu chairman and CEO

118.2

90.0

182

18.9

228

Technical Engineering Consultants 850 Stephenson Highway, Suite 600, Troy 48083 (248) 720-5020; www.tec.biz; www.battoninc.com

Kurt Mains senior vice president

74.6

63.5

800

Altimetrik, Corp. 1000 Town Center, Suite 700, Southfield 48075 (800) 799-9625; www.altimetrik.com

Tim Manney president

70.0

71.1 C

14.2

252

This list of temporary-employer/staffing-service companies and companies that provide such services is an approximate compilation of the largest companies in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. It is not a complete listing but the most comprehensive available. Crain's estimates are based on industry analyses and benchmarks, news reports and a wide range of other sources. Unless otherwise noted, information was provided by the companies. Companies with headquarters elsewhere are listed with the address and top executive of their main Detroit-area office. NA = not available.

B Acquired by the UK staffing company, Impellam Group plc in December 2015. C Company estimate.

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C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

ACQUISITIONS & MERGERS

Butcher & Butcher Construction, Rochester Hills, and G.A. Frisch Construction, Troy, are merging

and moving operations to B&B’s headquarters, will assume the B&B name and continue to provide roofing, sheet metal, glass and other services to the upper Midwest and Florida. Website: bbconstruction.com.

Preh Inc., Novi, a member of the Joyson Group, an automotive

systems supplier and automation specialist, acquired TechniSat Automotive, Daun, Germany, and will operate as Preh Car Connect GmbH. Websites: preh.com, technisat.com.

DEALS & DETAILS

Michigan, Wisconsin and Illinois up to $100 each for back-to-school supplies through Quill.com. Websites: meemic.com, quill.com. American Society of Employers,

Livonia, announced a new website with a dashboard where members can access benchmark data, research portals and membership

information. Website: aseonline.org.

Bianchi Public Relations Inc., Troy, is offering an infographic that highlights the five biggest social media mistakes area firms are making. It is part of its mission to help Detroit-area professional service firms enhance social media marketing. Website: bianchipr.com.

Automotive Industry Action Group,

Southfield, has developed an e-learning platform for the materials management operations guideline/logistics evaluation, a supply chain management process. Website: aiag.org.

Automotive Industry Action Group,

Southfield, has created an online portal to help connect OEMs and suppliers who have lost returnable transport items with those who have found them. Website: aiag.org.

Olga’s Kitchen, Livonia, was to

unveil its new Sunday brunch service and menu on Mother’s Day, May 8. The brunch service starts at 10 a.m. at all locations. Website: olgas.com.

CONTRACTS

Atlas Oil Co., Taylor, announced its investment in FuelNow network, developed by Vixta Solutions LLC,

Birmingham, a cloud-based platform that automates the supply chain and streamlines the fuel delivery process. Websites: atlasoil.com, vixtasolutions.com.

NEW PRODUCTS

Altair Engineering Inc., Troy, has

added a multiscale designer application to its HyperWorks software suite. The application is a tool for the development and simulation of multiscale material models, and adds new composites expertise to the HyperWorks suite. Website: altair.com.

]'ZGEWVKXG UGTKGU _ History repeats itself. Will you be ready? Today’s forward-thinking executives are facing a critical decision: How do I maintain my business’s growth and profitability, yet prepare for future uncertainty?

Boreas Systems, Troy, which offers nitrogen-based refrigeration systems for truck trailers, introduced a dual zone cooling system that allows users to set two separate temperate conditions within the same truck. Website: boreassystems.com. GKN Automotive, Auburn Hills, part of GKN PLC, and Volvo announced

the new Volvo S90 plug-in hybrid. By producing an eAxle system that fits in the same space as a standard rear drive module, the innovation enables Volvo cars to offer customers a plug-in hybrid upgrade. Website: gkn.com.

McKeon Products Inc., Warren, announced the availability of the new LunaGuard, which provides improved protection against nighttime teeth grinding, more comfort when in use, and consumer health care savings. Website: macksearplugs.com. Living Essentials LLC, Novi, the

distributor of 5-hour Energy shots, debuted a limited-edition, extrastrength, cherry flavored shot that will support military causes. The company will donate 5 cents from every sale of the specially marked bottles to the Special Operations Warrior Foundation. Website: 5hourenergy.com.

NEW SERVICES

The Meemic Foundation, Auburn Hills, and Quill.com, Lincolnshire, Ill., have launched Quill.com Back to School Grants, a program that will award 1,500 teachers across

Get practical answers from Plante Moran experts via an online executive series led by Managing Partner Gordon Krater.

May 26 Effective strategies for customer growth: What C-suite executives should know June 2

Cutting through the data analytics hype

June 9

Selling your business: Timing is everything

June 16 How to deploy a flexible approach to real estate June 23 Strategy and contingency planning: Is your company prepared to take advantage of the next economic downturn? All sessions are at 1:00 p.m. EDT. Double-booked? Each session will be available to download after the webcast.

To learn about the presenters and register for the series, go to

executives.plantemoran.com.

STARTUPS

Drafting Table Brewing Co., a local

microbrewery, has opened at 49438 Pontiac Trail, Wixom. Telephone: (248) 956-7279. Website: draftingtablebeer.com. The Yoga Garden, a local yoga studio, has opened at 31815 Southfield Road, Suite 14, Beverly Hills. Telephone: (248) 792-3387. Website: yogagardenbh.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.

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

WEDNESDAY

CALENDAR

MAY 11

An Inside Look at The Rio Olympics with Bob Costas. 11:30 a.m.-1:30 p.m. Adcraft Detroit. NBC host

Costas will discuss the upcoming Rio Olympics, the headlines leading into the world’s biggest event, and the network’s preparations for the games. Baldwin Theater, Royal Oak. $40 members; $50 nonmembers; $25 junior/student members. Website: adcraftdetroit.com.

THURSDAY MAY 12

WLAM-Wayne Regional Annual Meeting. 11:30 a.m.-1 p.m. Women

Lawyers Association of Michigan. Panel members will discuss election law and voting rights this year. Panelists include former Sen. Carl Levin from the Levin Center; Jocelyn Benson, dean of Wayne State University Law School; Melvin “Butch” Hollowell, corporations counsel from the city of Detroit; and Judy Karandjeff, president of the League of Women Voters of Michigan. Miller Canfield, Detroit. $40 advance; $50 at the door; $30 law students. Contact: Deanne Bonner Simpson, phone: (313) 596-9500; email: dlb@ bonnerdisalvo.com. Executive Connection Summit 2016: Thriving on Disruptive Technology. 8

a.m.-2:30 p.m. Michigan Council of Women in Technology. With special keynote by Mary Barra,

chairman and CEO, General Motors Co. Guest speakers and panelists include Joseph Bradley, chief business officer and global head of Internet of Things works, HCL Technologies; Linda Dillman, chief information officer, QVC; Sheila Jordan, CIO, Symantec; Beth Niblock, CIO, city of Detroit; Manjula Talreja, senior vice president, customer success, Salesforce; Paula Tolliver, CIO/vice president of business services, Dow Chemical; Marcy Klevorn, vice president/CIO, Ford Motor Co.; Randy Mott, senior vice president and CIO, GM; and Ryan Talbott, vice president/CIO, Fiat Chrysler Automobiles-North America and Asia Pacific. Moderators: Mary Kramer, publisher, Crain’s Detroit Business, and Jennette Smith, editor. Cobo Center, Detroit. $50 MCWT members; $140 nonmembers. Phone: (248) 218-2578. Website: mcwt.org.

THURSDAY-FRIDAY MAY 12-13

American Society of Civil Engineers Michigan Section Centennial Celebration and Infrastructure Conference. 6 p.m. May 12 to 6

p.m. May 13. ASCE, American Council of Engineering Companies and Urban Land Institute. Keynote speakers

include Kirk Steudle, director,

Michigan Department of Transportation, and Maurice Cox,

planning director, city of Detroit. Infrastructure panel members include Jennette Smith, editor, Crain's Detroit Business; Michael Ford, CEO, Regional Transit Authority of Southeast Michigan; Sue McCormick, CEO, Great Lakes Water Authority; Palencia Mobley, deputy director/chief engineer, Detroit Water and Sewerage Department. Educational breakout sessions are included. Cobo Center, Detroit. $50 Centennial Celebration. $175 members; $250 nonmembers; $85 government agency members for infrastructure conference. Phone: (517) 332-2066. Website: acecmi.org. The Positive Business Conference. 9 a.m.-10 p.m. May 12, 9 a.m.-4:15 p.m. May 13, University of Michigan Ross School of Business. Grand prize winner of the Positive Business Project, an annual contest celebrating organizations that deliver change through positive business practices, will be announced. Ross School of Business, Ann Arbor. $425 and up. Contact: Angie Ceely, phone: (734) 764-2811; email: aceely@ umich.com. Website: positivebusinessconference.com.

UPCOMING EVENTS

Annual Automotive Roundtable. 5-8 p.m. May 18. Marketing and Sales

Executives of Detroit. Moderator Dave Andrea, executive vice president of research, Center for Automotive Research, leads a panel of auto executives to discuss opportunities, challenges and successes of auto suppliers. Panelists include Ken Hopkins, president/CEO, Neapco Holdings LLC; Kim Korth, president/CEO, Techniplas Group and DMP; and Jonathan DeGaynor, president/CEO, Stoneridge Inc. Sheraton, Novi. $50 members; $65 nonmembers. Website: msedetroit.org. DEC Presents Ryan Lance. 11:30 a.m.-1:30 p.m. May 25. Detroit

Economic Club. Lance, chairman and CEO of ConocoPhillips, will be guest speaker. Westin Book Cadillac, Detroit. $45 DEC members; $55 guests of DEC members; $75 nonmembers. Contact: (313) 963-8547; email: info@econclub.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.

ADVERTISEMENT SECTION

ADVERTISING & MARKETING

ADVERTISING & MARKETING Amanda Broadwater Project Manager MVP Collaborative

ADVERTISING & MARKETING Mary Louise Luczkowski Vice President Strategy MVP Collaborative

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Senior Vice President/ Managing Director Competition Graphics Daryl Clasen has been promoted to Senior Vice President/Managing Director of Competition Graphics. He will implement the organization’s vision and mission, oversee sales and the development of new business, and manage staff, client services, production and finances. He will also have a leadership role at J. R. Thompson. CG is a leading supplier of automotive and motorsports graphics. JRT is a marketing communications firm driven by everyday invention and collaboration.

MVP Collaborative appointed Mary Louise Luczkowski as Vice President Strategy. Her focus extends across strategy, research, and innovation for MVP and its client partners. Her strategic planning and executive leadership spans 20 years crossing multiple industries. Mary Louise’s work at a boutique management consulting firm led to improved customer engagement and brand development. MVP Collaborative provides full-service Strategic Experiential Marketing services to a variety of clients.

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PEOPLE: SPOTLIGHT

Denso International America names Ito as CEO Kenichiro Ito has been named CEO of Southfield-based Denso International America Inc. as part of several top management changes at the Japanese auto parts supplier. Effective June 21, Ito will also be chairman of Denso’s North American board of directors. He had been executive director for corporate planning, finance and accounting and business innovation at parent Denso Corp. in Japan. Ito replaces Sadahiro Usui, named CEO of Denso International Europe. Hisaaki Sato takes over as COO of Denso International America, essentially swapping jobs with Kazumasa Kimura, who returns to Japan to take Sato’s post as executive director of the global sales and business development, global business planning, Chubu sales and Hiroshima sales divisions. Also, Satoshi Inukai has been promoted to senior director of Global Denso and will be chief manufacturing officer of Denso International America.

Striebich new St. Joseph Mercy Oakland president Ann Arbor-based St. Joseph Mercy Health System named COO Shannon Striebich president of

St. Joseph Mercy Oakland

hospital in Pontiac. She wil succeed the retiring Jack Weiner on July 1. Striebich Striebich joined St. Joseph Mercy Oakland in 2002 and has held a variety of posts, including director of facility planning and operations and associate vice president of performance leadership.

Rock Ventures taps Uhl Rock Ventures LLC has named former Skillman Foundation executive Chris Uhl to the newly created position of vice president of corporate giving. Uhl, who had Uhl served as vice president of social innovation for Skillman since 2012, joined Detroitbased Rock Ventures April 18. Uhl, a member of Crain’s 2014 40 under 40 class, spent eight years as a banker at LaSalle Bank (now Bank of America), Comerica Bank and PNC Bank.

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6 CRAIN’S DETROIT BUSINESS

May 9, 2016

Page 29

3-D in R&D makes an imprint on automotive suppliers By David Sedgwick Automotive News

It seemed like a cute stunt two years ago when a little-known startup called Local Motors took to the streets of Las Vegas with a car built largely of parts made with a 3-D printer. But cute no more. The auto industry is beginning to take 3-D-printed car parts seriously. 3-D printers, once little more than handy tools for quickly creating a one-off prototype part, suddenly are emerging as a practical alternative for low-volume automotive production. Carbon3D, a startup based in Redwood City, Calif., is supplying production parts made from polymers to BMW AG and Ford Motor Co. Mini models use a 3-D-printed decorative side trim, while the Ford Transit Connect has been fitted with damping bumper parts. Carbon3D is working with Troy-based Delphi Automotive LLC to line up more customers. Others also are jumping into the technology. In September, Alcoa invested $60 million in its Pittsburgh R&D center to develop 3-D printers that could form components from aluminum, titanium and other alloys. Meanwhile, General Electric has begun using 3-D printers to manufacture fuel nozzles out of powdered metals for jet engines. The emerging practice — also called additive manufacturing — has enormous implications for the auto business. Manufacturers spend huge amounts to tool up assembly lines to make auto parts. Tools and dies must be created to produce early prototypes of parts, often repeatedly as engineers try to get new parts to meet in line with design specs.

DELPHI/JOHN F. MARTIN

Jerry Rhinehart, additive manufacturing technology manager, operates a Carbon3D printer at Delphi’s Champion Technical Center in Warren, Ohio.

Suppliers and automakers now believe they can sidestep some of that investment and time-consuming effort by using advanced printers that build finished parts to spec by building them up from digital designs.

Technology advances The technology “has definitely advanced a lot over the last several years,” said Deb Holton, director of industry strategy for Dearborn-based SME, formerly the Society of Manufacturing Engineers. “That’s their dream — to make parts without using a mold.” Carbon3D hopes to supplant traditional injection molds on low-volume production runs of 50,000 units a year or less. Until now, skepticism about 3-D printing has had less to do with the basic science than with the practicality of relying on it on unforgiving factory schedules. Printers have been slow until now. They could work with only a few raw materials. The durability of the objects produced was minimal. The layered component could crumble

under the stress of everyday use, so they primarily were used for prototypes, mainly suitable for R&D uses or for display. But the technology has evolved and is creeping into other industries, such as aerospace and medical products. The printers now being used for commercial purposes by Carbon3D, for example, are up to 100 times faster than previous-generation printers. They can turn out objects in a variety of raw materials, and their parts match the strength of parts produced by injection molds.

Resins A Carbon3D new 3-D printer resembles a hot water heater with the middle section missing. On a shelf at waist height sits a tray of liquid resin. Via a photochemical process, incoming light hardens the resin as it takes the shape of a component. Oxygen prevents it from sticking to the tray printer. A component rises out of the resin pool in one piece, rather than requiring multiple layers of material. “Since you get rid of the layers, you get a higher-quality part,” said Kirk Phelps, Carbon3D vice president of product management. Last year, Carbon3D leased its printers to a group of early adopters for $40,000 a year per machine. One of those customers is Delphi, which now wants to find out whether 3-D printing is a practical production technique for mass producing electrical components. Jerry Rhinehart, Delphi’s manager of additive manufacturing development, said he will install 3-D-printed connectors and other electrical components in a 25-car fleet this June for road tests.

Low cost is not the technology’s value proposition. And for most mass-produced components, 3-D printers will not be competitive with injection molds, Rhinehart noted. But if a subassembly of four or five pieces can be replaced by a single 3-D-printed component, a manufacturer can cut cost, reduce weight and simplify assembly, he said.

Warehouses beware The emerging science also has implications for the aftermarket and service parts business. Since 3-D printing is best suited for production runs of 50,000 units or less, it may find a niche in making parts that have low demand — for instance, for a trim part on a 12-year-old vehicle. A parts retailer such as Pep Boys could maintain its own printers to spit out replacement parts as customers order them, rather than requiring factories to build them and warehouses to store them. The technology’s aftermarket potential got a publicity boost in 2014 when astronauts at the International Space Station handily printed a 4-inch-long ratchet wrench they needed, made from 104 layers of plastic. The back-room shop at Pep Boys might not be glamorous, but that’s where this technology may find a home, said Thomas Kurfess, a mechanical engineering professor at Georgia Tech and a member of SME. “Pep Boys could download a digital file from General Motors and print it,” Kurfess said. “So GM doesn’t have to worry about inventories or the tooling to produce it. They could get a tremendous increase on their profit margins.”

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C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

PHOTOS COURTESY 826MICHIGAN

The Detroit Robot Factory store and a creative writing lab will occupy this space on Eastern Market’s Winder Street.

HUB

The 3,500-squarefoot writing lab on the second floor will host school field trips, workshops and after-school programs.

FROM PAGE 3

In downtown Ann Arbor, the storefront is called the Liberty Street Robot Supply & Repair, which sells robot kits and robot-themed novelties and toys that produce enough revenue to cover rent, Uhle said. In Eastern Market, it will operate the Detroit Robot Factory, selling similar products but also new Detroit-centric ones developed by local graphic designers and artists. The site will host creative writing field trips for area schools, tutoring beginning in January, and creative writing workshops and related programs later in 2017.

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“We’re at the point where we’ve recruited so many volunteers and work with so many educators and students and families that the next step is to have a full-service, dropin center that’s open to all,” Uhle said. Last year, 826michigan reached 3,200 students, more than 500 of them in Detroit. Its 2015 surveys designed to gauge its impact found: n 100 percent of teachers whose classrooms visited 826michigan for a field trip viewed the organization as a good resource for teachers. n 73 percent of students who participated in its most recent book publishing project said at the beginning of the project that they liked to write. By the end of the school year, 100 percent said they liked writing. n 9 percent of students who visited 826michigan for after-school tutoring said they felt more confident completing their homework on site with the nonprofit. “We also look at things like attendance as well at our drop-in programs to determine if the programs are still relevant,” Uhle said, noting that an increasing number of students are being served across the board in its programs. About 600 volunteers with 826michigan work with students on writing and tutoring, staffing the store and planning special events. About 100 of them are in Detroit, Uhle said, noting the organization will need many more to fully launch all of its programs. This year, the organization is operating on a budget of about $825,000, with revenue coming from grants, donations, events and its store sales. That’s up from $425,000 in 2013, when it was

named a finalist in Crain’s Best Managed Nonprofit contest. It employs nine people who work between Detroit, Ann Arbor and Ypsilanti, where 826 takes over Beezy’s Café in the evenings for drop-in tutoring. As 826 ramps up new programs at the Eastern Market site, it’s looking for a program coordinator, “someone who has deep connections in the Detroit education community and who respects school-age students and their work in the way we do and can help coordinate the program with educators, volunteers and the public,” Uhle said. 826michigan has built strong relationships with students, families and volunteers across the city over the past few years, Kresge said. “In addition to serving as a hub for programs, the Detroit Robot Factory will meaningfully contribute to the vibrancy and range of activity in Eastern Market, complementing other unique spaces for creative expression such as Signal-Return, the Red Bull House of Art and Salt & Cedar alongside all of the many important amenities that draw thousands to the market every week,” said George Jacobsen, senior program officer. In addition to enlivening the street where it is located, 826michigan is helping repurpose an older building that would be hard to convert to food use, while also supporting Russell Street as a primary shopping district, said Eastern Market Corp. President Dan Carmody. “Its focus on youth and families helps us to keep the Eastern Market District a place that welcomes everybody,” he said. Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

Planning expert: Hudson’s site could open national retail doors Plans by a Dan Gilbert-affiliated entity for the site of the former J.L. Hudson’s department store on Woodward include at least 225,000 square feet of mixed-use space — including dozens of potential retailers and restaurants — plus at least 700 parking spaces and a minimum of 250 residential units to support high demand for downtown living. The redevelopment and financing plans are due to the DDA by the end of the year and the financing must be secured by March 1. Groundbreaking is planned by April 1 with construction largely completed within three years of that. Crain’s reporter Kirk Pinho spoke with Robert Gibbs, a retail and urban planning expert who is the managing principal of Birmingham-based Gibbs Planning Group Inc., last week about the project and what could be in store for the two-acre site that has been vacant since the department store was imRobert Gibbs: ploded 18 years Imagining what ago. Hudson’s site could hold. What kind of challenges do you foresee with a site and plan like this? Gibbs: That kind of mixed-use

density is very complicated, and it means they are going to be developing in what’s known as a fasttrack process, where they are finishing construction drawings as they are still programming the building. It’s a 6- to 9-month minimum to do the architecture and engineering, and to bid it out is a 2- to 3-month process. What’s the most logical mix of uses for the space? Gibbs: That figure, 225,000

square feet, is too much to be all retail, unless they brought in a junior department store or junior anchor (think power center anchor stores) that could go with a two- or three-story footprint. That would be a great footprint for one of those because it’s at the ‘Main and Main’ corner of the downtown shopping district. It would be an ideal place for a junior department store or a junior anchor tenant in the 20,000 to 40,000 square foot range. The other mixed-use space would probably be some office, but that’s probably it — office and retail. It would be really nice for them to bring in a full-sized anchor, like a Target, for example. Urban Targets are around 80,000 to 100,000 square feet in size, and their expansion policy right now is to go into city centers. But that’s just speculating, and I don’t have any first-hand knowledge of the project. But it generally does meet Target’s criteria for deploying new

Gibbs: I think the existing baseline demographics are there to support those sort of retailers now, and they are only getting better with 1,000 or 1,500 new (apartment) units coming into the market. But its trade area includes parts of Grosse Pointe and parts of Dearborn. Those tenants tend to have a 5 to 7 square mile trade area. That extends out to Dearborn, Grosse Pointes, a little bit of Downriver, probably St. Clair Shores, all of those areas. Detroit is one of the most under-retailed cities in the country. It only has 3 square feet of retail per person; and the national average is 21 square feet. The city is one of the most under-retailed in the country, statistically. That’s the city entirely.

COURTESY ROCK VENTURES

“I see it as a profit center,” urban planning expert Robert Gibbs said of the retail square footage announced for development on the Hudson’s site. stores in city centers, as well as Wal-Mart. They could also get junior anchors – like T.J. Maxx, Saks Fifth Avenue Off 5th, Nordstrom Rack, H&M, Zara. There are a number of foreign department stores coming into American cities now and they’ve

picked over all the easy cities like Los Angeles, New York and Chicago, and I could see them coming into a second-tier city like Detroit. How do changing economic demographics around downtown affect the site?

Do you foresee cost being a significant factor in how this all plays out? Gibbs: I don’t see the retail

square footage as a cost. I see it as a profit center. Every square foot they can develop is additional profit; they are going to make money on every square foot that they put in there, so I see that on the profit side of the spreadsheet, not the expense, and I doubt they are going to be subsidizing the retailers. The retail generates more than enough income to cover its cost.

That’s the traditional way of developing mixed-use buildings. I don’t know anything about Gilbert’s or Rock’s finances — I’ve consulted with them, but don’t know anything about their finances. I see it as an income-generating use. And it will become an amenity downtown and make the other buildings around it more valuable. It’s not just to say in this footprint what you capture; it will have a ripple effect on everything around the building. It’s hard to quantify the impact on just that alone. If you get a market rate of return on your investment, that’s great. Then in addition, you get the Starbucks effect, which means that within a quarter-mile, it raises the residential property values 12 percent. The same thing would be happening if you could walk to a market or store at the Hudson’s site. It’s a win-win because if you can make a market return on your investment, then increase the values of your surrounding property, it’s a double-whammy. This is an industry standard, to get multiple wins out of one investment. This is what Detroit has never had before, but it’s common in Boston, Chicago, Seattle and Portland and elsewhere.

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C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

PISTONS FROM PAGE 1

from 2003-09 (except for finishing second in 2006-07). In one measure of renewed fan interest in the Pistons, Mannion said Detroit sold 30 percent more tickets for its first-round playoffs this year than it did for its last postseason berth, in 2009. Unfortunately for the Pistons, the 2009 and 2016 first rounds had the same result: A sweep at the hands of the LeBron James-led Cleveland Cavaliers.

“It had been in so many years (in the playoffs), fans stopped going to first round in 2009,” Mannion said. Losing to the Cavs in 2009 ended a run of eight straight seasons in the playoffs, and attendance went from among the best in the NBA to among the worst — triggering the revenue hemorrhaging that the team has slowly begun to stanch. This year, Detroit sold more than 22,000 tickets for its two playoff games at the Palace. Season tickets are the lifeblood of an NBA team’s local revenue, and the Pistons report positive

growth in the sales of full-season tickets and partial game packages that, when sales are combined, create the equivalent of a fullseason ticket sale. The team has been adding about 1,000 season tickets since Tom Gores bought the club in 2011 for $325 million. This season, the Pistons were at 6,500 season tickets sold, and Mannion expects to hit 8,500 next season. “That’s a good, strong number,” he said. “We want to get to 10,000. That assures you of a big gate.” More than 600 new full-season season tickets have been sold for next season, Mannion said, and the team’s renewal rate for current season ticket holders is tracking at more than 90 percent. The first two of the three courtside season ticket types — they sell for $50,000 — were sold out this season, and Mannion expects all the on-court seats to sell out in 2016-17. Also telling: Detroit was in the top five in the league for group ticket sales the past two seasons and expects to be in the top three after the accounting is finished for 2015-16. The team had about 3,300 group sales tickets sold per game. Merchandise sales were up

Palace headcount Here is the Detroit Pistons’ annual per-game attendance average dating to their 2003-04 NBA championship, with the team’s record and attendance rank in the 30-team league in parentheses: 2015-16: 16,515 (44-38, 25th) 2014-15: 15,266 (32-50, 26th) 2013-14: 15,005 (29-53, 26th) 2012-13: 14,782 (29-53, 28th) 2011-12: 14,413 (25-41, 28th) 2010-11: 16,660 (30-52, 18th) 2009-10: 18,751 (27-55, 8th) 2008-09: 21,877 (39-43, 1st) 2007-08: 22,076 (59-23, 1st) 2006-07: 22,076 (53-29, 2nd) 2005-06: 22,076 (64-18, 1st) 2004-05: 22,076 (54-28, 1st) 2003-04: 21,290 (54-28, 1st) Source: ESPN.com

44 percent over last season, Mannion said, but he declined to disclose the revenue totals. Typically, merchandise sales account for 5 percent or less of an NBA team’s total revenue, but such sales are

NDJG

considered a measure of the team’s financial health — an up-andcoming club will see an uptick in retail sales. The team retains more than 80 percent of its corporate sponsors each season, Mannion said. Mannion predicts more companies will want to sign on or extend their sponsorship deals with the Pistons for next season. “I see that as a major, major growth area for us,” he said. Additionally, the team continues to seek naming-rights sponsors for its north and east pavilions, its various arena clubs, its training center and even parking lots. On the broadcast front, the Pistons are focused on linking TV and digital sponsorships, which Mannion said were done piecemeal in the past. He also said he wants to accelerate broadcast sales with categories such as auto and health care. The team currently has a 10year broadcast-rights deal with Southfield-based Fox Sports Detroit that pays the Pistons about $25 million per season. Its expiration date hasn’t been disclosed, but it’s believed to be around 2020.

8DAD86I>DC

Mannion praised the team’s relationship with FSD as “fantastic,” but said it makes good business sense to investigate possible alternatives when it comes time to renew. Pistons broadcast ratings were up 8.2 percent this season. Detroit also has seen significant growth on its social media platforms: The team’s Twitter account grew from 58,000 followers in 2012 to well over 500,000 now, while its number of Facebook followers has grown to more than 1.7 million. Mannion said the Pistons are ninth in the NBA in social media engagements per 1,000 followers. “You’ve got to be relevant before you can build a relationship with your fans. Once you’re relevant, you can grow revenue,” he said. The improving on-court product means the Pistons will rely less on gimmicks to get people into the seats. Fans will notice what’s presented to them at games will transition from entertainment such as the dance teams to more of what’s happening on the court, Mannion said. “We’re moving toward more of a basketball-based presentation,” he said, noting that statistics display boards were added for the playoffs. Gores has invested $40 million on improvements at the Palace over the past three years, and the upgrades include a bevy of new technologies such as better Wi-Fi and cellphone service, and digital applications that send targeted advertising, such as food deals, directly to fans’ mobile devices during games. The team is still learning how best to deploy such things, including in-seat orders and bathroom wait-line apps. A likely future option will be a “mobile wallet” that allows fans to pay for everything with a phone app. As for physical infrastructure, the Palace is in the middle of the $6 million, three-year replacement of all of its seats by 2018, and Mannion said the highest tier of suites between the foul lines will be refreshed during the offseason while management considers what to do with the third level of seating. The Pistons, who have seen Gores overhaul their business operations, were estimated by Forbes in January to be worth $850 million, a $40 million increase over 2015 and a $400 million improvement over 2014. The NBA’s most valuable franchise, according to Forbes, is the New York Knicks at $3 billion. The average value of an NBA team is $1.25 billion. Local sports industry insiders praise what the Pistons are doing, both off the court and with coach Stan Van Gundy and young players such as Andre Drummond. “They are on the right track, and did all the right things in the down years,” said Mike Dietz, president and director of Dietz Sports & Entertainment in Farmington Hills. “A better team with a great atmosphere, they’re going to sell a lot more tickets. The casual fan definitely starts coming when they’re winning.” Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

STUDIO FROM PAGE 1

potentially preserve the recording studio. But if the feds win, the Justice Department could simply sell the land, or give it to the state. “If that place comes down, it will cut the heart out of the Detroit music business,” said Royal Oak businessman Ed Wolfrum, the studio’s chief engineer from the late 1960s through early 1970s. Federal prosecutors are not using drug allegations as a ploy to seize the property for the I-94 widening project, said Gina Balaya, a spokeswoman for the U.S. Attorney’s Office in Detroit.

Michigan Department of Transportation

officials acknowledge the United recording studio, preser vation efforts and Midtown's resurgence have Dwayne c o m p l i c a t e d Richards: Trial set and delayed for June 7 in federal the widening court in Ann Arbor. project. “We just don’t know if we need the property or not,” MDOT spokesman Rob Morosi said. “We never made an offer, primarily because we’re still refining the design to minimize the impact in Midtown.” United Sound Systems is a two-story red brick home with a large rear studio addition at the corner of Antoinette Street and Second Avenue, north of I-94 in Midtown. The studio was established in 1933 and evolved from a venue that produced advertising jingles into a musical factory that hosted jazz greats, blues musicians and rock stars through the

1980s and 1990s. Singer Marv Johnson recorded “Come to Me” at United in 1959, the first single released by Gordy before he opened Motown’s headquarters, Hitsville U.S.A., less than two miles away. By 2009, the studio had fallen into disrepair and foreclosure.

Family ties The federal drug case, meanwhile, dates to November 2012 when alleged drug dealer Richards was charged in federal court with conspiring to distribute cocaine. Richards, however, disappeared, triggering a years-long manhunt.

U.S. Drug Enforcement Administration agents soon learned Richards

was the cousin of a second fugitive accused of distributing drugs in Detroit, a California man named Mark Jones. Jones had been shipping cocaine from California to Richards in metro Detroit since 2000, according to court records. Jones also disappeared that same year, but the drug investigation intensified in April 2011 when Indiana State Police troopers pulled over a car hauler. Inside, investigators found 40 kilograms of cocaine hidden inside a 2007 Mercedes-Benz and a 2006 RollsRoyce Phantom bound for a Detroit-area customer. Something was missing, however. The car hauler was built for three. Inside the car hauler, investigators found paperwork for the missing car, a 2003 BMW 745i registered to Jones, the fugitive alleged drug dealer, prosecutors allege. The Rolls-Royce and Mercedes-Benz were sold through luxury car broker Marc Laidler of Los Angeles, court records show. After finding drugs inside the

INDEX TO COMPANIES

These companies have significant mention in this week’s Crain’s Detroit Business: 826michigan ..........................................................3

JVS .........................................................................19

American Red Cross of Southeastern Michigan .19

Leelanau Coffee Roasting ..............................9, 12

Autoliv ...................................................................14

Leelanau Vacation Rentals ................................10

Belfor Holdings ....................................................14

Kelly Services .......................................................14

Brain Injury Association of Michigan ................19

Key Safety Services .............................................14

Butzel Long............................................................. 4

KLA Laboratories ................................................. 21

Cherry Republic ....................................................11

Michigan Department of Transportation ....... 33

Civilla ...................................................................... 8

Michigan Small Business Development Center ..19

Cooper-Standard Automotive ..........................14

Michigan Veterans Affairs Agency ....................19

Cooper-Standard Holdings................................ 15

Michigan Veterans Foundation .........................19

Crystal River Outfitters ....................................... 9

Miller, Canfield, Paddock and Stone .................. 4

Dayco Products ...................................................14

MPG .......................................................................14

Delphi Automotive ............................................. 29

Napier Industries LLC .........................................19

Detroit Pistons ...................................................... 1

National Veteran Business Development Council ... 15

Domino’s Pizza .....................................................14

Penske Automotive Group .................................14

Dow Chemical ......................................................14

Pure Michigan Talent Connect ..........................19

Dow Corning .........................................................14

Salvation Army Eastern Michigan Division .....19

DTE Energy ............................................................ 17

Scavolini ............................................................... 23

Eastern Market Corp. ............................................3

SME ....................................................................... 29

Emmanuel House Recovery Program ...............19

Southwest Housing Solutions ..........................19

FCA US LLC ...........................................................14

Strategic Staffing Solutions .............................. 17

Federal-Mogul ......................................................14

Team Detroit ..........................................................7

Ford Motor.............................................................14

TechShop Detroit ................................................19

Friends of Sleeping Bear Dunes ......................... 9

TI Automotive ......................................................14

General Motors ....................................................14

United Sound Systems Recording Studios ....... 1

Gibbs Planning Group ...........................................3

United Way for Southeastern Michigan ..........19

Grand Traverse Resort and Spa .........................10

University of Detroit Mercy Law School ..........19

GTB ..........................................................................7

Veteran’s Haven ...................................................19

Handstand Innovations LLC .............................. 13

Volunteers of America-Michigan ......................19

The Homestead Resort ......................................10

W4 Construction Group .....................................18

Inforum Center for Leadership ..........................19

Wins for Warriors Foundation ...........................19

Home of hits Here is a sampling of albums and songs recorded at United Sound Systems Recording Studios: John Lee Hooker, “Boogie Chillun” Marvin Gaye, “What’s Going On” Bob Seger, “Ramblin’ Gamblin’ Man” The MC5, “Back In The U.S.A.” Isaac Hayes, “Shaft” The Red Hot Chili Peppers, “Freaky Styley” Rolling Stones/Aretha Franklin, “Jumpin’ Jack Flash” Aretha Franklin & The Eurythmics, “Sisters Are Doin’ it For Themselves” Source: United Sound Systems

luxury cars in 2011, investigators analyzed Laidler’s bank records and discovered more than $253,000 in cash deposited in Michigan, court records allege. In January 2011, Laidler bought cashier’s checks totaling $42,700 payable to Fine Touch Dermatology in Redondo Beach, Calif., according to court records. The checks included the notation “Shawn Burman” — an alias for Jones, the Califorinia fugitive who had been missing for 11 years, according to Assistant U.S. Attorney Julie Beck. The services purchased were hair and eyebrow transplant work, Beck wrote in a court filing. “These records included photographs which confirmed that the patient Shawn Burman was in fact Mark Jones.” After the surgery, Jones would stay missing for four more years until federal agents caught him near Los Angeles last fall. Jones, 51, is awaiting trial in a separate drug case in Mississippi. Meanwhile, cooperating witnesses told agents that Richards was involved with or owned a music studio in Detroit, court records allege. The studio: United Sound Systems. One witness said Richards’ money was used to buy the studio, prosecutors alleged. Property records show Richards’ cousin Danielle Scott, a 43-year-old Redford Township resident who worked for the U.S. Postal Service, bought the foreclosed studio property for $20,000 in May 2009. Another witness said Richards’ wife Chynita, 39, oversaw day-today operations, booked artist recordings at United “and that drug transactions have taken place in the building.” Music wasn’t the only other business venture for Dwayne Richards, prosecutors alleged. He was among the investors of the 2012 movie comedy “House Arrest.” Two years after the film was released, United Sound Systems reopened in 2014. One witness spotted Dwayne Richards inside, renovating the studio, prosecutors said. In 2015, MDOT officials met with Scott to talk about the I-94 widening project and the process for possibly buying or moving the

studio, MDOT’s Morosi told Crain’s. And, in May 2015, Chynita Richards and Scott testified in front of a City Council committee regarding the historic district designation. “We really didn’t know what we were getting into by reopening United Sound Systems recording studios,” Chynita Richards told City Council members. “United Sound is such a gem in Detroit because we have so many hits that were recorded there.” Wolfrum, the studio’s former chief engineer, visited the studio and said the new owners ripped out, in some cases, pioneering, innovative equipment that helped create United’s sound. “It’s sort of wrecked now,” Wolfrum said.

In the shadows The historic designation won’t necessarily save the studio from being demolished for the I-94 project, said Peter Henning, a Wayne State University law professor and former federal prosecutor. “If the federal government wins, they can do whatever they want with the property,” Henning said. “That said, I think (U.S. Attorney) Barbara McQuade is very cognizant of the interests of the city, and I doubt she would want to wade into a fight by doing something that would get the city of Detroit mad.” When City Council approved the historic designation, a federal investigation involving the studio site continued in the shadows. After analyzing Scott’s bank accounts and flagging more than $33,000 worth of cash deposits and checks, federal agents and the U.S. Attorney’s Office reached a conclusion. “It appears that Dwayne Richards, a known cocaine trafficker, used Danielle D. Scott to try to conceal the movement of money and property that are the proceeds of his drug trafficking activities by purchasing” the studio, the prosecutor wrote. Scott has not been charged with a crime. She did not respond to a message seeking comment. The federal investigation reached a breakthrough in January when Dwayne Richards, the alleged drug dealer and fugitive, was finally located and arrested in metro Detroit. He is being held without bond and set for trial June 7 in federal court in Ann Arbor. If convicted, Richards faces up to life in prison. There is a strange continuity in the studio’s history if the government’s drug allegations are true, said Wolfrum, the former United Sound Systems chief engineer. “My gosh, if you look at the history of that place, there were always nefarious characters,” he said. “I worked with (singer) George Clinton there. Hell, there isn’t anything he didn’t put in his body.” Robert Snell: (313) 446-1654 Twitter: @robertsnellnews

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WEEK Outdoor ed center takes shape on Detroit’s east side

our vacant lots in the Osborn neighborhood of Detroit soon will have new life as an outdoor environmental education center. The Greening of Detroit and the Osborn Neighborhood Alliance are leading the project on the city’s east side, with American Forests and the Bank of America funding it. Osborn residents, neighborhood children, volunteers from Bank of America and American Forests, along with The Greening’s staff, installed a natural ecosystem last week. Participants will learn about the vegetative materials planted, the habitats being created and benefits of the installation. The site will become a nationally certified pollinator and natural habitat space.

COMPANY NEWS n Chicago-based AJ Capital

Partners opened the Graduate Ann Arbor hotel. The 204-room,

14-story hotel — the largest in downtown Ann Arbor — occupies what used to be The Dahlmann Campus Inn, which closed last December. AJ Capital Partners acquired the Dahlmann from Ann Arbor developer Dennis Dahlmann for $51 million. n On the Move Inc., a Boerne, Texas-based company that builds food trucks and manages trucklease programs, has purchased Oak Park-based Detroit Custom Coach LLC, a maker of customdesigned food trucks. Terms were not disclosed; Detroit Custom Coach will remain in Oak Park. n DTE Energy Co. and Royal Oak tech company Vectorform have introduced a virtual reality simulation that will change the way the Detroit-based utility trains its field employees. The HTC Vive system, developed by HTC Corp., uses goggles and controllers to turn any room into a 360-degree, interactive virtual environment with motion tracking.

n St. John River District Hospital

in St. Clair is back in compliance with Medicare standards and a decision to terminate the hospital’s participation in Medicare has been rescinded, officials for parent St. John Providence Health System were told. The U.S. Department of Health and Human Services’ Centers for Medicare and Medicaid Services had notified St. John Providence last month of the termination, the result of a patient’s suicide in January, with the hospital being cited for failing to follow required procedures.

n Advanced Professional Hospice

Care is now based in Royal Oak as Custom Hospice LLC, after Custom Home Health Inc. acquired the Troy

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 9 , 2 0 1 6

ON THE WEB APRIL 30-MAY 6

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

$500 million

The amount approved by the Michigan House to restructure Detroit Public Schools. The plan came just after teachers staged a two-day sickout because they feared the financially strapped district wouldn’t be able to pay them through the summer. The House measure did not include a plan to create a commission with the authority to approve which schools open and close in the city — a key part of an alternative plan already passed in the Senate.

32 ounces

The size of to-go cans Hazel Park-based hand-crafted cider and beer maker Cellarmen’s will offer to customers. Cellarmen’s said it will be among the first in the country to offer mead and cider in large-format cans.

hospice services provider last month and relocated it. Terms of the deal were not disclosed. n Auburn Hills-based Unique Fabricating Inc. announced the acquisition of Canadian automotive adhesive supplier Intasco Corp. for nearly $21.8 million. n A Kmart store in Farmington Hills is slated to close this summer. The Orchard Lake Road store near Northwestern Highway and West 14 Mile Road began a liquidation sale April 21, Sears Holdings Corp. previously announced the closing of a Super K store in Taylor. n Three Detroit health centers — The Wellness Plan, Covenant Community Care Inc. and Detroit Health Care for the Homeless — will get $1 million each in federal funds for facilities improvements, the U.S. Department of Health and Human Services announced. n U.S. auto safety regulators ordered a major expansion of the Takata airbag inflator recalls, more than doubling the number of hazardous parts covered by the callbacks, Automotive News reported. The National Highway Traffic Safety Administration said an additional 35 million to 40 million Takata-made inflators must be replaced, on top of nearly 29 million already covered by the largest recall in U.S. history. Tokyo-based Takata’s North American subsidiary, TK Holdings Inc., is based in Auburn Hills.

OTHER NEWS n Detroit’s Ilitch family issued a succession-planning statement confirming that their intent is to keep their businesses — including the Detroit Tigers and Detroit Red

Wings — family

owned in the future under son Chris Ilitch. Mike Ilitch, 86, and Marian Ilitch, 83, are founders of the Little Caesars pizza chain and have Chris Ilitch significant business interests in Detroit, including the $627.5 million Red Wings arena set to open in 2017.

n Detroit Recreation Department

Director Alicia Bradford was set to retire after a nearly 30-year career and two months after the botched awarding of a contract to manage the city’s four golf courses. n Driven by a sharp boost in local employment, the Southeast Michigan Purchasing Managers Index rose 3.6 points in April, with the three-month average rising from 56.1 to 57.9. The employment component of the index was up by 9.4 points, from 57.3 to 66.7. The index is a research partnership between Wayne State University’s Mike Ilitch School of Business and the Institute for Supply Management -Southeast Michigan.

n Last year, Detroit’s three casinos — Greektown Casino-Hotel, MGM Grand Detroit and MotorCity Casino Hotel — contributed $174.3 million, or 16 percent of the city’s total revenue, officials from the American Gaming Association said. The AGA was in Detroit as part of a tour of casino cities days before a federal legislative hearing to consider the legal status of sports betting and related topics. n The $6.9 million, 19,000-square-foot Penske Technical Center, designed to serve as the maintenance, storage and operations nexus for M-1 Rail’s under-construction QLine streetcar system in Detroit, opened at the northern terminus of the line at Woodward Avenue and West Grand Boulevard. n The 2016 Quick Lane Bowl at Detroit’s Ford Field is getting a new kickoff time and going back to its former broadcast home: The college football game matching teams from the Big Ten and Atlantic Coast conferences will be played at 2:30 p.m. Dec. 26 on ESPN. Last year’s game began at 5 p.m. and aired on ESPN2. The first Quick Lane Bowl, played in 2014, kicked off at 4:30 p.m. on ESPN. n Anne Elizabeth Moore, a writer, editor, artist and cultural critic from Chicago, is expected to receive a house on Detroit’s east side as the third recipient in a program that awards homes to new writers-inresidence. Write A House is part of the Detroit Land Bank Authority’s Community Partners program. A fourth house was awarded to Detroit poet Nandi Comer, with move-in expected this fall.

RUMBLINGS Surf’s up at local tap rooms as debut of new brew nears

etroit Surf Co., maker of an eponymous lifestyle apparel and sports equipment brand, and Dexterbased Jolly Pumpkin Artisan Ales are cooperating on a draft microbrewed beer intended for rollout this summer. “The first 10-barrel test batch is in production and should be done over the next couple of weeks. The final version should be done for release midsummer,” said Detroit Surf Co. founder Dave Tuzinowski. Dave Tuzinowski A summer tap release party is in the works at the Midtown Jolly Pumpkin location (and next year in Hawaii, where Detroit Surf Co. was born a decade ago), and proceeds will benefit a charity to be determined, he said. The new brew is a red IPA, he said, and will be available at Mercury Burger Bar, Jolly Pumpkin locations and Rust Belt Market’s forthcoming bar in Ferndale. Rust Belt has been Detroit Surf Co.’s retail location; a second was added Wednesday when a pop-up shop opened at 4215 Cass Ave. in Detroit. Jolly Pumpkin is bearing the costs for the test batch, and if the 50-barrel production batch takes off, the two companies will sort out percentages, licensing and the usual business relationship details, Tuzinowski said.

Ride share firm may get $100K from AOL founder Anya Babbitt, the founder of Detroit-based SPLT, a ride-sharing platform for companies’ employees, got a challenge last Wednesday from AOL founder Steve Case, at the national Google Demo Day in Mountain View, Calif.: If she can raise $1 million in capital in the next 100 days, he told her he’ll invest $100,000 in her company. SPLT was in the first class of the Tech Stars mobility accelerator at Ford Field last summer. The company won the Detroit-area Google Demo Day at Grand Circus in March, which got Babbitt a trip to Silicon Valley to make a pitch with 10 other startups for capital to some of the most influential venture capitalists in the world. All of them got the same challenge from Case.

Wayne State event to promote U.S.-Italian biz Wayne State University will host the first Italian Technological

Excellence in the U.S., a symposium to promote business between U.S. and Italian companies. The event, organized by Southfield-based nonprofit Leonardo International Inc. and The Consulate of Italy in Detroit, will take place from 10 a.m. to 4 p.m. Tuesday at the McGregor Memorial Conference Center at WSU. The agenda includes seminars on autonomous vehicles, robotics and advanced medical technologies from companies like Brembo North America Inc., Fiat Chrysler Automobiles NV, Comau LLC, Comerica Bank and St. Joseph Mercy Health System, among others. Seven companies from Italy are expected to attend the event. The conference will also include an expo, career fair and Italian art exhibit. Sponsors include FCA, Comau, Brembo, Esaote North America, Magnetti Marelli, Butzel Long PC, Comerica Bank, Dawda, Mann, Mulcahy & Sadler PLC and WSU. The event is open to the public, which can register on site. See www.leonardointernational.org.

Speaker may have to testify in Courser-Gamrat case Michigan House Speaker Kevin Cotter could appear in a Lansing

district court as early as this week, if he and other legislative attorneys can’t persuade a county court to quash his subpoena in criminal proceedings against former state Reps. Todd Courser and Cindy Gamrat. Attorneys for Cotter at Dykema Gossett PLLC and for the Michigan Senate at Warner Norcross & Judd LLP both asked Ingham County Circuit Judge James Jamo to strike down a defense subpoena for Cotter last week. Cotter is appealing an April 22 order from 54A District Judge Hugh Clarke that he appear and answer questions from defense attorneys in the judge’s chambers. Courser faces charges of perjury and misconduct in office and Gamrat of official misconduct from state Attorney General Bill Schuette’s office, related to an alleged coverup of their extramarital affair, either by misusing public staff resources or lying to investigators. Courser resigned and Gamrat was expelled. At issue for Cotter, and the Senate as an outside party, is part of the state Constitution that states a legislator “shall not be subject to a subpoena for any matter involving statements made...pursuant to his or her duty as a legislator.” John Bursch, an attorney for the Senate, said he was unaware of any case where a legislator was compelled to give deposition testimony. Stay tuned.

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